The New Normal Insights into the Post Recessionary...
Transcript of The New Normal Insights into the Post Recessionary...
Copyright © 2010 The Nielsen Company. Confidential and proprietary.
The New Normal – Insights into the Post Recessionary Consumer and a View of the Retail Landscape in 2015
Todd HaleSVP, Consumer & Shopper InsightsThe Nielsen Company
September 17, 2010
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Copyright © 2010 The Nielsen Company. Confidential and proprietary.
Today’s Agenda
•Economic Update
•Buying & Retail Trends
•Retail Channel 2015 Forecast
•Retail Evolution Predictions
•Evolving Demographics
•What Should You Be Doing Now To Prepare For
the Future?
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Economic Update
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14.9 MM jobless
Monthly Job Gains/Losses
August 2010: 9.6% Unemployment
16.7% Underemployed
42% unemployed for longer than 27 weeks
Labor Market Trend Was Improving, But Disappointing Last Three Months
Source: Seasonally Adjusted U.S. Total Non Farm Employment, U.S. Government
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Expect Lengthy Recovery Period
Source: Calculated Risk
2001
Recession
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Value (Quality/Options Relative to Price)
Being Rephrased…
I’ll trade down even if it means
sacrificing what I really want
I want what I want, but at the
best price
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-4%
-2%
0%
2%
Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10
2010 Retail Sales Ex Auto vs prior month
2H08
Fear
2009
Cautious Rebound
2010
New Normal?
Aug
„08
Aug
„09Aug
„10
Source: U.S. Census Bureau
Lackluster 2010 Retail Sales
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Discretionary Making Comeback, But Off Poor 2009; Weaker 2010 for Nat’l Grocers & Walmart
2009
-15 -10 -5 0 5 10
Costco
BJ's
Sams
Kroger
Safeway
SuperValu
Family Dollar
Dollar Tree
Dollar General
Target
Kmart
Walmart
CVS
Walgreens
Rite Aid
Whole Foods
Nordstrom
Kohls
Macy's
JC Penney
Lowe's
Home Depot
2010
-10 -5 0 5 10
Costco
BJ's
Sams
Kroger
Safeway
SuperValu
Family Dollar
Dollar Tree
Dollar General
Target
Kmart
Walmart
CVS
Walgreens
Rite Aid
Whole Foods
Nordstrom
Kohls
Macy's
JC Penney
Lowe's
Home Depot
Value &
Convenience
Source: Company press releases; latest monthly or quarterly report
Discretionary
Spending
Stock-Up
& Save
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96
103106 108 106
100
83 8280
8582
84
80
87
1Q05
3Q05
1Q06
3Q06
1Q07
3Q07
1Q08
3Q08
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
Consumer Confidence Index
Emerging
Developed
U.S. Consumer Confidence Remains Below Pre-Recession Levels
Source: Nielsen Global Online Consumer Confidence and Opinion Survey 2Q10
Rebound indicative of
elongated “L-shaped ”
recovery curve
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Consumer Behavior Has Shifted
Saving
Coupons reborn
Private Brands as Equal or Better
Unlimited supply
Limited demand
Questioning
Spending
Coupons dying
Private Label as fall back
Limited supply
Unlimited demand
Habitual
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-0.5
3.0
2.01.5 1.4
0.4 0.4 0.3
-0.8
-3.2-3.6
-6.8
Latest 52 Weeks
Edible Departments Driving Growth; Less Growth in Fresh Meat & Dairy (Where Prices Have Been Cut)
Total Dairy
Fresh
Meat
DeliFresh
Produce
Alco
BevDry
Grocery
Pkgd
MeatHBA
Non
Food
General
Merch
% Dollar Growth (FDM w/WM)
Source: Nielsen Scantrack, (U.S. FDM w/ Walmart) 52 weeks ending 08/07/2010 (vs. prior year); UPC-coded
Frozen
Foods
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0.2
4.23.5
1.9 1.91.5 1.3
1.00.5
-1.9
-3.2
-6.2Latest 52 Weeks
Total DairyFresh
Meat
DeliFresh
Produce
Alco
Bev
Dry
Grocery
Pkgd
Meat
HBA
Non
FoodGeneral
Merch
Frozen
Non-Edibles Leading Unit Decline
Economy driving consumers to make
trade-offs or buy less
% Unit Growth (FDM w/WM)
Source: Nielsen Scantrack, (U.S. FDM w/ Walmart) 52 weeks ending 08/07/2010 (vs. prior year); UPC-coded
13
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Source: Company websites
Price Wars in Chicago
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A&P Lowering Prices Too
Source: Company website
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Consumer Packaged Goods Prices Have Fallen & Units on Promotion Have Grown
% Change Unit Prices
-2
0
2
4
6
All Departments
% Change Feature and/or Display Unit Sales
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-4
0
4
8
12
11/29/08 12/27/08 01/24/09 02/21/09 03/21/0904/18/0905/16/09 06/13/09 07/11/09 08/08/09 09/05/0910/03/09 10/31/09 11/28/0912/26/0901/23/1002/20/1003/20/1004/17/1005/15/1006/12/1007/10/1008/07/10
Source: Nielsen Scantrack, (U.S. FDM w/ Walmart) 4 week increments (vs. prior year); UPC-coded
4 Weeks Ending
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Weak Total Store Performance – Price Cuts & Heightened Promotions Not Working
% Change Dollar Sales
-2
0
2
4
6
% Change Unit Sales
-5
-2
1
4
11/29/08 12/27/08 01/24/09 02/21/09 03/21/0904/18/0905/16/09 06/13/09 07/11/09 08/08/09 09/05/0910/03/09 10/31/09 11/28/0912/26/0901/23/1002/20/1003/20/1004/17/1005/15/1006/12/1007/10/1008/07/10
All Departments
Or would situation be worse without
value efforts?
4 Weeks Ending vs Year Ago
Source: Nielsen Scantrack, (U.S. FDM w/ Walmart) 4 week increments (vs. prior year); UPC-coded
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Same-Store-Sales Trends
-8
-6
-4
-2
0
2
4
6
1 2 3 4 5 6
Last Six Reported Quarters
Kroger
Walmart
Safeway
SuperValu
As Prices Fall, So Have Same-Store Sales Trends, But Kroger Outperforming Their Peers
Source: Company Press Releases
Retail Innovation
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Store Formats
Supercenter Expansion
Small Formats
Green Formats
Ethnic Formats
Outdoor Malls
Pop-Up Retailers
Assortment & Services
Self-Check-Out
Health Clinics
Food & Food Service
Store Brands
Better-For-You Solutions
Online
Gift Cards
Communication
Digital Media
Social Media
Smart Phone Apps
In-Store Kiosks & TVs
Promotion
Coupon Renaissance
Shopper Cards Fulfill Promise
Gas Savings
Shopper Marketing
CPG Retail Innovations in Past Decade?
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Value Channels Big Share Winners
1825
0
10
20
30
Winners
82
75
70
75
80
85
Losers0 20 40 60
Supermarkets
Drug
Mass
Convenience
Mass Supers
Club
Dollar
$ Share
2004
2009
Source: Nielsen Trade Dimensions & Nielsen TDLinx
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While Online Sales Slowed During 2008 & 2009, its Share Continued to Grow
0
5000
10000
15000
20000
25000
30000
35000
40000
Q4 1
999
Q2 2
000
Q4 2
000
Q2 2
001
Q4 2
001
Q2 2
002
Q4 2
002
Q2 2
003
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003
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006
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008
Q4 2
008
Q2 2
009
Q4 2
009
0
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4
Retail E-Commerce Sales
% of Total Retail Sales
Do
llars
(m
illio
ns)
On
lin
e %
of
tota
l U
S S
ale
s
Source: U.S. Census Bureau
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18%
19%
20%
21%
22%
23%
24%
Store Brand Unit Share(Data through August 7, 2010)
2005 2006 2007 2008 2009
Economic Growth Recession
GDP 3.1% 2.7% 2.1% 0.4% - 2.4% 3.0%
2010
Pre-Recession Norm
Post-Crisis Norm
Source: Nielsen Scantrack, (U.S. FDM excl. Walmart) 4-week increments (vs. prior year); UPC-coded
Great Recession Created New Normal for Store Brands
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% Change in Manufacturer Coupon Redemptions
Top 5 Redemption Growth Methods
Internet +263%
Direct Mail +69%
Magazine +51%
Instant Redeem +48%
Direct Mail Coop +45%
The Coupon ReinventedItself & Made a Comeback
Q1 Q2 Q3 Q4
2008 -7% -1% -3% +10%
2009 +17% +33% +29% +26%
2010 +13% +1%
Source: Inmar
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Smaller Stores & Food Focus
Source: Company websites; Philly.com, Charles Fox / Staff Photographer
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Food Fight: Grocers Seizingthe Opportunity
A new wave of lifestyle
store formats
Source: Company websites; supermarketnews.com
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Want to Sell More Groceries & Cookware, Try Cooking Lessons
Source: Company websites
27
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Following the success of Aldi & Save-A-Lot, New No-Frills Formats from Giant Eagle & HEB
Source: Valu King; Joe Vs Smart Shop; Columbus Dispatch & Houston Chronicle
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Even High-End Retailers Expanding into Price-Impact Formats
Why can‟t other retailers
follow a similar path? What
about holding periodic BIG
SALE events?
Source: Company websites
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New Ways to Extend Brand Reach Through Retail Formats
Source: Company website
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Times Square Brand Awareness & Equity Building
Source: New York Times; SoulofAmerica.com; Hershey’s
31
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If Your Customers Aren't Coming to You, Go After Them or Make it Easier
Source: Keith Hine/Chicago Sun-Times; Meijer; Publix
32
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Independents w/Ethnic Formats; a Few Big Chains Experiment
Source: Company websites
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Store Brand Innovationin New Territories
Source: Company websites
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Winning & Experimenting w/Technology
Source: Company websites; Progressive Grocer &
Pittsburgh Post-Gazette
35
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Source: Dr. Vino
Technology & Sustainability – I’ll Drink to That!
Self-Serve Tanks
Bring Wine to
French
Supermarkets
36
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Feature Ads Go Online
Source: Company website
37
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Walmart & 7-Eleven Make Big Betson In-Store TVs
Source: Company websites; QSRMagazine.com
38
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7-Eleven On-Line Video Campaign to Build Awareness of Offerings
Source: New York Times; Company website
39
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Smart Phone Apps to Simplify Our Lives & Make Smarter Shoppers
Source: Company website
40
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How Will P&G’s Online StoreImpact Retailing?
Source: Company website
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Predictions:Retail Channel 2015 Forecast
42
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Mass Supercenters & E-commerce Will be Big Winners
Channel $ Shares
2001 2009 2015 forecast*
Mass Supercenters E-commerce Club
11
23
29
Source: 4i Consulting Group, Inc. a Nielsen Partner
43
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Channel $ Shares
2001 2009 2015 forecast*
Supermarkets Drug Home Improvement Conv/Gas Mass Merch
Supermarkets Will Lose Share, but at Declining Rate – These Other Big Channels will Suffer Share Losses
7767 61
Source: 4i Consulting Group, Inc. a Nielsen Partner
44
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Channel $ Shares
2001 2009 2015 forecast*
High-End Grocery Limited Assortment Grocery
Growth in Low & High-End Grocery, but Small Share Positions
1
1.7
2.1
Aldi & Save-A-Lot
Trader Joe‟s & Whole Foods
Source: 4i Consulting Group, Inc. a Nielsen Partner
45
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Channel $ Shares
2001 2009 2015 forecast*
Consumer Electronics Liquor Dollar Office Pet Books Toy
Mixed Performance for Remaining Retail Channels – Pet & Dollar Gain
1210 10
Source: 4i Consulting Group, Inc. a Nielsen Partner
46
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E-Commerce & Supercenters WillDrive Strong CAGRs
-1
1
2
3
3
4
4
5
5
5
6
6
6
8
12
Books
Mass Merch
Liquor
HHI
Supermarkets
Conv/Gas
Drug
Office
Club
Dollar
Pet
Electronics
Supers
E-Commerce
Average
Channel
Growth: 5%
CAGR 2009 to 2015
Toy
Source: 4i Consulting Group, Inc. a Nielsen Partner
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Predictions:Consolidation
48
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Top 3 Chains $ Share
76
55
78
60
84 8292
100
Dollar Stores Drug
2001 2004 2009 2015 est
Big Three Dollar & Drug StoresWill Dominate
Source: Trade Dimensions & TDLinx, services of The Nielsen Company
49
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Supermarket + Mass Supers $ Share
24
3134
4341
5048
56
Top 3 Chains Top 5 Chains
2001 2004 2009 2015 est
Top 3 Food Chains Should Capture Half the Market in 2015
Source: Trade Dimensions & TDLinx, services of The Nielsen Company
50
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Supermarkets, Mass Supers, Mass Merch,
Drug Club, Dollar & Convenience $ Share
2330
43
2836
48
3141
55
35
46
61
Top 3 Chains Top 5 Chains Top 10 Chains
2001 2004 2009 2015 est
The Big Will Get Bigger
Source: Trade Dimensions & TDLinx, services of The Nielsen Company
51
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Strong Regional Chains Will Expand & Form Alliances for Scale
52
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Predictions:Retail Evolution
53
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The Future of Retailing – Not Exactly, but
Source: daylife.com
54
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Smart Phones Will Be the Primary Enabler of Shopper Engagements +
•Position/location tracking
•Best price locators
•Camera shots of bar codes w/links to
promotions & product information
•Links to purchases for up-selling
opportunities
• “SMART” shopping list management &
home inventory auto fulfillment
•Budgeting tools & tax preparation/filing
55
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Store Formats
•Get smaller, but larger formats dominate
•Pop-up retailing accelerates
•Blended & exclusive formats catering to
generations & ethnic consumers
•> expansion from high-end & low-end formats
•Entertainment & lifestyle formats
•Battle for supremacy between fixed & flexible–brick & mortar.com
–pure play.com
–.com brokers
–manufacturer.com
Source: supermarketnews.com
56
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Source: Company website
Assortment & Services
•Anywhere in-store check-out
•Rationalization of box to build shopper entanglement
•Pop-up departments
•Mechanized shelf re-sets & re-stocks
•Green assortment delivers green backs
•Expanded portion size control to battle obesity
57
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Source: Photo by Mark Hoffman
Communication & Promotion
•Demise of traditional age & sex targets
•Anywhere & real time communications & promotions
• Immediate access to consumer reviews & product
demos
•Virtual online shopping tools
• In-store kiosks, digital media & holograms
•Loyalty programs get sophisticated–Deliver right communication/promotion
–2-way communication loop
–> continuity focus
58
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Evolving Demographics:The Changing
Face ofConsumers
59
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We See Major Impacts Basedon Demographics
Income Declines
& Income
Concentration
Uneven
Population
Growth
Immigration
& Growth in
Ethnic Families
Older
Consumers with
New Needs
Declines in
Per HH
Spending
Declining
% of HH with
Children
60
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Take Stock Now of HowYour Portfolio Stacks Up
-20 -15 -10 -5 0 5 10
Projected Growth Rate
Category 1
Category 2
Category 3
Category 4
Category 5
Category 6
Category 7
Category 8
61
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What Should You Be Doing Now to Prepare for the Future?
62
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Be Prepared to Make Tough, Gut-Wrenching Decisions
•Develop or buy expertise in on-line, digital &
social media
•Plan for diminishing returns from traditional
media
•Nurture retailer/supplier relationships
•Format planning
•Demand forecasting by category & consumer
segment
•Expand via regional or global opportunities
•Make future management a company strength
•Understand the new faces of opportunity
Thank You