big data analytics: is only option to grow with assortment optmisation
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SHRINK TO GROWUSE ANALYTICS AND TECHNOLOGY TO OPTIMISE YOUR LINE-UPBrenda KoornneefBusiness Executive, Group Marketing & Corporate Strategy, Tiger Brands
José Carlos González-HurtadoPresident of IRI International
15th-17th June 2016, Consumer Goods Forum Global Summit 2016
AGENDACONTENTS
1 HOT TOPIC ON YOUR AGENDA
2 THE TIGER BRANDS SUCCESS STORY
3 HOW TO WIN
HOT TOPIC ON YOUR AGENDA
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CHOICE IS A KEY DRIVER TO WIN CLIENTS
"WHY HAVE YOU SELECTED THIS SHOP TODAY FOR YOUR GROCERYSHOPPING?"
Source: IRI Shopper Survey France 2015
Price Selection of products
Point of sales comfort and clarity of the
offer
Promotions Private labels New products
* Except proximity from your home or work
30%
25%
20%
15%
10%
5%
0%
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BUT CURRENT OVERABUNDANCE OF PRODUCT OFFERING…
In suppliers price list
In a large hypermarket
In a supermarket
Bought in a year by household
In an average basket SM/HM
Number of FMCG items available – average per store (supermarkets) Europe and US
400.000 SKU’s (US = 970 000)
20.000 to 50.000 SKU’s
6.000 to 9.000 SKU’s
300 SKU’S(US 600)
10 to 50 SKU’s
MARKET SITUATION
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6
AND THE MULTI-CHANNEL REVOLUTION…
M-commerce for a rebirth of loyaltyprograms and in-
store personalization
Demand for freshproducts and short
time delivery is increasing
Different trip missions with
different banners at different times
of the week
Online/Click & Collect (Drive)
growth
Convenience is growing
in importance
On-the-go shopping
with QR code -Shopping
walls is growing
Emergence of pure players in
FMCG
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AND THE MULTI-CHANNEL REVOLUTION…
M-commerce for a rebirth of loyaltyprograms and in-
store personalization
Demand for freshproducts and short
time delivery is increasing
Different trip missions with
different banners at different times
of the week
Online/Click & Collect (Drive)
growth
Convenience is growing
in importance
On-the-go shopping
with QR code -Shopping
walls is growing
Emergence of pure players in
FMCG
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FORCES RETAILERSTO RETHINKASSORTMENT
TESCO CUTS RANGE BY 30% TO SIMPLIFY SHOPPING
BY REDUCING NUMBER OF PRODUCTS FROM 90,000, SUPERMARKET WILL BE ABLE TO CUT PRICES AND IMPROVE AVAILABILITY ON ITS SHELVES
Friday 30 January 2015
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…AND MANUFACTURERS TO FACE NEW CHALLENGES LIMITED SHELF SPACE
RETAILERS REJECT "ME TOO" PRODUCTS
SHOPPER IS MORE DEMANDING
THE PRIVATE LABEL PRESSURE
MORE DIFFICULT TO STAND OUT OF THE SHELF
THE TIGER BRANDS SUCCESS STORY
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11
A top 40 JSE (JHB Stock Exchange) listed company
Leading FMCG Manufacturer in SA:
• Baby Care• Beverages• Grains• Groceries• Perishables• Personal Care• Home Care• Snacks & Treats
Present in > 22 African countries
Founded in 1921
16,800 employees across Africa
KOO won favourite brand
in SA in 2015
“LEADING MANUFACTURER IN ALMOST EVERY CATEGORY IN WHICH WE PLAY”
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12
GROWTH THROUGH FOCUSPortfolio complexity is often the root cause of symptoms faced by consumer goods companies in developed markets
BRANDSSKUs
SPECSCHANGES
High Overheads
Low Speed(decisions, launches)
LowMarketing
ROI
Poor in Store Execution
Low PurchasingScale
Low SupplyCosts
High Capex
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GROWTH THROUGH FOCUS
High speedimplement-
ation
High marketing
ROI
High purchasingscale
Competitivesupply chain
costs
Capex forGrowth
Perfect in Store
executionOptimum
overheads
GROWTH THROUGH FOCUSED
PORTFOLIO
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14
HALF THE JAMS SOLD IN THE MARKET* WILL BE A TIGER BRANDS JAM
*Defined Market i.e. formal trade & wholesalers
“Tastes real good, like good food
should”
Most valuable jam brand in SA
Within top 5 jam brands in SA
Discontinued in 2015
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15
THE BURNINGQUESTIONS How do we drive growth in
a mature segment?
What is the optimum assortment for each of our brands within the different retailers?
Can we launch new products without one brand cannibalizing the other?
Which product attributes (flavour, size, format etc.) do our products need and which do shoppers want?
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17% 12%28%
51%
22% 29%
77% 79%64%
48%
75% 66%
6% 9% 8%
0%10%20%30%40%50%60%70%80%90%
100%
Spar PnP Checkers Shoprite Makro Total Mkt
Quality Grade Attribute Importance by Retailer: Latest Year
Economy Everyday Premium
THERE IS A CLEAR DISTINCTION IN THE TYPES OF JAMS THAT DIFFERENT RETAILERS SELL
Source: IRI
Retailer 1 Retailer 2 Retailer 3 Retailer 4 Retailer 5 Total Market
Brand + FlavourBalancedPrice + Size Dependant
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METHODOLOGY: HOW DO WE DO IT?
Sales Figures+ Distribution Figures
Product Attributes + Store Level
+ Dynamic Product Mix
Importance per Attribute + Incremental Sales
Incremental Volume
Transferable volume
TRADITIONAL APPROACH COMPETITIVE EDGE
25%
75%
New Performing Approach
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ASSORTMENT OPTIMIZATION 2.0 TO SPOT INCREMENTAL AND TRANSFERABLE SALES
25%
75%
Incremental SalesNon transferable
(Drives market size)
Transferable(Drives market share)
Gains from the added item
(uniqueness)
Sales substitutable with other products
Total new item’s sales
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19
ATTRIBUTE IMPORTANCE DIFFER BY RETAILER
22.0
16.9
15.5
14.4
14.1
9.7
7.4
Packtype
Flavour
Brand
PriceBin
Size
SKU‐Count
Consiste…
32.2
23.8
16.3
9.8
8.9
6.3
2.7
Lifestyle
Flavour
Brand
Size
PriceBin
Consist…
Packtype
25.5
21.8
19.3
15.2
12.2
3.2
2.9
Brand
Size
Flavour
PriceBin
Lifestyle
Consisten…
Packtype
28.6
19.9
18.2
15.7
9.6
4.9
3.1
Brand
Lifestyle
Flavour
PriceBin
Size
Packtype
Consist…
19.1
18.7
16.9
14.1
13.3
11.6
6.3
Size
Brand
Flavour
Lifestyle
Packty…
Consist…
PriceBin
Retailer 1 Retailer 2 Retailer 3 Retailer 4 Retailer 5
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PLANETARY SYSTEM INDICATES UNIQUENESS AND INTERCHANGEABILITY OF BRANDSUniqueness: Brand map
Product mapping is a visual representation of attribute interaction, where proximity of attribute values implies strong interaction. Bubble sized by value share.
All_Gold
Spar_Brand
Rhodes
Hugo_S
KOO
Hazeldene Weigh_pm_LessThistlewood
Product Mapping by Brand
All_Gold Spar_Brand Rhodes Hugo_S KOO Hazeldene
Goldcrest St_Dalfour Weigh_pm_Less Hillcrest Hilton Thistlewood
Other_Brands Melissa_S Naturelite Dursots
Premium brands in this retailer are highly
interchangeable
Mainstream brands are quite unique
Brand 1 Brand 3
Brand 2
Brand 4
Brand 6
Brand 5
Brand 7
Brand 8
Brand 9
Brand 10 Brand 12
Brand 11
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All_Gold
Hugo_S
KOO
Product Mapping by Brand
Rite_Brand All_Gold Hugo_S Rhodes Sunshine Hazeldene
Pot__O_Gold KOO Danish_Choice Naturelite Other_Brands Dursots
Goldcrest Thistlewood Weigh_pm_Less Housebrand St_Dalfour Hillcrest
BRANDS INTERACT DIFFERENTLY IN DIFFERENT RETAILERSUniqueness: Brand map
Product Mapping is a visual representation of attribute interaction, where proximity of attribute values implies strong interaction. Bubble sized by value share.
Premium brands do not play a major role in this retailer
Brand 1
Brand 4
Brand 2
Brand 3
Brand 5
Brand 6
Brand 7
Brand 8
Brand 9
Brand 10
Brand 11
Brand 12
Brand 13
Brand 14
Brand 15
Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary.
22
THE BURNINGQUESTIONS How do we drive growth in
a mature segment?
What is the optimum assortment for each of our brands within the different retailers?
Can we launch new products without one brand cannibalizing the other?
Which product attributes (flavour, size, format etc.) do our products need and which do shoppers want?
Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary.
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RESULTS
Reducing the products by 37% will drive 1.1% ($270k) value growth for the retailers and 3.4% ($440k) value growth for Tiger Brands
New launch has the potential to drive additional revenue of approx. $600K across markets
Additional benefits: De-cluttered range Less complicated merchandising More efficient distribution & supply chain
ROI x 12
NEW
HOW TO WIN
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FOCUS ON WHAT MATTERS
Traditional view: Focus on the shelf
Assortment optimisation 2.0:Starts with the shopper
Sales rotation only Product isolation view
Look at the at the category as a dynamic product mix
Use the incrementality
Use the incrementality from attributes’ attractiveness
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ASSORTMENT OPTIMIZATION 2.0 FOCUSES THE DRIVERS OF THE PURCHASE DECISION
SHOPPER CHOICE
Packaging
Brand
Category
IngredientFlavor
ProductForm
Price Value
Pack Type
MarketingMix
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ASSORTMENT OPTIMIZATION 2.0 IDENTIFIES ATTRIBUTE IMPORTANCE AND ATTRACTIVENESS
Brand:
Sub-category:
Pack type:
Pack size:
Sugar:
Red
Classic
Metal Can
330ml
12%
Each product has a setof attributes (features):
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ASSORTMENT OPTIMIZATION 2.0 SIZE OF THE PRIZE
Category revenue % change between optimized scenario and actual revenue across different regions/stores within each country
Category revenue gain with the optimized scenario versus actual revenue
02468
10121416
Netherlands - Hot Sauces France - Frozen Fish Spain - Margarines
Non Optimized Store Group 1 - Optimized Store Group 2 - Optimized
+1.2
+4.2 +4.6
+14.2
+9.5
+2.3
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IN OUR INCREASINGLY COMPLEX WORLD, COMPANIES NEED SIMPLICITY AND SCALABILITY TO TURN OCEANS OF DATA INTO ACTION AND GROWTH
The MarketIs ChangingEvery Day
No 2 CountriesAre The Same
Data Is NowDisparate
Win Local,Track Global
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THE TRADITIONAL MARKET READING MODEL IS NOT ADAPTED TO THE BIG DATA ERA
THE TRADITIONAL MODEL TRANSLATES PRODUCT CATEGORIES INTO RIGID HIERARCHIES
Hair Shampoos Hair Conditioners Hair Colorants
Hierarchy 1 Hierarchy 2 Hierarchy 3
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SO, MR. RETAILER MRS. MANUFACTURER IN THE FUTURE… WHAT WILL YOU NEED
TO GROW?
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32
1. BREAK SKUS INTO ATTRIBUTES = THE END OF RIGID HIERACHIES
Move from rigid hierarchies to multidimensional analysis of all consumer – product data
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33
1. BREAK SKUS INTO ATTRIBUTES = THE END OF RIGID HIERACHIES
Move from rigid hierarchies to multidimensional analysis of all consumer – product data
Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary.
34
1. BREAK SKUS INTO ATTRIBUTES = THE END OF RIGID HIERACHIES
Move from rigid hierarchies to multidimensional analysis of all consumer – product data
Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary.
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2. HAVE A 360O VIEW OF CONSUMERS / SHOPPERS AND YOURSELF
Liquid DataTM
Technology PlatformData integrated and aligned across
multiple dimensions of brand, customer, segment, geography,
channel, store and time.
You need to have a super powerful IT platform
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3. MAKE IT EASY
SIMPLE VISUALISATION
, MAKE IT FAST
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3. MAKE IT EASY
SIMPLE VISUALISATION
, MAKE IT FAST
15.000 USERS GLOBALLY
1MILLION QUERY A MONTH EXECUTED
95% OF WHICH ANSWERED IN LESS THAN 10 SECONDS
“ON THE FLY“
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THE FUTURE IS NOW
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WHAT YOU WILL NEED TO GROW…AND WIN
Observe & Understand Reality
• Analytics on Oceans of Data• Analytics on Attributes
2 Make Sense of It Super Powerful Integration Platform
3 Be Able to Act Fast “On the Fly”
1
Thank you!Find out more at iriworldwide.com
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