July 2011

Insights Driven Merchandising

Martin CreggInnovation and Marketing Summit

Store Brands Decisions

Key Trends in Retail

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Shoppers do not have the money to spend

Categories are not growing like they were four years ago.

Retailers are creating new formats to react to the market

New Formats and the web are likely to dominate the growth landscape

Trends are flat category growth

Incremental Revenue &

Profit

Brand CategoryGrowth

Shopper Insights

Research

Strategy

Concept

Insights

Validation

MerchandisingStrategy

Retail Channel / Retailer

In Store Execution

Thought leaders are leveraging Shopper Insights…

to drive incremental sales for categories, brands and private brands.

Shopper insights drive solutions with Category Segmentation, information and shopper merchandising.

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From sets that drive commodity behavior to shelf sets that force the shopper to consider other choices and buy differently.

Enhancing and aiding new shoppers and engaging current shoppers

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• Engaging the shopper, • Aiding shopping,• Providing information the packages can’t or creating a destination with authority presence and more apparent choice.

In some cases shoppers are strongly influenced by brands as the category authority…

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Expecting that the entire category is defined by a key brand and all its components

New department merchandising concepts come directly from listening to the shopper’ insights

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Small business owners said

BestBuy was not a small business

retailer…if they were they would

have small business departments!

So we designed one and anchored it

with the only brand that was for sure

for business in the store:

QuickBooks

Others are reassessments of Current Aisle Experiences

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Shoppers told us the existing aisles do not appeal to a beauty shopper at all. Target is not any different than other stores…which is not what Target expected as their equity.

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New Beauty Merchandising Concept based on how the shopper looks for the beauty aisle…

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Now in 350 stores after 2 years…..

Credentialing

Consumer Trends

Innovation

Technology

Competition

StoreDesign

ResearchMarketing

Web shopping

Web strategy Pricing Private

Label Sustainability

New influences on retailer’s categories and department sales….

Equity .Com PackagingPurePlay Content

New Formats

How will shoppers choose where to shop?Auto

replenishment

Guarantees

Augmented reality

Relevant Assortment

Technology is changing the game as well….

Smartphones are a store in your hand!

3 Billion apps sold

49% of US in 2011

300,000 apps available

28,000 developers

1st app - July 6, 2008 !!!

Shoppers want to shop more stores• They get bored

• They don’t believe all retailers are the same

• New stores can be exciting

• They may find an item or product that makes them a hero

• The cost of shopping took them out of play

• The time it takes also slowed shopping in more stores

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She’s shopping at home, when she wants…

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And she’s shopping for national brands. How do store brands play on the web?

Bringing new questions for retailers as formats, the web and technology grow…

What’s the effect of mobile

on your category?

Who’s winning in this category today and why?

What’s your company doing

that’s innovative?

How will you use technology

in merchandising?

Should I have the same

strategy for store brands on

the web?

What are the trends with

shoppers that shape the

future?

What’s going on with new formats? What new skills

do we need in merchandising?

And new issues…Online shopping drives the total basket down

Average number of items in online basket is less than 3

Average number of items in retail shopping trip is more than 15

When items go down, retailers lose revenue

The biggest driver…..is the shift to the shopper that’s

changed the game

The shopper owns the power because…with a phone…is carrying a store!

18 CONFIDENTIAL AND PROPRIETARY. NOT TO BE USED OR DISTRIBUTED WITHOUT THE WRITTEN CONSENT OF CHASEDESIGN, LLC.

• Check prices• Find a store(s)• Order on line• Direct to Store• Direct to home• Expand assortment• Check stock• Find alternatives• Navigate the store• Find deals

And they don’t have to come to a store. Consider our shopper:

She works, raises two kids under 12, takes the kids to activities, and solves her schedule by shopping late at night. She has Amazon Prime, every order comes with free shipping, she gets auto replenishment on many of the bulky items at home, bought all her Christmas gifts without going to a store, and gets recommends from her favorite websites that she really enjoys, from books to recipes to clothes.

This is the new reality, when the economy shifts, she’s not going back to her old ways of shopping. Where does private label fit here?

So….The Past is not a predictor

of the future

For the first time in 20 years we can’t model using data from the past…there is no norm

We look for clues telling us how the shopper makes decisions and what will

drive incremental growth

If it’s not incremental, the retailer has no reason to expand it!

What’s happening now…• Store layouts evolving now…

– New formats and store footprints

– Rethink of center store

– Rethink the route through the store

– Trip drivers and convenience will shape store layout

– Retailers will make choices on shoppers to win with and still be opportunistic

• For the next five years the largest growing format size will be mid size stores:

– 20,000 to 90,000 sq. ft.

– End of 200,000 sq. ft expansions

– No new space for categories

– Category choices will be critical for new formats

– Product and brand choices will be part of that decision

What’s happening now…

• Retail as a marketing medium is changing– The role and execution of promotion is evolving, and stealing

space from categories

– In-store media is less effective as retailers drive their equity

• Shoppers are more empowered– More ways to shop

– More at-home browsing and purchasing

– They can choose the brand they want at a better price than their core store

– The web will enable/drive price shopping

– Loyalty will need to be achieved differently

– Phone apps give a total view of pricing and availability

• Technology– Changes the game totally

– Much heavier emphasis on price than traditional retail values (convenience)

– Technology is convenience

What can Retailers do to drive category sales?

• Use Shopper Research…..real research, by category

• Find the opportunities for national brands and store brands

• Talk to operations about how to be the destination for key departments

• Explore your new formats for what categories should be there and what the assortment should be

• Look for Innovation opportunities with private brands

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What will be true?

There will still be shoppers and shopping….and…

There will still be someone selling the goods…and…

There will still be brands to enable the choice

25 CONFIDENTIAL AND PROPRIETARY. NOT TO BE USED OR DISTRIBUTED WITHOUT THE WRITTEN CONSENT OF CHASEDESIGN, LLC.

We need new techniques for shopper orchestrationWhat we’ll need to do tomorrow will build on what we know

today, but be executed in more complex environments

Retailers need new merchandising skills:

Shopper Insights

Merchandising Innovation

Clear Role for Private brands

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Know what drives incremental volume in each category

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‘Less than 20 % of our buyers know what drives

incremental revenue in their categories’Senior VP grocery

What’s the shopper doing in your category now?

Thank You