Craig Rosenblum Provides a Glimpse of the Next Generation of Food Retailing
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Craig Rosenblum Provides a Glimpse of the Next Generation of Food Retailing
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Willard Bishop partner, Craig Rosenblum, provides insights into the next generation of retailing at the Food and Drug Conference, held Dec 16-17, in Las Vegas. Craig details the massive changes that are reshaping the world of food and drug retailing. Topics include: Growth Strategies, Omni Channel, Shopper Driven Merchandising, eCommerce, Emerging Formats, Disruptive Products, M&A, and more.
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Craig Rosenblum Provides a Glimpse of the Next Generation of Food Retailing
- 1. Craig Rosenblum Partner The materials herein are proprietary to Willard Bishop may not be copied, reproduced or disclosed in any manner without prior written permission from Willard Bishop. Copyright © Willard Bishop, 2013. All rights reserved. Any logos, design marks, company names or product names contained herein are the sole property of their respective owners.
- 2. Willard Bishop | Snapshot RETAILERS MANUFACTURERS DATA PRODUCTS AND OPTIMZATION TOOLS
- 3. Willard Bishop | Practice Areas and Products sample list only Activity Based Costing Retail Pricing/Promotion Strategies Localization Strategies Shopper Relevancy eCommerce Channel Development Collaborative Performance Product Positioning DATA PRODUCTS AND OPTIMZATION TOOLS
- 4. Everybody Please Stand Up
- 5. Please sit down if you’ve ever purchased from:
- 6. Please sit down if you’ve ever purchased from:
- 7. Two Companies. 100% Market Penetration. A Gazillion Dollars. How are we to compete?
- 8. Only Two Ways to Compete
- 9. Price
- 11. How to Differentiate Prepared Foods Pricing Quality eCommerce Service Levels Assortment Offers Formats Targeting
- 12. Change in Behaviors • Still like their brick-and-mortar, traditional supermarkets • Less brand loyal • Down-sizing households • Very price-conscious…but willing to pay up sometimes • Eating less, but eating healthier • Convenience-driven and very social/connected • Local products and community’s importance grow • Fresh, N&O and Specialty appeal
- 13. Shifting Formats Non-Traditional is the Only Growth Segment Dollar Share by Channel* 2% 8% Military 1% (Rounded) 34% 37% 39% Mass 12% +5.1% Dollar 6% +9.6% +2.7% 16% 15% 14% Supercenter 45% Drug 14% +3.1% 90% 50% 48% 47% +4.5% Warehouse Club 22% +5.7% Traditional Convenience * Excludes eCommerce Source: Willard Bishop, The Future of Food Retailing; June 2013 Non-Traditional Breakout of Non-Traditional with Growth Percentages
- 14. Get Ready for the Next TLA Shopper Driven Merchandising
- 15. Shopper Driven Merchandising Current Focus is on the How Snail Mail Loyalty Card Email In-Store Coupons Personalized Mobile Circulars Internet
- 16. The Value of SDM is in the “What” Household-Oriented Merchandising • Pricing and Promotion • Product Assortment • Format • Space Allocations
- 17. Leading Change Agents • Understanding the Digital Consumer • Social Media • Responsive eCommerce • Prepared foods • Fresh, natural and organic • Less brand loyal • Limited assortment • Extreme value formats
- 18. The Millennial’s BFF Did you know? It takes 26 hours for the average person to report a lost or stolen wallet. It takes 68 minutes for them to report a lost phone. Source: Unisys
- 19. Going Mobile Did you know? There are 6.8 billion people on the planet. 5.1 billion of them own a cell phone. 4.2 billion own a toothbrush. Source: Mobile Marketing Association Asia
- 20. Speed Counts 70% of all mobile searches result in action within one hour Source: Mobile Marketer The average person responds to email in 90 minutes The average person responds to a text in 90 seconds Source: CTIA.Org
- 21. Reach. Reward. Retain. Mobile coupons get 10 times the redemption rate of traditional coupons Source: Borrell
- 22. New Rules of Engagement
- 23. New Rules of Engagement | eMart
- 24. New Rules of Engagement | Budweiser
- 25. Beyond the Webvan Hangover
- 26. eCommerce is Getting Its Grove On In 2 years…. Worldwide eCommerce business will double to $1.5 billion
- 27. eCommerce is Getting Its Grove On In 1 year…. eCommerce business will account for 8% of total sales
- 28. Ranking Kroger’ eCommerce Business 14 Trader Joe’s Co. $10,300,000 15 Giant Eagle, Inc. $9,900,000
- 29. Other eCommerce Notables 100 Orders per Week High Volume Stores Filling 500+ Orders per Week Offers Home Delivery eCommerce we continue to evolve and be the price of poker for many retailers. It will put huge pressures on stores with large square footages.
- 30. Omni Channel | It’s Everywhere
- 32. Wheel or No Wheel? • Warehouse • Dark Store • FedEx/UPS • Direct from Store • Locker/Kiosk
- 33. Wait. I’m Confused! • The endless aisle is growing • Limited assortment formats are growing
- 34. Without Confusion there is No Growth Growth appears on the periphery Limited Assortment TRADITIONAL SUPERMARKETS Endless Aisle
- 35. Growth is Still Viable, Provided…. • You know where to look for opportunities Limited Assortment TRADITIONAL SUPERMARKETS Endless Aisle • You take the appropriate action once discovered
- 36. Top 7 Growth Opportunities Disruptive New Products eCommerce 88% 17% Fresh Format 11% N&O Non-Foods 10% Extreme Value 10% 7% Prepared Foods 5% Limited Assortment +3.4% Traditional Grocery Sources: Willard Bishop 2013 Future of Food Retailing, eMarketer.com, Packaged Facts, Organic Trade Association, Store Brands Decisions, & Information Resources
- 38. Mergers & Acquisitions Will Increase and Become More Diverse
- 39. 5 Focus Areas for 2014 Omni Channel Value Equation Disruptive New Products Growth in Traditional Channels Shopper Driven Merchandising Integrate your path-to-market to capture sales everywhere. Define your competitive pillars; then pursue and promote them relentlessly Streamline your product development process and focus on truly disruptive offerings Prepared foods, private label and new formats will continue to capture growth Use BI and shopper insights to improve merchandising decisions and agility 1 2 3 4 5
- 40. The mantra for 2014 is business wisdom, which is intelligence applied. Craig Rosenblum Partner Craig.Rosenblum@WillardBishop.com 847-756-3726
Notas del editor
- General welcome.Hello everyone and thank you for joining me today. I’m Craig Rosenblum and I’m a consumer packaged goods and retail lifer – having been in the biz for over XX years.Before we dive into the new generation of Retail, I’d like to share two slides on Willard Bishop - I think understanding who we are will help frame the content we’re about to cover.This session is for you, so if you have questions along the way, just raise your hand and we’ll do Q&A on the fly.
- Willard Bishop is a 38-year old, shopper centric, consulting firm that services both retailers and manufacturers.
- Our key practice areas are….Through the years we’ve also developed a number research instruments and optimization products – our most recent being AD-INExplain AD-IN, SuperStudy, and Localization StudyThat’s enough about Willard Bishop – It’s time now for audience participation…
- Would everybody please stand up. Come on, everybody…..
- Now, if you’ve ever purchased from Amazon, please take your seat.[Comment on the number of people that sat down]
- OK, now please be seated of you’ve ever purchased something from Walmart…..Come on, be honest. Remember, what happens in Vegas – Stays in Vegas.
- OK – Perfect. Thanks for playing along. So through our audience participation, we can see that 2 companies - 2 retail giants, have 100% market penetrations.[Comment on their combined revenue] So how do the rest of compete against these 2 giants?
- Well, there are only ways to compete…..
- Once is price – And we all know who the low-cost provider is……
- And the other, more challenging method is differentiation.
- There are lots of way to differentiate – Service levels, quality, assortment – even price; despite not being the cheapest. But before determining your value equation or competitive stance, you must understand market dynamics….
- … For example – Millennials have reached the tipping point… Baby Boomers, as a percent of the population are shrinking. [Explain each bullet]While the Millennials ; sometimes called Generation Z, is expanding. And Gen Z’ers are…. [Explain each bullet]
- In addition to changes in shopper behaviors - retailing channels continue to shift.. And at a faster rate.And this paradigm shift in retail channels is coming at the expense of the traditional supermarket.[Explain charts] But major swings in market dynamics create new opportunities… for example…(next slide) SDM…
- … is the next TLA TLA stand for Three Letter Acronym, and every few years we get a new TLA. Well the up and coming TLA is SDM – Shopper Driven MerchandisingSDM has been talked about for years but the required technology didn’t exist. Now that it does decision makers are making a mad dash to leverage this new capability; however….
- Some people think SDM is all about delivery. They are focused on the HOW – How to disseminate my offers. While The HOW is important, game-changing performance resides in the …..
- ….What. The real values of SDM is in the data mining that will align your merchandising strategy with your targeted shopper.The holy grail is insight – Insight that drives profitability by aligning your merchandising plans directly with your targeted households[Explain bullets]SDM provides the coveted triple-whammy…. Higher sales, reduced costs and improved loyalty.
- But before moving to SDM we have to dig deeper into the shopper’s psyche. Especially that of the digital consumer. Because… as most of us with kids know…Their different.[Bullets]In fact one of the most important things – maybe the most important thing – to a Millennial – is…..
- …. Their phone.For instance, did you know….[content]Even more mind boggling…..
- [Content]This still blows my mind…. But it’s not just about pervasive technologies….
- …. It’s about speed.[content]And when you cross speed with insight, you capture the three Rs…..
- …. The ability to reach. Reward. And Retain.[content]The bottom line….
- Insight and technology are changing the rules of engagement. The video snippet we going to see is that of a Korean retailer that used technology and insight to create shopper excitement and increase sales.Then we’ll see how Budweiser is using social media to engage its conusmers.
- [after the video]…… And drinking with your buds is the perfect segue for our next topic….
- [Wait for laughs]How fitting .. Right? Well, like in The Hangover I, II and III … we survived. We got beyond the Webvan hangover. In fact, now we’re…..
- … getting our eTailing groove on.[content]
- [Content]In fact, if you rank Kroger’s eCommerce business as a stand-alone retailer….
- … it would be the industries 15th largest chain
- Some other eCommerce notables include:[Content]So… it’s clear the industry and the consumer have gotten over the Webvan hangover. So-much-so, that now we can shop anywhere….anytime ….
- Meaning we are no longer tied to brick and mortar stores. The Internet has made shopping ubiquitous. And as a result, we have a new channel definition – The Omni Channel. Basically we can shop how we want – when we want.[content]Shoppers now have an endless aisle available 24/7
- The Omni Channel gives new meaning to the question:Paper or Plastic?Who here remembers paper shopping bags? Laugh and say “There’s our baby boomers.”[Content]
- Not only can we order any way we want – when we want…we can receive our goods any way we want[Content]
- But wait! eCommerce is giving us the endless aisle… yet limited assortment stores are among the fastest growing. They are opposites – how can both be growing at the same time?
- ---- Laughingly ----- I don’t know why I thought I could do this with a straight face…This is what happens when you don’t give your marketing department clear direction.I couldn’t remember who said “Without confusion there is no growth,” so when they asked me for the source, all said , “It was somebody smart……”…….And they gave me Sheldon….. Lesson learned.[Content]
- Even though the middle is shrinking, growth is still possible….[Content]
- For instance, here are the top 7 opportunities for growth…. And most of these apply to retailers and manufacturers.[Content]
- Traditional growth vehicles such as M&A will also continue; however,…..
- …. They are likely to become more fragmented and diverse.[Content][Notes on Walmart LabsOneOps is a cloud computing company that was started by a group of former eBay veterans.TastyLabs is a software application development firm started by former Google and Mozilla employees. ]
- The bottom line is that there is a lot of confusion in the marketplace. But that’s good because the confusion is being created by an evolution – some might say a revolution – and change is what stimulates growth, and growth creates sustainability - and that allows the cycle to perpetuate. So if you take everything we just covered and developed a growth strategy from it, we would end up with 5 key growth opportunities…[Content]Business Intelligence continues to help us understand what happened; however….
- The mantra for 2014 goes beyond business intelligence.[Content][Thank them for listening and offer to field questions]Or if you prefer to talk off-line, we can talk during the break. You are also welcome to email or call me.Thank You.