competing in the digital now:competing in the digital now ...€¦ · competing in the digital now:...
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Competing in the Digital Now:Competing in the Digital Now: Winning in the New Digital Era
Bob Black, Senior Advisor to BCG and former Group President Kimberly Clark & Annie's Board of DirectorsDan Cooke, General Manager, Global eCommerce, Kellogg Company
CONFIDENTIAL MATERIAL
August 15, 2015Gabrielle Novacek, Partner, Boston Consulting Group
GMA Steering Committee members
Rick Brindle Dan Cooke Evan Fernando Keith Aldredge David Wurmg
Sarah Wagoner Eric Ong Tim Madigan James Splinter Jeff Malat
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Steve Savell Sara Mirelez Nigel Burton Gian-Carlo Peressutti Scott Cameron
CPG companies face a '1-5-10' market over next few yearsy
with multiple PENETRATIONWe are living in a HYBRID WORLD...
5%
10%
... with multiple PENETRATION LEVELS by market/category/ segment ...
1+% ... that will ACCELERATE at1 %an unknown pace
2Note: From BCG-GMA "The Digital Future: A Game Plan for Consumer Packaged Goods" (2014)
Potential market evolution
750
US grocery sales ($B)Online Offline
Contribution to Growth
36
725
700
+2%
718
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Contribution to Growth
~50%
8
36700
675
52
666 24
+
8
0
3
2018E2013
Note: From BCG-GMA "The Digital Future: A Game Plan for Consumer Packaged Goods" (2014)Source: IRI Database L52 ending May 2014, Wells Fargo analyst report on online grocery, BCG analysis
Brick & mortar shelf Website shelf Mobile shelf
4Source: Store visit (Target), Amazon website and mobile app (accessed August 4, 2015)
Breakfast Chocolate Bath & Breakfast Chocolate Bath & B&M bestsellers Amazon bestsellers
Coffee foods Candy shower Coffee foods Candy shower
1
2
3
5Source: B&M top brands based on IRI MULOC database, excludes private label; Amazon bestsellers from Amazon bestsellers 8/31/2015
FairFair shareshare
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The impact of a "winner takes all" world
What is the 2,000
+1,650Online sales in USD millions
What is the difference between winning and losing
f $10B
,
+800
for a $10B company with ~30% overall
1,000
350share?
10%
350
5%
200 Lose shareGain share
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Note: "Lose share" refers to getting 10% of online market share, while "gain share" refers to getting 60% online market shareSource: BCG analysis
10%5%Online penetration
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Click & Collect in France
4,000
No. of C&C locations in France
Aggressive
Maturity
2,7213,000>3,000
Entrance of others
ggrollout
1,890
1 000
2,000
First mover
2nd entrant
750
0
1,000 First mover
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201020082009 20142013201220112001 200520032000 2002 20062004 2007
Source: Leclerc website, Nielsen Research, BCG analysis
Pilots C&CPilots C&C Pilots C&C
2009 2010
Pilots C&C
Pilots C&C Announces plans for 1.2K C&C stores
Tests CurbsidePickup
Starts C&C atall stores
Opens storePlanning C&C in Pilots C&C Pilots C&CPilots C&C Pilots C&CExpands
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pick-upSilicon Valley with Instacartin AKin AZ/AL in OHC&C in OH
Source: Press search
Picking options Collection optionsPicking options Collection options
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Key actions to win in Click & Collect
1. Position yourself as a critical source of C&C knowledge and expertise for retailers
– Dedicate a cross-functional team
– "Go to school" on iterations in Europe – beyond your own categories
– Actively engage and lead in pilots across multiple retailers – your categories
2. Set standards for product content, shopping list optimization, and fundamentals
3 Aggressively experiment and innovate for unique consumer and logistical aspects of your3. Aggressively experiment and innovate for unique consumer and logistical aspects of your
categories, e.g.,
– Lane and locker sampling programs, e.g., small pack, impulse
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– Unique point of pick-up promotional strategies, e.g, bulky, fresh, and impulse
– Shopping list population, basket auto repeats
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Maximize total Support Amazon's goal to get greater share of household contribution dollars spending through optimal prices, selection and convenience
Master operational basics and become
top partner
Supply chain PackagingA+ product content
Strategic Vendor Services
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Strategic Vendor Services SEO Vine program
SVS enables a more strategic, beneficial relationship with Amazon
Amazon not conducive for personalized account management
SVS provides opportunities to sell more strategically
Amazon culture - biased to minimize human contact
Dependence on algorithm limits need for
CPG companies can fund a single point of contact through SVS• Ensures success of promotional efforts,
helps address challengesDependence on algorithm limits need for suppliers relationships
No single point of contact for most vendors – scale not correlated with bargaining
helps address challenges• Provides an interpretive lens to
performance
But... SVS comes at cost and does notscale not correlated with bargaining power
But... SVS comes at cost and does not solve all Amazon challenges
15Source: Expert interviews, 3rd party data vendors, and GMA members, online research, BCG analysis
Developing A+ product content Optimizing for search
old
Min. 6 high quality images Direct link to
other SKUs
Brand name in title
p g p p g
Amazon ranks search results by: 1. Relevance2. Product sales performance
Abo
ve fo
Optimize keywords on a regular basis to achieve page 1 ranking
• Monitor related keywords that are
Expanded product description
Interactive/ inspirational contentd
Monitor related keywords that are popular/trending
• Infuse these keywords in product descriptions and page HTMLp
Bel
ow fo
ld
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B
Digital marketing spend outpacing traditional media
CPG digital marketing spend reaching ~25% of media spend
Kraft Foods Group
CPG digital spending survey estimatesAd Age 2014
Kraft Foods Group
Clorox Co.
McCormick & Co.
Proctor & Gamble Co.
Unilver
Heineken USA
Mondelez International
0 10 20 30 40
General Mills
Campbell Soup Co.
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% digital share of media mix
Source: BCG Digital Marketing COE; Advertising Age, eMarketer, Jeffries
C Fan sentimentHigh
Blogs
ForumsReviews
D Consumer engagement
Level of interaction
Blogs Social Media
E Controlled experience
A Digital shelf space
e-mail marketingO li d
MobileB Targeted impressions
Retail com
A Digital shelf space
Search engineti i ti
L l f t lL Hi h
marketingOnline adsRetail.com optimizationLow
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Level of controlLow High
Source: BCG analysis
Driving brand onlineDriving sales online
Digital coupons
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No "Fair" Share. Make your move – laggard, winner or disruptor?
Laggards Dabblers Winners Disruptors
Most traditional retailers and
consumer products companies
• Do nothing or are very late to react
• Very conservative investment stance playing catch-up
• Elevate consumer experience • Transformed consumer expectationsreact
• Don't capitalize on trend for fear of cannibalizing existing product sales
stance, playing catch-up
• Face flat or stagnating sales• Aggressive digital bets,
experiment heavily, move fast
expectations
• Disrupting the value chain
• Move from manufacturer to consumer company
ree
of
ange
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Deg
rch
a
Source: BCG analysis
BE BOLDnot stupidnot stupid
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Key Actions to Win
– Commit to action - today– Set bold objectives – winners not laggardsAlign as a
leadership team j gg– Invest ahead of volume - risk of inaction is too high
– Immerse as consumers – go on a digital diet
leadership team
Immerse as consumers go on a digital diet– Follow consumers 24/7- understand evolving behaviors– Make digital a core focus – discuss Walmart AND Walmart.com
Engage as a leadership team
– Identify key places to win – where and with who– Reallocate resources – prioritize across key levers– Integrate across functions - eliminate silos that are barriers
Focus as an organization
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– Accelerate talent and capabilities – new needs for a new market
Contact information
Leslie Hinchcliffe (for publication details)[email protected]@ g
Gabrielle [email protected]
Dan CookeD i l C k @k ll
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