HOW TO WIN THE BATTLE IN THE STORE

DRIVING GROWTH

Alexandru Zudor06.10.2016

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The Client is not authorised to publish and/or adapt this research report,

whether in whole or in part(s), in the press, on the radio, on television, in

leaflets, data search systems, litigations etc. without prior written consent of

Nielsen .

Consent for publication should be sought from Nielsen each time.

CONFIDENTIALITY CLAUSE

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• INTRODUCTION

• MARKET CONTEXT

• SALES FUNDAMENTALS

• HOW TO ENSURE IN-STORE PERFORMANCE

• CASE STUDY

AGENDA

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WHY ARE WE

HERE

TODAY?

Get to know

each other

Answer

your

questions

Present ways

to ensure the

optimal in-

store

execution

AGENDA

MARKET CONTEXT

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EVOLUTION OF RETAIL ASSORTMENT

1990 2000 201619501900

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157 7 4 1 5 6

38

2216

14

97 8

31

28

2425

18 13 12

10

25

1923

23

16 16

4

12

15 14

20

18 17

17

19 2129

40 41

2006 2008 2010 2012 2014 2015 2016

6 + retailers

5 retailers

4 retailers

3 retailers

2 retailers

1 retailer

AVERAGE NUMBER OF VISITED RETAILERSRETAILERS USED IN THE PAST 4 WEEKS

*Nielsen Shopper Trends Slovenia, 2016

2,5 3,4 3,9 4,1 4,7 5,0 5,1

In average, Shoppers visit 5different stores/retailers in 2015. 40% of shoppers are visiting 6 and more than 6 retailers in one month.

Average/

Retailers

%

6 Retailers 13%

7 Retailers 12%

8 Retailers 7%

> 8 Retailers 9%

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50% of shoppers will buy an alternative brand if their desired brand is out-of-stock

*Nielsen Shopper Trends Romania, 2016

THREAT OF OUT OF STOCKS AFFECTS EVERYONE

21%31%

20% 22%28%

35%

21%29%

55%43%

60%60%

57% 44%

51%

52%

13%14%

13%12% 10%

11%

10%

12%4% 8%

5%4% 5%

10%

3%

7%7% 5% 4%14%

Doesn't buy category

Wait until it was available

Look for the same brand butchange sub-brand, size stc.

Buy an alternative brand

Buy the same brand at anotherstore

THREAT TO

RETAILER

THREAT TO

MANUFACTURER

LOYALTY

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Although 80% of shoppers prepare a shopping list, they usually end

up buying additional grocery items, but it is decreasing compared to

2015

*Nielsen Shopper Trends Serbia, 2016

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11% 11% 12%

27%32% 28%

51%

53%55%

11%5% 6%

2014 (Feb) 2015 (Feb) 2016 (Mar)

I don't know about or notice theprices of grocery items

I don't necessarily know all theprices but I generally noticewhen the price changes

I know the prices of most of theitems and always notice whenthe price changes

I know all the prices of thegrocery items I buy regularly

40% of shoppers are very price conscious

40%43%

38%

PRICE AWARENESS

*Nielsen Shopper Trends Slovenia, 2016

SALES FUNDAMENTALS

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STORE EXECUTION FUNDAMENTALS

Distribution &

Assortment

Visibility

PriceInvestment

Promotions

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COMPARATIVE OUT-OF-STOCK

DISTRIBUTION & ASSORTMENT

ASSORTMENT OUT-OF-STOCKCOMPETITION’S ASSORTMENT

» Are all my target products available on the shelf?

» Are my minimum stock requirements met?

» How high is the OOS incidence?

» How high is the near-OOS incidence?

» Do I have defined the right assortment?

» For each store type?

» Considering region specifics?

» Considering the season?

» What is the competitions assortment?

» How does it compare to my target assortment?

» How is my OOS incidence compared to competition?

» Are the direct competitor SKUs present in the stores where my SKUs were OOS?

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SHARE OF SECONDARY

VISIBILITY

MERCHANDISING STANDARDS

SECONDARY PLACEMENT EXECUTION

SHARE OF SHELF

» Are my secondary placements present according to agreements?

» Are they executed according to standards?

» Where are the gaps?

» Are my shelf merchandising standards implemented?

» Where are the gaps?

» Are all products presented according to standard?

» Are all prices communicated according to standard?

» How is my overall shelf space compared to competition?

» How is my shelf space brand by brand compared to direct competitor brands?

» How many competitor secondary placements are present?

» What is my share of secondary placements compared to competition?

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COMPARATIVE PRICE

PRICE

SHELF PRICE PRICE ANALYSISRECOMMENDED SELLING

PRICE COMPLIANCE

» Which is the average shelf price?

» Most frequent shelf price?

» Minimum shelf price?

» Maximum shelf price?

» Are my prices according to standard?

» Are my prices communicated according to standard?

» Are my price promotions implemented?

» Do the retailers comply with my recommended selling price?

» Where are the gaps?

» Which are the shelf prices of my competitors?

» How are the prices compared to my prices?

» Are there price related promotions?

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COMPETITION’S INVESTMENT

INVESTMENT

COOLERSDRAUGHT / VENDING

MACHINESFURNITURE

» Are my draught machines / beverages vending machines present & functional?

» Are they used according to agreement?

» Are my coolers present & functional?

» Are the coolers merchandised according to standard?

» Are the coolers used according to agreement?

» Are my branded furniture / parasols present?

» Are they used according to agreement?

» Does the competition have coolers?

» Does the competition shave draught / beverages machines?

» Does the competition has branded furniture?

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COMPETITION’S PROMOTIONS

PROMOTIONS

PRESENCE OF PROMOTIONS

TYPE OF PROMOTIONSCOMMUNICATION OF

PROMOTIONS

» TPR / Discount

» Co-Package

» Gift-pack

» Buy 1 get 2

» Are my promotions implemented in the stores according to agreement?

» For which SKUs / brands?

» Are the promotions properly communicated?

» What kind of POSMs are present?

» Does the competition have promotions in the store?

» For which SKUs / brands?

» What type of promotions?

» How are they communicated?

HOW TO ENSURE IN-STORE PERFORMANCE

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Continuously

Track In-Store

Execution

(Re)define In-

Store

Benchmarks

Implement &

Maintain

Benchmarks

THE PROCESS

Analyze In-

Store

Performance

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ANALYZE & DEFINE IN-STORE BENCHMARKSOrganic, natural and local fresh produce

Actual Performance

• How are current standards

performing?

• Sales Performance

• Store Execution

• Compared to

competition

Advanced Analytics / Modeling

• What will be the impact in

terms of sales if we would

increase / decrease:

• Distribution / OOS

• Visibility

• Price

• Investment

• Promotions

New Benchmarks

• Target Stores

• Assortment

• Merchandising standards

• Cooler / Draught / Other

assets usage

• Pricing policy

• Promotional activity

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IN-STORE BENCHMARKS EXAMPLES

ASSORTMENT MINIMUM STOCK VISIBILITY COOLER PRICING

• Brand A CAN 0.5l

• Brand A RGB 0.5l

• Brand A PET 2.5l

• Brand B CAN 0.5l

• Brand B RGB 0.33l

• Min 3 pieces for CAN 0.5l

• Min 6 for RBG 0.33 & 0.5l

• Minim 5 for PET 0.5l

• Share of Shelf >30%

• Share of Secondary >=Each Competitor

• Minimum 2 POSM materials

• Min 80% full

• Bottom 2 shelvesonly PET

• Top shelf only premium brands

• Vertical block by brand merchandising

• Minimum 5% lower than directcompetitor for RGB

• Same price for CAN and PET as direct competitor

Supermarket Type A

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CONTINUOUSLY TRACK EXECUTION

Distribution

Visibility

Price

Investment

Promo

Channel

Distributor

Sales Rep

City

Chain

Catchment Area

Store

Region

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BACK TO PERFORMANCE ANALYSIS

6-12

Months

Implement &

Maintain

Analyze

Performance

CASE STUDY

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BACKGROUND

1 Romania 2016

2 Beverages Manufacturer

3 Promo Activation period

4 Modern Trade channel

5 Weekly tracking of execution

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BUSINESS OBJECTIVE

Evaluate activation campaigns with focus on:

• In-store execution: how was POS activated?

• Impact on sales: how the company

performed in activated stores?

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• What is the total effect of the activation program?

• How much additional sales is generated by activation

mechanics?

• Which mechanics are most impactful and which are not

contributing to sales?

27

BUSINESS QUESTIONS

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1. Evaluate true in-store execution information2. Combine with store level sales and performance metrics

STORE AUDITSSTORE LEVEL DATA

ANALYTICS

END RESULT: EVALUATE IMPACT OF ACTIVATIONS & DRIVE OPTIMAL EXECUTION

NIELSEN SOLUTION HAD TWO STEPS…

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COMBINING EXECUTION WITH PERFORMANCE

Execution levelExecution audit

A

B

C

Activation/ execution Impact

Modelling to separate baseline sales from promotions& activations mechanics, which influence sales

Audit was used for execution level assessment & to build foundations for activation/execution impact analysis.

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HOW MUCH ADDITIONAL SALES WAS GENERATED BY THE ANALIZED ACTIVATION CAMPAIGN?

This analysis shows how much additional sales was generated by the different elements considered in the model: seasonality, target activation, banded pack, TPR

Total Incremental

vs. Base

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WHICH ACTIVATION ELEMENTS TRANSFER TO INCREMENTAL SALES?

This analysis shows how much of the incremental sales generated by the activation was due to the different activation element:

• Display• Gondola• Palet• And so on

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RANKING OF THE ACTIVATION MATERIAL

Ranking

Type 1

Type 2

Type 3

Type 4

Type 5

1

2

3

4

5

This analysis shows how the different Activations materials rank in terms of impact on sales growth:

• Poster• Wobbler• Shelf Divider• And so on

SUMMARY & RECOMMENDATIONS

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SUMMARY & RECOMMENDATIONS

• Threat of out of stocks affects everyone, manufacturers & retailers alike

• The shelf is getting crowded – visibility is a key issue

• Shoppers are shopping around, they visit 5-6 retailers a month on average

• The battle on the shelf is as important as always, what have changed are

the tools and tactics

• Taking empirical based decisions it is not enough anymore

• A more elaborate analysis, evaluation and decision making process is

needed

• The tools are there, the knowledge is there, use them, invest in store

execution in order to win the “battle in the store”

THANK YOU!

Alexandru Zudor

Store Observation Leader South-East

Europe

Mobile: +40 755 140 016

www.nielsen.com