Nielsen consumers demands in baltics catman opportunities 04092014 by ECR Baltic

CONSUMERS’ DEMANDS IN THE BALTICS OPPORTUNITIES OF THE CATEGORY MANAGEMENT Anda Daliņa September 4th, 2014

ONCE UPON A TIME… Life was simple – and emptier

LESS/NO CHOICE LESS/NO CHOICE A LOT OF TIME A LOT OF TIME

There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.

Sam Walton

KNOWING THEM IS THE KEY!

LITHUANIA

LATVIA

ESTONIA

EUROPE

GLOBAL

GL – 97 (+1)

100

LT – 87 (+1)

EE – 79 (0)

80 70

LV – 78 (+2)

EU – 77 (+2)

LT – 19% LV – 26% EE – 21% EU – 21% HAVE NO SPARE CASH Source: Nielsen Global Online Survey

2014 Q2

2014 Q1

2013 Q4

2013 Q3

2013 Q2

2013 Q1

2012 Q4

2012 Q3

2012 Q2

2012 Q1

2011 Q4

2011 Q3

2011 Q2

2011 Q1

2010 Q4

2010 Q3

2010 Q2

2010 Q1

2009 2H

2009 1H

2008 2H

2008 1H

CONSUMER CONFIDENCE INDEX

LT – 33% LV – 12% EE – 32% EU – 34% PUTTING INTO SAVINGS 4

HIGHER BUDGET RESTRICTIONS IN LV AND EE I HAVE A STRICT BUDGET FOR HOUSEHOLD GROCERIES LT: 57% → 58%

LV: 50% → 58%

EE: 61% → 70%

TOTAL EXPENDITURE (EUR)

FRESH FOOD (EUR)

400

361

350

318 276

300 250

266

(-4%)

238 (+9%)

217

210

200 150

(+14%)

168 115

134

167

(+14%)

(+42%)

148

100 50 0

53%

56%

61%

63%

47%

58%

2013

2014

2013

2014

2013

2014

LITHUANIA

LATVIA

ESTONIA

4 KEY ELEMENTS OF SURROUNDINGS OF TODAY’S SHOPPERS PRICE-VALUE

SHOPABILITY

CHOICE

CONVENIENCE 6

AVERAGE CONSUMER 25% GO SHOPPING EVERY DAY

<90% Replenishes supplies at the store at least once a week

FREQUENTS AT LEAST 4 DIFFERENT BANNERS

IS VERY PRICE AND PROMO SENSITIVE Source: Nielsen. Shopper Trends 2014

“BUY IN

“PLAN MY

ADDITION TO PLANNED PURCHASES” LV – 68 LT – 66 EE - 73

PURCHASES“ LV – 76% LT – 82% EE – 73%

35% “Man patinka leisti laiką parduotuvėje ir išnaršyti visus jos skyrius” Source: Nielsen. Shopper Trends 2014

SHOPPER STUDIES CLEARLY SHOW THAT ASSORTMENT IS KEY IN CONSUMERS’ CHOICE OF STORE ALWAYS HAVE WHAT I WANT IN STOCK EVERY THING I NEED IN ONE SHOP EASY TO QUICKLY FIND WHAT I NEED HIGH QUALITY FRESH FOOD WIDE RANGE OF FRESH FISH AND MEAT

CHOICE AND CONVENIENCE

EVERY THING I NEED IN ONE SHOP ALWAYS HAVE WHAT I WANT IN STOCK EASY TO QUICKLY FIND WHAT I NEED SPACIOUS HIGH QUALITY PREPARED MEALS

SHOPABILITY / ENJOYABLE EXPERIENCE

PROVIDE ENJOYABLE SHOPPER EXPERIENCE EXCELLENT CUSTOMER SERVICE PLEASANT STORE ENVIRONMENT SPACIOUS HAS HIGH QUALITY PREMIUM BRANDS EVERY THING I NEED IN ONE SHOP

CHOICE IS CRITICAL AROUND THE WORLD ONE OF THE TOP 5 STORE CHOICE DRIVERS

“EVERYTHING I NEED IN ONE SHOP” City Centre Store

43 out of 56 markets

Super Store

Source: Nielsen Shopper Trends 2012

How do we make your Assortment more attractive in store for the Shoppers? Assortman capabilities 11

GETTING CLARITY ON SHELF IS CRITICAL THE “RIGHT” ASSORTMENT CAN MAKE THE SHOPPING EXPERIENCE EASIER & IS A CRITICAL DECISION FOR RETAILERS AND MANUFACTURERS.

shoppers are increasingly short of time

shoppers are overwhelmed by choice

seconds

average time spent by shoppers looking for a specific brand before they settle for an alternative

60%

of the final purchase decision are made in front of the Shelf

shoppers make a high level of unplanned purchases 12

THE NIELSEN ADDED VALUE IN THE CATEGORY MANAGEMENT PROCESS : A COMPLETE APPROACH FROM GLOBAL PERFORMANCE ANALYSIS TO STORE IMPLEMENTATION 1. Prioritize Categories

2. Category optimization

3. Store implementation

Identify categories with lowest share of wallet and that are growing on the market

Improve category segmentation Define right size of box List and delist the right products Optimize price and promotion

Improve the store execution

Scalable results : Global / regional / Store clusters / Local Integrated solution : one item list both for consumers and retailers measurement solutions

Consulting & Analytical skills / Local market knowledge 13

THE NIELSEN CATEGORY MANAGEMENT PROCESS

Prior categories

Category opmitiza -tion

Store implemeta tion

Steps of the process

Involved people

Nielsen tools

Define priorities according to the retailer ACV and market trends

Nielsen RS team + retailer catman teams

RMS (+ internal datas)

Determine the most relevant category segmentation based on consumer purchase behavior

Nielsen CR team

Decision tree / Market structure

Calculate the optimal size of the box at each product level of the study

Nielsen AAC team

Assortman

Fill the box with the right items

Nielsen CR & NRPS teams + catman teams of the retailer

Decision Tree/Market Structure + NRPS assortment solutions

Optimize price and promotion

Nielsen AAC teams + catman teams of the retailer

Assortman promo / Scanpro promo / Price elasticity modelling

Optimize the store execution

Nielsen OSA teams

OSA 14

CLASSICAL ASSORTMENT MANAGEMENT LOOKS AT HISTORIC PURCHASES BASED ON CURRENT AVAILABILITY EXERCISE: NARROW ASSORTMENT DOWN TO 3 SKUS

Classical – « What happened ?» D Turuosa/sortimendi laius C

100%

80% Cumulative sales

2.1. – DEFINE THE RIGHT SIZE OF BOX

60%

Recommendations

A 40%

Delist product D 20%

Which to delist? 0% 1%

16%

31%

46%

60%

75%

90%

Listed SKUs %

WHICH PLAYERS TO PLAY? Goal / match 1.Rooney 0.46 2.Hernandez 0.44 3.Berbatov 0.36 4.Owen 0.29 5.Welbeck 0.21 6.Giggs 0.18 7.Nani 0.17 8.Gibson 0.17 9.Park 0.15 10.Macheda 0.15 IN 11.Valencia 0.15 … … 15.Raphael 0.03 16.Ferdinand 0.02 17.Evra 0.01 18.Carrick 0.07 20Anderson 0.03 21.Kuszczak 0

WE CANNOT FOCUS ON A SINGLE METRIC, BUT NEED TO FOCUS ON WHAT THEY BRING TO THE TEAM

Player

AS WITH CATMAN, WE NEED TO LOOK AT WHAT IT BRINGS TO THE CATEGORY OUT

MODELLING APPROACH BRINGS CLEVER RECOMMANDATIONS AND GIVES THE OPTIMAL BALANCE BETWEEN CATEGORIES, SEGMENT, TYPE OF BRANDS, ETC… TO OPTIMIZE SALES Comparison between classical and modelling approach Classical – « What happened ?»

Modelling – « what will happen ? » Incrementality Product A Product C

Sku reduction

Cumulative sales

2.1. – DEFINE THE RIGHT SIZE OF BOX

Product B Product D

Recommendations

Delist product D

Delist product C 17

Example of hierarchical tree

Example of levels of results (can be customized)

TOTAL FMCG

TOTAL BANNER

Areas

AREA 2

AREA 1 HM 35004000sqm

HM 30003500sqm

HM 35004000sqm

Urban stores

Sub-categories

HM 30003500sqm

Urban stores