our markets are facing many pressures€¦ · millennials 24% of the current population . 10 the...
TRANSCRIPT
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OUR MARKETS ARE FACING MANY PRESSURES
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RETAIL IS BECOMING MUCH MORE COMPLICATED The emergence of digital greatly increases the complexity of running retail
Brick & Mortar Digital
Fixed Real Estate
Staff at Regular Hours
Traditional Categories
Stop in Store
Discovery-Driven Shopping
Connected Commerce
24/7 Anytime, Anywhere
Localized Assortment
Omnichannel
Navigational-Driven Shopping
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COMMON RETAIL MYTHS
1 Emerging markets have run their course 2 Bigger = better
3 Promotions are the best way to drive sales 4 E-commerce isn’t
important for grocery
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3.0%
1.9%
4.0%
2.1%
3.6%
1.8%
EmergingMarkets
DevelopedMarkets
THE REALITY: GLOBAL GROWTH IS SLOWING Emerging markets will still provide the fastest growth opportunity
Source: The Conference Board Global Economic Outlook November 2015; updated early 2016
Global GDP Growth Forecasts: 2015-2025
Key Developed Markets Growth Forecasts: 2015-2025
Key Emerging Market Growth Forecasts: 2015-2025
1.0%
1.7%
2.0%
1.4%
1.9%
2.0%
1.6%
1.5%
1.6%
Japan
Euro Area
US
2.5%
-3.0%
6.3%
3.7%
2.7%
2.2%
6.0%
4.5%
2.5%
2.3%
5.5%
3.6%
Mexico
Brazil
India
China
2021-2025 2017-2020 2016
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7 Projections are based on the SSP2 (medium) scenario; source: http://www.oeaw.ac.at/vid/dataexplorer/
EMERGING MARKETS ARE LARGE AND GROWING… Population growth projections in (000)s
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2015 2020 2025 2030
North America – 0.6%
Latin America & Caribbean – 1%
China – 0.1%
Africa – 2%
India – 1%
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… AND THEY ARE GETTING WEALTHIER Purchasing Power
0
4000
8000
12000
16000
1995 2000 2005 2010 2014
WorldBank World Development Indicators – GNI per capita, PPP (current international $)
0
20000
40000
60000
Latin America & Caribbean – 4%
China – 9%
India – 7%
Sub-Saharan Africa – 7%
North America – 3%
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EMERGING MARKET DRIVERS Younger, more urban, wealthier
MIDDLE CLASS
3.2 BILLION by 2020
URBAN POPULATIONS
TWO-THIRDS will live in urban areas by 2030
MILLENNIALS
24% of the current population
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THE OPPORTUNITY: WIN IN EMERGING MARKETS Consistent, long-term perspective required
Both wealth and poverty: premium products as well as basic
Spending power is already there / tailor to emerging market consumers
Local competitors are stronger than ever / need to compete like a local
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REALITY: THE RETAIL LANDSCAPE IS CHANGING
CONVENTIONAL WISDOM
• Consumers want a large store where they can find everything they need in one trip
• Big stores are more efficient for retailers, yielding advantaged economics
• Traditional Trade (Mom & Pop) stores will
quickly be displaced by more efficient stores
REALITY
• Big stores can be hard to shop • Not everyone has a car / storage space • For fresh foods, global shoppers make trips
to the store 2.5 times per week on average • e-commerce offers new options
• Technology is making smaller stores more efficient
• Traditional stores continue to thrive by
being close to their consumers, focused in their assortment, and responsive
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GROWTH BEING DRIVEN BY SMALL FORMATS Sales Growth – Developed vs. Developing Countries
Note: Collection dates vary by country and category, but more were ending between September 2014 and January 2015 | Source: Nielsen Retail Measurement Data
% Annual Channel Growth in USD Adjusted for Inflation
12.6
10.6
10.1
6.5
5
4.8
4.3
3.1
1.8
-0.7
0.3
1.9
1.2
2.6
-0.5
0
Drug
Small Supermarket
Large Supermarket
Hard Discounter
Hypermarket
Convenience
Traditional
Specialty
Developing Developed
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U.S.: MORE STORES THAN EVER, BUT SIZE DECLINING U.S. Store Counts – 2006-2015
140,000
145,000
150,000
155,000
160,000
165,000
170,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Store Count
12,600
12,800
13,000
13,200
13,400
13,600
13,800
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Square footage per store
Source: Nielsen Trade Dimensions Data
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TRADITIONAL TRADE REMAINS KEY IN EMERGING MARKETS
Traditional Trade
Europe
8% Asia- Pacific
38%
4%
Latin America
34%
Africa / Middle East
42%
North America
0%
Source: Nielsen Retail Measurement Data Note: Value in USD, adjusted for inflation – latest 12 months Collection dates vary by country and category, but most were ending between September 2014 and January 2015
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TRADITIONAL TRADE FITS CONSUMERS’ LIFESTYLES
SOURCE: Nielsen Global Shopper Trends (Indonesia, Philippines, Turkey, Russia, Argentina, Chile, Mexico, Peru, Cambodia, Kuwait, Czech Rep., Venezuela, Colombia, Vietnam, UAE & Brazil)
and spend only
5 minutes per visit
86% go alone to
the traditional trade
68% arrive
walking
Shoppers make at least
28 VISITS PER MONTH to traditional trade around the world
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MODERN MEETS TRADITIONAL TRADE
http://www.femsa.com/en/femsa-businesses/companies/oxxo
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THE OPPORTUNITY: PERSONALIZED CONVENIENCE
Think local
FOR RETAILERS: Align format and assortment to the shopping mission for that store
FOR MANUFACTURERS: To win, you need good execution across many different channels/store types
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20 Nielsen Proprietary 2016 Global Benchmark Analysis
THE INDUSTRY IS ADDICTED TO PROMOTIONS Globally, over half a trillion $ is invested annually in trade promotion
$500,000,000,000
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AND IT ISN’T WORKING Promotion Frequency and Trade ROI Trend – US, Canada and Top 5 EU Markets
4.3%
4.4%
4.5%
4.6%
4.7%
4.8%
4.9%
5.0%
5.1%
$0.89
$0.90
$0.91
$0.92
$0.93
$0.94
$0.95
$0.96
$0.97
Pro
mo
tio
n F
req
uen
cy
Man
ufa
ctu
rer
Trad
e Ef
fici
ency
Manufacturer Trade Efficiency Promotion Frequency Trade Efficiency Trend Promo Frequency Trend
Nielsen Global Promotions Benchmark Database
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THE REALITY: PRICE IS NOT MOST IMPORTANT Top ten highly influential factors for store selection
57%
56%
54%
52%
50%
48%
47%
45%
43%
The store has high quality fresh produce
The store is in a convenient location
The store has the products I want and they are regularly in stock
I discover good values for my money when shopping there
The store carries the food and non-food items that I need
The store has the lowest prices overall
The store has great sales and promotions
The store has an organized layout that makes it easy to shop
The store makes it easy for me to get in and get out quickly
Source: Nielsen Global Retail Growth-Strategies Survey, Q3 2015
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CONSUMERS PAY MORE FOR THE RIGHT BENEFITS
44%
SAY THEY ARE WILLING TO PAY A PREMIUM PRICE FOR INNOVATIVE NEW PRODUCTS.
Q1 2015 Global Survey of New Product Innovation; 2015 China Breakthrough Innovation Report; 2015 India Breakthrough Innovation Report
BREAKTHROUGH INNOVATION WINNERS INDEX TO
AVG. CATEGORY PRICE
2.5x
1.5x
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THE OPPORTUNITY: FOCUS ON CONSUMER PRIORITIES
MAKE INNOVATION A PRIORITY • Find unmet needs to grow the category • Know which benefits allow you to take a premium price
MAKE SURE PROMOTIONS ARE FOCUSED TO BE EFFECTIVE On the right categories / brands that respond better to promotion
• At the right depth of discount • Supported with displays and features
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THE REALITY: RAPID GROWTH OF CONNECTED COMMERCE IS INEVITABLE
UNDERSTANDING YOUR E-COMMERCE PERFORMANCE IS NO LONGER ‘NICE TO HAVE’ – IT’S ESSENTIAL
FMCG online sales are growing at
20% year-over-year
In U.S., direct-to-consumer brands already have
10% of share of certain categories
SOURCE: The Nielsen Global Retail-Growth Strategies Survey
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THE ROLE OF PHYSICAL STORES WILL CHANGE
Bricks & Mortar
Add value Make it easy
Satisfy needs
Know your
shoppers
Digital Retail
Digital
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OMNICHANNEL IS THE NEW RETAIL REALITY
*Global average includes 24 countries
Source: Nielsen Global Connected Commerce Survey, Q4 2015
% who strongly or somewhat agree
49%
74% 69% 69%
64% 63% 59%
Global Thailand China India Turkey Philippines Nigeria
I shop online to get grocery products I cannot find in physical stores
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ONLINE SHARE OF TOTAL CATEGORY SALES
3.0% 3.6% 3.2% 2.8% 1.6%
3.9% 2.3% 3.0% 4.2% 4.1%
Source: Nielsen Retail Measurement Services, latest 52 weeks ending April 2015
FRANCE E-COMMERCE PENETRATION
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CHINA SHOWS MORE E-COMMERCE TRACTION
Source: Nielsen Retail Measurement Services, latest 52 weeks ending June 2015
Online Share Of Total Category Sales
Year-over-year Sales Growth Rate
E-commerce is a “must-do” for CPG in China
Baby-related Personal care Beverage Household Food 33% 25% 2% 9% 7%
40% 35% 72% 86% 52%
23% of online purchases are incremental sales
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Note*: India includes national and state highways and expressways only
Source: CIA World Factbook; Nielsen
MOBILE ECLIPSING WEB FOR MANY EMERGING MARKETS GOING STRAIGHT TO MOBILE
US Germany Brazil Mexico China India S. Africa Nigeria
100 123 139 85 94 76 150 78
87 87 53 41 48 19 47 53
Mobile And Internet Access Across Countries (2014)
MOBILE SUBSCRIPTIONS (Per 100 inhabitants)
INTERNET USERS (Share of population)
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DIGITAL TOUCHPOINTS ARE INCREASINGLY IMPORTANT
39%
44%
52%
52%
30%
35%
34%
46%
38%
54%
60%
63%
Looked Up Production Information Checked/Compared Prices Searched for Deals/Promotions/Coupons
Travel Products or Services Consumer Electronics Beauty & Personal Care Products Fresh Groceries
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OPPORTUNITY: EMBRACE DIFFERENT COST DRIVERS AND DIFFERENT VALUE FOR ONLINE SHOPPING
Stores will not disappear, but shopper expectations will change
Expect competition from new and unexpected directions
Match shopper missions with online/offline offerings
Use mobile as the primary way to interact
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STRATEGIES FOR SUCCESS
Consistent, long-term perspective in emerging markets
Cater to convenience
Build your brands
Embrace different cost drivers and value for online
1 2 3 4
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