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The new face of retail
Retail and consumer trends reshaping the landscape
The materials contained in this document are intended to supplement a discussion with L.E.K. Consulting. These perspectives are confidential and will only be meaningful to those in attendance.
L.E.K. Consulting LLC, 75 State Street, 19th Floor, Boston, MA 02109, USA T: 617.951.9500 F: 617.951.9392 www.lek.com
©2014 L.E.K. Consulting
April 2014
CONFIDENTIAL
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2
A number of major trends are reshaping the U.S. retail landscape
The new face of retail
More spending among high and low income levels as middle class is squeezed
Hourglass economy
1
Population is becoming older and more ethnically diverse
Demographic shifts
2
Information transparency and accessibility creating empowered, sophisticated consumers who expect more from retailers
Uber consumers 3
Digital tools and channels have reshaped the purchase cycle… and role of physical stores
Omni-channel6
Paper and broad-based ad vehicles declining, but not dead
Decline of traditional media
7
Balance of power has moved to new channel segments
Channel shifts8
International markets provide source of growth in otherwise low growth world
International10
Brands establishing direct consumer relationships and building own commercial channels (stores and e-com)
Brands going direct to consumer
9
Consumers want specialized brands, products, and experiences that deliver on specific needs
Smaller and focused is better
4
Brands / retailers building a deeper understanding of consumers and tailoring product, messaging, and experience to their specific needs
One-to-one customer
engagement5
©2014 L.E.K. Consulting
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The rising income inequality gap is squeezing the middle class, resulting in an “hourglass” economy
Source: U.S. Census, CBRE; L.E.K. research and analysis
©2014 L.E.K. Consulting
The new face of retail
Top 20%
Bottom 20%
50
100
60
0
10
20
30
40
70
80
90
Lowest quintile
Second quintile
2005 2010 20121975 1980
Highest quintile
Fourth quintile
1985 1990 1995 2000
U.S. shares of household income(1970 – 2012)
1970
Third quintile
1
2
3
4
5
The highest 20% of earners accounted for more than half of the income earned in 2013, up from 43% in 1970
Upper-middle class proportion of income has declined ~2ppt since 1970, largely at the benefit of the top quintile
Meanwhile, the share of middle-income households has markedly declined
- Third quintile middle-class share has declined 3ppt since 1970, or 20% of its relative share
Lower-income households have largely maintained income levels and even increased spending power, due in part to government assistance (transfer payments, tax credits, subsidy programs, etc.)
1
2
3
4 5
Macroeconomic indicators suggest these trends are structural and unlikely to
change in the near future
Hourglass economy1
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The effects of the hourglass economy can be seen all around us
Source: Bloomberg, Forbes, QSRWeb.com, USDA, Financial Times, Savings.com,, Euromonitor, NRN, company websites©2014 L.E.K. Consulting
The new face of retailHourglass economy1
Private label accounts for nearly 23% of unit sales in the U.S.
Dollar General added ~650 stores in 2013 and plans to open 700 additional stores in 2014
Deals offered by major department stores and apparel retailers increased 63% between 2009-2012, with average discounts rising from 25% to 36% over the same period
P&G developed dish soap Gain specifically targeting low-income brackets; the product achieved retail value sales growth of 70% in 2012
Fast casual restaurant traffic rose 8% in 2013, compared to a decrease of 1% and 2% for casual dining and midscale restaurants, respectively
The luxury market in the Americas grew ~4% p.a. from 2008-2013
Global sales at LVMH grew ~4% in 2013
Neiman Marcus experienced same store sales growth of ~6% in the first half of FY 2014
Whole Foods’ 2013 profit was up ~20% YoY
Patron Tequila has capitalized on “ultra-premiumization” to reach >2M cases/year
BMW posted record sales of over 309K units in the U.S. in 2013, representing 10% growth over 2012
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Note: * Non-Hispanics onlySource: U.S. Census Bureau, L.E.K. Analysis©2014 L.E.K. Consulting
CAGR %(2012-20F)
0.9
3.2
2.0
1.0
2.3
0.8340
320
300
280
260
240
220
200
180
160
140
120
100
80
60
40
20
0
U.S. population by ethnicity(1980-2020F)Millions of people
2020F20121980
Total
The new face of retail
Demographic shifts are changing the composition of the U.S. consumer base
Demographic shifts2
180
200
160
140
120
100
80
300
320
340
280
260
220
240
40
60
20
0
U.S. population by age group(1980-2020F)Millions of people
Kids (3-8)
Infants (0-2)
2020F
333
2012
314
1980
227 Young Adults (18-29)
Middle Youth(30-44)
Tweens (9-12)
Seniors (60+)
Mid-Lifers(45-59)
Teens (13-17)
0.1
CAGR %(2012-20F)
0.4
0.1
0.5
0.3
0.7
0.8
Total
(0.2)
(0.5)
2.9
American Indian& Eskimo*
White*
Hispanic
Black*
Two or MoreRaces & Other*
Asian & NHPI*
∆ million people
(2012-20F)
0.2
1.7
2.7
3.0
10.8
1.6
20.0
∆ million people
(2012-20F)
0.4
(0.3)
0.1
0.8
1.1
4.0
(2.5)
15.5
19.0
81% of U.S. population growth coming from Seniors (60+)
76% of U.S. population growth coming from Hispanic and
Asian households
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The new face of retail
Forward-looking consumer businesses are finding ways to exploit these trends
Source: U.S. Census Bureau Consumer Expenditures Report, Euromonitor, Convenience Store News, Kurt Salmon, Latin Post, Whole Foods, L.E.K. analysis©2014 L.E.K. Consulting
Demographic shifts2
Aging population
Ethnic diversity
Broaden products and engagement tactics to cater to an older consumer base without losing focus on the
younger demographic
Evolve traditional approaches (product,
marketing, distribution, etc.) to access growing ethnic
consumer segments
Channel and location
presence
Evolve product for consumers
Tailored media /
advertising
• Hispanics spend more on food than any other item and more on apparel & services than any other consumer group
• 61% of Hispanics shop with a child or another adult, vs. 38% of gen. pop.
• U.S. Hispanics consume more media via mobile phones & magazines than non-Hispanics, but less on tablets & TV
• Hispanics have a different channel mix (e.g., over-index in bodegas and dollar stores)
• 7-11 growing in Hispanic neighborhoods to compete with bodegas
Contemporary needs
Tailored offerings for
seniors
Key segments intrinsically advantaged
1
2
3
1
2
3
• Retailers directly targeting seniors and giving them specific experiences / products (e.g., Amazon’s easy-to-navigate micro-site for older consumers)
• Certain categories should see out-sized benefits due to key themes (e.g., travel & leisure, heath & wellness, etc.)
• Today's seniors are different (e.g., live longer, are healthier)
• They’re physically active and want to look / dress / feel younger
• They are digitally savvy
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Today’s consumers are highly informed and savvy, which is raising the bar for retailers and brands to win their business
Source: L.E.K. analysis ©2014 L.E.K. Consulting
The new face of retail
Customers “know” the products better…
…understand they have a multitude of
options…
…know exactly what each of those options
are charging…
Ability to instantly shop and compare across channels / brands
Access to countless sources of information
With online product reviews, real consumer experiences matter; it’s no longer just about marketing
A deeper understanding of products and their attributes means falling short on any one attribute can be devastating
Visibility and access to countless brands / products
Outside the confines of the physical (e.g., mall and shelf), the universe of options is vast and competition is much greater
Price transparency has never been greater
Consumers are sophisticated in comparing price and value
Digital makes everything convenient; there’s no longer a reason to pay higher price
Consumers don’t have tolerance for paying price premium
Uber consumers3
…and therefore require true
differentiation
The product and value proposition must clear and compelling
Need to differentiate and eliminate choice; consumers must want YOUR product
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For example …
Source: Pew Internet & American Life Project, Google Shopper Marketing Council Insights
©2014 L.E.K. Consulting
21
15
9
0
5
10
15
20
25
30
2010
15%
Researched a Product / Service Online Yesterday (2004-2010)% of Americans
20072004
Mobile is accelerating this trend 79% of smartphone owners use their device to assist with
shopping at least 1x / month; of these shoppers:
44% make price comparisons
44% find promo offers
31% find product information
31% find product availability in-store
30% find product reviews
84% use to help shop while in-store
Uber consumers3 The new face of retail
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Consumers have increasingly higher expectations of retailers and brandsA
bilit
y to
buy
onl
ine,
pick
up
in-s
tore
50%
71%
Abi
lity
to v
iew
in-s
tore
in
vent
ory
onlin
eSource: Forrester, Accenture, Oracle©2014 L.E.K. Consulting
Consumers expect …
73%
Onl
ine
and
in-s
tore
pr
icin
g to
be
the
sam
e
61%
Onl
ine
and
in-s
tore
pr
omot
ions
to b
e th
e sa
me
Res
pons
e w
ithin
2
hour
s of
com
plai
nt
on T
witt
er
52%
Uber consumers3 The new face of retail
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These rising consumer expectations are putting pressure on retailers to evolve their go-to-market strategies to meet consumers’ needs
Before… Today!
Price
Selection
Convenience
Availability
Selection, Availability, Price, Convenience
Free shipping / returns
Multi-channel shopping, delivery, & returns
Bigger selectionSame / next day
delivery
Personalized experiences
Uber consumers3
Impartial recommendations
Consistent engagement
Easy navigation
Promotions
Whatever, wherever, and whenever
The new face of retail
©2014 L.E.K. Consulting
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Brands are becoming increasingly specialized across categories … and bigger is not always better
The new face of retail
Source: Company websites, L.E.K. analysis©2014 L.E.K. Consulting
Smaller & focused is better
4
Food & beverage
Personal care
Apparel & accessories
Other
Energy / recovery Sport performance
Healthy lifestyle
Cosmetics Health & wellness
Bath & body
Outdoor apparel Focused lifestyle
Active lifestyle
Technology
Fitness & clubs
Fast food
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Brands and retailers are building more robust datasets of their customers; sophisticated data analytics can unlock substantial benefits via more tailored strategies (experiences, messaging, assortments, offers, etc.)
The new face of retail
Source: Experian, Company websites, L.E.K. analysis©2014 L.E.K. Consulting
One-to-one customer engagement
5
Transaction history
Behavior by channel
Demographic information
Stated preferences
Sophisticated data analytics
Tailored offerings delivering enhanced value to consumers based on their specific needs
Personalized messages perform 10x better in
terms of revenue generated per message, than
traditional batch and blast emails
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Deeper insights are enabling companies to establish stronger connections with consumers and deliver a more compelling value proposition
The new face of retail
Note: * As told to Advertising AgeSource: Advertising Age, MGI, ICLP, Internet Retailer, Retail Touch Points, Company websites, L.E.K. analysis©2014 L.E.K. Consulting
One-to-one customer engagement
5
Shoedazzle steers customers in the direction of the product which they would most likely be interested in by collecting shopping preferences via a quiz prior to giving the customer product recommendations
“… We ask them what they’re looking for next month… They tell [our client services team] what they’re looking for and ultimately that information informs the algorithm …”
Chief Marketing Officer, Shoedazzle
Harrah’s considers its loyalty program “the vertebrae of the company” and utilizes customer data to personalize the guest experience before, during, and after visits
“… We know if you like golf, chardonnay, down pillows, if you like your room close to the elevator, which properties you visit, what games you play, and which offers you redeem …”
Former CMO, Harrah’s*
Amazon utilizes collaborative filtering to generate add-ons and adjacent product recommendations
- The company attributes up to 30% of sales to its recommendation engine
Williams-Sonoma uses personalized e-mail targeting by combining shopper history with broader demographic information on ~60 million households (e.g., income, home values, and number of children)
- The company cites a 10-18x better response rate of these targeted emails
Revolve Clothing allows shoppers to build their own digital boutiques, which they curate with assortments of their favorite products and designers from the store
- The company cites that shoppers using the interactive feature are 6x more likely to convert than consumers that browse on the standard e-commerce site
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The traditional purchase path …
The new face of retail
Awareness
Consideration
Purchase
Intent
Omni-channel6
Source: L.E.K. analysis©2014 L.E.K. Consulting
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… has been dramatically changed by technology
The new face of retail
Educate
Compare
Reflect & share
Omni-channel6
Awareness
Consideration
Purchase
Intent
©2014 L.E.K. Consulting
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The lines between offline and online shopping experiences are blurring
In-store
Online
51% Research
online and visit store to
purchase
44% Research
online and buy products
online
17% Visit a store
first, and then purchase
online
32% Research
online, visit store to view product, then return online to purchase
Source: Google Think Insights©2014 L.E.K. Consulting
The new face of retailOmni-channel6
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Some examples of the way consumers are engaging outside the store …
52% of shoppers share retail-related posts via social media, of which:
• 51% post pictures of items they’re interested in
• 37% post items they’ve purchased
• 29% post about coupons / sales
65% of tablet device owners used their
device for shopping activities in Q3 2013
Blogs are most likely to influence a
purchase after retail / brand sites; they rank
favorably for trust, popularity &
influence
Source: Nielson, JiWIre, Shop.org, Business Insider©2014 L.E.K. Consulting
The new face of retailOmni-channel6
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The new face of retail
Retailers are experiencing a significant channel shift as consumers increasingly utilize e-commerce in lieu of stores
*Note: 2011 is the most recent year with annual figures; analysis excludes Building materials and supplies stores, Health and personal care stores, and General merchandise stores because of data limitations, and Nonstore retailers and Gas Stations because of relevance Source: U.S. Department of Commerce, L.E.K. analysis ©2014 L.E.K. Consulting
Store-based retail sales are not growing; virtually all growth in consumer
spend is being captured by e-commerce
Omni-channel6
7
2
45
78
9
18
22
0
2
4
6
8
10
12
14
16
18
20
22
U.S. online sales as percent of total retail sales* by product category (2013E)Percentage
Com
pute
r an
d el
ectr
onic
s
App
arel
and
ac
cess
orie
s
Boo
ks, m
usic
, vid
eo
Aut
o &
par
ts
Fur
nitu
re a
nd h
ome
furn
ishi
ngs
Hea
lth a
nd p
erso
nal
care
Toys
and
hob
by
Foo
d an
d be
vera
ge
Tota
l
82,046
1330
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
In-store E-commerce
Change in U.S. retail sales, 2006 – 2011*$M
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*Note: Traffic data is collected from 60,000 traffic-tracking devices installed at malls and large retailersSource: Wall Street Journal, ShopperTrak, L.E.K. research and analysis©2014 L.E.K. Consulting
18
21
25
34
0
5
10
15
20
25
30
35
40
2013201220112010
Total mall and large retailer foot traffic for November and December 2010-2013 (ShopperTrak)Billions of Visits*
-20%
The new face of retail
The widely cited fall in mall traffic is the most visible sign of the rapid change that retailers are facing
Omni-channel6
• Fewer store visits and transactions
• Non-destination categories (e.g., impulse, add-on purchases) particularly at risk
• Stores are playing new roles
Traffic to U.S. retailers is declining, in large part due to a shift to digital tools and e-commerce
- There is a lesser need to go to stores given other options for research and purchase
Shoppers also aren’t using physical stores to browse as much anymore
- Shoppers visited an average of 5 stores per mall trip in 2007, vs. 3 stores in 2013
These trends continue to prevail and should drive even further e-commerce penetration
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The new face of retail
To win business in this new multi-channel environment, companies must define what ‘omni-channel’ means for them and make investments to enable this
Omni-channel6
Channel strategy
Single view of the customer
Organizationalalignment
Fulfillment / logistics
Marketing Merchandising
Increased:TrafficEngagementSalesLoyalty
Seamless, holistic
customerexperience
Omnichannelinteractions
Foundational enablers
1 2 3
4 5 6
©2014 L.E.K. Consulting
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We believe that developing an omni-channel strategy is best done by considering the needs across the full consumer lifecycle
The new face of retailOmni-channel6
Learn
Research
Purchase
Support
Share
Consumer engagement lifecycle
ProductWhateverWheneverHowever
ProductWhateverWheneverHowever
Channels
Marketing and tools
Increase awareness
Share and socializeExpand community
Drive consideration and selection
Post-purchasesupport
Facilitate the purchase processSource: Company websites; FierceRetail; BusinessInsider©2014 L.E.K. Consulting
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Engagement with traditional media continues to decline…
The new face of retailDecline of traditional
media7
Source: Editor and Publisher Yearbook, Alliance for Audited Media, Nielsen Media Research©2014 L.E.K. Consulting
4343
4952
54
0
5
10
15
20
25
30
35
40
45
50
55
U.S. weekday newspaper circulation (2004-12)Millions of subscriptions
121008062004
-8-9-8
-9
-11
-15
-10
-5
0
5
10
15
U.S. magazine single-copy sales(2008-12)Percent change in sales
121110092008
0
1
2
3
4
5
6
7
8
9
10
12100806
U.S. broadcast television ratings(2004-12)Average rating per night
2004
CBS
ABC
NBC
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… however, the growth of digital provides retailers with increasing opportunities and formats to engage with consumers
The new face of retailDecline of traditional
media7
0
5
10
15
20
25
30
35
40
45
50
20122011201020092008200720062005
U.S. advertising revenue by media (2005 – 2012)Billions of dollars
Newspaper
Internet
Radio
Cable television
Broadcast television
Note: * “Social media advertising” encompasses all money spent on ad formats across social networks, including both display and native advertisingSource: Pew Research Center, IAB, PWC, BIA / Kelsey©2014 L.E.K. Consulting
CAGR %(2005-2012)
(1.1)
16.8
3.7
(12.1)
(2.7)
0.0Total
Marketers are still spending the same amount on advertising, but through
different media
11
10
8
7
6
5
0
2
4
6
8
10
12
14
16
U.S. social media advertising growth (2012-17F)*YoY percent growth
17161514132012
Social media advertising is projected to grow at a CAGR of ~19% through 2017
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Retailers and brands are working hard to effectively realign their marketing strategies in this environment
Marketing objectives
Reactivate lapsed customers
Build awareness
Engage / retain customers
Acquire new customers
Stimulate purchases
Marketing tools
The new face of retailDecline of traditional
media7
How do you effectively deploy
these tools?
©2014 L.E.K. Consulting
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The balance of power within the retail channel has also evolved dramatically
The new face of retail
Note: 1Excludes food, motor vehicle and parts dealers, and gasoline stations; 2Includes H&M, Inditex and American Apparel; 3IIncludes TJX, Ross Stores & Stein Mart; 4Includes mass merchants (e.g., Wal-Mart); 5Includes Dick’s Sporting Goods, Staples, Office Depot, Barnes & Nobles, PETCO, PetSmart, Toys R Us, Best Buy, Circuit City, Bed, Bath & Beyond, Guitar Center, Linens and Things & BordersSource: U.S. Department of Commerce, WSJ; TJX Investor Information; International Council of Shopping Centers; ICSC; L.E.K. analysis©2014 L.E.K. Consulting
Change in U.S. Retail Sales by Select Channels (2003-2013) 1
CAGR % Total Retail Sales 1 : 4.0%
-2.0
2.6
3.1
3.7
5.1
5.4
6.9
7.1
11.7
-12 -8 -4 0 4 8 12
Department Stores
Grocery
Big box specialty5
Off-Price Retail3
Fast Fashion2
Outlet Stores
Drug Stores
Dollar Stores
Mass Merchants & Clubs4
• Growth supported by the entry of international retailers such as Zara, H&M and Uniqlo
• U.S. sales at Zara more than tripled between 2007-12 and Uniqlo plans to expand its store count from ~20 currently to 200 by 2020
• Costco grew from ~430 to ~650 locations from 2003-13• Walmart and Target successful in expanding geographically and driving
traffic with super-center format
• ~4,300 and ~2,800 stores added at Dollar General and Family Dollar, respectively, since 2003
• Growing market share by substantially expanding food & consumables offer, growing private label, and building destination categories
• Subject to industry consolidation (e.g., Eckerd, Duane Reade)• Faced challenges in some categories (e.g. photography) which the
category has sought to counter by placing more focus on grocery type items & increasingly fresh food
• Competing with warehouse clubs and supercenters at the lower end• Premium / specialty segment (e.g., Whole Foods) seeing continued
growth
• More brands going direct with own stores and online• May/Federated merger resulted in net store closings• Many regional department stores have declared bankruptcy (e.g.,
Hacketts, Loehmann’s & Mervyn’s)
• Model which delivers treasure hunt for top brands at great value has driven consistent growth, even through tough market conditions
• TJX added ~650 stores between 2003 and 2013 and plans to add ~100 new locations across the U.S. in 2014
• Outlet center openings have grown from ~2 per year in 2008 to ~8 per year in 2011
• Center owners have relaxed or abandoned former radius restrictions
• Channel has struggled to compete on the basis of breadth of product range since the emergence of online retailers such as Amazon
• Littered with bankruptcies, e.g., Barnes & Noble, Linens and Things, Circuit City. Many others facing major challenges
Channel shifts 8
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The new face of retail
Brands are increasingly going directly to the consumer
Brands going direct to consumer
9
Forgoing the traditional wholesale route of selling through multi-brand retailers
Many brands are…
Source: L.E.K. analysis©2014 L.E.K. Consulting
Increasingly making websites more commercial and marketing / selling directly to consumers
Relying on Amazon’s Marketplace to increase awareness and tap into Amazon’s ~85 million unique monthly visitors
Building direct consumer relationships and engagement via social media, community outreach, content, and value-add services
Opening outlet stores to convey full brand representation and drive incremental sales of full-price and liquidation goods
Significant incentives for brands to go direct include: higher margin capture, controlling customer relationship, and compensating for weaker points of physical wholesale distribution
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The new face of retail
Source: SEC filings, MarketWatch, Company websites, Forbes, Seattle Times, Reuters, Business Week, L.E.K. analysis©2014 L.E.K. Consulting
Brands across categories are pursuing global strategies to capitalize on macroeconomic tailwinds
Geographic distribution of sales (Percent of 2012 sales)
Retailer N. America Europe Asia ROW
68% 5% 8% 19%
48% 11% 38% 3%
64% 22% 14% -
42% 25% 16% 17%
70% 20% 10%
40% 13% 7% 40%
32% 39% 29%
EXTRA! EXTRA!
“Walmart to invest more in Mexico this year”
“Tiffany & Co is embarking on major
expansion plans, bringing its ubiquitous name to new
areas, including India”
“Ralph Lauren reaches worldwide audience with its
Olympic made-in-America designs”“Going forward, market
penetration in China and e-commerce growth look to
be two of the biggest contributing growth factors
for Nike”
“This Bud’s for you, Brazil – AB InBev to introduce
Budweiser as a premium brand in Latin America’s
largest nation”
International 10
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Retailers are increasingly expanding to emerging economies in Asia, Africa and Latin America as the middle class in these geographies grows
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
Size of worldwide middle class* population (2009-30F) Millions
North America ~(2)
Europe ~1
Middle East & N. Africa ~49
Sub-Saharan Africa ~83
Asia Pacific ~148
Central & S. America ~31
30F
~4,900
20F
~3,200
2009
~1,800
CAGR%(2009-30F)
The new face of retail
Note: * Defined by Brookings Institution as households with daily expenditures between US$10-US$100 / person in purchasing power parity terms; North America includes U.S. and Canada only; Europe includes the EU5, Russia, Scandinavian countries as well as Eastern European countries; Asia Pacific includes China, India, other Asian countries as well as Oceania ; ** India 2012 data extrapolated
Source: Brookings Institution, L.E.K. analysis©2014 L.E.K. Consulting
Europe & North America’s combined
share falls from 54% to 20% of the total middle
class population
International 10
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The new face of retail
So, what are the implications?
©2014 L.E.K. Consulting
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30
In light of these trends, retailers and brands should consider the following:
Challenge the status quo and ask yourself, “Are we really delivering a compelling value proposition to the customer?”
Consider how you can position brands against distinct consumer segments and their needs to separate yourself from the competition
Embrace the hourglass economy and look to exploit opportunities at the top or bottom – don’t get caught in the middle
Find ways to activate key customer groups to take advantage of shifting income, age, and ethnicity demographics, as well as changing consumer expectations
Define what omni-channel means for you, and build a pragmatic plan to get there
Holistically embrace digital and rethink the go-to-market channel plan, including the role of stores, channel mix, links between digital and traditional stores, and the appropriate media mix to drive traffic and customer acquisition / loyalty
Build one-to-one relationships with your consumers and ‘own’ your brand engagement plan with them
Refine pricing and promotion frameworks to maximize total margin dollars and profitability
Evolve the organizational structure and capabilities to meet the realities of today’s business model
Determine whether international is an opportunity for you and, if so, start planning now
The new face of retail
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Potential keys for success
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©2014 L.E.K. Consulting
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DRAFT
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Do we have the right brand / product mix to compete in today’s market?
Do we have a robust consumer segmentation that helps drive corporate strategy?
Are we micro-targeting consumers? Do we even have the capability to?
How does our loyalty program differentiate in an increasingly crowded space?
Does our channel plan embrace technological changes and the role of digital? Is our store strategy aligned to demand and role shifts?
Do we have the capabilities, org structure, infrastructure, and incentives in place to win and support growth objectives?
How can we preserve profitability without losing share in an increasingly price-transparent environment?
Are there activities 'on the edge' of our core business that could drive differentiation, revenue and / or customer satisfaction?
Do we have an actionable plan to grow international?
Companies are asking themselves a number of key questions, and taking action to evolve their businesses to win in this new market landscape
The new face of retail
Key questions to ask Potential areas to focus
Strategic customer segmentation and prioritization
One-to-one customer relationship management
Next-generation loyalty program
Market-based store network, role and footprint plan
Pricing and promotion optimization by objective, market, brand, etc.
Omni-channel definition and plan with clear priorities and timeline
In-store customer service best practices and training to deliver value to customer and increase conversion
Org structure and capabilities evolution
“Edge” strategy (e.g., adjacent categories, services)
International expansion (e.g., market selection, go-to-market planning, business optimization / distributor management, implementation)
©2014 L.E.K. Consulting