REIGNITE IN-STORE MERCHANDISING EFFECTIVENESS IN THE ...

September 28, 2020

REIGNITE IN-STORE MERCHANDISING EFFECTIVENESSIN THE GROCERY CHANNEL

PART 9 | COVID-19

The Changing Shape of the CPG Demand Curve

Read Other CPG Demand Curve-Focused Reports

https://www.iriworldwide.com/en-us/insights/publications/coronavirus-archive

© 2020 Information Resources Inc. (IRI). Confidential and Proprietary. 2

Executive SummaryCPG retail operations and the customer experience have taken some wild turns throughout the COVID-19 pandemic, including revising store layouts and instituting new cleaning protocols on the part of the retailer, and suspending or dramatically revising marketing and promotional activity on the part of the manufacturer, along with new shopping patterns and bigger baskets for consumers.

In this report, IRI looks at the impact COVID-19 has had on total food channel store display merchandising as well as strategies to help manufacturers and retailers navigate the future of display in the next normal.

The Transforming CPG Display Landscape• In-store display space has been significantly reduced as retailers enable social distancing.• High COVID-19 demand categories such as bleach, soap / beauty and beverage alcohol

are displacing traditional display categories such as cookies / crackers and candy.• Despite these shifts, contribution to sales from display has held steady vs. pre-COVID-19

and decreased only slightly vs. year ago.• Sales with features have softened, not keeping pace with display despite no significant reduction in activity.

Looking Ahead• As display space remains challenged, retailers and manufacturers will continue to refine merchandising strategies to maximize

lift by aligning the metrics that matter across display product mix, size, location and number with new shopping patterns.• Continual evaluation will be required to ensure the “right” categories get display space – merchandising strategies that

worked during peak stockpiling of mid-March and subsequent stock-up periods may no longer work as behavior evolves.• Ensuring all off-shelf merchandising efforts are in sync with weekly feature ad support will continue to be both a key

goal and challenge.

HOW CAN IRI HELP? IRI’s Enhanced Display tools can help manufacturers and retailers better understand trends and opportunities across the total store. IRI employs a collection force of 1,200+ highly trained auditors who collect display and causal data from IRI sample stores weekly.


In-Store Displays Are Displaced to Accommodate Distancing: ~5 Fewer Displays

On Average vs. YA, with Both Edible & Nonedible Categories Experiencing Losses

Average Number of Weekly Displays per Store – Pre-COVID-19 vs. 7 WE 9-6-20 – Total U.S. Food

91.077.2

24.1

83.470.7

22.2

1.7 1.4

-0.5

-4.8

-3.6-3.1

NonedibleTotal Store Edible

Average Weekly Number of Displays per Store Displaying

Average Weekly Number of Displays, Absolute Change vs. YA

Source: IRI Total Store Display Audit / *Differing store counts by location causes totals to be nonadditive

Pre-COVID-19 8 WE 02/23/20 7 WE 09/06/20


As Distancing Measures Require More Space in Store,

perimeter and In-Aisle Display Locations Are Being Squeezed

Average Number of Weekly Displays per Store by IRI Standard Location –

7 WE 9-6-20 – Total U.S. Food

3.9

10.311.7

13.1

2.8

13.2

30.6

0.1 0.10.2

Lobby PerimeterFrontEndcap

BackEndcap

AOEndcap

Promo/ Seasonal

In-Aisle

0.0 0.0

-1.7

-1.5

Source: IRI Total Store Display Audit / *Differing store counts by location causes totals to be nonadditive

Average Weekly Number of Displays per Store Displaying*

Average Weekly Number of Displays, Absolute Change vs. YA*


General Food, General Merchandise Show Most Display Decline, While Number

of Beverage Alcohol Displays Continue to Increase in the Most Recent period

Average Number of Weekly Displays per Store by Department – 7 WE 9-6-20 – Total U.S. Food

Source: IRI Total Store Display Audit

EDIBLE NONEDIBLE

21.4

4.7

11.2

5.5 6.6

13.6

6.74.0

52.8

-0.9-0.1

-3.8

0.6

-0.7

0.5

-3.7

0.3

-0.8

HealthBeautyBeverage Alcohol

Beverages Frozen General Merch

General Food

Refrigerated Home Care

Average Weekly Number of Displays per Store Displaying

Average Weekly Number of Displays, Absolute Change vs. YA


Traditional Top Display Categories, Including Cookies and Candy, Are Losing Space

to Bleach and Soap; Supply Chain Issues Impacting Decliners Like Paper Towels

Top and Bottom Categories by Number of Display (NOD) % Chg – 7 WE 9-6-20 – Total U.S. Food

0.6

-6.4

-0.9

-5.5

3.7

-3.9

Salty Snacks(General Food)

Bottled Water(Beverages)

Fresh Bread & Rolls(General Food)

Cookies(General Food)

Snack Nuts/Seeds (General Food)

CarbonatedBeverages

(Beverages)

Crackers(General Food)

Non ChocolateCandy

(General Food)

ChocolateCandy

(General Food)

-9.8

Beer(Bev Alcohol)

-13.8

-11.2

-10.8

TOP 10 CATEGORIESRanked on NOD

TOP 10 CATEGORIESRanked on % Change vs. YA

75.7

71.7

35.0

29.2

22.3

22.3

16.4

16.4

16.0

Premixed Cocktails(Bev Alcohol)

Soap(Beauty)

Home Health Care/Kits (Health)

Dough/BiscuitsRfg (General Food)

External AnalgesicRubs (Health)

Bleach(Home Care)

Baby Formula(General Food)

Hair Coloring(Beauty)

Liquid DrinkEnhancers (Beverages)

Cosmetics - Lip(Beauty)

1,115.7

-38.3

-64.5

Gastrointestinal Tabs (Health)

Popcorn / Popcorn Oil(General Food)

Dinners - SS(General Food)

Culinary(General Merch)

Cleaning Tools/Mops (Home Care)

Paper Towels(General Merch)

Baby Wipes (Health)

-47.7

-50.9

Moist Towelettes(Beauty)

-58.9

-41.1

Household CleanerCloths (Home Care)

-76.3

Facial Tissue(General Merch)

-41.1

-39.7

-38.2

BOTTOM 10 CATEGORIESRanked on % Change vs. YA



As Most Departments Are Challenged with Diminished Assortment, Items Available

on Display Across All Departments Show Dramatically Weaker Trends

Average Number of Weekly Displays per Store by Department – 7 WE 9-6-20 – Total U.S. Food

Frozen General

Food

Beverages Beverage

Alcohol

Refrigerated Beauty General

Merch

Health Home Care

-2.9

-12.7

-5.2

-10.4

-4.1

-16.0

3.5

-10.5

-6.0

-1.5

-4.1-2.7

2.1

-2.1

-5 -5.2

-2.5

-14.8


Average UPCs per Display % Change vs. YA

Average Weekly Items per Store % Change vs. YA

EDIBLE NONEDIBLE


Reduction of Displays Has Impacted All Top National Brand

Parent Companies, But Largest Erosion Is Among Private Label

Average Number of Weekly Displays per Store by Parent Company – 7 WE 9-6-20 – Total U.S. Food

10.7

5.64.6 4.2 3.9 3.4

23.3

-0.8

-1.5

-0.2-0.7 -0.7

Parent

Company B

-2.4

Private

Label

0.0

Parent

Company A

Parent

Company D

Parent

Company C

Parent

Company E

Parent

Company F


Average Weekly Displays per Store

Average Weekly Displays per Store, Change vs. YA


The Contribution of Sales from Display Held Essentially Steady vs. Pre-COVID-19

and Year Ago; Importantly, Feature Contribution Now Lags Display

% Share of Dollar Sales by Merch Type – Pre COVID-19 vs. 7 WE 9-6-20 – Total U.S. Food

13.5 12.2

7.87.9

10.0

7.3

4.1

3.2

7 WE 9/6/20Pre-COVID-19 8 WE 02/23/20

35.4

30.6

Share Point Change vs. YA

-5.0

-1.0

-2.5

-0.2

-1.1

Source: IRI TSV Data Ending 9/6/20

Feature &

Display

Feature

Only

Display

Only

TPR

Only


Feature Sales Are Soft vs. Year Ago Despite Maintaining

Frequency of Activity; Display Trends Are Thriving

Dollar Sales % Change by Merchandising Type –

Pre-COVID-19 vs. 7 WE 9-6-20 – Total U.S. Food

1.6

3.9

1.0

-0.8

1.5

-1.5

5.0

11.4

Temporary PriceReduction Only

FeatureOnly

Any Merchandising

DisplayOnly

Feature &Display

-14.9

-13.6

Pre-COVID-19 8 WE 02/23/20

7 WE 09/06/20

- - - - - - -0.04 -0.20 -0.24

($219) $289 $399 -$628 -$248

Source: IRI TSV Data Ending 9/6/20

Dollar Sales by Merchandising Type / % Change vs. YA

11.4

Weighted Weeks Change vs. YA / $ Change (000s) vs. YA


Growth Due to Base Demand Is the Largest

Contributor to the Increase in Display Sales

Breakdown of Total Store Display $ Sales Change (000s) vs. YA, by Department – Total U.S. Food

Source: IRI Total Store Display Audit.

$1,002

-$227-$376

Incremental Display Dollars

$ Due to Incremental Dollars per Display Change

Difference in incremental sales per display vs. YA multiplied by the number of displays placed

Base Display Dollars

$ Due to Base Dollars per Display

Quantifies display sales generated by the change in base demand

Decline in Dollars Due to Fewer Displays

$ Due to Number of Display Changes

Average sales per display multiplied by the difference in number of

displays vs. YA

TOTAL = $399


$3

$25$8

In Addition to Base Demand Gains, Beverages and Health

Departments Have Shown Improved Display performance

Breakdown of Display $ Sales Change (000s) vs. YA, by Department – Total U.S. Food

$11

$179

-$67

-$1

$56

-$16

-$148

$412

-$190

-$32

$96

$26

-$22

$94

-$55

-$44

$89

-$52

$6$14

$0

-$4

$19

-$11

General Food

$74

Beverages

$123

Frozen

$39

-$189.8

Bev Alcohol

$90

Refrigerated

$17

Health

$20

Beauty

$36

General Merch

-$7Home Care

$4

$ Due to Number of Display Chg

$ Due to Incremental Dollars Per Display Chg

$ Due to Base Dollars Per Display



Implications for Manufacturers and Retailers

MANUFACTURERS

• As display space shrinks and categories such as cleaning take center stage, CPG manufacturers must work with retailers to drive more incremental opportunity via displays while balancing the need to highlight high-demand items.

• Understand the shifting role of display and determine the display metrics that matter to help drive performance and maximize ROI of trade and merchandising labor investments.

• Partner with retailers to identify relative lift of key categories on display to determine optimal focus areas as shopping patterns shift.

• Explore opportunities to increase variety on display as COVID-19-related streamlining eases.

• Temporary Price Reduction and Feature remain important activities, but to continue to move merchandising up the “lift ladder,” shift TPR to display, and ensure display compliance to features.

RETAILERS

• Social distancing measures are creating new pressures on sales and profit per square foot. Driving productivity of remaining display locations and space will be key moving forward.

• With declining feature-only lifts, ensuring adequate display allocation on feature items is a priority. Checking store compliance on display during feature weeks will be critical.

• Allocate display holding power to categories and items that can maintain supply and drive incremental sales.

• Consider extra drive period execution of traditional snack and beverage categories to maximize display productivity overall.


IRI Offers a Variety of Solutions and Services to Help

Manufacturers and Retailers Understand Off-Shelf Merchandising

• Total store view of cross-category display presence by store location

• Largest total market view reporting of 300+ syndicated CPG categories and 200+ retailer or regional geographies

• Powered by the combination of POS data and display observations

• Provides category-focused view of expanded display measurement

• Detailed understanding of location, number and variety on display Compare results against prior periods, YAG and/or seasonal time frames

• Direct access within UNIFY to the entire category product hierarchy

• Ranks the order of importance and validates in-store drivers of sales and volume, highlighting execution priorities and blind spots

• Provides national guidance, creating a validated merchandising strategy for your portfolio

• Implement better KPI development to effectively measure key levers

Enhanced Display

Measures

Total Store Display

Metrics

That Matter

ACTION and IMPACT

• Provides clear understanding of merchandising strategy guiding in-store actions

• Redefines what it means to “win” the in-store environment

ACTION and IMPACT

• Provides clear understanding of key display variables, share and location

• Helps identify key display priorities to win

ACTION and IMPACT

• Category to UPC level solution

• Provides clear understanding of total display opportunities

• Identifies and prioritizes key display location targets


Vivek Sankaran

President & CEO, Albertsons Companies

August 25, 2020

Ram Krishnan

Global Chief Commercial Officer, PepsiCo

August 17, 2020

Brian Cornell

CEO of Target

July 16, 2020

https://www.iriworldwide.com/en-us/csuite2




Insights and Strategic

Guidance for Better Decisions

IRI’s Online Resources Include Real-Time

Updates and Weekly Reports That Track

the Impact of the Virus on CPG and Retail

The IRI COVID-19 lmpact

Includes COVID-19 impact analyses, dashboards

and the latest thought leadership on supply chain,

consumer behavior and channel shifts for the U.S.

AND international markets.

IRI CPG Economic Indicators, Including

the IRI CPG Demand Index™, IRI CPG

Supply Index™ and IRI CPG Inflation

Tracker™

Accessible through the insights portal

to track the daily impact of COVID-19.

This includes top-selling and out-of-stock

categories across the country and

consumer sentiment on social media.

https://www.iriworldwide.com/en-US/Insights/Publications/coronavirus-impact-to-CPG-and-retail

https://bit.ly/IRI-COVID-19-Reports

https://advantage.iriworldwide.com/Engineering/covid19/index.html


The Latest COVID-19 Reports and Insights From IRI (click to see full report)

IRI COVID-19 IMPACT ASSESSMENT REPORTS RECESSION PROOF YOUR BUSINESS

THE CHANGING SHAPE OF THE CPG DEMAND CURVE

https://www.iriworldwide.com/IRI/media/Library/IRI-TL-Recession-Series-Part-3-Brand-Performance-5-21-2020.pdf

https://www.iriworldwide.com/IRI/media/Library/IRI-TL-Recession-Series-Part-2-Maintaining-Pricing-Discipline-5-7-2020.pdf

https://www.iriworldwide.com/IRI/media/Library/IRI-TL-Recession-Series-Part-I-4-29-2020.pdf

https://www.iriworldwide.com/IRI/media/Library/COVID-19_IRI.pdf

https://www.iriworldwide.com/IRI/media/Library/COVID-19-Thought-Leadership.pdf

https://www.iriworldwide.com/IRI/media/Library/COVID-19-Thought-Leadership-3-25-2020.pdf




https://www.iriworldwide.com/IRI/media/Library/IRI-TL-Recession-Series-Part-4-Private-Label-5-28-2020.pdf

https://www.iriworldwide.com/IRI/media/Library/IRI-TL-Recession-Series-Part-5-Building-Brands-6-3-2020.pdf

https://www.iriworldwide.com/IRI/media/Library/IRI-TL-Recession-Series-Part-6-Innovation-Lessons-6-12-2020.pdf

https://www.iriworldwide.com/IRI/media/Library/COVID-19-Impact-Assessment-Millennials-Meat-5-15-20.pdf

https://www.iriworldwide.com/IRI/media/Library/IRI-COVID-19-Impact-Assessment-4-24-2020.pdf/

https://www.iriworldwide.com/IRI/media/Library/COVID-19-Changing-Shape-of-the-Demand-Curve-Part-3-6-18-20.pdf


https://www.iriworldwide.com/IRI/media/Library/IRI-TL-Recession-Series-Part-7-Defending-and-Recapturing-the-Shelf-7-6-2020-vF.pdf



https://www.iriworldwide.com/IRI/media/Library/U-S-CPG-Growth-Leaders-TL_aug20.pdf

https://www.iriworldwide.com/IRI/media/Library/COVID-19-Changing-Shape-of-the-Demand-Curve-Part-8-8-28-2020.pdfhttps:/www.iriworldwide.com/IRI/media/Library/COVID-19-Changing-Shape-of-the-Demand-Curve-Part-8-8-28-2020.pdf


The IRI CPG Demand Index™ provides a

standard metric for tracking changes in spending

on consumer packaged goods. It measures

weekly changes in consumer purchases, by

dollar sales, against the year-ago period across

departments, including fixed and random weight

products, grocery aisles and retail formats. The

IRI CPG Demand Index™ is available for eight

U.S. regions, all U.S. states, UK, France, Italy,

Germany and the Netherlands.

CLICK HERE FOR MORE!

IRI CPG Demand Index™NOW INCLUDES

U.S., UK, FRANCE, ITALY, GERMANY & NETHERLANDS

https://advantage.iriworldwide.com/Engineering/covid19/?i=0


The IRI CPG Channel Shift Index provides a

standard metric for tracking changes (migration)

in spending on consumer packaged goods across

select channels. The index measures weekly

changes in consumer purchases by dollar sales

and product trips against the year-ago period for

edible and non-edible products. The index is

available for seven geographies—All Outlets,

Grocery, Club, Dollar, Drug, Mass and Total E-

Commerce.


IRI CPG Channel Shift Index™



The IRI CPG E-Commerce Demand Index provides a standard metric for tracking changes in spending on consumer packaged goods purchased online. The index measures rolling quad-weekly changes in consumer purchases by dollar sales against the year-ago period across releasable edible and non-edible departments. The index is available for three channels--Total E-Commerce, Brick & Mortar E-Commerce and Online E-Commerce, and two fulfillment types –Click & Collect and Delivery / Shipment.


IRI CPG E-Commerce

Demand Index™



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INFORMATION

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REIGNITE IN-STORE MERCHANDISING EFFECTIVENESS IN THE ...

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