AS CONSUMERS EVOLVE,RETAIL ANALYTICS
ADVANCE
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TODAY’S PANEL
Jon QuinnVice President,
Marketing Strategy, Safeway
Adam HolykGroup Vice President, Insights and Analytics,
Walgreens
Ravi DharGeorge Rogers Clark Professor
of Management and Marketing, Yale School of Management &
Director, Center for Customer Insights
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COMPLEX DYNAMICS IMPACT RETAIL ANALYTICS
TECHNOLOGY
CHANGING SHOPPERS
RETAILER
ECONOMICS
INTENSIFYING COMPETITION
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RETAILERS ARE PROVIDING SHOPPERS MORE ACCESS
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TECHNOLOGY IS CREATING PRICE TRANSPARENCY
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TECHNOLOGICAL CHERRY PICKING
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SHOPPERS MIGHT KNOW MORE THAN YOU DO
PRICING
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SIMPLE OUTCOMES, COMPLEX ANALYTICS
In which stores?
At What Price?
How much Promo
Support?
Which items to carry?
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THE WINNING ANALYTIC STRATEGY
GET THE RIGHT INSIGHTS ORGANIZE TO WIN EXECUTE WITH GREATER PRECISION
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THE RIGHT SHOPPER INSIGHTS
PERCEPTION OF VALUE DRIVES RESPONSE TO PRICING
Prof. Michael Porter – Competitive Advantage
Buyers will not pay for value that they do not perceive, no matter how real it may be.
REQUIRED INSIGHTS:
• What they do, inside & outside the box
• What they perceive & believe
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INSIGHTS TO BOTH BEHAVIOR AND BELIEFS
of your shoppers are “core”…
25%
….they drive most of your dollars
59%
your share of their All Outlet spend
36%…but they
aren’t very loyal WHAT SHOPPERS
SAID:
Everyday low prices
Fresh produce
Well stocked
Prices well labeled
Grocery selection
Clean store
Fresh meat & seafood
Nearby location
1
2
3
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WHAT SHOPPERS DID:
Fresh produce
Grocery selection
Fresh meat & seafood
Prepared foods
Store brand
One-stop shopping
Well stocked
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THE RIGHT COMPETITIVE INSIGHTS
$0.49 $0.59 $0.65 $0.69 $0.75 $0.79
7%
37%
11%
17%19%
9%
Non Promoted Prices in xAOC
Yoplait 6 ounce
Client 3: $0.75
ACTUAL VS. ASSUMED COMPETITORS
STRATEGY
PRICE POSITIONING
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10%Also Highly
Elastic
8MM
Elasticity Estimates
80MM
Competitive Price Points
EYES ON THE PRIZE, SIZE OF THE PRIZE
25%
“Overpriced” OPPORTUNITY
$900M
DISCUSSION
ASSORTMENT
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Average # of unique UPCs per household purchased in Grocery Channel in a year
WHY ASSORTMENT ISN’T EASY
328 Items selling in Grocery
weekly average Items selling in Drug
weekly average
16,897 4,932
Can’t profitably be all things to all people
Hyper-local assortment impacts supply chain efficiency
Assortment is “slower” than pricing, just as important
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Water
Growing MTA’s: 3,519
Infant Nutrition
Growing MTA’s: 2,414
Frozen Pizza
Growing MTA’s: 659
ALL DEMAND IS LOCAL
Growing: > 2% $ growth; Stable >-2% and < +2%, Declining > -2%Source: Nielsen Scan and Panel Data, Nielsen Analysis
CHANGE IN DOLLARS
DECLINING GROWING STABLE
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• NURTUREReview Slow movers for de-listment
AVG
SALE
S RA
TE
DEVELOPIncrease Items
• RATIONALIZEMake sure you have the best items in distribution
• SQUEEZEDe-list worst performers DI
STRI
BUTI
ON
(# IT
EMS)
FAST
SLO
W
NEGATIVE POSITIVECONSUMER RESPONSE TO ASSORTMENT (INCREMENTALITY)
SIMPLE FRAMEWORKS ENCOURAGE ACTION
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LOCALLY RELEVANT DECISIONS, AT ENTERPRISE SCALESuper- Premium Segment Value Segment
Assortment Response:Total Category
Assortment Response:Total Category
SEGMENT A
SEGMENT B
SEGMENT C
SEGMENT D
6
4
10 SEGMENT_
x000d_ASEGMENT_x000d_B
SEGMENT_x000d_C
SEGMENT_x000d_D
2
43
2
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CURRENT SIZE (553 ITEMS)
OPTIMIZED AT CURRENT SIZE (553 ITEMS)
RE-SIZED UP TO 602 ITEMS
OPTIMIZED AND RE-SIZED UP TO 602 ITEMS
$2,994 $3,128 $3,002 $3,141
RIGHT PRODUCTS, RIGHT PLACES
Source: Nielsen AssortMan, TUS Mass, 52 weeks ending 10/13/12
Laun
dry
Sale
s ($M
M)
Laundry 4.9%0.3%4.5%
DISCUSSION
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TABLE TALK QUESTIONS
What are the industry challenges for analytic strategy and capacity keeping up with the rate of change in the industry, e.g. personalization and dynamic pricing?
As a Manufacturer or a retailer, what would you change about collaboration to address these analytical needs?
With the evolution of smart phones and information access, how do you see your analytical needs changing?
THANK YOU
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