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FUTURE ROUTES TO MARKET IN RETAIL Inspiration Session By Ray Gaul, Kantar Plovdiv 11 th April 2019
FUTURE ROUTES TO MARKET
IN RETAIL
Inspiration Session
By Ray Gaul, Kantar
Plovdiv 11th April 2019
2
Global Retail Brain Teaser
1 2 3
Which calendar date will be the biggest global shopping day in 2019?
How many SKUs did Amazon add to their USA platform in 2014?
Has average European grocery EBIT % gone up, down, or stayed the
same since 2013? (Past 5 years)
4 Do shoppers force retailers to transform stores or do retailers force
shoppers to adapt their shopping habits?
3
Which came first?
…The Chicken or the Egg?
Shopper or Retailer?
Our default view is that retailers transform shopping and consumers transform shopping needs
…but is this true today?
Retailer or Shopper?
4
Money
€
Angst
Time
Shopper or Retailer?
Shoppers invest time, money, angst…customers invest in locations, technology, and exclusives / activations
PHYSICAL SPACES
SHOP FLOOR
BACKROOM
OUTDOOR SPACES
DISRUPTORS
Examples of IN & OUT Flow Disruptors:
1. EPAY
2. REGULATION
3. REMOTE MANAGEMENT LIKE NEST
4. ROBOTS
5. DECLINE OF FOOTFALL CATEGORIES LIKE
TOBACCO,
PRINTING, TOP UP PHONES, LOTTERY
6. PHYGITAL / OMNICHANNEL
7. ETICKETS / ELOTTERY
SPEED UP OR SLOW
DOWN SHOPPERS?
SIMPLIFY OR
COMPLICATE WORK?
INCREASE OR
DECREASE AUDIENCE?
VISITORS / CONSUMERS
COMMUNICATION
SECURITY
FIXTURES / EQUIPMENT
CASH / SCANNERS / CHECKOUT
ENERGY & WASTE
STAFF / WORKERS
INVENTORY / STOCK / DELIVERY
Our default view is that good retailing is getting shoppers to spend more money?
But with new technology, is that the best bet?
5 Source: Lidl Slovenia, bryanroberts72
WHO IS A CONVENIENCE EXPERT?
6
WHAT IS THE DISCOUNTER BUSINESS MODEL?
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WHERE IS THE LINE BETWEEN PHYSICAL AND DIGITAL?
8
Bulgaria’s Retail Challenge
Retailers expanding
Retailers Simplifying
Shoppers expanding
Shoppers simplifying
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10 Source: Kantar
Buying Strawberries in Germany Has Never Been More Diverse than Today
Retail is getting filled by operators that want to stand out in having something unique — fragmentation?
Full Range / Large Format Stores Discounters & Limited Range
BIO / ECO and Premium Ultrafresh / Delivery Specialists
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Differentiation: It Means Something Different for Suppliers Compared to Retailers
The easiest way to see the difference is by looking at the definition of the word “fresh”
Retailer’s definition of fresh is about the speed / relationship between the source and the
consumer and requires the retailer to remove steps in supply-chain
THE SUPPLIER
Factory
For suppliers fresh is about the relationship between the product and its shelf life –
or the source - For suppliers it is primarily about formula / packaging / sourcing
Consumers Display Packaging Shipping
THE RETAILER
Source
Wholesaler
or
Aggregator
Regional or
local
Collection
Point
Consumers Store
KEY MESSAGE: For Retailers it is about Supply Chain!
(Either where something happens or how fast it happens)
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Four trade-offs that retailers must make when moving to differentiation
1 2 3 4
Compact
Self-Service
52-Week Permanent
One-Size Fits All
Spacious
Connoisseurs
Modular & Fast
Changing
Cater to Niche and
Special Needs
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Space: Most retailers heat map and layer with productivity (sales per square metre)
Challenges around placement – Getting the right location critical for success
Source: Kantar
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Only 2% of all Shoppers go
through the entire store
Have you thought about:
What % of shoppers actually visit each location / aisle?
How sales per sq. m. will change with more space? (not just
category lift but sales per slot?)
How sales per sq.m. in hero differentiators compares to other hot
zones?
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Space: Changing Category Dynamics – Pressure on All Fronts
Reallocation of Space to Hero Categories Results in Store Redesign and ‘Battle for Visibility’
Source: Kantar
Drug - Beauty / Health Services / Food-to-Go Grocery & Convenience –
Mobile / Food Service
/ Fresh / Lockers
Discounter – Fresh / Bakery / Beauty
Petrol stations know how to do
Fresh in Compact Formats
Challenge yourself: What can I do
with limited space?
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Connoisseurship (Expertise)
Added labor investments must be managed via gross margin
Fast and frequent, and local, deliveries = More Labor and Transport Costs
“PRODUCE FROM ROMANIA” AT DOOR FRESH INSPECTED EVERY 2 HOURS
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Timeliness
Innovation in Micro Retailing - Casino example
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Timeliness
Amazon Fresh is forcing all retailers to raise their game
Amazon’s Membership Program Locks Shoppers into Purchase Patterns and Locks Partners into Supply Chain
18 Source: Farmdrop website, June 2015
Loyalty
100% Organic - Farm Drop
Marketing gets personal, very personal
ABOUT WILD COUNTRY ORGANICS
Adrian Izzard has a PhD in Human Nutrition from Cambridge, but organic
farming is where his heart is. In 1998 Adrian reopened the family farm —
closed since his parents’ retirement – and, with hard work and vision,
transformed the farm from one derelict nursery with trees growing out of the
panes to six acres of greenhouses
Adrian’s father had Parkinson's disease, which he believes was linked
to pesticide exposure, so he has a very personal reason to be passionate
about avoiding chemicals in farming. This organic ethos has led him to
develop the growing techniques that make Wild Country Organics’ produce
so fresh and tasty
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NEXT STEPS FOR 2020+
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Bulgaria’s Retail Challenge
Try to do “all 4”
Small Space Big Space
High Connoisseurship
Self Service Pick yourown
