presented by: mike paglia – director, retail insights alida destrempe – senior analyst...

Presented by:

Mike Paglia – Director, Retail InsightsAlida Destrempe – Senior Analyst

Subscription Webinar Series

3 September 2014

Pick Me, Pick Me!! How Supermarkets Are Trying to Differentiate

© Copyright 2014 Kantar Retail

Copyright © 2014 Kantar Retail. All Rights Reserved.

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Disclaimers

The analyses and conclusions presented in this seminar represent the opinions of Kantar Retail. The views expressed do not necessarily reflect the views of the management of the retailer(s) under discussion.

This seminar is not endorsed or otherwise supported by the management of any of the companies covered during the course of the workshop or within the following slides.


Agenda

• Personalizing Loyalty

• Supermarkets Go Back to School

• Kroger's e-commerce Plan Taking Shape?

3


Why are Retailers Making Loyalty Personal?Partly a reactive move

4Source: Kantar Retail ShopperScape®, October 2013

Spending Priorities(% of shoppers selecting products as one of top five near-term spending priorities)

Spending Priorities(% of shoppers selecting products as one of top five near-term spending priorities)


Messaging, Website Becomes PersonalTargeting, and becoming more predictive?

Source: Kantar Retail research and analysis 5

“Just for You” honing to your shopping“We built a sophisticated, brand-new recommendation engine that's been

built internally by the Walmart Labs” – Joel Anderson, Oct. 2013

“We built a sophisticated, brand-new recommendation engine that's been

built internally by the Walmart Labs” – Joel Anderson, Oct. 2013

Still some kinks…

“It's about how can we help you find one item whether that's our search engine [or]

our personalization tools” – Neil Ashe, Oct. 2013

“It's about how can we help you find one item whether that's our search engine [or]

our personalization tools” – Neil Ashe, Oct. 2013

Now targeted price drop emails too…


Website Relaunches to Make it More Personal

• Started in 2014, to be completed by early 2015

• Goal to be more relevant by:– More tailored suggestions, also better

accounting for past purchased, searches, and behaviors of similar shoppers (online & store)

– Account for location, including weather and local events

– Easier store search and more streamlined check out

• Pangea platform to launch, quickening Walmart.com’s ability to respond and upgrade its website, across countries



Yumprint Targets Online Meal Planners

Yumprint acquired by @WalmartLabs in February 2014

•Displays more than 15 million recipes from food blogs

•Users can access it via website, mobile app, and browser extension (allowing shoppers to easily save recipes to their “cookbooks”)

•Users can view friends’ saved recipes

•For a fee, “Yumprint Premium” tracked sale items for local supermarkets in recipes saved in users’ cookbooks—now appears disabled

Mobile and social food app will link with online grocery, lists?

Source: Kantar Retail research and analysis, company material 7

“A vision for how technology can improve the way all of us discover and prepare our meals” –Ben Galbraith, VP, Global Products, Walmart.com,

about Yumprint

“A vision for how technology can improve the way all of us discover and prepare our meals” –Ben Galbraith, VP, Global Products, Walmart.com,

about Yumprint


Ultimately, its Aim is Personalize & Facilitate Elevating convenience, the shopping experience she expects


Help her…


Personalizing the Reward: Meijer’s MPerks

Source: Kantar Retail analysis; Meijer.com 9

All through mobile number (no card)

Choose 1 of 4 from each dept. that fit

your purchase/list

(total of 3 rewards).

EdiblegroceryEdible

grocery

HBC/ Non-Edible Grocery

Home/Apparel (GM)

Limited-time offers (push shoppers into the store).Limited-time offers (push shoppers into the store).

Test message

reminders

Earn rewards on the things

you buy and

choose the reward you want.


Everything Accessible Online (and Via Mobile)Making shoppers more aware of there trips and behaviors

Source: Kantar Retail analysis; Meijer.com 10

Track behavior

Track stores / access receipts

Or access on-the-go

Not only are shoppers seeing their shopping behaviors, Meijer is acquiring their

shopper data to internalize to deliver a more customized

experience.


Personalizing the PromotionAnd taking the “card” out of loyalty cards

Source: Kantar Retail analysis; company websites 11

1. Create online account

2. Select coupons, download to smartphone

3. Shopper enters account # at checkout, coupons get applied


But Coupons are Just the BeginningPublix quick to realize the potential

Source: Kantar Retail analysis; company websites 12

1. Stores

2. Product/assortment

3. Price

Enables segmentation:

4. Shopper/behavior

Ability to directly offer targeted promotions


Where Does Publix Go With It?

Source: Kantar Retail analysis 13

…but lacking shopper data

© Copyright 2014 Kantar RetailSource: Kantar Retail analysis

Digital Impact: 100%Digital touches (nearly) everything

14


Implications for Suppliers

• Loyalty doesn’t have to be card driven anymore–Identify new ways make loyalty personal

• The precedent has been set. More common behavior by retailers & more common expectation from shoppers

–Will have to become more common skill set with suppliers

• Shift in how suppliers spend trade dollars–Identify the best way to maximize ROI

• Engagement will move from mass to me–Develop flexible systems that can handle the complexity

• Your customers will get smarter about their shoppers–Meet the demand for more shopper analysis skill sets at the team

level



Agenda




16


Summer Overrides Back-to-School

Source: Kantar Retail analysis; retailer websites and store visits 17

A holiday not specifically built for a supermarket business model or assortment, supermarket

retailers seems to be behind versus other retailers in getting out back-to-school promotions

and merchandising.

Summer

BTS


Multiple Efforts to Maintain Share of Wallet during the BTW Season

Source: Kantar Retail analysis; retailer websites 18

Price freeze on seasonal items

Cash back rewards Linking BTS

promotions to fuel perks

Special weekend events


Balancing College & Grade SchoolTwo formats for two school scenarios

Source: Kantar Retail analysis; HEB.com 19


Online Support Creates Seamless Experience Creating an omni-channel experience

Source: Kantar Retail analysis; store visits and Meijer.com 20

Seamlessly integrating multiple departments (apparel

& office).

Online planning tools to make the trip efficient

Bringing it all together in one area of the store


Facilitating Promotions through the Hashtag

Source: Kantar Retail analysis; retailer websites 21

BTS hashtags are an easy way for retailers to aggregate entries for contests

or giveaways in their social stream promotions, but also generate shopper

excitement.


How Involved Can Grocery Retails Get During BTS?Other trends in 2014

Source: Kantar Retail analysis; store visits 22

Run a CPG supplier BTS promotions versus running a

retailer-driven BTS promotion.

Leverage food assortment to advertise school lunch

solutions.

Place emphasis on school rewards programs to engage

in local community.

Utilize the online, digital shelf to sell more BTS items not

found in stores.


PB&J: Joining Brands in a PromotionSolution based selling for the lunch bag

Source: Kantar Retail analysis; Raleys.com and store visits 23

Different pack sizes for “snack

packs”

Different pack sizes for “snack

packs”

Utilizing online as a resource for lunch ideas.

Utilizing online as a resource for lunch ideas.

Emphasis on store brands to balance

value message,

Emphasis on store brands to balance

value message,

Same approach

at H-E-B


Making Products Relevant BTS scenarios that make sense to the shopper

Source: Kantar Retail analysis; store visits and retailer circulars 24

BTS theme-based and scenarios for assortments displays and marketing messages

BTS theme-based and scenarios for assortments displays and marketing messages


Licensing Emerges as Prominent TacticLeveraging brands popular with kids


Disney characters Pixar movies Sesame St


Innovation Prevalent at the Item Level



Aligning to the New PremiumBTS Rewards Programs Shed Light on a New Form of Value

Source: Kantar Retail analysis; Publix.com 27

Shoppers can tear off tickets at register valued at $5, $7, and $10. The amount will be added to the grocery order, where the money will be donated to local schools

for supplies.

Rewards programs:-Drive shoppers to certain CPG brands-Link retailer to local school efforts (localization)-Nationally recognized BTS program


Supplier Displays Highlight (and mainly support) BTSShelf-ready packaging prevalent across categories aid in quick set up, replenishment, and disposal.


Supplier displays prevalent at Giant Eagle

Pallets and cut cases at Meijer


Simple Cross Merchandising in Center StoreRetailers attempting to grow the basket


Food storage

Discretionary items

Margin accretive


Key Takeaways for Suppliers

• Pockets of opportunity exist for suppliers who are willing to work to better leverage the back to school season

–Identifying those opportunities within your categories is the first step

• Relevance is critical to engagement–Align to shoppers’ values, favored brands, demands for convenience

while meeting their practical needs

• Cutting through the white noise is half the battle–Incorporate unique, eye catching, entertaining elements into your

programs

It’s never too late to start thinking about BTS 2015



Agenda




31


Brief History Lesson: Some Updates

Source: Kantar Retail analysis; Vitacost.com 32

Annual Sales

• Early 90’s: catalog retailer of 3rd party vitamins & supplements under the name Nature’s Wealth Company.

• Late 90’s: company launched Vitacost.com and later expanded its assortment to include food, beauty products, and sports nutrition items.

• 2010 - 2011: Launched a major sales growth initiative which involved expanding its customer base, product offering, enhancements to proprietary brands, etc.

• 2013 -2013: Continue to launch new proprietary brands.

• Kroger bought Vitacost for $280M, which now gives the large supermarket a new retail outlet.


What is Vitacost.com? Assortment:

•Over 45,000 items

•Over 2,500 brands

•Vitamins, supplements, health foods, sports nutrition items, herbs, natural household items, baby care essentials, etc.

Resources:

•Healthy Bites Blog

•Tips and advice, videos, nutrition facts

Savings:

•Promo pocket

•Set & save management

•Refer a friend program

•Savings up to 50% off retail

Source: Kantar Retail analysis; 33


Third Party Distribution through Amazon Facilitates sales growth and brand recognition

Source: Kantar Retail analysis; Vitacost Investor Relations 34

Number of Orders

Roughly 10% or orders come from

Amazon

Extensive eCommerce business that includes Amazon – a revenue

stream.


Customer Acquisition through Amazon


Number of New Customers

Between 25%-30% of Vitacost’s new customers

comes through its third party distribution with

Amazon.


Vitacost Strong Value Proposition to ShoppersThree key areas of focus



Everyday low price

Strong Value Position

• Promo Pocket: which stores all of the promotions available to a customer in one place.

• Deals: variety of sales (that rotate and change over time)that can be filtered by the shopper by category.

• Set and Save: Allows shoppers to receive an additional 10% off the locked-in lowest price.

Balancing multiple efforts to push value onto shoppers

Source: Kantar Retail analysis; Vitacost.com 37


Broad Selection of Items it Knows Best


Broad product

selection

• Niche Assortment: natural/organic, sports nutrition, herbs, vitamins/ supplements, natural beauty care, etc.

• Own Brands: launched Over 176 of its own brands in 2013

“Vitacost.com’s core focus on healthy living products is

complementary to our fast-growing natural foods business, and

we intend to grow Vitacost.com’s strong position in the online

nutrition market,”

Rodney McMullen, CEO - Kroger


When Strategies AlignVitacost’s core value proposition fits Kroger’s business model

Source: Kantar Retail analysis; Vitacost Investor Relations and store visits 39


What Does this Mean for Kroger?

• Entry into the nutritional business realm

• Learn the ropes of not only e-commerce, but mobile commerce

• Online fulfillment model

• New outlet for private brand expansion


Partnered with YOU Technology at the end of 2013.

Partnered with YOU Technology at the end of 2013.

Continued efforts around mobile and digital coupons, etc.

Continued efforts around mobile and digital coupons, etc.

Merger with Harris Teeter (plus HomeShop pilot)

Merger with Harris Teeter (plus HomeShop pilot)


Expanding its Business Means More CompetitionKroger has limited knowledge here..

Source: Kantar Retail analysis; Vitacost.com May 2013 Investor Conference Presentation 41

*Comparison based on estimated SKUs that overlap VITC’s product mix


Something is Missing…

“Delivering fresh product and those kinds of items is a difficult formula to get right….That is why we have had what we are doing in Denver for so long and have not expanded it. We

keep learning from that, but we have not solved the formula for that in the Denver market, which is why we have not expanded it outside that market.”

- Michael SchlotmanKroger CFO

Amazon gets FRESH



Implications

• Kroger is not only growing its digital capabilities, but also click & collect and e-commerce capabilities.

– Suppliers must remember it’s not just e-commerce but the whole range of digital marketing and transformational digital shopping behaviors.

– In an online and digital world, merchandising and marketing are the same thing, and should be managed as such.

• Vitacost is a gateway to new shoppers that have new behaviors and purchase those more “untraditional” products.

– As data becomes available, suppliers must learn a new set of shopper skills.

• As Kroger learns from Vitacost.com, so should your Kroger team! And though not available yet, fresh-to-home delivery is likely to be the next step.

– How well prepared are you to execute an omni-channel strategy?

– Suppliers need to start re-thinking how e-commerce will impact the store.



Contact:

Mike PagliaDirector, Retail [email protected]

T:+1 617 912 2855M:+www.kantarretailiQ.com

Alida DestrempeSenior Analyst – US [email protected]

T:+1 614 355 4030M:+www.kantarretailiQ.com

presented by: mike paglia – director, retail insights alida destrempe – senior analyst...

Documents

kantar retail copyright

kantar retail research

kantar retail messaging

kantar retail shopperscape

opinions of kantar retail

local supermarkets

cookbooks users

users cookbooks