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Powered byINSIGHTSsinsightss An annual statistical analysis2013
Welcome to Retailing Today’s annual Insights issue. Thisunique product was created to provide a blended look at theperformance of the nation’s Top 100 retailers and Top 100mass market product categories in one convenient format. In additionto offering an abundance of useful statistics, the greater objective wasto put the performance in context by providing analysis of key industrydevelopments, insights into market moving trends and a thought-provoking view on where the retail and consumer packaged goodsindustry is headed in 2013.To achieve this goal, we worked with our sister publication Chain StoreAge to compile a deﬁnitive ranking of the Top 100 retailers based on salesand proﬁts across all industry segments. We also partnered with Nielsento provide the most up-to-date and comprehensive view possible of theperformance of the Top 100 mass market product categories, which nowincludes point-of-sale information from Walmart following the retailer’sdecision last year to resume data sharing. In addition to sharing dataabout sales and unit volume, Nielsen provided insights into retail industrytrends, best practices and drivers of future demand.What emerged from this process is an engaging view of a retail andCPG industry that is highly resilient and able to cope with tremendouslevels of uncertainty. Many market participants who hunkered downduring the Great Recession by curtailing new store growth and reducingexpenses achieved solid performances during their most recent ﬁscalyear. This was an impressive feat, considering the signiﬁcant headwindsthat persisted in the form of a weak job market, limited wage growth, fuelprices that sapped discretionary spending and an achingly slow recoveryin the housing market.Some companies weathered the Great Recession while othersthrived because of it due to their value orientation. Either way, thosewho have survived are well positioned to see growth accelerate inthe coming year given any abatement in some or all of the forces thatpressured consumer spending last year. Of course, new challenges anduncertainties always arise. An unprecedented drought in the Midwestthis summer destroyed crops and sent corn and soybean prices to recordlevels that ultimately will be passed through to consumers. Any ﬂare upof the perpetual political turmoil in the Mideast will create energy pricevolatility that directly impacts consumer spending. And the prospectof inﬂation remains ever present as the Federal Reserve persists withpolicies that ensure interest rates remain at record low levels.There are plenty of unknowns for retailers, their trading partners andconsumers to ponder in the year ahead, but then life is always ﬁlled withsome level of uncertainty. Perhaps the most positive development for thecoming year involves the presidential election. It will ﬁnally be over andconsumers can stop thinking about whether they are better off today thanthey were four years ago. Such introspection against the backdrop of aweak economy isn’t good for consumer conﬁdence.Regardless of who occupies the White House come Jan. 1, consumersand businesses will gain increased visibility into the future, and that is agood thing. Roughly half the population is bound to be disappointed bywhat they see but at least there will be clarity. ■Where the growth isEditorialPowered byINSIGHTShtsinsightshtsBy Mike Troy, Editor, Retailing TodayThose [companies] who have survived[the Great Recession] are well positionedto see growth accelerate in the comingyear given any abatement in some or allof the forces that pressured consumerspending last year.
WALMARTWith total revenues equivalent to the next sixlargest U.S. retailers combined, Walmart domi-nates the U.S retail landscape like no other.A re-turn to core operating principles at Walmart U.S.and increased marketing helped the companyresume same-store sales growth. Comps turnedpositive in third quarter 2011, accelerated duringthe fourth quarter and again in the ﬁrst quarter.Undeterred by a slight deceleration in the sec-ond quarter, Walmart maintains its U.S. businessis on a growth trajectory and stores are gainingcustomer trafﬁc despite dramatic expansion bythe likes of Dollar General and Family Dollar.Walmart’s U.S. business has room to run. Thecompany’s smaller-format stores are said to begenerating returns sufﬁcient to warrant an ac-celerated expansion. And in the e-commercearena, the company is making acquisitions andexperimenting with new initiatives and continu-ing to leverage its multichannel capabilities.KROGERWalmart’s growth hasn’t fazed second-rankedKroger. In fact, the opposite is true. The nation’slargest operator of conventional grocery stores isenjoying a remarkable run of consecutive same-store sales growth that is approaching nine years.Kroger is all about consistency and its long-run-ning loyalty program is its secret sauce. Roughly90% of the transactions in Kroger stores involvea loyalty program, and that gives the companya wealth of shopper insights it can leverage tomore effectively serve shoppers and drive sales.Don’t look for Kroger to open large numbers ofnew stores anytime soon — and why should it?Kroger has shown it can continue to improve theproductivity of selling space in the company’sexisting 2,435 conventional supermarkets todrive proﬁtability and keep shareholders happy.COSTCOThird-ranked Costco’s shareholders are ahappy lot as well because the nation’s favoritewarehouse club keeps executing against a com-pelling value proposition that drives memberloyalty and record renewal rates. The companyis poised for continued success thanks to a dis-ciplined growth strategy and unwavering com-mitment to delivering value to its members.Don’t look for the company to deviate from itsstrategy in the wake of the January retirement ofco-founder and long-time CEO Jim Sinegal. Hewas replaced by 28-year Costco veteran CraigJelinek, who has held the position of head mer-chant, COO and president during his career. Inaddition, the company’s other co-founder, Jef-frey Brotman, continues to serve as chairman.Top 10 market moversand the best of the restPowered byINSIGHTShtsinsightshtsThere’s never a dull moment in the retail industry. That proved to be the case again this year asthe nation’s top 100 retailers and their trading partners endured economic weakness, politicalturmoil and an uncertain spending climate.Through it all, the retail industry soldiered on, servingcustomers with products they need and want, and attempting to do so in the most efﬁcientmanner possible to maximize proﬁts. What follows is a look at some of the key moves made bythe nation’s top 10 retailers, along with a look at the best of the rest.
WALGREENSIt was a tough year for fourth-rankedWalgreensas the company’s business suffered due to a long-running dispute over reimbursement rates withpharmacy beneﬁt manager Express Scripts. Itwasn’t the ﬁrst time Walgreens publicly squabbledwith a payer over reimbursement rates, but pastdisputes typically were resolved before customerslearned Walgreens could no longer ﬁll their pre-scriptions. Competitors, such as CVS and Walmart,showed no mercy and were more than eager toaccommodate peeved Walgreens customers.The matter got resolved after the damage wasdone, and now Walgreens faces the dauntingprospect of winning back customers. To that end,the company recently launched a major initiativecalled Balance Rewards, a points-based systemthat allows customers to earn unlimited rewards.HOME DEPOTMore so than any retailer among the top 10,Home Depot has weathered the roughest patchin the company’s history, which makes its per-formance last year rather impressive. Salesgrew roughly 3.7% to $70.4 billion and proﬁtsgrew 16.3% to nearly $3.9 billion, making thecompany the third most proﬁtable retailer in thetop 10, behind only Walmart and CVS Caremark.The news got a lot better for Home Depot thisyear as the conversation about the state of thenation’s housing market has shifted to specu-lation about the arc of the recovery and awayfrom whether the housing market has hit bottom.Same-store sale are poised to surge at HomeDepot and rival Lowe’s, if only more people wereable to qualify for record low rates that are sureto be the envy of future generations.TARGETAccelerating improvement of the housingmarket may not be enough for Home Depot, andpossibly Walgreens, to avoid being overtaken byTarget. The nation’s sixth-largest retailer is en-joying solid low- to mid-single digit same-storesales growth and is poised to resume squarefootage expansion of its traditional discountstores with expanded fresh food offerings in ad-dition to a new urban format called CityTarget.A two-year-old loyalty program continues togain traction and is boosting average transactionsizes. However, the biggest boost to sales in 2013will come from the company’s entry into Canada.A total of 125 new Target stores are due to opennext year in remodeled former Zellers locations.The ﬁrst wave of those stores is due to open inMarch, and Canadian expansion is expected tomake a major contribution to the company’s goalof achieving $100 billion in sales within ﬁve years.CVS CAREMARKWalgreens’ loss was CVS Caremark’s gain whenit came to the former’s dispute with pharmacy ben-eﬁt manager Express Scripts.In addition to continu-ing to execute well against its own strategy andprovide shoppers with compelling offers via its in-dustry-leading Extra Care loyalty program,CVS washanded a gift of countless customers by Walgreens.The company enjoyed a strong performancein 2011 and repeatedly exceeded its own guid-ance and analysts’ estimates during 2012. CVSgained signiﬁcant market share this year, andwith increased customer trafﬁc in its stores, ispoised for more gains in 2013.BEST BUYAmong the nation’s 10 largest retailers, no oneexperienced more difﬁculty than Best Buy. Asidefrom coping with lost momentum as the housingcrisis and increased online competition pressuredsales of key categories, the company botched aleadership transition.After only a few months in the top job, CEOBrian Dunn was relieved of his duties after it wasrevealed he had an inappropriate relationship witha subordinate. To make matters worse, companyfounder and chairman Richard Schulze was awareof the situation and failed to act, so he too wasrelieved of his responsibilities as chairman, eventhough he is the company’s largest shareholder.Best Buy promises to remain a hot topic duringthe coming year, regardless of its performanceduring the holidays, as Schulze wants to acquirethe company outright but needs the backing ofother investors willing to assume what appearsto be considerable risk.LOWE’SLowe’s faced all the same housing market relat-ed challenges as Home Depot, but it didn’t fare aswell as its larger rival. Sales grew a meager 2.8%to $50.7 billion while proﬁts declined to $1.84 bil-lion from slightly more than $2 billion. This year,Lowe’s undertook a major remerchandising initia-tive in stores and introduced a unique loyalty-typeprogram called My Lowe’s.Reviews are mixed andthe effectiveness of the changes have yet to revealthemselves. At the midpoint of the year, Lowe’s isstruggling to grow sales and improve proﬁtability.Powered byINSIGHTShtsinsightshts
The company also recently abandoned a bid to ac-quire a Canadian home improvement chain.AMAZONAmazon rounds out the nation’s 10 largest re-tailers, but not for long. The company grew salesby 40.5% last year to more than $48 billion and ithas continued to pile on volume during the currentyear. Even if sales growth were to slow from theprior year — a possibility given the gains are com-ing on top of a larger base — Amazon is poisedto moved up the ranking next year, surpassingLowe’s, Best Buy, CVS and threatening Target.The days of this online retailer enabling its cus-tomers to avoid paying sales tax are rapidly com-ing to an end, but that competitive advantage maynot matter any more. Amazon has built a lead inthe e-commerce arena with a best-in-class userinterface soon to be supported with more robustdistribution capabilities due to the addition of 18new facilities this year.BEST OF THE RESTOne retailer that gets overlooked in the Top100 ranking is the Sam’s Club division of Wal-Mart Stores.As a stand-alone entity, Sam’s Club’sannual sales of $53.8 billion position it as the na-tion’s eighth-largest retailer. Now the company isembarking on its most ambitious growth in sever-al years under the leadership of Rosalind Brewer,Walmart’s ﬁrst African-American division chief.The resumption of new club growth at Sam’sClub pales in comparison to the rampant expan-sion of 27th-ranked Dollar General and 51st-ranked Family Dollar. Dollar General this yearopened its 10,000th store when it entered theCalifornia market, and the company contendsthe market can support 20,000 stores. DollarGeneral opens an average of nearly two storesper day and Family Dollar isn’t far behind. Thesetwo companies, combined with single price pointleader Dollar Tree, will open roughly 1,000 newstores this year, and they show no signs of slow-ing their breakneck expansion in 2013 or beyond.While dollar stores are focused on deliver-ing their brand of value to shoppers focused onconvenience and opening price points, a differenttype of drama is unfolding among leading depart-ment store operators.The most notable of these is JCPenney, whereCEO Ron Johnson has declared the audacious goalof transforming the chain into, “America’s favoritestore.”Things haven’t gone well for Johnson sincehe unveiled a transformation strategy at a majorevent in New York, which was supposed to hingeon a simpliﬁed pricing strategy.After two consecu-tive quarters of roughly 20% declines in same-store sales, the pricing strategy was modiﬁedand other course corrections were implemented.Johnson hasn’t softened his stance, though, andcontinues to talk a good game, even if results ap-pear to be a long way from materializing.If shoppers are weary of promotional pricing,someone forgot to tell the throngs of customersfrequenting Macy’s. The nation’s leading depart-ment store retailer is hyper promotional and servescustomers a mind-numbing offering of discounts,deals and special coupons.And it works.Shoppers remain focused on the deal, whetherit be a percentage discount at an upscale retaileror a special ﬁnd while combing through the racksat Ross Stores or one of the off-price formats op-erated by the TJX Cos. Both retailers continue toamaze with their mid- to high-single digit same-store sales growth.Value players have been big beneﬁciaries ofthe nation’s protracted economic weakness, andnowhere has this been more evident than in thegrowth of the dollar store channel. Dollar Generalthis year surpassed 10,000 units by opening aprojected 625 new stores, and its shows no signof slowing. Neither does rival Family Dollar or sin-gle price point leader Dollar Tree. All three haveexpanded or continue to expand their offeringof food and consumables. Their food initiatives,combined with Target’s addition of fresh food andgrowth from such value players as Aldi, is placingunprecedented pressure on such conventionalsupermarkets as Safeway and Supervalu.Traditional national food retailers continue tosuffer share losses while the likes of Whole Foodsand such emerging players as The Fresh Marketgain new converts despite premium pricing.In other notable industry developments,Autozone surpassed 5,000 units, Bed Bath &Beyond continued to thrive despite the chal-lenging housing market while Staples ﬁnallysuccumbed to the pressures of a weak businessspending climate that already had negatively af-fected rivals Ofﬁce Depot and OfﬁceMax. ■Powered byINSIGHTShtsinsightshts
Powered byINSIGHTShtsinsightshtsTOP 100 RETAILERSRANK COMPANY 2011 REVENUE* 2010 REVENUE* 2011 NET INCOME* 2010 NET INCOME*1 Wal-Mart Stores1$443,854,000 $418,952,000 $15,699,000 $16,389,0002 The Kroger Co.290,374,000 82,049,000 602,000 1,116,0003 Costco387,048,000 76,255,000 1,462,000 1,303,0004 Walgreens472,184,000 67,420,000 2,714,000 2,091,0005 The Home Depot570,395,000 67,997,000 3,883,000 3,338,0006 Target Corp.269,865,000 67,390,000 2,929,000 2,920,0007 CVS Caremark659,599,000 57,345,000 4,912,000 4,537,0008 Best Buy750,705,000 49,747,000 [1,231,000] 1,277,0009 Lowe’s Cos.850,208,000 48,815,000 1,839,000 2,010,00010 Amazon.com648,077,000 34,204,000 631,000 1,152,00011 Safeway643,630,200 41,050,000 516,700 589,80012 Sears Holdings Inc.241,567,000 42,664,000 [3,113,000] 122,00013 Supervalu936,100,000 37,534,000 [1,040,000] [1,510,000]14 Publix Supermarkets626,967,389 25,134,054 1,491,966 1,338,14715 Macy’s226,405,000 25,003,000 1,256,000 847,00016 RiteAid726,121,222 25,214,907 [368,571] [555,424]17 Ahold USA1025,072,000 23,523,000 NA NA18 Staples225,022,192 24,545,113 984,656 881,94819 TJX Cos.223,191,455 21,942,193 1,496,090 1,343,14120 Alimentation Couche-Tard1122,997,500 18,550,400 457,600 369,20021 7-Eleven (U.S. & Canada)620,350,000 16,800,000 NA NA22 Delhaize America619,230,000 18,807,000 NA NA23 Kohl’s Department Stores218,804,000 18,391,000 1,167,000 1,120,00024 HE Butt Grocery Co.1218,000,000 15,500,000 NA NA25 Pilot Flying J1317,770,000 17,000,000 NA NA* In thousands1 Company reports for the ﬁscal year ended Jan. 31, 20122 Company reports for the ﬁscal year ended Jan. 28, 20123 Company reports for the ﬁscal year ended Aug. 28, 20114 Company reports for the ﬁscal year ended Aug. 31, 20115 Company reports for the ﬁscal year ended Jan. 29, 20126 Company reports for the ﬁscal year ended Dec. 31, 20117 Company reports for the ﬁscal year ended March 3, 20128 Company reports for the ﬁscal year ended Feb. 3, 20129 Company reports for the ﬁscal year ended Feb. 25, 201210 Company reports for the ﬁscal year ended Jan. 1, 201211 Company reports for the ﬁscal year ended April 29, 201212 Estimate for the ﬁscal year ended Oct. 30, 201113 Estimate for the ﬁscal year ended Dec. 31, 2011
Powered byINSIGHTShtsinsightshtsTOP 100 RETAILERSRANK COMPANY 2011 REVENUE* 2010 REVENUE* 2011 NET INCOME* 2010 NET INCOME*26 JCPenney14$17,260,000 $17,759,000 $[152,000] $378,00027 Dollar General1514,807,200 13,035,000 766,700 627,90028 Gap Inc.1414,549,000 14,664,000 833,000 1,204,00029 Meijer1614,400,000 14,200,000 NA NA30 Apple†,1714,120,000 9,820,800 NA NA31 Toys‘R’Us1413,900,000 13,855,000 149,000 168,00032 Wakefern Food Corp.1812,800,000 11,800,000 NA NA33 Dell Computer†,1511,900,000 12,357,000 NA NA34 Starbucks1911,700,400 10,707,400 1,248,000 948,30035 eBay2011,651,654 9,156,274 3,229,387 1,800,96136 Ofﬁce Depot2011,489,533 11,633,094 95,691 [46,205]37 BJs Wholesale Club2111,300,000 10,632,947 NA 95,03638 Verizon Wireless†,2210,997,000 8,021,000 NA NA39 Quik Trip2310,770,000 8,770,000 NA NA40 Nordstrom1410,497,000 9,310,000 683,000 613,00041 Limited Brands1410,364,000 9,613,000 850,000 805,00042 Army & Airforce Exchange Service1410,300,000 8,700,000 277,000 428,50043 Whole Foods Market2410,107,787 9,005,794 342,612 245,83344 Liberty Interactive Corp. (QVC)209,616,000 8,932,000 965,000 1,937,00045 GameStop Corp.149,550,500 9,473,700 339,900 408,00046 Bed, Bath & Beyond259,499,890 8,758,503 989,537 791,33347 Giant Eagle269,300,000 8,600,000 NA NA48 Trader Joe’s279,000,000 8,500,000 NA NA49 Sherwin-Williams208,766,000 7,776,000 442,000 462,00050 Ross Stores148,608,291 7,866,100 657,170 554,797* In thousands † Retail operations only14 Company reports for the ﬁscal year ended Jan. 28, 201215 Company reports for the ﬁscal year ended Feb. 3, 201216 Estimate for the ﬁscal year ended Jan. 27, 201217 Estimate for the ﬁscal year ended Sept. 24, 201118 Estimate for the ﬁscal year ended Oct. 1, 201119 Company reports for ﬁscal year ended Oct. 2, 201120 Company reports for ﬁscal year ended Dec. 31, 201121 Estimate for ﬁscal year ended Jan. 31, 201222 Estimate for the ﬁscal year ended Dec. 31, 201123 Company reports for ﬁscal year ended April 30, 201224 Company reports for the ﬁscal year ended Sept. 25, 201125 Company reports for the ﬁscal year ended Feb. 25, 201226 Estimate for the ﬁscal year ended June 30, 201227 Estimate for the ﬁscal year ended July 1, 2012
Powered byINSIGHTShtsinsightshtsTOP 100 RETAILERSRANK COMPANY 2011 REVENUE* 2010 REVENUE* 2011 NET INCOME* 2010 NET INCOME*51 Family Dollar Stores28$8,547,835 $7,866,971 $388,445 $358,13552 The Pantry298,138,500 7,265,300 9,800 [165,600]53 AutoZone288,072,973 7,362,618 848,974 738,31154 Cumberland Farms308,020,000 6,570,000 NA NA55 Aldi318,000,000 6,800,000 NA NA56 Hy-Vee327,300,000 6,850,000 NA NA57 Menard’s337,170,000 8,300,000 NA NA58 Barnes & Noble347,129,199 6,998,565 [68,867] [73,920]59 OfﬁceMax357,121,200 7,150,000 32,800 68,60060 WaWa316,990,000 5,890,000 NA NA61 Casey’s General Store366,987,804 5,635,240 116,791 94,62362 The GreatAtlantic & PaciﬁcTea Co.376,700,000 8,078,455 NA [598,575]63 Dollar Tree386,630,500 5,882,400 488,300 397,30064 AT&T Wireless†,316,486,000 4,990,000 NA NA65 Dillard’s386,263,600 6,120,961 463,909 179,62066 Wegmans Food Markets356,200,000 5,600,000 NA NA67 Advance Auto Parts356,170,462 5,925,203 394,682 346,05368 PetSmart386,113,304 5,693,797 290,243 239,86769 Defense Commissary Agency295,900,000 5,800,000 NA NA70 O’Reilly Automotive355,788,816 5,397,525 507,673 419,37371 Sheetz295,775,000 4,525,000 NA NA72 Racetrac Petroleum315,750,000 4,700,000 NA NA73 FootLocker385,623,000 5,049,000 281,000 173,00074 Dick’s Sporting Goods385,211,802 4,871,492 263,906 182,07775 Big Lots Inc.385,202,269 4,952,244 207,064 222,524* In thousands † Retail operations only28 Company reports for the ﬁscal year ended Aug. 27, 201129 Company reports for the ﬁscal year ended Sept. 30, 201130 Estimate for the ﬁscal year ended Sept. 30, 201131 Estimate for the ﬁscal year ended Dec. 31, 201132 Estimate for the ﬁscal year ended Oct. 2, 201133 Estimate for the ﬁscal year ended Jan. 30, 201234 Company reports for the ﬁscal year ended April 28, 201235 Company reports for the ﬁscal year ended Dec. 31, 201136 Company reports for the ﬁscal year ended April 30, 201237 Estimate for the ﬁscal year ended Feb. 25, 201238 Company reports for the ﬁscal year ended Jan. 28, 2012
Powered byINSIGHTShtsinsightshtsTOP 100 RETAILERSRANK COMPANY 2011 REVENUE* 2010 REVENUE* 2011 NET INCOME* 2010 NET INCOME*76 WinCo Foods39$5,200,000 $4,500,000 NA NA77 Susser Holdings405,194,168 3,930,630 47,500 80078 IKEA North America°415,077,000 4,404,000 NA NA79 BI-LO Holdings424,943,119 6,880,776 NA [70,000]80 Luxottica Group†°434,880,000 3,900,300 NA NA81 Coach Inc.444,760,000 4,158,507 1,040,000 880,80082 Save Mart454,600,000 4,900,000 NA NA83 RadioShack434,378,000 4,265,800 72,200 206,10084 Neiman Marcus Group464,340,000 4,002,300 NA 31,60085 Harris Teeter474,285,565 4,099,353 91,247 112,04186 Tractor Supply Co.434,232,743 3,638,336 222,740 167,97287 Michaels Stores484,210,000 4,031,000 176,000 103,00088 Abercrombie & Fitch484,158,058 3,468,777 127,658 150,28389 Burlington Coat Factory483,887,531 3,701,089 [6,272] 30,99890 Roundy’s433,841,984 3,766,988 48,048 46,19491 Bass Pro Shops453,830,000 3,650,000 NA NA92 Signet Jewelers483,749,200 3,437,400 324,400 200,40093 Williams-Sonoma483,720,895 3,504,158 236,931 200,22794 Stater Bros. Markets493,700,000 3,600,000 NA NA95 Belk483,699,592 3,513,275 183,148 127,62896 Systemax433,682,039 3,589,989 54,400 42,60097 Tiffany & Co.503,642,937 3,085,290 439,190 368,40398 Price Chopper/Golub Corp.513,600,000 3,500,000 NA NA99 Ingles Markets493,559,921 3,390,051 39,060 30,842100 Collective Brands483,461,700 3,375,700 [149,800] 122,600* In thousands † Retail operations only° Currency reported converted to U.S. dollars based onexchange rate as of date of company’s ﬁscal year end39 Estimate for the ﬁscal year ended March 31, 201240 Company reports for the ﬁscal year ended Jan. 1, 201241 Estimate for the ﬁscal year ended Aug. 31, 201142 Estimate for the ﬁscal year ended Dec. 31, 201143 Company reports for the ﬁscal year ended Dec. 31, 201144 Company reports for the ﬁscal year ended June 30, 201245 Estimate for the ﬁscal year ended Dec. 25, 201146 Estimate for the ﬁscal year ended July 28, 201247 Company reports for the ﬁscal year ended Oct. 2, 201148 Company reports for the ﬁscal year ended Jan. 28, 201249 Company reports for the ﬁscal year ended Sept. 25, 201150 Company reports for the ﬁscal year ended Jan. 31, 201251 Estimate for the ﬁscal year ended April 30, 2012
Robust databases ﬁlled with petabytes of point of sale information,gleaned from an expanded universe of retail companies, provideNielsen with an unrivaled view of category sales trends. However,the true value of the company’s vast data repository lies in the insightsthat are generated when combined with economic trends, demographicvariables and other societal factors to more fully understand shopperbehavior and develop actionable strategies to drive category growth.What follows are some of the key ﬁndings from Todd Hale, Nielsen’sSVP consumer and shopper insights, and the most recent version of areport titled “Retail 2016”:• Current economic conditions have produced a wide range of im-pacts on consumer spending. More people are renting homes andthat has an inﬂuence on what people buy, but they have to be will-ing to spend in the ﬁrst place. Nielsen research showed that savingand paying off debt are top priorities for most Americans who wereasked what they do with spare cash after they cover essential livingexpenses. The bad news is nearly one-third of those surveyed saidthey don’t have any spare cash.• Energy price volatility has made it challenging for retailers and CPGcompanies to forecast sales. Gasoline prices back in April were ap-proaching a national average of $4 a gallon before falling to a lowaround $3.36 in July and then roaring back more recently. Whoknows where they are headed next? But if they head higher, retail-ers can know with a high degree of certainty that shopper behaviorwill fall into a familiar pattern of trip consolidation, less eating out,a greater focus on value and increased coupon usage. Supermarketretailers — those that sell gas, anyway — are able to capitalize onthe trend by linking their reward programs to gas incentives. Thenumber of shoppers who said they are buying more gas where theybuy food has risen to 32% from 19% in 2007.• There has been plenty of talk about the plight of the middle classduring the presidential election, and for good reason. There is agrowing disparity between upper and lower income levels, with1-in-7 Americans relying on supplemental nutrition assistance pro-grams, and 15% of U.S. households earning less than $15,000 peryear.As of June 2012, there were 46.7 million people receiving foodassistance beneﬁts, compared with 30.8 million in October 2008.Retailers, such as Dollar General and Family Dollar, that appeal tolower-income shoppers can’t open stores fast enough. Meanwhile,retailers at the other end of the spectrum — Nordstrom, WholeFoods and Macy’s, to name a few — also are enjoying success.• Sales may be growing but consumption of key categories isn’t nec-essarily increasing due to price inﬂation that creates the appear-New dynamics affect category growthPowered byINSIGHTShtsinsightshts Identifying the most successful consumer packaged goods com-panies isn’t hard to do, but determining why they are successful isanother matter. Leading CPG companies rely on a common set oftraits and business practices to deliver growth in a changing busi-ness climate, and it was the goal of the 2012 Customer and Chan-nel Management Survey to identify the best practices. The majorresearch undertaking, conducted by the Grocery Manufacturers As-sociation, Nielsen and McKinsey & Co., involved participation from220 executives at 50 major CPG companies with total U.S. salesof roughly $160 billion across a broad range of product categories.With the objective of identifying winning practices of top-perform-ing companies, the common theme that emerged was a high level offocus in the following areas:• Placing forward-looking strategic bets;• Leveraging data and advanced analytics to drive decision-making;• Collaborating more effectively with top retail customers; and• Building industry-shaping capabilities.The study’s authors are the ﬁrst to admit these broad practicesare straightforward and already in place at many companies; how-ever, winning CPG companies have a tendency to deploy such prac-tices throughout their organizations with greater consistency andmagnitude.For example, with regard to placing strategic bets, the researchdetermined CPG leaders were more likely to invest in emerging retailchannels, Amazon, the Hispanic market and sales technology.In terms of analytics and decision-making, CPG leaders are morelikely to use pricing diagnostic, optimization and trade promotionmanagement tools that help analyze total category performance aswell as their own sales.With respect to collaboration, deﬁnitions can vary widely. Thosewho do so effectively view it as a strategic priority and are more likelyto share new product details with partners 18 months prior to launch.As for building industry-shaping capabilities, talent development isthe key area of focus for CPG leaders. Sales leadership at top-per-forming companies spend twice as much time as their peers at lower-performing companies on talent development and talent management.These winning practices enable leading CPG companies to opti-mize their current performance while looking ahead and planning forfuture growth, according to the study’s authors. ■Habits of successful CPG cos.
ance of growth even though unit volumes are down. Inﬂation trendsof late have begun to moderate somewhat from the mid-single digitlevels seen in 2011, but unit volumes still are negatively affected andhave declined for three consecutive quarters. Price increases havebeen the highest in fresh meat, dairy, fresh produce and packagedmeat. In most of those departments, increased pricing is leading todollar sales gains. As for the recent drought, concerns about the im-pact of weak crop yields on food prices are overblown. In fact, com-modities make up about 14% of the average retail food purchase withsuch factors such energy and transportation costs, labor costs, pro-cessing and marketing costs all playing a more signiﬁcant role.• Economic weakness and price-sensitive shoppers fueled a private-la-bel boom, but even so the sky hasn’t fallen on brands. Since the end of2008, store-brand share growth has been fairly ﬂat as brands steppedup their promotion support and innovation efforts. That said, privatebrands are signiﬁcant as sales reached $107.5 billion for the 52-weekperiod ended Aug. 4, more than 14% greater than $94 billion in calen-dar 2009. Brand sales during the same period reached $518.6 billionand grew 5.7% since calendar 2009. In terms of unit volumes, brandscaptured 78.9% of consumer packaged goods unit sales and 82.8%of dollar sales for UPC-coded product categories tracked by Nielsen.Private brands captured 21.1% of unit sales and 17.2% of dollar sales.• Shoppers looking for deals continue to rely on the trusty weekly ad pub-lished by many retailers. Traditional print circulars remain inﬂuential inhelping shoppers choose where to shop, and this is true across youngand old generations. Most consumers would like access to paper cir-culars in the future, and they are leveraged primarily by deal seekersto ﬁnd sales on the items they prefer to buy. On the digital front, cur-rent methods have rather low reach, but high weekly conversion or useamong those who use them. Predictably, younger consumers, particu-larly Millennials, are big fans. Because consumers go to sites they arefamiliar with, digital circular users have loyal shopper tendencies.• Demographic factors are fueling change and the growth of Hispanicshoppers and aging Baby Boomers are well-established trends. Lessnoticeable is the impact an increasingly diverse U.S. population ishaving on new product introductions and mainstream access to moreexotic ﬂavor proﬁles. While increased diversity brings expanded prod-uct offers, growth of older population segments is causing a shift inpack sizes and packaging. Pack sizes are shrinking and print is gettinglarger on products geared toward older Americans. Meanwhile, CPGcompanies remain on a never-ending quest to shift food preparationupstream to deliver time-starved shoppers the increased convenienceof fully cooked and ready-to-consume offerings.• The growth of online retail remains on an upward trajectory with nolimit in sight. Online sales currently account for only about 5% of totalretail sales, so pure-play companies, as well as conventional retailers,have ample digital growth ahead. Even so, physical store expansionalso remains intact for many retailers,with such sectors as warehouseclubs, supercenters, dollar stores and c-stores adding the most unitssince 2005. Lately the look of expansion has changed, with more ex-perimentation occurring with such small formats as Petco Unleashed,Cabela’s Outpost, CityTarget, Walmart Express and Sports AuthorityElite, just to name a few.• Looking forward, the days are long gone when retailers and CPGcompanies need only concern themselves with direct competitors.Now it is equally important, if not more so, for retailers and CPG com-panies to understand how companies founded or led by folks withsuch recognizable last names as Jobs, Zuckerberg, Brin and Bezosare enhancing or disrupting the future of the retail industry and alter-ing the way companies engage with shoppers. ■Powered byINSIGHTShtsinsightshtsSorry baseball, America’s new national pas-time is searching for deals.This is especially true online,where Nielsen’sexhaustive “Global Survey of Digital’s Inﬂuenceon Grocery Shopping” showed the top monthlyactivities for U.S. shoppers included looking fordeals and coupons (43%) and price checking/consumer reviews (37%). The highest-rankeddaily activities were using digital shopping lists(39%) and looking for deals online (31%).“Connected consumers and their devicesare providing consumer packaged goods mak-ers and retailers with options to differentiatetheir brands and stay relevant,” said Todd Hale,Nielsen’s SVP consumer and shopper insights.“Those who can keep up with what mattersmost to digital shoppers will be well positionedfor the short and long term.”The top weekly U.S.activities related to gro-cery shopping on a connected device (PC, mo-bile phone, tablet, etc.) included reading onlinegrocery circulars (62%), looking for couponsonline (55%) and browsing a manufacturer’swebsite for a grocery category (55%).When asked which factors inﬂuenced theirgrocery purchase decisions compared with ayear ago,U.S.respondents identiﬁed rising foodprices (49%), such health factors as heart/cho-lesterol/weight (28%) and increased transpor-tation costs (28%) as having a “major impact”on their decisions. Food labeling (25%) and re-tailer loyalty programs (24%) rounded out thetop ﬁve U.S.“major impact” categories.Nielsen surveyed more than 28,000 shoppersin 56 countries in North America, Asia, Europe,Latin America,Africa and the Middle East. ■Hunting for deals dominates online grocery activity
Powered byINSIGHTShtsinsightshtsRANK CATEGORYSALES2012* % CHG1 COFFEE $8,205.2 19.4%2 JAMS/JELLIES/SPREADS 3,322.8 16.63 NUTS 4,645.8 11.64 LIGHT BULBS TELEPHONE ACCESSORIES 2,700.4 10.25 YOGURT 6,366.7 9.56 FLOUR 849.7 9.27 FRAGRANCES - WOMEN 869.4 8.68 VITAMINS 9,024.2 8.59 LIQUOR 4,770.7 8.410 PET CARE 4,539.2 8.111 DESSERT/FRUIT/TOPS-FROZEN 1,723.8 8.012 FRESH MEAT 4,698.5 7.813 BOTTLED WATER 8,449.4 7.814 HOUSEWARES APPLIANCES 8,233.9 7.715 EGGS-FRESH 4,662.6 7.616 BREAKFAST FOODS-FROZEN 2,651.4 7.517 COSMETICS 5,555.9 7.418 SNACKS 20,930.7 7.319 PACKAGED MILKS & MODIFIERS 3,560.2 7.120 CHEESE 15,816.7 6.821 SHORTENING/OIL 3,610.4 6.722 WINE 8,797.9 6.623 KITCHEN GADGETS 3,825.4 6.424 GROOMING AIDS 2,149.3 5.925 MOTOR/VEHICLE CARE/ACCESSORIES 2,599.6 5.9* In millions; for the 52 weeks ended Aug. 4, 2012 Source: NielsenGlaceau Vitaminwater Zero, Chobani,Prevacid, Bud Light Lime, Zyrtec andArnold Select Sandwich Thins are sixvery different products uniﬁed by one impor-tant trait — they all achieved the highest levelof new product success on Nielsen’s recent“Breakthrough Innovation Report.”The ﬁrm analyzed 11,000 new product in-troductions in the United States from 2008 to2010 to gain insight into why the vast majorityof products fail and others — 34 to be exact— go on to achieve success. The items men-tioned above fall into the latter camp becausethey generated two-year cumulative sales inexcess of $200 million and were designated asPlatinum innovation leaders.Sixteen other products were designated asGold innovation leaders thanks to two-yearsales in the range of $100 million to $200 mil-lion.Another 12 other products with sales in the$50 million to $100 million range were desig-nated as Silver. Regardless of which preciousmetal is used to signify innovation, Nielsen de-termined each product on the elite list satisﬁedfour essential innovation requirements:• Distinctiveness: Breakthrough innova-tion requires delivering on a new valueproposition, which is why Nielsen exclud-ed from its assessment brand restages,ingredient reformulations, line extensionsand packaging and size changes.• Relevance: To even be considered as aBreakthrough Innovation Leader, a prod-uct had to generate ﬁrst-year sales inexcess of $25 million.• Category Impact: Innovation leaders hadto outperform the sales velocity of the av-erage product in their category and eitherhelp grow the overall category or mean-ingfully alter the competitive landscape.• Endurance: Breakthrough innova-tion isn’t a one-year proposition fromNielsen: New products’ path to glory50 FASTEST-GROWING CATEGORIES
Powered byINSIGHTShtsinsightshtsRANK CATEGORYSALES2012* % CHG26 COOKIES/ICE CREAM CONES $6,677.8 5.7%27 TEA 4,071.8 5.728 CANDY 15,074.1 5.529 ICE CREAM 5,105.2 5.130 SPICES/SEASONING/EXTRACT 3,231.4 4.731 SALAD DRESSINGS/MAYO/TOP 4,305.0 4.732 FRESH PRODUCE 21,889.4 4.533 VEGETABLES & GRAINS-DRY 1,620.1 4.434 WRAPPING MATERIALS AND BAGS 5,037.1 4.335 PERSONAL SOAP/BATH NEEDS 4,584.1 4.336 BAKING MIXES 2,126.3 4.137 BAKING SUPPLIES 2,864.4 4.038 BEER 13,010.7 3.939 SUGAR/SUGAR SUBSTITUTES 2,909.0 3.840 SOFT DRINKS-NON CARBONATED 2,045.5 3.641 FRESHENERS/DEODORIZERS 2,659.5 3.342 PREPARED FOODS-DRY MIXES 5,822.1 3.343 FROZEN NOVELTIES 3,603.5 3.244 BAKED GOODS-FROZEN 2,101.1 3.245 PASTA 2,218.4 3.146 BUCKETS/BINS/BATH ACCESSORIES 2,772.0 3.047 CRACKERS 4,923.5 2.948 MEDICATIONS/REMEDIES 12,657.7 2.949 HAIR CARE 7,826.0 2.950 BREAKFAST FOODS 4,462.9 2.8* In millions; for the 52 weeks ended Aug. 4, 2012 Source: NielsenNielsen’s perspective.That’s why the elitegroup of products recognized as leaderswere required to show staying power byachieving at least 90% of their ﬁrst-yearsales in the second year.This last point arguably is the most impor-tant because it weeds out products that startstrong but don’t ﬁnish. The emphasis on en-durance also differentiates Nielsen’s assess-ment of innovation from other reports on newproduct success, which tend to focus on ﬁrstyear sales. However, only one-third of newproducts are able to sustain their sales fromyear one, according to Vicki Gardner, the In-novation Report’s co-author and Nielsen SVPproduct innovation. She contends there is toomuch focus in the industry on ﬁrst-year salesas the benchmark of success.“You should not hold up year one success as agood example of innovation,”Gardner said.“Yeartwo is the most important year of innovation.”That’s why Nielsen’s “Breakthrough Inno-vation Report” only reﬂects industry standoutsthrough the end of 2010. Products launchedin 2011 can be measured on such attributesas distinctiveness, relevance and categoryimpact, but their endurance won’t be knownuntil the end of 2012 when second-year salesare tallied. ■You shouldnot hold up yearone success as agood example ofinnovation. Year twois the most importantyear of innovation.— Vicki Gardner, Nielsen50 FASTEST-GROWING CATEGORIES
otherwise take several months to achieve.otherwise take several months to achieve.otherwise take several months to achieve.Capitalizing on this chance to meet with severalindustry leaders in one location will help toeliminate office appointments down the road.today!www.ECRM.MarketGate.com/Eventswww.ECRM.MarketGate.com/Eventswww.ECRM.MarketGate.com/Events3 days3 days3 days3 days3 days3 daysYou can accomplish inYou can accomplish inYou can accomplish inwhattakeswhattakeswhattakesyour competitionyour competitionyour competitionmonths,months,months,months,Attend an ECRM event and join us in redefining the way buyers and sellers go to market.Attend an ECRM event and join us in redefining the way buyers and sellers go to market.Attend an ECRM event and join us in redefining the way buyers and sellers go to market.Want to Learn More?Want to Learn More?Contact our SeniorVP of Sales & MarketingContact our SeniorVP of Sales & MarketingJohn Allen | +1-440-528-0421 | email@example.comJohn Allen | +1-440-528-0421 | firstname.lastname@example.orgJohn Allen | +1-440-528-0421 | email@example.com
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