SHIFTING GEARS - Kantar...SHIFTING GEARS The 5 Gears of Growth in a Post-Cost-Cutting Era 2018:...

19
SHIFTING GEARS The 5 Gears of Growth in a Post-Cost-Cutting Era US 2018 Established in 1997

Transcript of SHIFTING GEARS - Kantar...SHIFTING GEARS The 5 Gears of Growth in a Post-Cost-Cutting Era 2018:...

Page 1: SHIFTING GEARS - Kantar...SHIFTING GEARS The 5 Gears of Growth in a Post-Cost-Cutting Era 2018: Leaders who have shifted their mindset from cost-cutting to investment for the future

SHIFTING GEARSThe 5 Gears of Growth in a Post-Cost-Cutting Era

US 2018

Established in 1997

Page 2: SHIFTING GEARS - Kantar...SHIFTING GEARS The 5 Gears of Growth in a Post-Cost-Cutting Era 2018: Leaders who have shifted their mindset from cost-cutting to investment for the future

"Leaders who have shifted their mindset from cost-cutting to investment for the future are perceived as successfully driving both their top and bottom lines."

A Growth Company has an investment mindset because it has confidence in its strategy, brands, and people to achieve real growth. It can be confident because it has identified the right insights, allocated resources appropriately, and achieved strategic intimacy with its trading partners.

Gear

Stage Starting Moving Cruising Passing Racing

5-C Focus Core Consumer Customer Commerce Community

Action Fulfillment Obsession Connection Enabling Technology Commitment

What it Takes Grit Passion Passion Perseverance Perseverance

st nd rd th th

2

The 5-Speed Growth Gearbox

Page 3: SHIFTING GEARS - Kantar...SHIFTING GEARS The 5 Gears of Growth in a Post-Cost-Cutting Era 2018: Leaders who have shifted their mindset from cost-cutting to investment for the future

3

Introduction................................................................................05

Executive Summary.....................................................................10

2018 Results (Available in Full Report)

Manufacturer Rankings...........................................................20

Retailer Rankings....................................................................36

In This Issue

Page 4: SHIFTING GEARS - Kantar...SHIFTING GEARS The 5 Gears of Growth in a Post-Cost-Cutting Era 2018: Leaders who have shifted their mindset from cost-cutting to investment for the future

4

Page 5: SHIFTING GEARS - Kantar...SHIFTING GEARS The 5 Gears of Growth in a Post-Cost-Cutting Era 2018: Leaders who have shifted their mindset from cost-cutting to investment for the future

The survey originated from our industry benchmarking studies on category management and trade promotion management, which for the past 22 years have provided insight into industry best practices in these areas. The objective of the PoweRanking® study is to research and benchmark how retailers and manufacturers view each other in the most important areas of the manufacturer-retailer relationship.

The PoweRanking study identifies those retailers and manufacturers who set the standard of performance as ranked by their trading partners. This provides benchmarks for retailers and manufacturers across trade channels.

The specific goals of the research are to:

� Identify the best manufacturers and retailers, as evaluated by their trading partners

� Provide insight into what makes them “the best”

� Define the importance of key metrics between trading partners

� Highlight areas for improvement

5

Introduction

Page 6: SHIFTING GEARS - Kantar...SHIFTING GEARS The 5 Gears of Growth in a Post-Cost-Cutting Era 2018: Leaders who have shifted their mindset from cost-cutting to investment for the future

6

Customized questionnaires were developed for retailer and wholesaler respondents in food, drug, mass merchandise, dollar, convenience, and club channels, as well as for manufacturers in food, household products, general merchandise, and health & beauty care categories. These questionnaires are distributed every spring from 1997 to 2018 to personnel at all levels of management, with the assurance of total confidentiality of respondents.

Over 444 manufacturer and retailer respondents participated in this year’s study. The results of the 2018 survey were compared with the results of 2016 and 2017 to determine the causes behind shifts in the rankings.

Retailers were asked to rank manufacturers on criteria that fall into two broad areas:

STRATEGIC METRICS

� Clearest Company Strategy

� Most Important Consumer Brands to Retailers

� Best Combination of Growth & Profitability

BUSINESS FUNDAMENTALS

� Best Sales Force/Customer Teams

� Most Innovative Marketing Approach

� Best Consumer & Shopper Insights/ Category Leadership

� Best Supply Chain Management

� Best Shopper Marketing Programs

� Best Use of Digital Platforms

AD HOC METRIC

� Best Revenue Growth Management

Manufacturers were asked to rank retailers on similar criteria:

STRATEGIC METRICS

� Clearest Company Strategy

� Best Store Branding to Shoppers

� Projected Power Retailers in 15 Years

BUSINESS FUNDAMENTALS

� Best Retailer to Do Business With

� Best Category Management/Buying Teams

� Most Innovative Merchandising Approach

� Best Supply Chain Management

� Best Practice Category Leadership

� Best Use of Digitial Platforms

AD HOC METRIC

� Best Revenue Growth Management

Page 7: SHIFTING GEARS - Kantar...SHIFTING GEARS The 5 Gears of Growth in a Post-Cost-Cutting Era 2018: Leaders who have shifted their mindset from cost-cutting to investment for the future

7

Results were tabulated on a two-year rolling basis, reflecting the percentage of respondents ranking each company among the top three. Additionally, follow-up qualitative interviews were conducted among a diverse group of manufacturers and retailers to provide further insight into the data.

The PoweRanking methodology reflects mergers and acquisitions that have occurred in the past. We have consciously rolled up operations into the parent company where appropriate for this year and versus a year ago. At the same time, where retailers and manufacturers are operating largely as independent companies, they are treated as such in the data. As a dynamic monitor, PoweRanking will continue to consolidate or separate companies as retailers perceive them.

PoweRanking® COMPOSITES

The 2018 PoweRanking results include the Overall PoweRanking Composite, created by weighting the three strategic rankings equally with the six business fundamental rankings (see previous page) — thus placing greater importance on the strategic rankings. This reflects the importance of sound strategy as an overall driving force in business performance.

STRATEGIC COMPOSITE

The Strategic Composite combines the three strategic measures into an overall composite to provide better insight into which manufacturers and retailers are most strategically important to their trading partners.

BUSINESS FUNDAMENTALS COMPOSITE

The Business Fundamentals Composite combines the six fundamental areas of business into a composite, which reflects the retailers’ and manufacturers’ opinions of those trading

partners that have the strongest organizations and personnel and provide the best tools for solid business development.

DIGITAL PLATFORMS

Beginning in 2011, Kantar Retail added a measure for Digital Platforms. Given its increasing influence on retailers, manufacturers, and consumers, as of 2016, digital is a measure to be monitored and is included in the Business Fundamentals Composite.

Page 8: SHIFTING GEARS - Kantar...SHIFTING GEARS The 5 Gears of Growth in a Post-Cost-Cutting Era 2018: Leaders who have shifted their mindset from cost-cutting to investment for the future

8

2018 Participating Manufacturers

3M

Abbott

Bayer

Beam Suntory

Beiersdorf

BIC Consumer Products

Campbell Soup Co.

Chattem, Inc.

Chobani

Clorox

Coca-Cola

Colgate-Palmolive

ConAgra Foods

DanoneWave

Diageo

Domtar

Edgewell Personal Care

Florida's Natural

General Mills

GlaxoSmithKline

Hamilton Beach Brands

Helen of Troy

Henkel

Hormel

J.M. Smucker Co.

Johnson & Johnson

Kellogg Co.

Kimberly-Clark

Kraft Heinz

Land O'Lakes

LEGO

Lindt & Sprungli

Mars

Mars Petcare

Materne

Mighty Leaf Tea

Mondelēz

Morton Salt

Nestlé

Newell Brands

Pepperidge Farm

PepsiCo

Pfizer

Pinnacle Foods

Procter & Gamble

Red Bull

Sargento

Scotts Miracle Gro

Seneca Foods

StarKist

Sun-Maid Growers

Tom's of Maine

Tree Top, Inc.

Treehouse Foods

Tyson Foods

Unilever

Page 9: SHIFTING GEARS - Kantar...SHIFTING GEARS The 5 Gears of Growth in a Post-Cost-Cutting Era 2018: Leaders who have shifted their mindset from cost-cutting to investment for the future

9

2018 Participating Retailers

84.51°

99 Cents Only Stores

Ace Hardware

Acme Markets

Ahold USA

Albertsons Companies

Aldi

Amazon

BJ's

Brookshire Grocery Company

C&S Wholesale Grocers

Costco

County Market (SuperValu)

CVS

Dollar General

Dollar Tree

Dollar King

Fairway

Family Dollar

Food 4 Less

Food Lion

Fred's Inc.

Giant Eagle, Inc.

Harris Teeter

H-E-B

Home Depot

Hy-Vee

Ingles Markets

Jet.com

Jewel Osco

Kmart

Kroger

Kum & Go

Meijer

Osco Drug

Peapod

Pet Supplies Plus

Petco

PetSmart

Publix

RaceTrac Petroleum

Ralphs

Randalls

Rite Aid

Safeway

Sam's Club

Save-A-Lot

Sears

Shaw's Supermarkets

Shell

Shopko

Speedway

Stop & Shop

Target

The Fresh Market

Wakefern Food Corporation

Walgreens

Walmart

Walmart.com

Wegmans

Whole Foods Market

Winn Dixie

Page 10: SHIFTING GEARS - Kantar...SHIFTING GEARS The 5 Gears of Growth in a Post-Cost-Cutting Era 2018: Leaders who have shifted their mindset from cost-cutting to investment for the future

10

SHIFTING GEARSThe 5 Gears of Growth in a Post-Cost-Cutting Era

2018: Leaders who have shifted their mindset from cost-cutting to investment for the future are perceived as successfully driving both their top and bottom lines.

Executive Summary

A Growth Company is able to have an investment

mindset because it has confidence its strategy, brands,

and people will deliver real growth. It has identified the

right insights, allocated resources appropriately, and

achieved strategic intimacy with its trading partners.

For the last several years, it feels as though the U.S. CPG/Retail ecosystem had been stuck in neutral. Brick-and-mortar retailers seemed locked in an Amazon-centric malaise, with near-daily headlines describing a “retail apocalypse” reshaping the industry. The manufacturing landscape was beset by challenger brands and rumors of acquisitions and mergers, and intense pressure on their U.S. business to fund international expansion. This pressure has begun to cause “stress fractures”

to appear in many companies. Not only is the new work hard to achieve, but even the old work has gotten harder as organizations struggle to manage a more complex world with fewer resources. Cracks have surfaced in terms of the basics, and many retailers and manufacturers struggled with executing the basics in 2018.

At the same time, 2018 has seen the industry back on a growth footing. Retailers are beginning to understand and execute omnichannel strategies, and a strong economy has bolstered consumer spending that manufacturers can leverage. Their strategies are beginning to catch up to a changing consumer, and through acquisition and innovation brands are moving to address new consumer

Page 11: SHIFTING GEARS - Kantar...SHIFTING GEARS The 5 Gears of Growth in a Post-Cost-Cutting Era 2018: Leaders who have shifted their mindset from cost-cutting to investment for the future

11

and shopper behavior with increasing speed. This speed has resulted in best-in-class companies “shifting gears” to be able to capture new growth opportunities.

This gear shift comes at an opportune time. The cost pressures remain, as shareholders remain voracious for year-over-year earnings growth far in excess of topline growth. And although the omnichannel world is becoming more familiar, many companies are going through “digital adolescence,” where their instincts and behavior have not quite caught up to the growing size of the digital opportunity.

The PoweRanking® leaders for 2018 — Walmart and PepsiCo — are two companies who have handled this gear shift with skill. Walmart achieved the #1 position for 22 years in a row, this year driven by clarity of strategy, supply chain, digital platforms, and manufacturers' belief in their future performance. PepsiCo not only achieved the overall #1 position for three consecutive years, but they

also achieved the #1 position on all nine metrics for 2018.

These, and the other best-in-class businesses, have mastered outstanding agility and have executives in place with a growth mindset who are willing to look beyond quarterly results to achieve real growth over the long haul. Some are investing in core brands, some in innovation, and others have made significant acquisitions. In any case, these business leaders, while staying true to their strategy, have “pivoted, achieved returns on change, and have been courageous” over the past three years and now are “shifting gears” to stay on top.

Page 12: SHIFTING GEARS - Kantar...SHIFTING GEARS The 5 Gears of Growth in a Post-Cost-Cutting Era 2018: Leaders who have shifted their mindset from cost-cutting to investment for the future

12

The 5 Gears of Growth

First Gear: Getting Started

Executional ExcellenceThe “stress fractures” mentioned previously are exacerbated as change in the landscape accelerates. The competition is fierce: “This is the slowest change it will ever be. The dollar and value segments have ticked up. Walmart has stepped up their game. Amazon is raising the expectation of now.” The shopper is more demanding than ever before: “Consumer preferences are changing in how, when, and where they want to shop.” Supply chain issues are causing missed sales: “We have had more shipping issues than is the past. Vendors have been cutting demand forecasting too close. They have been struggling to keep inventory up for popular items, and click-and collect models are causing outages at shelf as shopping lists are picked in the morning, leaving product gaps for our brick-and-mortar shoppers.”

Throughout this year’s study, consistent themes

emerged. Like any good transmission, each gear

plays a slightly different role, but they all work

together for speed and acceleration.

Without first gear, the rest of the gear shifts are impossible. More so than in many years, PoweRanking® revealed executional challenges in a number of established and historically strong industry players. Those overcoming or preventing stress fractures were well-positioned for growth.

Page 13: SHIFTING GEARS - Kantar...SHIFTING GEARS The 5 Gears of Growth in a Post-Cost-Cutting Era 2018: Leaders who have shifted their mindset from cost-cutting to investment for the future

13

Second Gear: Forward Momentum

Customer First: Consumer/Shopper ObsessionIt seems that everyone has adopted the famous “Customer First” strategy, but growth leaders are beginning to take it to a new level, and one manufacturer characterized it by telling us: “Putting our consumer first isn’t enough anymore. We have to become obsessed with them." Real growth comes from consumption and not deliveries, and the only way we can achieve this is if we truly understand and serve our consumers and our retailer’s shoppers. "Many companies are (re)committing to their insights functions, with the end goal of them understanding their consumers and shoppers' wants and needs before they realize them.”

Page 14: SHIFTING GEARS - Kantar...SHIFTING GEARS The 5 Gears of Growth in a Post-Cost-Cutting Era 2018: Leaders who have shifted their mindset from cost-cutting to investment for the future

14

Third Gear: Reaching Cruising Speed

Connection and CollaborationDuring the “cost-cutting-years,” relationships were strained as manufacturers reorganized and pulled back assets, while retailers looked to entrepreneurial brands to fill growth gaps. While some of the craft manufacturers have been successful, retailers have realized that successful ones are often purchased by their traditional trading partners, and that even the independent ones cannot bring the retailer critical resources they need to drive profitable, long-term growth. As a result, both have concluded that they need each other more than ever and are finding new and deeper ways to partner: “Trading partners who have moved past worrying about who has the ‘power’ and are able to put their assets and resources together (for the benefit of the shopper) are finding ways to not only compete, but win.”

Page 15: SHIFTING GEARS - Kantar...SHIFTING GEARS The 5 Gears of Growth in a Post-Cost-Cutting Era 2018: Leaders who have shifted their mindset from cost-cutting to investment for the future

15

Fourth Gear: In the Passing Lane

Tech-Enabled CommerceThe transition from an eCommerce strategy to an omnichannel one is one where suppliers and retailers simply embrace a completely digital future. “We know that we are quickly transitioning from a digitally enabled retail landscape to a digitally dominant economy. We know that retailers are becoming digital media companies, and fulfillment centers are bursting at the seams. We are imagining a go-to-market model where buyers no longer buy, shoppers no longer shop, and fulfillment centers no longer fulfill. We are building the sales force of the future, learning to market to algorithms, and building a supply chain where we can ship direct to consumers.”

As we look to the future, the 5G network is right around the corner. The significantly increased speeds and capacities will further enable mobile consumers to interact and shop in ways never before seen.

Page 16: SHIFTING GEARS - Kantar...SHIFTING GEARS The 5 Gears of Growth in a Post-Cost-Cutting Era 2018: Leaders who have shifted their mindset from cost-cutting to investment for the future

Fifth Gear: Efficient, High-Speed Travel

People and CommunitiesAchieving growth is one thing, but maintaining it and growing from growth is another. “We have to flip the script on our growth algorithm. Historically, we have focused all of our energy on driving sales and cutting costs, hoping our people understand and stay. To be successful in the future, we have to shift our focus on developing our people and communities, knowing that we will achieve real growth and profitability.” In this environment of low unemployment, people have more options than ever, and the best talent is being courted by industries outside of CPG and retail. Given the number of restructurings that have occurred over the past few years, the industry has some work to do to attract and retain talent, and that can only be achieved by looking beyond financial returns and creating a more nurturing environment with a greater purpose.

16

Page 17: SHIFTING GEARS - Kantar...SHIFTING GEARS The 5 Gears of Growth in a Post-Cost-Cutting Era 2018: Leaders who have shifted their mindset from cost-cutting to investment for the future

1st 2nd 3rd 4th 5th

Growth Gear Getting Started Forward Momentum Reaching Cruising Speed In the Passing Lane Efficient,

High-Speed Travel

Insights The digital economy is creating growth opportunities, but also causing some fundamental outages.

Identifying insights is a perennial need, but how the industry finds them is changing.

Entrepreneurial companies often find growth in uncomfortable places, but frequently lack the resources retailers require.

Technology is automating marketing, merchandising, shopping, and buying, which is rapidly changing retail.

Our society is evolving from "me" to "we" and will require businesses to build communities to achieve company profits.

Actions Get Gritty with online and in-store details to ensure you are on time and in stock everywhere.

Be Obsessed about your Consumers and Shoppers to unlock not just facts, but consumption-driving insights.

Invest in Connectionsand Collaboration with trading partners to drive long-term mutual success.

Prepare for Tech-Enabled Commerce by building your omnichannel go-to-market strategy of the future.

Develop your People and invest in building Communities to unlock long-term growth.

Output Executional Excellence Real Consumption Growth

Partnership for Growth Future-Proof Commercial Plans

Committed Employees; Loyal Consumers

17

The 5-Speed Growth Gearbox — Roadmap

Page 18: SHIFTING GEARS - Kantar...SHIFTING GEARS The 5 Gears of Growth in a Post-Cost-Cutting Era 2018: Leaders who have shifted their mindset from cost-cutting to investment for the future

18

Closing StatementWe are (at least) five years into this chaotic, disruptive, and uncomfortable retail market, and while crazy may be becoming the new norm, it is perhaps the most exciting time to be in the industry. As we shift from a cost-cutting mindset to an investment mindset, real growth is likely to be accelerated as businesses are operating more efficiently and will generate enough money to both invest in the business and drive greater returns to shareholders.

Leaders who persevere with executional excellence, embrace technology, and are passionate about fulfilling the needs of their consumers, customer, and employees will be able to shift from digital

adolescence to an organization that is not only built to survive in a digitally dominant world, but will be built to thrive.

Find your next gear!

Daniel RaynakChief Client Officer

Page 19: SHIFTING GEARS - Kantar...SHIFTING GEARS The 5 Gears of Growth in a Post-Cost-Cutting Era 2018: Leaders who have shifted their mindset from cost-cutting to investment for the future

19

FIND YOUR NEXT GEARReach out to Kantar Consulting to obtain

a full report of the 2018 manufacturer and retailer Rankings.

Learn how YOU can get deeper insights into how to return to growth in 2018 and beyond.

For a copy of the full PoweRanking® report, contact [email protected]

Study Price: US $2,500