US RETAIL TRENDS

Future Trends & Forces

November 2012

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PLMA Private Label Trade Show 2012 Chicago, USA

Agenda 1. Who is Planet Retail? 2. Onmi-channel retailing

3. Reinvigorating the City 4. E-commerce Retailing 5. The Future of Private Label

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1. Who is Planet Retail?

1. Who is Planet Retail?

Who is Planet Retail? Planet Retail is a provider of digital retail intelligence. What does Planet Retail do? Planet Retail provides retail intelligence that helps businesses to uncover opportunities and power decisions that turn potential into profit. What makes Planet Retail different?  The breadth and depth of data.  Specific expertise in retail technology and private label.  Team of Analysts around the world.

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2. Omni-channel Retailing

2. Omni-channel Retailing – Future Forces

Some channels are no longer ‘alternative.’ Once considered ‘alternative,’ the warehouse club and value channels are growing sales faster than traditional channels, i.e. supermarkets and supercenters (mass). US: Channel Sizes by Sales, 2007-2017f (USD bn) 2007

2012f

700

2017f 600

622

Sales (USD bn)

500

531

524 469 443

400 381

300 252

200

202

237

211

207

201 169

100

163

125 47

0 Supermarkets

Mass channel

*Note: Convenience store sales represent merchandise sales only; f – forecast. Source: US Department of Commerce, National Association of Convenience Stores and Planet Retail

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103

Drugstores

Convenience stores*

Warehouse clubs

69

Value channel

2. Omni-channel Retailing – Future Forces

Non-traditional channels and formats continue to encroach.

Target’s PFresh

Warehouse Club

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Family Dollar

E-commerce Grocery

2. Omni-channel Retailing – Top Trends: Fragmentation

Fragmentation – US grocery retailing is transitioning from retailers operating single banner/same footprint to instead managing portfolios of smaller, more fragmented formats, each with its own unique footprint.

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2. Omni-channel Retailing – Anytime/Anywhere Shopping

Multi-channel: Combining bricks and mortar with digital technology will be the norm by 2017. Site-to-store services – essentially using outlets as online purchase pickup depots – will increase in popularity. “It’s time to leverage our size and global footprint to take advantage of this evolving customer trend.”

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3. Reinvigorating the City

3. Reinvigorating the City – Top Trends: Urbanization

Urbanization – Urban is one of few US expansion opportunities remaining for big-box retailers. The land rush is on as a host of retailers look to fill the gaps in urban food deserts in the coming years. CityTarget launched in July 2012.

Walmart Express stores.

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3. Reinvigorating the City – Top Trends: Localization

Localization – The new ‘convenience’ stores will be those offering localized assortments and solutions that reflect surrounding neighborhood demographics and shopper needs. Grab & Go cooler wall

Fresh Prepared

Upscale beauty desination

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3. Reinvigorating the City – Top Trends: Food Deserts

Food Deserts: “A low-income census tract where a substantial number or share of residents has low access to a supermarket or large grocery store.” – USDA definition.

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3. Reinvigorating the City – Top Trends: Food Deserts

More “buzz” in 2011 but retailers are now in the execution phase.

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4. E-commerce Retailing

4. E-commerce Retailing – Online Trends

E-commerce share of retail spend is growing - Led by customer desire for convenience and new technology.

Sales: Online vs. Traditional, 2012-2017 (%)

Online 4%

Online 8%

2012

2017 Traditional 92%

Traditional 96%

Source: Planet Retail

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4. E-commerce Retailing – Top Trends: Digitization

Digitalization – Future shopper generations are growing up with technology, tools and apps that will revolutionize grocery shopping. Watch as more routine replenishment (stock-up) shopping moves online. Amazon.com Subscribe & Save

Peapod QR codes

Quidsi offers ‘mylists’ making reorders fast and easy.

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4. E-commerce Retailing – Online Trends

Multi-channel retailers are seeing online sales soar. Getting e-commerce operations right is essential. Sales: Online Growth, 2012-2017

In Store

Online

-1%

+217%

+20%

+107%

+23%

+103% +200%

Source: Planet Retail

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4. E-commerce Retailing – France: The home of the drive-thru!

France has 1,700 Grocery drive-thru locations.

Chronodrive (Auchan)

 Concept also popular in Germany and growing the UK.  Implications:  Defend threat of pure play e-commerce retailer.  Limits impulse opportunities.

 320 outlets at the end of 2010 with net sales of EUR8.44 billion (USD11.18 billion).

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Advert from Carrefour website

5. The Future of Private Label

5. The Future of Private Label

1. 2. 3. 4. 5. 6.

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Will continue to grow post recession Managed as a brand by the retailer Consumer endorsement Transparency Niche and higher end products Best practices

5. The Future of Private Label – Consumer Endorsement

Leading grocery retailers looked to launch, or re-launch, private label ranges in 2011. With shoppers looking for ‘value’ in developed markets, retailers looked to develop new niche and premium ranges to target specific consumer groups. France Casino: healthy living range Bien pour Vous! (food & non-food). UK Carrefour: Halal PL

Walmart’s Asda: Chosen by You

SEP 2010

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OCT 2010

DEC 2010

USA

South Africa

Walgreens: grocery umbrella PL Nice!

Pick n Pay: Finest premium PL

JUN 2011

AUG 2011

SEP 2011

OCT 2011

DEC 2011

Austria, Italy, Slovenia

UK

UK

USA

SPAR (Austria): SPAR Premium

John Lewis Waitrose: mid-price healthy food PL – Love Life.

Walmart’s Asda: Chosen by You Scotland

Kroger: The Truly Awesome

Tesco: Tesco Venture Brands

Rewe Group: non-food PL - Vivess

5. The Future of Private Label – Transparency

Shopper engagement requires new levels of transparency.

In 2011, Aldi Germany proactively offered traceability information for fresh meat.

Asda (Walmart) in the UK embracing transparency installing webcams with the live feeds viewable to the public.

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Ito-Yokado (Seven & I) in Japan offers shoppers the ability to scan a QR code on its private label products.

5. The Future of Private Label – Best Practices

Private Label Marketing ideas from Europe.  PL food concessions cropping up in new places, e.g. inside other retailer stores, workplaces, theme parks, etc.  Social media interaction – using as a focus group for suggestions, voting for products, allowing fans/followers to sample, input into marketing campaigns, etc.

Kellogg’s brought in retro packaging to coincide with the Diamond Jubilee.

 Shop-in-shop concept for private label, e.g. Ocado.  Amazon – private label shops within Amazon sites, taking care of logistics on behalf of other retailers, e.g. Migros in Germany, dm in Germany, ELC in UK.  E-commerce sites suggesting PL alternatives to products in basket, e.g. Sainsbury’s Switch & Save.  Promote heritage of PL – similar to M&S campaign or Sainsbury’s tying up with Kellogg’s to introduce retro packaging for Diamond Jubilee.  Venture brands going into other stores as ‘brands’, e.g. Tesco venture brands could do this. 24

Renowned British illustrators were asked by M&S to design commemorative tins for the Diamond Jubilee.

5. The Future of Private Label – Best Practices

Private Label Marketing ideas from Europe.  Collaboration between PL brands and manufacturers, e.g. coffee maker manufacturer including coupon in box for free or money-off Sainsbury’s PL coffee.  Trusted PL brands continuing to branch out into becoming service providers, e.g. John Lewis insurance/holidays, Tesco Mobile/banking.  Loyalty points: retailers could offer double points for PL brands.  Celebrity endorsement continuing to evolve, e.g. Delia Smith & Heston Blumenthal at Waitrose, Gok Wan at Sainsbury’s.

 Television advertising for private label as if it were a premium brand – mini series campaign linking to social media or more comparative advertising campaigns, e.g. Aldi’s “I like this ketchup but I also like this one.”  Product placement: Very.co.uk sponsored X Factor – dressed contestants, allowed purchasing via QR codes/website/mobile app. 25

5. The Future of Private Label – Implications

Change =

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