Steven Hasen, AVP, Business Development, Precima Greg Girard, Program Director, WW Retail Intelligent Product Merchandising & Marketing Strategies, IDC Retail Insights

1. Preparing for the Future of Grocery Shopping:
What Retailers Need to Do, Now!
Precima to finalize

3. • With the continued shift in consumer behavior trends,
focus on a loyalty strategy - not just programs
• Accelerate enterprise-wide innovation to drive loyalty
• Make your loyalty processes smarter within an
enterprise AI/machine learning strategy
Actionable Takeaways from this session:

4. Steve Hasen Greg Girard
Program Director, WW Retail Intelligent
Product Merchandising & Marketing
Strategies
4© IDC
Today’s Presenters
AVP, Business Development

5. Disruption on All Fronts!
Marketplaces speed
global growth
Store automation matures AI-driven engagement
» Hyper-personalization to
segments of one, at scale
» Next best action
Omni-channel
fulfillment is required
The “store” is redefined
» Tencent automated store
» BingoBox
» Amazon Go
» Auchan Minute
» Alibaba—Auchan, Macy’s
» Amazon–Kohl’s
» Walmart
» Zalando
» Karstadt
» Facebook and WeChat
» Amazon–Whole Foods
» Instacart
» Target–Shipt
» Walmart
» Kroger
» Alibaba
» Kroger meal kits
» Bodega
» Hema Fresh (Alibaba)
» 7-Fresh (JD.com, Walmart)
5© IDC

6. 6
Thrive Amidst Disruption
© IDC
Profitable Loyalty
Differentiate business – build unique emotional
and economic relationships with customers
Create an adaptive enterprise through sustainable
intelligent innovation

7. © IDC 7
The King of Loyalty

8. Source: IDC, Beyond Its CX Technology and Shopping Options, Amazon's Hold on Consumers' Emotions, Not Just Wallets, Matters Most, N=2,064
Amazon Reaches Far More Hearts and Minds
Than Other Retailers
Logarithmic Scale
8© IDC
Likely position of
customer-focused
retailers
Likely position of
broadline mass retailers
Insurmountable
Profitable Loyalty
Emotions
of Loyalty

9. 9© IDC
Mission of Retail in Age of Intelligence:
Create Emotionally Rewarding Experiences
in the Customer’s Stream of Life

10. Create Emotionally Rewarding Experiences
10© IDC
Mission
Foundations for Loyalty
Treated fairly
“Just the right thing”
“Just for me”
Convenience
Profitably & Securely
Transformational Strategy
Strategic Priorities Programs
Experiential Commerce
Intelligent Order Fulfillment & Returns
Virtual & Augmented Engagement
Omni-channel Commerce
Intelligent Product Design
Curated Product Assortment & Positioning
Product Innovation
Curated Merchandise
Life-cycle Management
Next-gen Customer Care
Customer Experience Analytics
Hyper-personalized Engagement
Omni-experience
Customer Engagement
Optimized Supply Networks
Optimized Fulfillment Operations
Supply Chain Accountability
Digital Supply Chain
Optimization
Mobile Enterprise
Connected Workforce
Secure Omni-channel Operations
Efficient & Innovation-ready
Operations

11. 11© IDC
IDC Retail Insights Research:
» Shopper/Consumer Loyalty Survey, December 2017
» Retailer Loyalty Survey, December 2017
Preparing for the Future of Grocery Shopping

12. Stream of Life: People Grocery Shop to Enjoy Meals
Context: People Like Restaurants and Take-out Options
Sources: National Retail Association’s 2017 State of the Industry Report; Restauant Success in 2017 Industry Report,Toast
Restaurants' revenue up
5.3%
39%of adults want to eat at
restaurants more often
61%prefer eating out experience versus
buying items from the store
73%say technology improves
their guest experience
12© IDC
in 2017

13. Mission of Retail in Age of Intelligence:
An Emotionally Rewarding Experience in Food Retailing
Meal Kits
13© IDC

14. 14© IDC
Shifting Appetites and Innovation Erode Food
Retailers’ Share of Stomach
Outside of home CAGR is
2Xretail store CAGR.
Source: Calculated by the Economic Research Service, USDA, from various data sets from the U.S. Census Bureau and the Bureau of Labor Statistics
Total Food Market, U.S., Current Dollars

15. 15© IDC
For Millennials and Boomers, Food Shopping
Blends Into Eating Inside and Outside the Home
Important to Deciding Where to Shop
Source: IDC Retail Insights, IDC Shopper/Consumer Survey, December 2017 & IDC Retailer Loyalty Survey, December 2017

16. 16© IDC
Create Loyalty With Assortments and Experience
Source: IDC Retail Insights, IDC Shopper/Consumer Survey, December 2017 & IDC Retailer Loyalty Survey, December 2017

17. 17© IDC
Shopper Loyalty Is More Highly Prized than
Ever Before
Source: IDC Retail Insights, IDC Shopper/Consumer Survey, December 2017 & IDC Retailer Loyalty Survey, December 2017
76%of retailers stated that the importance
of loyalty has increased.
Shopper loyalty isn’t just an emotion.
Shopper loyalty can be earned and lost in
many ways.

18. 18© IDC
There's a Huge Opportunity to Cash in on Loyalty
Source: IDC Retail Insights, IDC Shopper/Consumer Survey, December 2017 & IDC Retailer Loyalty Survey, December 2017
Meanwhile, 43%of
retailers believe their average
customer is very loyal.

19. 19© IDC
Complement Your Loyalty Program With
Value-Added Services Customers Say Are Important
Source: IDC Retail Insights, IDC Shopper/Consumer Survey, December 2017 & IDC Retailer Loyalty Survey, December 2017
Believes Attribute Is More Important than Loyalty Program

20. 20© IDC
Think Beyond Your Loyalty Program to Align Your
Loyalty Strategy With What Customers Value
Source: IDC Retail Insights, IDC Shopper/Consumer Survey, December 2017 & IDC Retailer Loyalty Survey, December 2017
Consumers rated importance and performance on a 5-point scale where 5=high and 1=low
Performance vs. Importance inDeciding Where to Shop
Overperforming on
emerging differentiators
Underperforming on
critical table stakes

21. Retail Tops Other Verticals on
Cognitive/AI Spending
21© IDC
$ 1,108
$ 2,543
$ 4,019
$ 6,287
$ 8,652
$ 11,159
$ 14,033
$ -
$ 20,000
$ 40,000
$ 60,000
$ 80,000
$ 100,000
2016 2017 2018 2019 2020 2021 2022
CognitiveArtificialIntelligenceSystems
Spending(Millions)
Retail
Banking
Discrete Manufacturing
Healthcare Provider
Process Manufacturing
All Other Verticals
Source: IDC Worldwide Semiannual Cognitive Artificial Intelligence Systems Spending Guide, 2017H2

22. The core merchandising areas (good prices, quality products, good promotions) and core shopper experience
elements (clean stores, good customer service, short checkout lines) are important to all shoppers.
Elements such as personalized offers, ecommerce, and digital engagement are more important to millennials.
It’s share of stomach, not share of wallet, and grocery retailers have an opportunity to
expand their offerings to satisfy emerging food and eating preferences and habits.
Beyond just points empowered shoppers want personalization and choice in loyalty programs.
They find special events, tiers, and syndicated points less appealing and can be disappointed.
Loyalty programs are just part of a loyalty strategy. Shoppers want new value beyond them—
personalization, restaurant alternatives, e-commerce and mobile services.
Food retailers have an opportunity to increase basket size and shopping frequencies among the 79% of
shoppers who say they’re loyal—to get a sliver of the 93% of their food dollars spent elsewhere.
Summary of Findings
© IDC 22

23. Deploy your 3D loyalty strategy to reposition your value proposition. Along with innovations in assortments,
prices, and technologies, loyalty is critical to taking market share back from restaurants and other grocery
retailers as millennials increasingly shapedemand.
Business Strategy
• Identify customer-driven growth opportunities
• Allocate resources to attractive customer, category
and store opportunities
Program Tactics
• Early, frequent, relevant rewards
• Timely In-context communications
• Personalized offers
Daily Decisions
• Shopper-driven price/promotion decisions
• Shopper-driven assortment/space decisions
• Shopper-centric marketing decisions
The size of the prize is significant
Recommendations
© IDC 23

24. Key Actions to Make Loyalty Work for
Your Business
24© IDC
Seize the loyalty advantage through emotionally and
economically rewarding customer experiences
Accelerate enterprise-wide innovation to drive loyalty across
commerce, stores, marketing, customer care, assortments,
supply chain, and operations
Make your loyalty processes smarter within an enterprise
AI/machine learning strategy

25. Increasing Importance of Digital in Food
Retailing
25© IDC
• Differentiatebrandusingcustomer-facingdevicesandscreenstocreate
individualizedexperiences
• ApplyAItoweavepersonalizedincentivesandrewardsintoaseamless,
tailoredcustomerjourney
• Focusonend-to-endconvenienceandpersonalizationforonlinesuccess
• Deliverpromotionshow,when,andwhereeachshopperwants—email,
mobileapps,printedcoupons,loyaltycards,oratcheckout
Takeaways so far from a forthcoming InfoBrief sponsored by Precima,
Spring 2019
Global Surveys of 4,003 ShoppersGlobal Surveys of 4,003 ShoppersGlobal Surveys of 4,003 ShoppersGlobal Surveys of 4,003 Shoppers |||| 403 Retailers in Europe and U.S.403 Retailers in Europe and U.S.403 Retailers in Europe and U.S.403 Retailers in Europe and U.S.

26. CONFIDENTIAL26
To achieve this, retailers need to realize two objectives:
Understand
Customer Needs
on a granular, timely &
frequent basis
Consistently
Execute Actions
that best satisfy customer
needs
Loyalty is NOT a card or a program or an initiative
Loyalty has to be earned by Best Satisfying the Needs of Customers

27. CONFIDENTIAL27
Loyalty as a Strategy: Daily Decisions, Focused Goals
Source: Precima

28. CONFIDENTIAL28
Loyalty as a Strategy: Largest customer-driven growth
opportunities
Source: Precima
What are the largest customer-driven opportunities to drive growth?

29. CONFIDENTIAL29
Delist Opportunities
hold less appeal to
Best Customers and
have most
transferability
Loyalty as an Outcome of Daily Decisions: Assortment
Core Items appeal
to Best Customers
and have few
substitutes
Source: Precima
What items in the assortment have high value and are important to loyal customers?

30. CONFIDENTIAL30
Loyalty as an Outcome of Daily Decisions: Total Store Pricing
Where should you personalize prices?
Source: Precima
Price
All $1.99
90% of
Customers
Volume Sales GP$’s
10% of
Customers
Delivery
Shelf
$1.89
$1.85
$1.95
$1.80
$1.75
$1.80
$1.65
$1.69
$1.79
$1.89
Price
email
app
paper
online
email
app
email
app
paper
online
DeliveryCurrent Value
high
high
med
high
high
high
med
high
med
high
Potential Value
low
med
high
low
low
med
high
low
high
low
Intent
Defend & retain
Retain & grow
Grow
Defend & retain
Defend & retain
Retain & grow
Grow
Defend & retain
Grow
Defend & retain
+2.2% +2.3% +1.4%

31. CONFIDENTIAL31
Loyalty as an Outcome of Daily Decisions: Promotions
Source: Precima
What promotions are valuable for the category and for loyal customers?

32. CONFIDENTIAL32
Loyalty as an Outcome of Daily Decisions: Personalized
Marketing
How do I identify offers for each customer
that drive response & incremental sales?
Thank You
Incremental Sales (Cross Sell/Up Sell)
Improve Category Penetration
Support Brand Objectives
Total Spend and Frequency
Total Store Offer Bank
How do I incorporate customer-driven
offers into the personalization process?
Offer Optimization Engine
Source: Precima

33. CONFIDENTIAL33
Loyalty Strategy
Customer-Centric
Merchandising
Personalized
Marketing
Enhanced Loyalty
Programs
Shopper-Driven
Supplier
Collaboration
1-1.5X 2-3X 4-6X 5-8XROI
Source: Precima
Loyalty Delivers Differentiated & Sustainable Results

34. CONFIDENTIAL
•Stop byStop byStop byStop by PrecimaPrecimaPrecimaPrecima BoothBoothBoothBooth #601#601#601#601
orororor
•Download the full report:Download the full report:Download the full report:Download the full report:
precima.com/future
Get Your Free Copy of the Study!

35. CONFIDENTIAL35
Precima Thought-Leadership
Download the Precima “Next Generation Loyalty”
Part 1 & 2 Reports at www.precima.com

36. CONFIDENTIAL36
Coming Up
New Research from IDC Retail Insights and Precima:
The Increasingly Important Role of Digital in Food
Retailing
See us at FMI Midwinter - January 25-28, 2019
Miami, Florida
For more information on Precima: www.precima.com or inquiries@precima.com
Presentation Contact: Shasen@precima.com

37. CONFIDENTIAL37
Questions?