trade relationships: it all starts with the shopper prof. gino van ossel 24th november 2010...
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Trade relationships:it all starts with the shopperProf. Gino Van Ossel24th November 2010
introduction
Source: GfK-FNLI Top Topics 2011 - manufacturer (n=290)
“% of top managers that mentions…”
agenda
3 |
1. shopper trends
2. retail trends
3. trade relationships
4. conclusion
agenda
4 |
1. shopper trends
2. retail trends
3. trade relationships
4. conclusion
shopper trends:decreasing loyalty
1
shopper trends:decreasing loyalty
6 |
shopper trends:decreasing loyalty
7 |
shopper trends:decreasing loyalty – 1st level
8 |
the Berlusconi syndrom
shopper trends:decreasing loyalty – 1st level
9 |
the Berlusconi syndrom
shopper trends:decreasing loyalty – 1st level
10 |
the Berlusconi syndrom
shopper trends:decreasing loyalty – 1st level
11 |
the Berlusconi syndrom:from brand loyalty to brand sensitivity
shopper trends:decreasing loyalty – 2nd level
12 |
shopper trends:decreasing loyalty – 2nd level
13 |
shopper trends:decreasing loyalty – 2nd level
14 |
A brand loversA brands represent >70% in purchased units
switchersA brands represent between 40 and 69% in purchased units
private label loversA brands represent <40 % in purchased units
source: GfK panel services Belgium
shopper trends:decreasing loyalty – 2nd level
15 | source: GfK panel services Belgium
(index 81)(index 111)(index 107)
shopper trends:decreasing loyalty – 2nd level
16 |
het “neusje dicht”-paradigma
shopper trends:decreasing loyalty – 2nd level
17 |
het “neusje dicht”-paradigma:from brand sensitivity to indifference
shopper trends:increasing price sensitivity
2
shopper trends: increasing price sensitivitygrowth of discount
market share discount – Western Europe(source: Nielsen)
shopper trends: increasing price sensitivitygrowth of private label
20 |
market share private label – Western Europe(source: Nielsen)
shopper trends: increasing price sensitivityincreasing promotion intensity
12,0 11,9 11,5 11,7
10,5 10,4 10,510,1
11,9
13,512,9 12,7
11,2
15,1
13,8
12,813,3 13,1 12,8
14,3
13,1
17,516,6
15,416,2
15,2
19,9
15,8
16,816,1
15,7 15,8 15,6 15,4
6,0
8,0
10,0
12,0
14,0
16,0
18,0
20,0
22,0
P1 P2 P3 P4 P5 P6 P7 P8 P9 P10 P11 P12 P13
2008
2009
2010
source: GfK panel services Netherlands
shopper trends:choice stress
3
shopper trends:choice stress
23 |
how much ketchup does a store need ?
shopper trends:choice stress
increasingprice
sensitivity
choicestress
decreasingloyalty
agenda
25 |
1. shopper trends
2. retail trends
3. trade relationships
4. conclusion
retail trends:managing price perception
1
source: investor relations meeting, Greece, 3rd December 2009
Source: Carrefour half year results, 30th August 2010
retail trends:cost management
2
source: investor relations meeting, Greece, 3rd December 2009
Source: Carrefour half year results, 30th August 2010
32 | source: Tesco Preliminary Results, 24th April 2010
retail trends:rethinking product ranges
3
retail trends:rethinking product ranges
less is more
source: investor relations meeting, Greece, 3rd December 2009
SKU’s - 7.5%
Source: Carrefour half year results, 30th August 2010
retail trends:rethinking product ranges
less is more private label proliferation
retail trends:rethinking product ranges: private label proliferation
Nielsen, MAT week 37 change 2009 vs. 2007, Belgium
salesvalue growth
SKUgrowth
correlation between changes in # PL SKU’s and PL market share
7300 SKUs(38% of total)
Source: Carrefour half year results, 30th August 2010
retail trends:rethinking product ranges
less is more private label proliferation more space for non-food & services
42 |
retail trends:in short…
efficiency rethinkingproduct ranges
managingprice
perception
agenda
44 |
1. shopper trends
2. retail trends
3. trade relationships
4. conclusion
© Vlerick Leuven Gent Management School© Vlerick Leuven Gent Management School
trade relationships:price cuts, promotions & delistings
De Standaard11 Feb 09
trade relationships
Source: GfK-FNLI Top Topics 2011 Retail (N=72) vs. manufacturer (n=290)
“% of top managers that mentions…”
Source: Unilever Q3 results, 4th November 2010
Source: Unilever half year results, 4th August 2010
Source: Unilever half year results, 4th August 2010Source: Unilever Q3 results, 4th November 2010
trade relationships:retailer vs. manufacturer margin
52 |
3,0%
5,7%
6,8%
5,4%4,8% 4,7% 4,5%
3,9%
3,2% 3,2%
Colruyt* Wal-Mart Tesco DelhaizeGroup
Ahold Casino Carrefour Kroger Metro Sainsbury
Operating Margin 2008/2007
* Concerns 2008 fiscal year results (year end March 2009)
agenda
54 |
1. shopper trends
2. retail trends
3. trade relationships
4. conclusion
conclusion
pressure on trade relationships:
starts with the needs of the shopper (consumer)
makes all retailers respond in similar ways
is accelerated by ‘human nature’: retailers envy margins (vs.
ROCE !!)
makes in turn all manufacturers respond in similar ways
conclusion
56 |
conclusion
if this were a weather forecast……rain with major risk of thunderstorms
58 |
conclusion
“The tough market conditions in the mature world are not expected to become easier in the near future, while for the FMCG companies the comparison base is becoming tougher. In addition, commodity costs are rising while consumer sentiment does not allow for price increases.
source: Petercam: Unilever (EUR 22.12, Reduce): Acquiring Alberto Culver for USD 3.7bn in cash, 27 th Sept 2010
conclusion
“The tough market conditions in the mature world are not expected to become easier in the near future, while for the FMCG companies the comparison base is becoming tougher. In addition, commodity costs are rising while consumer sentiment does not allow for price increases.
This environment forces the industry to further step up A&P spending etc. and likely to accept some margin pressure or to accept lower growth. Hence we expect tough times for the sector, with Unilever performing in line with the sector. “
source: Petercam: Unilever (EUR 22.12, Reduce): Acquiring Alberto Culver for USD 3.7bn in cash, 27 th Sept 2010
conclusion
“The tough market conditions in the mature world are not expected to become easier in the near future, while for the FMCG companies the comparison base is becoming tougher. In addition, commodity costs are rising while consumer sentiment does not allow for price increases.
This environment forces the industry to further step up A&P spending etc. and likely to accept some margin pressure or to accept lower growth. Hence we expect tough times for the sector, with Unilever performing in line with the sector. “
source: Petercam: Unilever (EUR 22.12, Reduce): Acquiring Alberto Culver for USD 3.7bn in cash, 27 th Sept 2010
conclusion
don’t let competition outpace you !
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