shelf smarts
DESCRIPTION
Shelf smarts. Leveraging assortment, price and promotion to drive category performance. Retail sales trends in US. are flat. #Consumer360. Driving efficiency is critical to success. Sales programs (shelf placement, feature, display and pricing tactics) are the second biggest spend. - PowerPoint PPT PresentationTRANSCRIPT
LEVERAGING ASSORTMENT, PRICE AND PROMOTION TO DRIVE CATEGORY PERFORMANCE
SHELF SMARTS
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RETAIL SALES TRENDS IN US. ARE FLAT
2Q 2012 3Q 2012 4Q 2012 1Q 2013 2Q 2013 3Q 2013 4Q 20130
5,000,000,000
10,000,000,000
15,000,000,000
20,000,000,000
25,000,000,000
Selected ConvenienceSelected DollarSelected MassSelected FoodSelected DrugTotal
#Consumer360
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DRIVING EFFICIENCY IS CRITICAL TO SUCCESS
COGS44.1
Adv7.5
Dist7.6
R&D1.4
Sales Programs19.0
Sales programs (shelf placement, feature, display and pricing tactics) are the second biggest spend
#Consumer360
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WE’RE NOT MANAGING ASSORTMENT WELL
MEAT BEAUTY CARE FROZEN FOODS DAIRY GROCERY HOUSEHOLD CARE
15%
11%9%
16% 17%18%
1% -1%
-4% -4%
-7%
-12%
Department TDP and $ Velocity Trends
TDP$ Velocity
Scantrack: xAOC 2013 vs. 2010
Declining velocities against SKU proliferation
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APPLIED ANALYTICS DRIVE ASSORTMENT PERFORMANCE
Predicted Actual
Assortment Opportunity
Retailer
Comp Mkt
Retailer Performance
#Consumer360
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EXPECTATION REALITY
MATCH PRICE TO MARKET CONDITIONS
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1Q 2012 2Q 2012 3Q 2012 4Q 2012 1Q 2013 2Q 2013 3Q 2013 4Q 20135%
6%
7%
Trade ROI Promotion Frequency
PROMOTING MORE BUT GETTING LESSPromotion Frequency and Trade ROI Trend – 2012-2013
Trad
e RO
IProm
otion Frequency
#Consumer360
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Negative ROI (<$0) Margin return on trade ($0 < ROI <$1)
Positive return on trade (>$1 ROI) Best in Class (top 5% trade ROI)
ONLY 10% OF PROMOTIONS ARE PROFITABLEProducts ranked by Trade ROI (One Category – in Grocery)
$1 is Breakeven
$2
Breakeven $1
$0
-$1
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Manuf. A Manuf. B Manuf. C Manuf. D Manuf. E Manuf. F Manuf. G
$1
SOME MANUFACTURERS OUTPERFORM PEERS Trade ROI by Manufacturer
Sales per Dollar Invested - $1 is Breakeven
Trad
e RO
I
$0
Negative ROI (<$0)
Margin return on trade ($0 < ROI <$1)
Positive return on trade (>$1 ROI)
Best in Class (top 5% trade ROI)
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Seg A Seg B Seg C Seg D Seg E Seg F Seg G Seg H Seg I Seg J Seg K Seg L
$1
CATEGORIES PERFORM DIFFERENTLY BY SEGMENTTr
ade
ROI
$0
Negative ROI (<$0)
Margin return on trade ($0 < ROI <$1)
Positive return on trade (>$1 ROI)
Best in Class (top 5% trade ROI)
Trade ROI by SegmentSales per Dollar Invested - $1 is Breakeven
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GET YOUR BALANCE SHEET IN ORDER
Product Assortment
Promotion Management
Pricing
To enable winning promotions
Get the right products on the shelf… At the right price…
#Consumer360
CASE STUDY: INTEGRATING ASSORTMENT, PRICE AND PROMOTION
#Consumer360
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LET’S LOOK AT IT IN ACTION
Only a few major brandsOver 400 UPCs $150 million category, flat sales for a couple years
Classic hi-lo retailer
2 brands = 32% of Sales#Consumer360
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Incremental Value ($/Store/Week)
Sale
s Ra
te ($
/sto
re/w
eek)
Retailer
-4 -2 0 2 4 6 8 10
0
2
4
6
8
10
12
14
Series4 Series7Series10Series14Series17
BARYCENTRE00.25STANDARD
-3 -2 -1 0 1 2 3 4 5 6 7
0
1
2
3
4
5
6
7
8
9BARYCENTRE00.25STANDARD
BREA
KDO
WN
Rationalize Develop
Squeeze Nurture
Rationalize Develop
Squeeze Nurture
Sub-cat 3
0
16
-10 15
0
10
0 10
sub-brands 1 - 7
Region
Rationalize Develop
Squeeze Nurture
-2 0 2 4
0
1
2
3
4
5
6
7
8
9BARYCENTRE00.25STANDARD
0
10
-2 4
New Sub-brand
#Consumer360
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FIXING ASSORTMENT DRIVES TOPLINE GROWTH
Retailer $ Sales Retailer Profit Manufacturer Gross Revenue
Trade Spend Manufacturer Profit
$1.21 $1.07
$0.55
$0.22 $0.06
Chan
ges
( Abs
. $M
M)
CURRENT PROPOSED
• Wide assortment in overdeveloped sub-brands • Introduce higher-performing sub-brand• Rationalize underperforming sub-brand• Minor other 1:1 changes
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3.1
3.19 3.
23.
29 3.3
3.39 3.
43.
49 3.5
3.59 3.
63.
69 3.7
3.79 3.
83.
89 3.9
3.99 4
4.09 4.
14.
19 4.2
4.29 4.
34.
39 4.4
4.49 4.
54.
59 4.6
4.69 4.
74.
79 4.8
4.89 4.
94.
99 55.
09
0%
2%
4%
6%
8%
10%
12%
0
20
40
60
80
100
120
140
160
ACV ACV "at-risk" Sales Index
THRESHOLDS PUT SIGNIFICANT VOLUME AT RISKSales Rate Index by Regular Price Point
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CURRENT HI-LOW STRATEGY WITH HOLIDAY FOCUS
$3.85Regular Price
Heavy focus on Holiday Discounts
Key holiday windows
Holiday timing Feature TPR EDLP spend Base
#Consumer360
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OPTIMIZED “HYBRID” STRATEGY USES EDLP + EVENTSKey holiday windows
Holiday timing Feature TPR EDLP spend Base
Use EDLP spend to bring regular price to
$3.49(below Threshold)
Focus TPR & Feature below
$3.00 (on & off Holiday)
#Consumer360
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HYBRID TRADE STRATEGY DRIVES WIN-WIN
Retailer $ Sales Retailer Profit Manufacturer Gross Revenue
Trade Spend Manufacturer Profit
$1.89
$1.02
$4.01
$0.99
$1.79
Chan
ges
( Abs
. $M
M)
CURRENT PROPOSED
• Premium regular price• Many deep discount ads
• Fewer deep discount ads• Hybrid EDLP spend during peak season to close
gap to competition
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LET’S THINK ABOUT THIS AS A SYSTEM
Product Assortment
Promotion Management
Pricing
To enable winning promotions
Get the right products on the shelf… At the right price…
#Consumer360
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Baseline = 100 Baseline = 150
Baseline 100
Baseline 150
Baseline Incremental
FIXING THE BASELINE SUPERCHARGES PROMOTIONSDisplay provides 200% lift. Same Display effectiveness drives 100 more incremental units due to increase in baseline
+50
+100Total 300
Total 450
Incremental 200
Cannibalization -40
Incremental 300
Cannibalization -30
#Consumer360
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WIN ON ALL METRICS: 1 + 1 > 2
Retailer $ Sales Retailer Profit Manufacturer Gross Revenue Trade Spend Manufacturer Profit $0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
PNP Alone Assort. Alone Combined
Retailer $ Sales
Retailer Profit
Manufacturer Gross Revenue
Trade Spend
Manufacturer Profit
+6.7%
+28.2%
+9.4%
+1.0
+3.9
INTEGRATED PLANNING USES INSIGHTS TO DRIVE DEMAND
#Consumer360
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24 negative Consumer Response to Assortment (Incrementality)
Dis
trib
ution
(# It
ems)
YOU NEED TO KNOW WHERE YOU STANDHigh incrementality would lead to different actions than low
Helps maximize category sales
Review slow mover for de-listment
NURTURE
Detrimental to category performance
De-list worst performers
SQUEEZE
RATIONALIZE
Saturated; restricting category growth
Make sure you have the best items in distribution
DEVELOP
Key category driver
Increase items
positive
slow
Avg
Sale
s Ra
te fa
st
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SUCCESSFUL TRADE STRATEGIES BY CATEGORY
Best in Class (top 5% trade ROI) Remaining category #Consumer360
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GET YOUR BALANCE SHEET IN ORDER
Product Assortment
Promotion Management
Pricing
To enable winning promotions
Get the right products on the shelf… At the right price…+ =
#Consumer360
