successful strategies in traditional trade around … · successful strategies in traditional trade...

Pedro Manosalva May 2016

SUCCESSFUL STRATEGIES IN TRADITIONAL TRADE AROUND THE GLOBE

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AGENDA

Global Economic Scenario

Developed (Lead) and Developing (Growth, China & Emerging Markets)

Middle Class, Urban & Rural Populations and Labor Force

Traditional Trade: A black Box?

Shop, Shopper and Shopkeeper

Manufacturer’s Market Playbook

Successful Distribution, Shopkeeper Strategies, Execution Standards & Manufacturer Operations

Emerging Demands & Retail Trends

GLOBAL ECONOMIC SCENARIO

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4 SOURCE: International Monetary Fund

% VARIATION - GLOBAL GDP

5,4%

4,2%

3,4% 3,4% 3,4% 3,1%

3,4% 3,6%

2010 2011 2012 2013 2014 2015 2016 2017

FORECAST

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NIELSEN CLUSTERS Looking to align countries with broadly similar needs, challenges and growth opportunities: LEAD MARKETS, GROWTH MARKETS, GREATER CHINA & EMERGING MARKETS

GROWTH MARKETS

Brazil

Mexico

Colombia

Chile

Japan

Korea

Indonesia

Singapore

Sri Lanka

Malaysia

Nepal

Russia

Poland

Turkey

Czech Republic

Slovakia

Hungary

India

GREATER CHINA

China

LEAD MARKETS

Australia

Austria

Belgium

Canada

Denmark

Finland

France

Germany

Ireland

Italy

Netherlands

New Zealand

Norway

Portugal

Slovenia

Spain

Sweden

Switzerland

U.K.

U.S.A.

EMERGING MARKETS

Algeria

Argentina

Belarus

Bolivia

Bosnia

Bulgaria

Cameroon

Costa Rica

Croatia

Dominican Republic

Ecuador

Egypt

El Salvador

Estonia

Ethiopia

Georgia

Ghana

Greece

Guatemala

Honduras

Israel

Jordan

Kazakhstan

Kenya

Kuwait

Latvia

Lebanon

Lithuania

Montenegro

Morocco

Myanmar

Nicaragua

Nigeria

Oman

Pakistan

Panama

Paraguay

Peru

Philippines

Puerto Rico

Romania

Saudi Arabia

Serbia

South Africa

Tanzania

Macedonia

Thailand

Uganda

Ukraine

United Arab Emirates

Uruguay

Venezuela

Vietnam

Bangladesh

Hong Kong

Taiwan

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GROWTH MARKETS AND CHINA TEND TO BE MORE RELAVANT IN GDP VS. POPULATION

SOURCE: International Monetary Fund * Estimated

Lead Markets

2016 +2.1%

2017 +1.8%

Growth Markets w/o India

% Population 13% % GDP per region 18%

2016 +2.1%

2017 +3.4%

Growth Markets

2016 +6.5%

2020 +6.2%

Greater China

2016 +2.8%

2017 +3.9%

Emerging Markets

2016 +2.4%

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ECONOMY IS A COMMON WORLD CONCERN

Increase vs. Q1’15

EMERGING MARKETS

Job Security 19%

Economy 14%

Health 9%

Work/Life Balance 7%

Debt 6%

Main Concern per Region for the Next 6 Months

SOURCE: Global Consumer Confidence Report Q1’16

GREATER CHINA

Economy 22%

Health 12%

Job Security 11%

Work/Life Balance 10%

Political Stability 7%

GROWTH MARKETS

Job Security 16%

Economy 16%

Health 8%

Debt 7%

Terrorism 7%

LEAD MARKETS

Job Security 11%

Economy 11%

Health 9%

Terrorism 9%

Immigration 8%

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0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Den

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ew Z

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nd

Ger

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yC

zech

Rep

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U.K

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Swit

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and

Slo

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Swed

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Ind

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Ro

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eth

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tvia

Sau

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eru

Hu

nga

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ust

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Bel

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akis

tan

Ch

ileEs

ton

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anad

aH

on

g K

on

gN

orw

ayB

ulg

aria

Slo

ven

iaSp

ain

Turk

ey

Po

rtu

gal

Co

lom

bia

Fran

ceEg

ypt

Tah

ilan

dJa

pan

Fin

lan

dG

ree

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uth

Afr

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Mal

aysi

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iwan

Serb

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tin

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aly

Ru

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Cro

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Ko

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Bra

sil

Ukr

ain

eV

enez

uel

a

LEAD MARKETS

GROWTH MARKETS

GREATER CHINA

EMERGING MARKETS

FEAR OF A RECESSION IS STILL A MAJOR CONCERN FOR MORE THAN HALF OF THE WORLD POPULATION PERCENTAGE OF PEOPLE WHO BELIEVE WE ARE IN A RECESSION IN Q1’16


GLOBAL AVERAGE

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EMERGING MARKETS

Spend less on new clothes 51%

Cut down on out of home entertaiment 48%

Switch to cheaper grocery brands 40%

GREATER CHINA

Cut down on out of home entertaiment 51%


Delay upgrades 36%

GROWTH MARKETS


Cut down on out of home entertainment 45%

Try to save on gas and electricity 45%

LEAD MARKETS


Switch to cheaper grocery brands 52%

Try to save on gas and electricity 45%

WHEN CONSUMERS HAVE A RECESSION SENTIMENT, THEY SACRIFICE CONSUMPTION Actions taken to save money during a recession


EMERGING DEMANDS & RETAIL TRENDS

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DEMOGRAPHICS ARE INEVITABLE Taking advantage of the emerging opportunity remains a challenge

Middle class

Labor force

Urban Populations

Working population & working women

Urban population growth far outpaces rural

Have TVs and phones before tap water

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DEMOGRAPHICS ARE INEVITABLE Taking advantage of the emerging opportunity remains a challenge

LESS TIME AVAILABLE MORE CONVENIENCE MORE CONSCIOUS DECISIONS MORE VALUE-PRICE

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GROWTH MARKETS & CHINA WILL MAKE UP FOR 58% OF TOTAL GLOBAL GDP IN 2060

SOURCE: OECD (Organization for Economic Co-Operation and Development) PROJCTIONAS based on historical data

0

100.000.000

200.000.000

300.000.000

400.000.000

500.000.000

600.000.000

2015 2020 2025 2030 2035 2040 2045 2050 2055 2060

2015

2060

32%

26%

21%

15%

30%

20%

35%

15%

LEAD MARKETS

GROWTH MARKETS

GREATER CHINA

EMERGING MARKETS

GDP Contribution per Cluster Million USD

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AVERAGE INCOME

2050 2014

5 BILLION For the middle class by 2030

2 BILLION

LEAD MARKETS

$ 58.248

GREATER CHINA

$ 36.151

GROWTH MARKETS

$ 24.243 EMERGING MARKETS

$ 14.171

GDP PER CAPITA 2050

US Dollars

SOURCE: OECD (Organization for Economic Co-Operation and Development) PROJECTIONS based on historical data

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AVERAGE SIZE PER HOUSEHOLD

2050 2014


2 BILLION

SOURCE: TekCarta, Households: Average Household Size (68 countries)

LEA

D

MA

RK

ETS

2000 2015 2020

2.49 2.31 2.25

GR

OW

TH

MA

RK

ETS

2000 2015 2020

3.64 3.21 3.06

GR

EATE

R

CH

INA

2000 2015 2020

3.33 2.81 2.65

EMER

GIN

G

MA

RK

ETS

2000 2015 2020

4.01 3.64 3.52

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AVERAGE SCHOOL ENROLLMENT INDEX (%)

2050 2014


2 BILLION

SOURCE: The World Bank Data, Average School Enrollment 2013

103,38

96,9

53,57

104,29

121,47

73,95

107,28

98,64

48,72

103,87

95,21

58,67

0 20 40 60 80 100 120

College Education

Junior and High-school Universidad

Elementary

GROWTH MARKETS

GREATER CHINA

LEAD MARKETS

EMERGING MARKETS

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LABOR FORCE

39% GLOBAL LABOR FORCE will be in Growth markets in 2050

-

1.000.000.000

2.000.000.000

3.000.000.000

4.000.000.000

5.000.000.000

6.000.000.000

2015 2050

GREATER CHINA

LEAD MARKETS

GROWTH MARKETS

EMERGING MARKETS

2050 2014


2 BILLION


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WOMEN IN WORKFORCE

2050 2014


2 BILLION


Employment to Population Ratio, 15+, Female (%)

40,1

68

41,5

48,8

43,4

61,5

44,9

50,9

47

63

47,6

51,9

35

40

45

50

55

60

65

70

EMERGING MARKETS GREATER CHINA GROWTH MARKETS LEAD MARKETS

2000

20

14

2020

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% URBAN POPULATION

LEAD MARKETS

GROWTH MARKETS

GREATER CHINA

EMERGING MARKETS

2050 2014


2 BILLION


GLOBAL RETAIL DYNAMICS

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29%

20% 26%

10%

4% 6% 2%

33%

22%

25%

7%

4% 5% 3%

HOUSEHOLD STOCK UP, IS THE MAIN REASON TO PURCHASE IN THE WORLD Thinking about Shopping for Groceries, what is the ONE PRIMARY Reason for it?

SOURCE: Global Survey - Growth Strategy – Q1 2016

36%

12%

19%

7%

3% 7%

3%

LEAD MARKETS

GREATER CHINA

EMERGING MARKETS

31%

19% 25%

10%

4% 6% 3%

GROWTH MARKETS

32%

19%

16%

10%

4% 6% 2%

GLOBAL

BUY A FEW ESSENTIAL ITEMS

HOUSEHOLD STOCK UP

BUY A PREPARED MEAL OR INGREDIENTS TO PREPARE A MEAL FOR TODAY

BUY SOMETHING QUICK TRIP

OTHER

TO BUY A NON-FOOD ITEM(S)

BUY SOMETHING THAT WAS ADVERTISED THIS WEEK

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CONVENIENCE IS STILL A KEY DRIVER FOR GROWTH, CHINA AND EMERGING MARKETS

“Grocery shopping is a chore and I try to spend as little time on it as possible”

SOURCE: Global Survey - Growth Strategy – Q1 2016

Shoppers consider store location to be the most influential part of the purchase

23% 48% 49% 56%

37% 45% 44% 46%

GREATER CHINA LEAD MARKETS EMERGING MARKETS GROWTH MARKETS

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THAT’S WHY, ACROSS THE GLOBE, THERE IS A RISE OF PROXIMITY RETAILING

SOURCE: Retail Index 2015 ACV (*Modern Trade breakdown not available in Emerging Markets)

35%

13% 18%

30%

12% 11%

7%

14%

18%

15%

3%

3%

5%

2%

5%

7%

2%

11% 10%

36%

1%

38% 40%

64%

Lead Markets Growth Markets China Emerging Markets*

Traditional Trade

Modern Trade*

Drugstores

Hard Discount

Convenience

Small Supermarket

Hypermarket

Large Supermarket

MO

DER

N T

RA

DE

Small Formats & Hard Discount are growing

Formats growing vs. 2014

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Retail and Brand Switching Reasons

PRICE CONTINUES TO BE THE MOST IMPORTANT REASON FOR CHANGE

SOURCE: Global Report of Loyalty Sentiment

44%

16%

8%

6%

26%

LEAD MARKETS

42%

14% 6%

8%

30%

EMERGING MARKETS

59% 10%

6%

5%

19% 32%

16% 12%

11%

29%

GREATER CHINA

GROWTH MARKETS

48%

13%

7%

7%

25%

BETTER SERVICE AGREEMENT

BETTER PRICE

BETTER SELECTION

BETTER QUALITY

BETTER FEATURES

GLOBAL

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DIGITAL IS INFLUENCING CONSUMER AND RETAIL TRENDS

SOURCE: World Bank – Internet Users Penetration 2015

% of population with internet access

83%

LEAD MARKETS

EMERGING MARKETS

GREATER CHINA

GROWTH MARKETS

57% 63% 42%

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RETAILERS MUST EVOLVE TO STAY AHEAD OF THE PACK AND KEEP CONSUMERS ENGAGED Flexible Retailing is About Adding Value and Differentiation

SOURCE: Global Survey Shopper Trends & Behaviors Q3’15

ADD VALUE

AISLE 1

B2C

B2B B2C C2C

MAKE IT EASY

RETAIL (BRICK AND MORTAR)

DIGITAL

KNOW YOUR SHOPPERS

RETAIL DIGITAL

CONSIDER CHANNEL DIFFERENCES

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THERE IS A HUGE POTENTIAL FOR E-COMMERCE

SOURCE: Global Survey Shopper Trends & Behaviors Q3’15

Already using

Willing to use

25% 11% 18%

33%

16%

55%

51%

59%

58%

59%

ORDER ONLINE FOR HOME DELIVERY

USE A VIRTUAL SUPERMARKET

13% 5% 9% 15% 8%

58%

47%

59%

68%

59%

ORDER ONLINE AND PICK UP INSIDE THE STORE

12% 7% 9% 20%

10%

57%

49% 56%

63%

57%

GREATER CHINA LEAD MARKETS

EMERGING MARKETS GROWTH MARKETS

GLOBAL

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ESTIMATED SIZE OF E-COMMERCE TRILLIONS 2019

Source: Forrester and Channel Advisor Estimates, Total Size at Global Retail ~

LATAM

$2.249

5.3% CAGR (2014-2019

US

$5.989

+3.3% CAGR (2014-2019)

EUROPE

$6.566 WE. 1% C&EE.

5.2% CAGR (2014-2019)

APAC

$11.460

7.7% CAGR (2014-2019)

ROW

$1.652

18.2% CAGR (2014-2019

12.8% Total Global Retail

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2009 2010 2011 2012 2013 2014 2015

LOCAL INFRAESTRUCTURE AND GOVERNMENT TAXES FOR B&M, FAVORED THE SUDDEN GROWTH OF E-COMMERCE IN CHINA

CHINA BUSINESS CASE

SOURCE: ALIRESEARCH

Sales value of Alibaba (Billion CNY)

0.05 3.36 0.93

19.1

36.2

57.1

91.2

261 1700 468 90 58 60 Growth vs.

Year ago

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RETAIL TRENDS ARE ORIENTED TOWARDS GENERATIONAL SEGMENTATION

SOURCE: The me generation meets generation me -Millennials, Boomers & your Advertising

Although the fastest growing generation are the Boomers,

in next few years Millennials will be the most powerful

economically and will dictate global consumption trends

MILLENNIALS (21-34)

SILENT GENERATION (65+)

GENERATION X (35-49)

BABY BOOMERS (50-64)

GENERATION Z (15-20)

LEAD MARKETS

GROWTH MARKETS

GREATER CHINA

EMERGING MARKETS

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MILLENNIALS AND GENERATION Z ARE THE MOST AVID ONLINE GROCERY SHOPPERS

Source: Nielsen Global E-Commerce and The New Retail Report

9%

17%

22%

30%

28%

35%

48%

57%

57%

55%

ORDER ONLINE FOR DELIVERY TO HOME

MILLENNIALS (21-34)

SILENT GENERATION (65+)

GENERATION X (35-49) (15-20)

BABY BOOMERS (50-64)

GENERATION Z (15-20)

5%

6%

11%

19%

20%

21%

40%

56%

60%

55%

USE ONLINE AUTOMATIC SUBSCRIPTION

USE A VIRTUAL SUPERMARKET

2%

4%

10%

18%

14%

28%

46%

61%

64%

66%

ORDER ONLINE AND PICK UP INSIDE THE STORE

2%

6%

10%

17%

14%

31%

48%

59%

61%

59%

Already using

Willing to use

TRADITIONAL TRADE A BLACK BOX?

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Have you bought home cleaning products in TT in

the last 6 months?

TRADITIONAL TRADE IS THE LARGEST CHANNEL, WITH THE LARGEST REACH

SOURCE: Global Survey Shopper Trends & Behaviors Q3’15 & Global Survey Home Cleaning Products Q1’16

There is 1 store for every

250 people…

GROWTH MARKETS

CHINA

EMERGING MARKETS

25%

40%

24%

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HOW

WHAT

WHERE

SHOPKEEPER

SHOPPER

SHOP

THREE MAIN ACTORS IN THIS STORY…

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35 SOURCE: Avg. % of Traditional Trade SOM in Value SaLes RMS

GLOBALLY 30% SALES, COME FROM

TRADITIONAL STORES

SHOP

7% Lead Markets

36% Growth Markets

40% Greater China

55% Emerging Growth

TOP 250 RETAILERS TOTALED

ALMOST US$4.5 TRILLION ~40%

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TRADITIONAL TRADE REPRESENTS HIGER PERCENTAGE OF SALES IN EMERGING MARKETS

GROWTH MARKETS

GREATER CHINA

EMERGING MARKETS

3 MARKETS AVERAGE

SOURCE: % of Traditional Trade SOM in Value Sales RMS – Nielsen Baskets 2015

SHOP 4

% 9%

10

%

14

%

21

%

23

%

26

%

29

%

29

%

31

%

32

%

32

%

33

%

35

%

37

%

37

%

37

%

38

%

39

%

40

%

40

%

43

%

43

%

46

%

48

%

49

%

50

%

56

%

57

%

60

%

60

%

62

%

65

%

67

%

69

%

70

%

70

%

74

% 83

% 9

4%

96

%

98

%

98

%

Ko

rea

Esto

nia

Slo

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Cze

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Latv

iaM

alay

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Sin

gap

ore

Arg

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na

Co

lom

bia

Mé

xico

Ph

ilip

pin

esB

rasi

lG

ree

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AM

Hu

nga

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AE

Ro

man

iaSo

uth

Afr

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Ch

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Po

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eA

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Ven

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Ind

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esia

Ru

ssia

Turk

ey

Sau

di A

rab

iaB

ulg

aria

Mo

nte

neg

roB

osn

iaSe

rbia

Ken

yaV

ietn

amB

elar

us

Ind

iaG

han

aC

amer

oo

nN

iger

ia

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AVERAGE GROWTH OF TRADITIONAL TRADE Uruguay and Ukraine had a Significant Growth (More Than 10.1%). But in Half of the Reported Countries Growth is Less than 1% or has no Growth.

SOURCE: CS SURVEY: Traditional Trade Market Trends (Alpine, Brazil, Argentina, CAM, Colombia, Germany, Greece, Hungary, India, Kuwait, Malaysia, Peru, Poland, Russia, Saudi Arabia, Singapore, Ukraine, Uruguay) – Avg. growth in Value Sales

ALP

INE

BR

AZI

L

AR

GEN

TIN

A

CEN

TRA

L A

MER

ICA

CO

LOM

BIA

GER

MA

NY

GR

EEC

E

HU

NG

AR

Y

IND

IA

KUW

AIT

MA

LAYS

IA

PER

U

PO

LAN

D

RU

SSIA

SAU

DI

AR

AB

IA

SIN

GA

PO

RE

SLO

VEN

IA

UK

RA

INE

MEX

ICO

UR

UG

UA

Y

LOSING SALES LESS THAN -

1%

NO GROWTH REPORTED

+/- 1%

BETWEEN 1% TO 5%

5.1% TO 10%

MORE THAN 10.1%

SHOP

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WHO IS SHOPPING IN TRADITIONAL TRADE?

SOURCE: Nielsen Global Shopper Trends (Indonesia, Philippines, Turkey, Russia, Argentina, Chile, Mexico, Peru, Cambodia, Kuwait, Czech Rep., Venezuela, Colombia, Vietnam, UAE & Brazil)

SHOPPER

Peru, Colombia, Venezuela, Turkey, Philippines, Vietnam & Indonesia (More Than 70%)

FAMILY WITH KIDS 65% UAE (90%), Kuwait (88%), Turkey (86%) & Venezuela (62%) increases the relevance of men

MEN 54%

Vietnam (67%), Philippines & Brazil (61%), Argentina (59%), Czech Republic, Peru, Cambodia, Colombia & Russia (More than 50%)

WOMEN 46% Turkey, UAE, Russia, Cambodia & Chile (More than 35%)

YOUNG ADULTS 31%

Mexico, Philippines, Turkey, Indonesia & Cambodia (More than 20%)

TEENS 15%

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BEVERAGES ARE THE MOST COMMON PRODUCTS TO BUY IN TRADITIONAL TRADE Top 5 most sold categories in the world

SOURCE: CS SURVEY: Traditional Trade Market Trends (Alpine, Brazil, Argentina, CAM, Colombia, Germany, Greece, Hungary, India, Kuwait, Malaysia, Peru, Poland, Russia, Saudi Arabia, Singapore, Ukraine, Uruguay)

“In average, Shoppers buy 2 items per visit”

SHOPPER

SOFT DRINKS

57.9%

BEER

52.6%

CIGARRETTES

31.6%

MILK

31.6%

FRUIT JUICES

26.3%

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And spends only

5 minutes per visit

Shoppers make at least

28 VISITS PER MONTH to traditional trade around the world

86% GOES ALONE to the traditional trade

68% ARRIVES WALKING

SHOPPER


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21%

21%

47%

BEVERAGES

SMALL PACKAGES ARE THE SIZE WITH HIGHEST NUMBER OF SALES IN TRADITIONAL TRADE

OF SHOPPERS SELECT THEIR household cleaning products

because packaging is convenient to hold/use/store or packaging

size (small or large) fits my family needs

16%

58%

16%

FOOD

16%

74%

← PERSONAL PACKAGES →

← SMALL PACKAGES →

← LARGE OR FAMILY PACKAGES →

PERSONAL PACKAGES →

SMALL PACKAGES →

LARGE OR FAMILY PACKAGES →

HOUSEHOLD PRODUCTS

SHOPPER


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STOCKING UP OF HIGH ROTATION CATEGORIES IS THE MOST IMPORTANT MISSION IN THE WORLD FOR TRADITIONAL TRADE

57.9%

LAST MINUTE REPLACEMENT OF HIGH ROTATION CATEGORIES*

47.4%

STOCK UP ON HIGH ROTATION

CATEGORIES*

42.1%

LAST MINUTE REPLACEMENT

FOR FMCG

15.8%

STOCK UP FMCG FOR THEIR HOMES (ENTIRE

FAMILY SHOPPING)

10.5%

READY-MADE MEALS TO EAT

AT HOME

5.3%

READY-MADE MEALS TO EAT OUT OF HOME

(OFFICE, STREET, SCHOOL)

SHOPPER

What is the Main Role (Shopper Need) of the Traditional Trade in Your Country?


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SHOPPER

MEANWHILE, PURCHASE OF URGENT ITEMS IS RELEVANT FOR MANY COUNTRIES

34

%

57

%

56

%

53

%

45

%

36

%

36

%

35

%

33

%

33

%

33

%

30

%

27

%

25

%

23

%

23

%

20

%

29%

7%

3% 21

%

39%

21%

30%

33%

12%

34%

49%

9% 30

% 48

%

38%

21

%

62%

20%

13%

31%

11%

7%

24%

13%

22%

28%

16%

10%

31%

16%

9%

20%

45%

2% 3%

3%

3%

4%

1%

3%

2%

3%

17%

3%

9%

4%

1%

1%

AV

ERA

GE

VIE

TNA

M

KW

AIT

AR

GEN

TIN

A

CH

ILE

BR

AZI

L

CA

MB

OD

IA

UA

E

IND

ON

ESIA

CO

LOM

BIA

TUR

KEY

PH

ILIP

PIN

ES

CZE

CH

REP

UB

LIC

MEX

ICO

PER

U

RU

SSIA

VEN

EZU

ELA

DAILY SHOP OUT OF HOME URGENT ITEM NON GROCERY

% Shoppers per mission in Traditional Trade


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of shoppers interact with shopkeeper

of countries declare that Traditional store owners are relevant because s/he decides the main product portfolio in the store and will continue selling any brand

SHOPKEEPER


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RETAILER VOICE NEEDS TO BE HEARD Owner priorities & concerns around the globe

SOURCE: CS SURVEY: Traditional Trade Market Trends (Alpine, Brazil, Argentina, CAM, Colombia, Germany, Greece, Hungary, India, KUwait, Malaysia, Peru, Poland, Russia, Saudi Arabia, Singapore, Ukraine, Uruguay)

31% OF COUNTRIES

store credit with suppliers

50% OF COUNTRIES

Discounts and promotions per

volume of purchase

44% OF COUNTRIES

Threat: Better prices in other channels

33% OF COUNTRIES

Threat: Small Formats Growth

81% OF COUNTRIES

Margin

Listen to retailers voice to help manufactures

to innovate and elevate the relationship

SHOPKEEPER

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8%

8%

15%

27%

25%

12%

10%

18%

23%

13%

5%

7%

12%

30%

36%

Extra benefits for my business (wall painting)

More frequent visits

Promotional packages

More product per volume of purchase

More credit

IN MEXICO SHOPKEEPERS DECLARED THAT THEY WOULD LIKE TO RECEIVE MORE CREDIT OPTIONS MEXICAN SHOPKEEPERS: Which actions do you consider manufacturers should take to help you in your business?

SOURCE: Mexico Store Owners Survey

SHOPKEEPER

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47

DISTRIBUTORS ARE THE MAIN PURCHASE PLACE WHERE DOES THE STOCK MAINLY COME FROM?


52.7%

47.4%

26.3%

21%

WHOLESALERS CASH & CARRY PRICE CLUBS

DIRECT DELIVERY FROM WHOLESALERS

AND MANUFACTURERS, CASH & CARRY,

PRICE CLUBS DIRECT DISTRIBUTION FROM OTHER COMPANIES WITH A DELIVERY SERVICE

DIRECT DELIVERY FROM MANUFACTURERS

SHOPKEEPER

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48

MANUFACTURERS NEED TO UNDERSTAND BOTH SHOPKEEPER AND SHOPPER NEEDS

SHOPKEEPER SHOPPER

PROFILE PROFILE WHO?

MISSIONS HISTORY WHY/WHERE/WHEN?

PRODUCT NEEDS BUSINESS NEEDS WHAT?

IN-STORE BEHAVIOUR

STORE OPERATIONS HOW?

SHOPKEEPER

MANUFACTURER’S MARKET PLAYBOOK

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1. All successful strategies should take into account a deep understanding of how Shoppers differ in the world… How and Why they are choosing stores and products, how they arrive to the stores, etc. and which are the main concerns of Shopkeepers at local level

2. TT shopping is not a “monthly stock up trip”, nor is it always a ‘top up’ shop - it all depends on the size of the store, the range available (assortment depends of Shopkeeper budget -limited- and their deals with distributors) and the purchase occasion, Shoppers need, preferences and out of pocket

3. Merchandising can also take on a life of its own in a traditional trade environment where interior and display space is limited, especially for fridges or free standing units. Shopkeepers often use cross merchandising so color coding and labeling becomes key in order for products to stand out, packaging is key for offerings such as everyday staples which are displayed at the front of the store

SOMETHINGS TO CONSIDER…

Source: Nielsen Knowledge Center

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MANUFACTURER’S MARKET PLAY BOOK

Segmentation Strategy

Shopkeeper & Distributor Loyalty Plans

Execution Standards

Manufacturer Operations

Segmentation Strategy


MORE THAN 23 MM TRADITIONAL STORES AROUND THE WORLD

IT’S PRACTICALLY IMPOSIBLE TO REACH ALL OF THEM, WITHOUT INVESTING MILLIONS IN DISTRIBUTION…

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4% (RIGHT) STORES NOT

REACHED – 20% UPLIFT

9% (RIGHT) STORES REACHED

INDIRECTLY – 13% UPLIFT

13% (OTHER) STORES

REACHED DIRECTLY

AND IT IS NOT NECESSARY TO ACCOUNT FOR ALL THE STORES IF YOU SEGMENT

India Business Case

80% SALES

30% STORES

RIGHT STORE

$ OPPORTUNITIES BY REACHING THE RIGHT STORES

20% SALES

70% STORES

MARGINAL STORE

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244

288

298

404

681

537

360

268

251

296

226

314

291

392

301

287

T. VDM

A. Obregón

Atizapán

Azcapotzalco

B. Juárez

Coyoacán

Cuauhtémoc

Cuautitlán Izcalli

Ecatepec

G. A. Madero

Iztapalapa

M. Hidalgo

Naucalpan

Nezahualcóyotl

Tlalnepantla

Tlalpan

AVG. TARGET HOSEHOLDS PER NEIGHBORHOOD

Less than 20% of households contribute with 46.5% of target in this Neighborhoods

Mexico Business Case

IF WE FOCUS OUR EFFORTS IN THE RIGHT PLACE, OUR RESULTS WILL BE MUCH BETTER

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FOCUSING ON THE DETAILS GUARANTEE A MORE SUCCESSFUL IMPLEMENTATION…

Top ColoniasHogares

TargetNarvarte Poniente 7,737

Del Valle Norte 3,974

Del Valle Sur 3,861

Del Valle Centro 3,709

Portales Norte 3,200

Portales Sur 2,857

Letrán Valle 2,372

Álamos 2,352

Nápoles 1,575

Extremadura Insurgentes 1,156

Centro Urbano Pdte. M. Alemán 1,073

Independencia 1,045

U. Hab. 8 de Agosto 986

U. Hab. Esperanza 957

Vértiz Narvarte 846

Top ColoniasHogares

TargetU. Hab. V. Guerrero 2,237

Los Paseos de Churubusco 1,787

Constitución de 1917 1,784

Escuadrón 201 1,769

San Andrés Tetepilco 1,749

Sector Popular 1,356

La Esperanza 1,345

Héroes de Churubusco 1,296

Fracc. Las Palmas 1,243

Real del Moral 1,241

U. Hab. P. Elías Calles 1,210

Chilero 1 1,145

Reforma Educativa 1,069

Zacahuitzco 1,015

Colonial Iztapalapa 1,012

Total AGEBs (Neighborhoods) 102

Total Target Households 69,432

Target Households per AGEB (Neghborhoods)

681

BENITO JUÁREZ

Total AGEBs (Neighborhoods) 458

Total Target Households 103,736

Target Household per AGEB (Neighborhoods)

226

IZTAPALAPA

Case brand distributed in

stores in these neighborhoods

and grew (1st. Yr)

70% In value sales

Mexico Business Case

With only 8 neighborhoods,

it’s possible to

reach

40% of target

With only 48 neighborhoods,

it’s possible

to reach

40% of target

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CHANNEL AND MICRO UNDERSTANDING IS CRUCIAL Winning Strategies for Store Segmentation

LOCATION ATTRIBUTES Dividing stores into regions or areas by store density, GDP, population density, economic class or income level enables efficient planning of sales force, numbers per region and provides guidance on brands/SKUs to be pushed in each region. Modeling across multiple data sources will help identifying high potential provinces/districts that will help realize potential with lower reach costs.

Source: Nielsen District Level Distribution Prioritisation, illustration

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QUANTIFY DISTRIBUTION EFFICIENCY AND OPPORTUNITY Winning Strategies for Store Segmentation

PERFORMANCE ATTRIBUTES Whether at total store level or individual category level, performance attributes provide a clear focus for store visits to the highest potential stores. Sales territories can be allocated based on the store performance profile. It is complex and cost-intensive for manufacturers to reach all the category stores. Understanding how your distribution is built can help to identify and quantify distribution opportunities.

ASIA BUSINESS CASE

Source: Nielsen District Level Distribution Prioritisation, illustration

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50

67

33

67

50

50

6

29

35

29

29

6

Typical consumption occasions

Socioeconomic level of the area

Profitability potential

Quality of the relationship

Potential share

Share at the store

100

67

50

71

47

35

Physical store characteristics

Own sales at the store

Channel

Forward looking criteria

Current performance

44%

32%

27%

38%

29%

15%

20%

21%

21%

Que tiene que ver el cost to serve?

Store segmentation criteria # of criteria used to segment stores

9

6

Winners Others

1.5x

Criteria used to segment stores % of companies that chose each criteria

Spread

Winners Others

USE FOWARD LOOKING CRITERIA TO SEGMENT FRAGMENTED TRADE FOCUSING ON GROWTH POTENTIAL AND PORTFOLIO NEEDS

SOURCE: 2015 LatAm GCCB Survey: Nielsen & McKinsey analysis


Shopkeeper & Distributor Loyalty Plans

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SHOPKEEPER INFLUENCES HIGHLY THE PURCHASE DECISIONS OF SHOPPERS

SOURCE: Global Survey, Growth Strategy 2016- Results based in the % HIGHLY INFLUENTIAL ATTRIBUTE

Do the store's personnel who are friendly & knowledgeable, influence your decision to shop at a particular retailer?

38%

GREATER CHINA

44%

EMERGING MARKETS

36%

GROWTH MARKETS

42%

GLOBAL

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ENGAGING RETAILERS OF TRADITIONAL TRADE AND TAKING THE BUSINESS TO THE NEXT LEVEL IS A POSSIBILITY

SOURCE: Nielsen Knowledge Center

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38%

13%

13%

Exclusivity 38%

63%

38%

10%

Qualified employees

Openness to collaboration

24%

13% Relationship with retailers

10%

50% Geography

5%

50%

38%

57%

Quality

52% Distributor cost/margin

13% Size/scale

0% Category Knowledge 33%

29%

Range of services

Winners Others

40%

-33%

8%

24%

3%

WHEN USING THIRD PARTY DISTRIBUTORS WINNERS PRIORITIZE EXCLUSIVE AND COLLABORATIVE RELATIONSHIPS OVER PARTNERING WITH LARGER, LOWER-COST PLAYERS

-16%

-7%

-1%

-15%

-11%

Most important attributes to choose a distributor % of companies that chose each attribute as one of their 3 most important attributes Spread


Execution Standards


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STORE FRONT IS THE GOLDEN GATE All Brands Should Aim to Land at Store – Front to Maximize Visibility

VIENTAM BUSINESS CASE

Image on Sign-board

Image on Fridge/Coolers

Image on Shelf

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SHOPPERS’ CONTACT WITH THE BRAND IN STORE COULD PUSH PURCHASES

INDIA BUSINESS CASE

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0,01,02,03,04,05,06,07,08,09,010,0

0

5

10

15

20

25

30

35

40

45

Brand A

Demand Accessibility

0,0

1,0

2,0

3,0

4,0

5,0

6,0

7,0

8,0

0,0

5,0

10,0

15,0

20,0

25,0

30,0

35,0

40,0

Brand B

Demand Accessibility

BRAND B INCREASES DEMAND DUE TO ACCESIBILITY Vv. Brand A, which diminishes accessibility as a consequence of lost demand

MEXICO BUSINESS CASE

LESS accesible

80% of total purchases are not pushed by the owner, that’s why accessibility is a key factor to gain shoppers

MORE accesible

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Another challenge is achieving in-store effective communication with the shopper: only 11% of shoppers interact with POSM

SOURCE: Nielsen Global Shopper Trends (Indonesia, Phillipines, Turkey, Rusia, Argentina, Chile, Mexico, Peru, Cambodia, Kwait, Czech Rep., Venezuela, Colombia, Vietnam, UAE & Brazil) – POSM: Point of sale Marketing

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DISCOUNTS ARE THE MOST EFFECTIVE ACTIVATION IN TT STORES AROUND THE WORLD


DISCOUNTS FOR SHOPKEEPER

BRAND FURNITURE

POSTERS INSIDE THE STORE

PROMOTIONAL PACKAGES

PAINT THE WALLS OF A

STORE

INNOVATE PRODUCT DISPLAYS

42.11% 31.6% 31.6% 15.8% 15.8% 5.3%

ALPINE

BRAZIL

CENTRAL AMERICA

HUNGARY

MALAYSIA

POLAND

SINGAPORE

SLOVENIA

ARGENTINA

COLOMBIA

MALAYSIA

PERU

SAUDI ARABIA

URUGUAY

CENTRAL

AMERICA

COLOMBIA

GREECE

PERU

URUGUAY

UKRAINE

BRAZIL

CENTRAL

AMERICA

INDIA

CENTRAL

AMERICA

PERU

URUGUAY

ARGENTINA

Activation in store: What types of marketing activities are the most successful in Traditional Trade for your country?

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SHOPPERS LEAVE IN 5 MINUTES Things happen fast but there’s at least 3 minutes to capture the shopper while he/she is idle.

FIRST 25 SECONDS

AT LEAST 3 MINUTES

LAST 25 SECONDS


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76% Planned purchases

DISTRUPT THE TRANSACTION Not all is lost when most transactions are being planned. There are opportunities to intervene and create opportunities for unplanned purchases and build your brand

SOURCE: Nielsen Global Survey: Traditional Trade Thought Leadership Q1’16

In

5 minutes you can… SAMPLING

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CREATE AFFORDABILITY WITH INNOVATIVE PACKAGING Bringing together affordability and convenience will translate into higher shopper value perception

Source: Traditional Trade Shopper Report

OPPORTUNITY • Find the right pack and price to provide value and convenience

• Innovate with new convenience friendly pack formats e.g. sachets, pouches, etc.

• Single use packs meet TT consumer needs for immediate consumption and frequent store visits

AFFORDABILITY CONVENIENCE

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500cc

1L

EVEN WITH MORE COMPETITORS SANCOR IS STILL THE LEAD IN TETRABRICK REGULAR YOGURT SEGMENT

SOM within T. Yogurt – Tetrabrick Regular Yogurt

3.0

1.7

SEP

13

OC

T1

3

NO

V1

3

DIC

13

FEB

14

MA

R14

AB

R14

MA

Y1

4

JU

N1

4

JU

L14

AG

O14

SEP

14

OC

T1

4

NO

V1

4

DIC

14

EN

E15

FEB

15

MA

R15

AB

R15

MA

Y15

JU

N1

5

JU

L15

AG

O15

SEP

15

OC

T15

YOGS YOGURÍSIMO

TOTAL REGULAR

45.1 54.2

REGULAR (BOTTLES) Even though Sancor is not

the leader in regular segment, being the pioneer in tetrabrick package has lead them to be leaders of the regular bottled yogurt segment

55.6

16.4

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BRAND DETECTED A NICHE MARKET, IN TERMS OF OUT OF POCKET AND GAINED 2ND SOM SKU

BUSINESS CASE COLOMBIA

SOURCE: Nielsen Scantrack - Cookies

$3,00

$4,00

$5,00

$6,00

$7,00

$8,00

$9,00

$10,00 2.5% SOM

PRICE POINTS - COOKIES

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MATCHING THE FLEXIBILITY THE VENDOR HAS DEVELOPED, THINGS TO BE CONSIDERED ARE:


Repackaging and branding products into single servings or smaller sizes

Providing branded packaging such as wrappers or sachets that retailers can use if they spilt up larger portions

Providing branded cooler boxes for table-top vendors to sell products which require refrigeration

Branding the selling vessel, for example, the basin from which water sachets are sold

BRAND

Branding re-usable product packaging or containers for top-ups and repurchases

Providing small, portable display stands for kiosk vendors to stack products and add visibility

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Level of price elasticity measure % of companies

WINNERS MEASURE PRICE ELASTICITY IN A MORE DETAILED MANNER (BY REGION AND CHANNEL)

National 61%

50%

Store format 9%

0%

Customer 17% 17%

Brand 65% 67%

City 17%

Category 52%

33%

33%

SKU 48%

67%

Packing size 30%

50%

Channel 57%

83%

Region 39%

67%

Others Winners

28%

27%

-1%

-9%

20%

19%

16%

-11%

-19%

1%


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Tools utilization to support pricing activities % of companies who have tools for each activity

WINNERS LEVERAGE ADVANCED TOOLS TO SET PRICES, SIMULATE PRICE SCENARIOS AND DIAGNOSE OPPORTUNITIES

Volume, revenue and profit simulator

55%

59%

Complaints monitoring and sales execution

Price diagnostic tool 50%

67%

67%

27%

Definition of recommendations for price changes

33%

32%

Others Winners

35%

23%

-21%

8%


Manufacturer Operations


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WINNING STRATEGIES AROUND THE WORLD Strategies in your region that manufacturers should focus on to win in TT

Ensuring the owner’s satisfaction

Developing their own distribution method

Gaining loyalty and increasing distribution with Wholesalers, C&C and Price Clubs

Ensuring the right portfolio according to the out of pocket of local shoppers

81% 50%

38% 25%


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PRIORITIZE IN-STORE EXECUTION BASICS: MINIMIZING STOCK OUTS AND EXECUTING THE PLANOGRAMS

Increase coverage of Secondary SKUs

43%

0%

Introduce new SKUs 14%

13%

Execute the planogram

10%

25%

Minimize stock outs 33%

63%

Winners Others

Top in-store challenge in traditional trade % of companies that chose each challenge


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75%

38%

63%

52%

36%

32%

38%

88%

40% 38%

52%

40%

36% 25%

60%

13%

68%

50%

Dynamic routing

Auto-replenishment

Online ordering

Execution monitoring

GPS delivery tracking

Tracking of sales people by GPS

POS surveys

Manual ordering

Telemarketing

Winners Others

Sales processes which use technology effectively % of companies that use technology effectively in each sales process

23%

-19%

-11%

2%

15%

20%

-2%

-2%

-14%

WINNERS LEVERAGE TECHNOLOGY FOR SALES FORCE ENABLEMENT FOCUSING ON GPS TRACKING, POS SURVEYS AND EXECUTION MONITORING


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WINNERS EXPAND HANDHELD CAPABILITIES TO TRACK POS PERFORMANCE (CAMERAS, STOCK) AND TO SUPPORT SALES ACTIVITIES (MAPS, RADIO, DATA TRANSFER)

Product and releases information

Software applications

Camera for photos at the store

Maps with locations and directions

Stock by SKU

Ability to send consumer service requirements

Radio transmitter and receiver

Pictures of success by store

Most used handheld features % of companies that use the features in their handhelds

Winners Others 33%

50%

0%

17%

25%

17%

33%

75%

25%

50%

50%

33% 75%

0%

50% 33%


Segmentation Focus in the real opportunity

Shopkeeper & Distributor Built a relationship

Execution Define and guarantee


Value-Price Right price points and Assortment

EnReach Golden Stores

Trade Dimensions Spectra / Sabines

Store Observation Instant Survey

Advantage Survey

Loyalty Shopper

Merchandising

Price Elasticity Marketing Mix

Assortment

Pedro Manosalva

Managing Director Colombia &

Growth Group Retail Vertical Leader

[email protected]

successful strategies in traditional trade around … · successful strategies in traditional trade...

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