Retailing in 2020 - XPG ConsultNet in 2020: Global Trends, eCommerce, ... –Consumer Society...

Presented by:

David Marcotte

Senior Vice President

Kantar Retail Americas

March 2014

Retailing in 2020: Global Trends, eCommerce, and Implications

© Copyright 2014 Kantar Retail 2

www.pwc.com

www.kantarretailiq.com

Retailing 2020:

Winning in a polarized

world

A global company with

a local view into the

global future

http://www.pwc.com/

© Copyright 2014 Kantar Retail

Agenda

Retailing in 2020

National eCommerce – Seven Indicators

Global Examples of National Excellence

Implications for Latin America

3


The Six to Watch

4

Middle

Class

Thinking

Gender

Shift

Relocating

Labor

Consumption

Seaboard

Inland

Penetration

Bigger Data

Bigger

Answers

Marketing to

Androids

Source: Kantar Retail IQ Research


Where’s the Middle Class?Growth and Change

5


In 2013 World Bank

stated that the Middle

Class in LA is above

30% of a low growth

population. Expected to

expand to 40% in 2030

or

2009: 210 million

2030: 300+ million

Middle

Class

Thinking


LA is a Global Leader in Social Reward ProgramsConditional cash transfers creates a ‘different’ middle class

6Source: OECD, Kantar Retail analysis

Benefits and cash transfers

for immunization programs,

participation in school, and

health education. Coupled

to regular assistance such

as energy.


Family Size Dramatic Drop in Latin America

7Source: OECD, Kantar Retail analysis

Longer lives, far

less children

means far more

emphasis on:

• Education

• Health &

Wellness

• Women in

Professions

• Elder Care

Smaller Families

are less expensive

overall though

spend per child

does rise,

disposable

income has

expanded


What is Middle Class Thinking

– Stable families, two children, two

incomes

– Belief in a predictable future

– Savings and Credit based on secure

income

– Belief in investing in education

– Frugality for Splurging

– Consumer Society – Value for Value

Paid

– Wanting and getting the better things

And why that makes such a huge shift

8


Middle

Class

Thinking


Children are special when there are less of them

9


Shifts in Generations and Lifestyles


History in PicturesThe Landscape of Education in 40 years

11

1971 2011

Tertiary Enrollment –

Ratio vs. 51%


Gender

Shift


The Global Gen Y & Z Trend

12

The Rise of Women is Disruptive for more than family



Static Societies still Generate Need

Outsourcing in the US is falling fast, in Europe it is growing

The Next Shift: China -> US, Mexico, Vietnam

India -> Philippines, Myanmar, Peru

India -> Indian-Africa, Indian-Middle East

But now it is about flexibility

13Source: “The Handbook of Global Outsourcing 2012” Oshri, Kotlavsky, Willcocks

Relocating

Labor

Consumption


Work is Now Going Where Clients are

Low Cost = Robots

Consumers are the real driver

that is shaping where work is

done

And Robots are Helping

14

Kiva Rethink


Relocating

Labor

Consumption


Baltic Dry Index as of Jan 2014 – Important Shift

15Source: Investment Tools.com & The Baltic Exchange

The Baltic Dry Index (BDI) is a number issued daily by the London-based Baltic Exchange.

The index provides an assessment of the price of moving major raw materials by sea.

Lowest in

15 Years

Seaboard

Inland

Penetration


Seaboard

Inland

Penetration

Mexico is a Good Example of Change

16

Serious Port Development is starting something

Source: Kantar Retail Analysis

New Port Facility

Guaymas, Sonora

Ford Plant

Hermasillo,Sonora

Nogales

http://rpmedia.ask.com/ts?u=/wikipedia/commons/9/97/Ferromex-map.png

http://rpmedia.ask.com/ts?u=/wikipedia/commons/9/97/Ferromex-map.png


Very Large Data is What we KnowBig Data is Using Ambiguity

17

Data Storage

Data Sources

Data Use and

Interactions

Source: KantarRetailiQ research

Data Sources

Data Storage

Data Use and

Interactions

Bigger Data

Bigger

Answers


Visualizing data not as a

report but as flowing and

changing set of patterns

Source: Kantar Retail analysis, LinkedinLabs

Big Data Requires a New Tool MindsetDo-it-yourself Big Data (LinkedIn Labs)

Bigger Data

Bigger

Answers


Big Data Analytics - Collusion: Another Big Data DIY

Bigger Data

Bigger

Answers


Big Data requires New ThinkingHumans are too Slow – Omni is Too Fast

20

IBM’s Watson finds the Questions

Source: IBM, ASIMO, Amazon, KantarRetailiQ reserach

BCollaborative Filtering

What the community has

indicated it has interest in

based on cart and the

overall portfolio bought

over time

AContent Association

What is in the cart (and

prior purchases) vs.

other products that are

like them

How Amazon

looks at Big

Data to guide

shoppersAmazon Recommendations

Bigger Data

Bigger

Answers


Retail Changes, the Shopper Even FasterBreaking through is not easy

21

“OMG! almst hit by dat

truk!”

21Source: Kantar Retail analysis

Marketing to

Androids

© Copyright 2014 Kantar Retail22

In an Omni-Channel World: Planning? Where to play, where to retreat

Source: Kantar Retail analysis, KantarRetailiQ

Marketing to

Androids


Next?

Managing and Planning for AndroidsIn 2014, what is our shopper made of?

Source: Google23


Agenda

Retailing in 2020




24


Gradual Transition

Gradual Transition

MT <20% of mkt

T5 MT retailers <30% of MT

OT>50% of mkt

T5 MT retailers >60% of MT

MT <40% of mkt


MT <30% of mkt


PioneersCategory Specialists, Hypermarkets, Cash & Carry, and Local Food Chains

Adjacent Nation, Primary FormatsDiscounters & C-Stores = new growth formats; Hypers and C&C largest growth formats

Adjacent Nation, Pioneers, andSecondary FormatsTraditional Trade now impacted

Pure Secondary Formats, Multi-formatsDrug, Supermarket, Category Specialists

Exploration Concentration Penetration Maturation

OT>60% of mkt

T5 MT retailers >70% of MT

Multi-Format DominantHigh-capability Drug, Supermarkets & Category Specialists.Regrowth of Specialty Chains, Mom ‘n Pops with Demographic Focus

Post-Modern

Source: MVI Custom & Applied Research

Predicting National Markets

Kantar Retail’s Market Evolution Model

Tracks 3 key drivers/factors:

1. Consumer changes

2. Retail consolidation

3. Disruptive factors

(government & external

influences)


The Canadian Problem

– Amazon exists in both US and Canada markets

– But, 90% if Canadian’s going to Amazon don’t buy

– They also don’t go to Amazon.ca

eCommerce is not the same

26

Exploration Concentration Penetration Maturation Post-Modern


The Seven Drivers and Indicators

1 - Internet

Existence, Speed, Restrictions

Speed is not everything

2 - Access

Coverage, Cost, Throughput

How to understand eCommerce growth

27

1 Hong Kong 58.28 Mbps

2 Singapore 57.10 Mbps

3 Romania 51.98 Mbps

4 South Korea 42.22 Mbps

5 Japan 42.19 Mbps

6 Switzerland 41.63 Mbps

7 Sweden 40.84 Mbps

8 Macau 40.49 Mbps

9 Lithuania 40.27 Mbps

10 Netherlands 37.85 Mbps

11 Taiwan 36.55 Mbps

12 Denmark 34.57 Mbps

13 Latvia 32.81 Mbps

15 Iceland 31.09 Mbps

16 Bulgaria 29.20 Mbps

17 Belgium 27.82 Mbps

18 Norway 27.57 Mbps

19 Finland 26.87 Mbps

20 France 26.38 Mbps

21 Portugal 25.73 Mbps

22 Germany 25.41 Mbps

23 United Kingdom 24.78 Mbps

24 Estonia 24.61 Mbps

25 Czech Republic 24.41 Mbps

26 Hungary 22.81 Mbps

27 Slovakia 22.17 Mbps

28 Israel 22.00 Mbps

29 United States 21.75 Mbps

30 Russia 21.25 Mbps


Access: Expanding C-Store Portfolio7-11 Global Movement into Mobility

28Source: Kantar Retail Research & Analysis



3- Mobility

Power, Device, Cost,

Terms

4- Payment

Transaction, Tender,

Credit, Security

How to understand eCommerce growth

29


Consumer Credit & Mobile Payments

The stats:

End of 2012 estimated 730 million people across Africa will have mobile phones –70% penetration

Almost 1/3 of Kenya’s GDP passes through M-PESA

In 2011 in South Africa

• 19% of smartphone users used PayPal

• 14% used a mobile payment

30Source: Kantar Retail, Google

• Mobile phones allows for the flow of money without the need to have a

large physical banking infrastructure.

• Allows for not only for purchase of in-person goods, but also facilitates

online retail in a safe and secure way.

Africa



5- Fulfilment

Predictability, Assurance, Costs

6 - Value

Price, Exclusive, Cache, Time

How to understand eCommerce enablers

31


LaModa.ruAddressing Mobility, Payment, and Fulfillment

32

In the catalog online store Lamoda.ru over 1,000 brands for men, women

and children's shoes and clothing for different price categories, with more than 2 million

products

With many manufacturers Lamoda.ru cooperates directly, otherwise we choose a

reliable, trusted suppliers.

We guarantee the authenticity of the item by certificates.

Shipping with the fitting - We have our own delivery service Lamoda Express. /

Delivery time - 1-2 days

Payment and Returns - Online shop shoes and clothing Lamoda.ru allows you to return

the pay for purchases not only cash but also bank cards

as well as through QIWI purse and Paypal.

http://www.lamoda.ru/landing/for-new-visitors/#howtopay


Amazon Investment in Shipping Costs EscalateFulfillment IS the Brand

33Source: Kantar Retail analysis; Company reports

$3.5B

NE

T S

HIP

PIN

G C

OS

TS

AS

% O

F S

AL

ES

TO

TA

L R

EV

EN

UE

AN

D C

OS

TS

(U

SD

)



7- Culture

Dependence, Trust, Engagement

How to understand eCommerce explosions

34


Short Hand: Population Pyramid Forecasting

Customer

Capabilities

Investments

Consumer

Drivers

Technology

Enablers

Gadgets (iPad)

Software (Bing)

Payment (Paypal)

Convenience

Quality

Price

Information

Dark Stores

eWarehouses, Delivery

Fleets

Website

inStore (Drive, Site 2

Store)

New

Path

to P

urc

hase

Past the Explosion of 7

Ray Gaul

VP Global Insight

London, UK

http://1.bp.blogspot.com/-8-boO7ChbXw/TuPOKtQ1vxI/AAAAAAAACi8/MdZoFwHoqIE/s1600/auchan-drive.JPG

http://1.bp.blogspot.com/-8-boO7ChbXw/TuPOKtQ1vxI/AAAAAAAACi8/MdZoFwHoqIE/s1600/auchan-drive.JPG


Agenda

Retailing in 2020




36

© Copyright 2014 Kantar RetailSource: Kantar Retail analysis

Global Trend: Digital Impact: 100%

Even if you don’t sell much online (today), the impact

extends well beyond eCommerce

37

Anne Zybowski

VP – eCommerce

NYC, USA


Global Online (b2c) Sales

2007 2012E 2017E

% of total

Retail Sales2% 6% 10%

Sales

$208bn

Total Online

b2c Sales

(trillions) –

Global

CAGR

24%

CAGR

16%

Sales

$1,298bn

Sales

$618bn

Source: Kantar Retail research & analysis

Methodology: Kantar Retail splits out sales of “C2C” from online estimates and therefore has more correct figures than

reported by other research companies (but our figures will appear smaller than what you may see elsewhere)

38


National Markets Continue to GrowBut not always as expected

39

Steve Mader

Director Digital

London, UK


China – OmniChannel Retailing

40

Oceanne Zhang

Shanghai

Pureplay

Convenience

Hyper

Electronic

Food

Surprisingly large regions in

China are now operating in a

omnichnanel model based on

competition and consumer

demands


>230,000 sq. m.

UAE Malls at a Glance: One Size Fits None

Source: Kantar Retail research and analysis; Company information41

ConvenienceEntertainment

Indulgence

Core Shopper Demands: Each Format Falls Along the Spectrum

Quick, Grocery-DrivenOne-Stop Solution-DrivenBreak Up the DayFull-Day Occasion

Need Fulfillment, ImpulseTreasure Hunt, Luxury

LA

RG

ES

MA

LL

>1.1 million sq. m. >130,000 sq. m. >32,000 sq. m.>150,000 sq. m.

Sara Al-Tukmain

Kuwait / UAE


Convenience: Align with the One-Stop Shop

Source: Kantar Retail store visits and analysis42

Mobile ServicesBanking & Money Exchange Centers

H&W, Clinics Dining

Design

GroceryMusic/Dance

Driving Lessons Mail Couriers

Kid Fun


E-Grocery Customers

43

7-Eleven Thailand

Multi-service through partnershipExciting and youth focused

Thailand

Tied to pricing and promotions Connected to broad platform

Himanshu Pal

India / UK

http://www.youtube.com/watch?v=PFDazpa3Ehw&feature=player_detailpage

http://www.youtube.com/watch?v=PFDazpa3Ehw&feature=player_detailpage


Hepsiburada.com- “The Amazon of Turkey”

http://www.pozitron.com/hepsiburada/ http://www.hurriyetdailynews.com/hepsiburadacom-sells-1-million-goods-

month.aspx?pageID=238&nID=55988&NewsCatID=345 http://www.hurriyetdailynews.com/e-commerce-on-rise-in-

turkey.aspx?pageID=238&nID=55154&NewsCatID=34544

With over 15.5 Million

visitors a month and a

range of 500,000

products from 5,000

suppliers,

Hepsiburada is

expected to generate

sales USD 500 million

in 2013

Recently partnered

with tech solution

providor, Pozitron, to

develop a mobile

platform

Vadim Khetsuriani

Russia / E.Europe

http://www.pozitron.com/hepsiburada/

http://www.hurriyetdailynews.com/hepsiburadacom-sells-1-million-goods-month.aspx?pageID=238&nID=55988&NewsCatID=345


Redefining Convenience: France Leads the “Click & Collect” Model...

45Source: Kantar Retail analysis, Company websites

France: Between 10 and 30 drive

locations opening every week

- ~1.6 million households pick up their

order at a Drive location~6,000

SKUs

62 Auchan Drives,

47 Chronodrives

“Enjoy the low price at Auchan

without going to an Auchan store”

Bryan Roberts

EU / S.Africa


New: Device Driven Selling: Matching Shopping to Platform

The Medium… is the Engagement … is the Shopper

Steve Mader

Director Digital

London, UK


Agenda

Retailing in 2020




47


LTE makes tablets and smart phones a clearer

choice… along with costs

48

Two factors:

1. The expansion of high-speed

access will expand usage and lower

costs of use

2. Lower incomes already view

access as part of normal life and

worth the trade-off time much like

television


Trends Shaping Consumers

The Six Global Trends all are impacting Latin America

Models and eCommerce

There is a predictability but requires a more innovation mindset

eCommerce Trends Across the Region

National models are in place

Digital into 2018

The market is already highly attuned to digital usage. eCommerce is

spreading rapidly

Contact Kantar Retail:

Eric Debarnot – Managing Director

T: +55 (11) 3066-6454

M:+55 (11) 98758-0450

[email protected]

www.kantarretail.com

Contact XPGConsultNet:

Willem F. Schol – Director

T: +56 (2) 2725-5323

M:+56 (9) 9432-7444

[email protected]

Pablo Toledo - Director

T: +56 (2) 2725-5323

M:+56 (9) 9437-4029

[email protected]

www.xpgconsultnet.com

Thank You!

David Marcotte Senior Vice President Americas Insights

T: +1 413 847 1067entarretail.cm

www.kantarretailiq.com

mailto:[email protected]




Retailing in 2020 - XPG ConsultNet in 2020: Global Trends, eCommerce, ... –Consumer Society...

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