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Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
Management Ventures, Inc.Management Ventures, Inc.
Understanding the implications of an economic slowdown over the UK retail industry
•Presented by:•Vincent Verdier
•September 2008
1-2 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
Copyright and DisclaimersCopyright and Disclaimers
Copyright © 2008 Management Ventures, Inc. All Rights Reserved.20 University Road, Cambridge, MA 02138 USA (617) 588-4100 [email protected]
No part of this material may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photography, recording, or any information storage and retrieval system now known or to be invented, without the express written permission of Management Ventures, Inc.
The printing of any copies for back up is also strictly prohibited.
DisclaimersThe analyses and conclusions presented in this seminar represent the opinions of Management Ventures, Inc. The views expressed do not necessarily reflect the views of the management of the retailer(s) under discussion.
This seminar is not endorsed or otherwise supported by the management of any of the companies covered during the course of the workshop or within the following slides.
1-3 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
www.MVI-Insights.com www.MVI-Insights.com Retail Analysis and Planning ToolRetail Analysis and Planning Tool
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1-4 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
MVI: Who We Are, What We DoMVI: Who We Are, What We Do
• MVI is a dynamic global research, training, and consulting company focused on the retail trade sector
• Founded in 1988, MVI has research hubs around the globe • Our analyst teams create insights on the tactical and
strategic developments of major retailers and their growth markets
• We deliver strategic, actionable insights for improving and growing supplier/retailer relationships
• We bring our analysis and insights to our clients through a variety of ways – online, onsite, or in an MVI classroomOur clients are CPG/FMCG suppliers, brand manufacturers, financial institutions, advertising or brand agencies and strategic marketing companies, servicing the retail industry.
1-5 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
Benefit from MVI’s Retail Thought Benefit from MVI’s Retail Thought Leadership, Research, Insight and AnalysisLeadership, Research, Insight and Analysis
• MVI Onsite • Critical Thinking, Facts and MVI Analysis
• MVI Publications • Retail News, Views, and Industry Trends in Our
Featured Research
• MVI Retail Consulting • Winning Strategies for Global, Market, Channel,
Product Lifecycle, Shopper and Customer Management
• MVI ShareGroups • The Future of Retailing Focusing on Joint Business
Planning, Category Management and Shopper Insights
1-6 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
We are at the beginning of a multi-year We are at the beginning of a multi-year economic slowdowneconomic slowdown
“The nice decade is behind us.”
Mervyn KingGovernor of the Bank of England
May 2008
•
1-7 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
Across the political spectrum, the Media Across the political spectrum, the Media is feeding further consumer anxietyis feeding further consumer anxiety
1-8 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
Today’s AgendaToday’s Agenda
• Evolution of the economic landscape in the UK and its impact on retailers
• Understanding the discount channel and its increasing role in this environment
• Future outlook and conclusions
1-9 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
Evolution of the economic landscape in the Evolution of the economic landscape in the UK and its impact on retailersUK and its impact on retailers
• Pressure on UK financial sector and lower consumer confidence
• UK consumers are now more concerned by the “value” proposition
• Conclusions
1-10 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
The UK financial sector came under The UK financial sector came under pressure in July 2007pressure in July 2007
• Within the space of a few weeks, the multi-billion pound market for mortgage backed securities froze• This was due to the falling value of US property
values
• The reduction of credit available in this market rolled through to other debt markets across Europe• Available corporate credit evaporated within a
manner of weeks• Consumer credit began tightening within the next
few weeks
1-11 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
The UK economy is directly exposed to a The UK economy is directly exposed to a contraction in the financial sectorcontraction in the financial sector
• UK firms were responsible for half of all private equity investment in Europe
• About 50% of global derivatives trades went through the UK
• 8% of GDP is directly linked to financial services with related business services totalling nearly 30% of GDP
1-12 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
Credit market contraction has hit consumers Credit market contraction has hit consumers through the housing marketthrough the housing market
The housing market
correction is still in a phase
where both existing
homeowners and first time buyers are suffering.
1-13 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
The fall in the value of Sterling has put The fall in the value of Sterling has put additional pressure on UK inflationadditional pressure on UK inflation
The Bank of England is limited in its options because of the credit crisis. Normal measures to control the value of Sterling are restricted
by pressure to maintain liquidity.
Value of GBP expressed in EUR for the past 2 years
Source: Yahoo Finance
1-14 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
Food inflation is now well ahead of other Food inflation is now well ahead of other retail price inflationretail price inflation
Consumer prices for food are under pressure from the basket of commodity price increases—both energy costs and raw
foodstuffs costs. The last time we saw this kind of separation in inflation, shoppers flocked to the discounters.
Yea
r o
ver
Yea
r ch
ang
e in
%
1-15 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
UK consumer confidence is plunging, as UK consumer confidence is plunging, as people start to feel the pressurepeople start to feel the pressure
Co
nsu
mer
co
nfi
den
ce i
nd
ex
Source: British Retail Consortium and MVI Analysis
1-16 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
The number of unemployed people is The number of unemployed people is expected to rise furtherexpected to rise further
“The BCC expects unemployment to rise by 250,000 to 300,000 over the next two to
three years”
FT Article, August 2008
Cla
iman
ts in
‘000
s
Source: The British Chambers of Commerce; The Financial Times, 18th August 2008
1-17 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
UK consumers are cutting back on UK consumers are cutting back on discretionary expensesdiscretionary expenses
38%
37%
32%
29%
26%
26%
19%
18%
7%
6%
3%
37%
35%
31%
24%
21%
24%
14%
22%
6%
6%
2%
Putting into savings
Holidays / vacations
Paying off debts / credit cards / loans
New clothes
Out of home entertainment
Home improvements / decorating
New technology
I have no spare cash
Retirement fund
Investing in shares of stock / mutual funds
Don’t know/undecided
Oct-07
May-08
“Once you have covered your essential living expenses, which of the following statements best describes what you do with your spare cash...?”
Source: British Retail Consortium
1-18 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
Conclusions for the lagging side of the Conclusions for the lagging side of the economic crisiseconomic crisis
• Things will get worse before they get better• Job losses are just beginning to hit the market• Governments will have to reduce expenditure
• The economic engine of the UK is too exposed to the financial sector• Restructuring will take 18-24 months as banks need to sell
assets and change their focus
• The government is no longer in a position to export the wealth of the few to the rest of the country• The effect outside of London will worsen later as the
government will be slower to react
1-19 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
Evolution of the economic landscape in the Evolution of the economic landscape in the UK and its impact on retailersUK and its impact on retailers
• Pressure on UK financial sector and lower consumer confidence
• Retailers adapting their messages to the “value” proposition
• Conclusions
1-20 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
Foodservice businesses which promote Foodservice businesses which promote convenience and value continue to growconvenience and value continue to grow
• McDonald’s like for like sales are up 10% and management is looking at selective pricing actions to continue projecting a value image despite cost pressures
• Burger King is also showing results slightly ahead of the grocery market
1-21 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
Grocery discounters are thriving while Grocery discounters are thriving while premium chains sufferpremium chains suffer
Source: Retailers and MVI estimates
3.0%
3.8%
4.6%
5.4%4.9%
3.9% 4.1%
6.0%
5.1%
6.4%6.4% 6.4% 6.4%
7.1% 7.1% 7.1% 7.1%
8.7%
6.1%
4.4%
3.1%
4.8%
2.5%
3.5%
1.0% 1.0%
-1.5%-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2008
Lik
e-f
or-
Lik
e s
ale
s (
%)
Average Top 4 Grocers Discounters Premium
Notes: Discounters include: Farmfoods , Netto, Iceland, Aldi and LidlNotes: Premium retailers include: Marks and Spencer and Waitrose
1-22 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
Aldi is ready to capitalise on mass market Aldi is ready to capitalise on mass market concerns about pricesconcerns about prices
Source: Aldi.co.uk, MVI store visits
1-23 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
Lidl is using a variety of simple and clear Lidl is using a variety of simple and clear price messagesprice messages
Source: Aldi.co.uk, MVI store visits
1-24 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
And Lidl is now strengthening its And Lidl is now strengthening its convenience positioningconvenience positioning
Source: MVI Store visits
1-25 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
M&S has began a series of modestly M&S has began a series of modestly endorsed promotionsendorsed promotions
Source: MVI Store visits
1-26 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
Sainsbury’s is aggressively trying to Sainsbury’s is aggressively trying to reposition itselfreposition itself
Source: The Store store visit
1-27 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
Pressure is building on Sainsbury’s for Pressure is building on Sainsbury’s for another big ideaanother big idea
• Results are flagging as consumers look for better value alternatives in this market
• Growth plans have been costly for Sainsbury’s bottom line prior to the current economic situation• Clearly things are getting worse
• Expect Sainsburys to be a candidate for M&A activity in the coming months
1-28 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
Waitrose is taking on other premium Waitrose is taking on other premium competitorscompetitors
Waitrose is also looking to roll-out a new convenience concept that will go head to head with Sainsburys Local and M&S
Simply Food.
Source: MVI Store visits
1-29 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
Different strategies for the two extremes Different strategies for the two extremes of grocery retailingof grocery retailing
• Discounters• Clear positioning which is to lower the cost of
monthly grocery shopping through a combination of price points and price competitiveness
• Premium grocers• Taking the fight to foodservice with a hope of
capturing aspirations of a quality meal for the family
1-30 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
Looking across the mainstream grocers, Looking across the mainstream grocers, there is a race to the bottom...there is a race to the bottom...
Evo
luti
on
of
like
-fo
r-li
ke s
ales
(%
)
1-31 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
Morrisons has had great success with Morrisons has had great success with new promotional messagesnew promotional messages
Source: MVI Store visits
1-32 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
ASDA continues to sharpen its price ASDA continues to sharpen its price positionposition
Source: MVI Store visits
1-33 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
As the grocery market reference, Tesco is As the grocery market reference, Tesco is having to pull at all the stopshaving to pull at all the stops
Source: Tesco
1-34 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
Tesco is both reducing the basket and Tesco is both reducing the basket and trying to encourage frequencytrying to encourage frequency
Source: MVI Store visits
1-35 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
Evolution of UK grocery sales by formatEvolution of UK grocery sales by formatCAGR 06-08E CAGR 08E-10E
Supermarket 3.0% 3.1%Convenience 6.1% 4.9%Hypermarket 11.6% 7.3%
Drug 4.1% 3.0%Cash & Carry 1.4% 1.2%Discounter 13.2% 13.1%
Online 23.2% 14.9%Total 4.8% 4.2%
Total £127.7
76.6 78.7 81.2 83.7 86.3
13.5 14.6 15.2 16.0 16.711.913.2
14.816.1
17.110.2
10.711.1
11.411.7
9.59.7
9.89.9
10.0
3.94.5
5.05.7
6.4
2.12.7
3.23.7
4.2
0
20
40
60
80
100
120
140
160
180
2006 2007 2008 2009 2010
Online
Discounter
Cash & Carry
Drug
Hypermarket
Convenience
Supermarket
Gro
cery
Sal
es (
£ b
illi
on
) Total £134.1Total £140.3
Total £146.5Total £152.4
Source: MVI database
1-36 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
Tesco, ASDA and Lidl will be the most Tesco, ASDA and Lidl will be the most successful retailers in the next two yearssuccessful retailers in the next two years
Note: Sales figures are expressed as GBP Billions
Source: MVI database
Note: Grocery sales are expressed as the sum of the total grocery formats operated by the retailer (includes online retailing)
1-37 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
Evolution of the economic landscape in the Evolution of the economic landscape in the UK and its impact on retailersUK and its impact on retailers
• Pressure on UK financial sector and lower consumer confidence
• UK consumers are now more concerned by the “value” proposition
• Conclusions
1-38 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
ConclusionsConclusions
• Real incomes are being squeezed• The Bank of England is virtually powerless to stop
inflation in the current context
• Consumers are very nervous and looking for answers• The Discounters are getting favourable press
coverage and accelerating expansion as part of the solution
• The mainstream chains are trying to reposition their brands as helping consumers live better in a tough economy (a different type of aspiration than the past decade)
1-39 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
ConclusionsConclusions
• Retailers are running to convenience as an added-value during this crisis• The success of foodservice shows that time
pressure remains a key issue for UK consumers• New small format concepts in development from
Waitrose, Tesco and Morrisons• One-stop shopping from M&S
• The discounters will lead growth in the market• This will force more restructuring amongst
competitive chains
1-40 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
Today’s AgendaToday’s Agenda
• Evolution of the economic landscape in the UK and its impact on retailers
• Understanding the discount channel and its increasing role in this environment
• Future outlook and conclusions
Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
Management Ventures, Inc.Management Ventures, Inc.“The worse off people are, the better off we are.”Attributed to Anna Albrecht, mother of Aldi founders Karl and Theo
Source: Aldi Nord and Coriolis research report with original quote source unknown
1-42 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
Understanding the discount channel and its Understanding the discount channel and its increasing role in this environmentincreasing role in this environment
• Discounters business model and key principles
• Competing in the UK context
• Implications for branded manufacturers
1-43 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
There are three types of financial business There are three types of financial business models in modern retailingmodels in modern retailing
MARGIN FOCUS (%) MARGIN FOCUS (%)
GROSS PROFIT FOCUS (£)GROSS PROFIT FOCUS (£)
HYBRID MODELHYBRID MODEL
Waitrose, Whole Waitrose, Whole Foods, M&SFoods, M&S
Tesco, Asda, Tesco, Asda, Sainsbury’sSainsbury’s
Lidl, Aldi, NettoLidl, Aldi, Netto
1-44 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
Discounters run on a simple model based Discounters run on a simple model based on cash marginon cash margin
Possible units sold X Gross margin = Cash margin
Initial unit forecast made
by buyer.
Initial margin forecast made
by buyer
Cash margin is estimated at the time of
negotiation.
Source: MVI
1-45 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
Where do discounters save moneyWhere do discounters save money
Administration
Payment
Stock
Store Manger
Cashier
Sales Assistant
SalesAssistant
Store Manger
Full-range retailer DiscounterRESPONSIBILITIES
Low Productivity High Productivity
High Personnel Costs Small Personnel Costs
Store Staff’s Responsibilities; Full-range retailer vs. Discounter
Source: MVI research
1-46 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
Simplicity and consistency are at the Simplicity and consistency are at the heart of the modelheart of the model
Source: MVI Store visit
LIDL UK LIDL CZECH REPUBLIC
1-47 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
Understanding the discount channel and its Understanding the discount channel and its increasing role in this environmentincreasing role in this environment
• Discounters business model and key principles
• Competing in the UK context
• Implications for branded manufacturers
1-48 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
The Discounter channel in the UKThe Discounter channel in the UK
Need Want
Ave
rag
e N
um
ber
of
Sh
op
pi n
g T
rip
s P
e r Y
ear
5
40
Merchandise Assortment
Source: MVI research
Single Price Point
Hard Discounter
Soft Discounter
Convenience Discount
Discount Supermarkets
1-49 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVISource: MVI Analysis
The discounters face well established The discounters face well established local competition in the UKlocal competition in the UK
BulkImmediate
Premium
Discount
Tesco
ASDA
Lidl/Aldi/Netto
1-50 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
The key for discounters is to get The key for discounters is to get shoppers in the store shoppers in the store onceonce
Source: BrandZ Millward Brown
Over the last 7 years Aldi and Lidl have been able to convert
roughly 60% of people that would consider the brand to regular users of the brand
1-51 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
Discounters still struggle with awareness Discounters still struggle with awareness and loyaltyand loyalty
Source: MillwardBrown BrandZ
1-52 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
However, the discounters are making However, the discounters are making inroads in building their brandsinroads in building their brands
• A nationwide survey by the consumer magazine Which? revealed that British consumers already rated Lidl and Aldi more highly than Tesco, Asda, Morrisons and Sainsbury’s. On overall satisfaction the scores were:• Aldi - 66• Lidl - 64• Sainsbury’s - 61• Tesco/ASDA - 58• Morrisons - 56
Note: Score was based mostly on price satisfaction, not overall satisfaction Source:Which? Survey 2007
1-53 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
Discounters have clearly benefited from this changing economic climate
• Lidl UK saw May sales increase 14.9% over the prior year
• Aldi has stated that in the UK:• Sales are up 17%, while like-for-like sales are up 12% over
the previous year• In Q1 2008, traffic is up 25% with the number of ABC1
shopper up 17%
• Netto has stated that in the UK:• “Netto is the fastest growing supermarket in the UK with an
11.2% sales increase over the last 12 months.”
Source: The Guardian 17 May 2008 and the Financial Times 24 May 2008, Netto website, based off of AC Nielsen study
1-54 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
And are accelerating expansion plans to And are accelerating expansion plans to take full advantage of this trendtake full advantage of this trend
Source: MVI database
All Other Food Formats
Discounters
% o
f n
ew s
pac
e ad
ded
25.5% 30.6%
74.5% 69.4%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2003-2008 2008-2013
1-55 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
Brands are playing a more prominent role Brands are playing a more prominent role in the channel, with Lidl leading the shift in the channel, with Lidl leading the shift
Source: MVI store visit UK May 2008
1-56 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
Brands have a much clearer role in the discounter today
• Help improve retail brand quality perception• Provide much needed margin to fuel continued
growth • Promotional activity to drive traffic
• Lidl has adapted its strategy to incorporate brands and branded promotions.• Offset the cost of promotions through requiring
them to be on pallets• For non-palletised SKUs, created additional
promotional space in store
1-57 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
Understanding the discount channel and its Understanding the discount channel and its increasing role in this environmentincreasing role in this environment
• Discounters business model and key principles
• Competing in the UK context
• Implications for branded manufacturers
1-58 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
Discounters are gaining share: Discounters are gaining share: implicationsimplications
• Discounters’ positioning is made of simple, value related messages
• Branded manufacturers will see most of their growth coming from this channel• Understanding what types of SKUs discounters are interested in
• Branded manufacturers are facing challenges across all components of the marketing mix:• Price• Product• Place• Promotion
1-59 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
Today’s AgendaToday’s Agenda
• Evolution of the economic landscape in the UK and its impact on retailers
• Understanding the discount channel and its increasing role in this environment
• Future outlook and conclusions
1-60 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
The UK economy is experiencing a major The UK economy is experiencing a major correction following 10 years of growthcorrection following 10 years of growth
• This is a crisis in a relative sense• Even as this gets worse, people will generally remain richer
than ever before• There is still a possibility that the private sector can
restructure itself in the coming 18-24 months
• People are trading down, yes... BUT• These discounts stores are much better than what they used
to be
1-61 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
For retailers, keeping shoppers in-store For retailers, keeping shoppers in-store is the number one concernis the number one concern
• Fragmentation of shopping trips is reaching new heights, impacting both frequency and average basket value
• Higher promotional activity is taking place within the Top 4 retailers
• Shift from more complex marketing messages to simple price cutting activities
1-62 Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.eu © 2008 MVI
Key growth categories will shift from Key growth categories will shift from what we saw over the last couple of yearswhat we saw over the last couple of years
• Product• The rise of premium products will slow down or even come to a halt. Organics
and other added-value products will make space for mainstream ranges (branded, private label)
• Frozen food sales are on the rise again
• Price• Mass-market retailers and discounters will further communicate on their price
competitiveness. Simple communication messages is key
• Place• More convenient shopping trips will further take shares out of the bigger stores
• Promotion• Strong promotional activity on KVIs, while premium products will only offer
tactical opportunities
Thank You!Thank You!
. . . A Partner in Your Success. . . A Partner in Your Success
Corp. Site: MVI-Worldwide.com, Licensed site: MVI-Insights.com © 2008 MVI
Vincent VerdierAnalyst
EMEA Headquarters6 More London PlaceTooley StreetLondon SE1 2QY