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The Future of Category Analytics – Win with Shoppers

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Presentation on theme: "The Future of Category Analytics – Win with Shoppers"— Presentation transcript:

1 The Future of Category Analytics – Win with Shoppers

2 Who is Acosta ACOSTA SALES Headquarter Selling AMG Strategic Advisors
Customer Relationship Management Joint Business Planning AMG Strategic Advisors Strategic Consulting Shopper Insights Market Research Advanced Analytics Business Insights Category Management Space Management Business & Retail Analysis Loyalty Analytics The Agency at AMG Integrated Marketing Solutions Shopper Marketing Retail Merchandising Continuity Sets Projects AMG Activation In-store Media, promotion and Communication Business Process Outsourcing Order to Invoice Invoice to Cash Mosaic Assisted Selling Training Experiential Marketing Interactive

3 Discussion Topics A quick look at the evolution of category analytics
The need to focus on the shopper New skills and methods needed Bret Thurston Sr. Manager Category Development – Hillshire Brands

4 - Everything Old is New Again(with a twist)
The industry is evolving back to a local shopper focus Past 1980’s 2012+ Future Local Store Control National Strategies Shopper Based Offers Local Market Advertising One Plan for the Entire Chain Neighborhood/ Precision Marketing Limited Assortment Assortment as a Differentiator Assortment customization Private Brands as a Point of Difference Private Brands as a Margin Play Private Brands as a Point of Difference There has been an interesting dynamic in the business cycle - the business has evolved with technology and gone almost full cycle over the past 15 years Moving from no data – to data- lead to centralization which left a gap in the local markets for the larger retailers. We saw several retailers make mistakes by not understanding the differences from one state to another and casing shopper flight Better technology and date have allowed a centralized control with a localized offering This has lead us full circle with strategies, adverting and assortment. This new understanding and thought process is also leading to new neighborhood clusters, banners, and formats. Small Neighborhood Stores Larger Super Stores Neighborhood Stores-Multi Formats Customer focus Efficiency focus “Shopper "focus - Everything Old is New Again(with a twist)

5 Category Management Process-Driven Multiple Templates
New Metrics like GMROI, DOS, Opp Gap, Market Coverage, etc

6 Cut the store into Micro units versus looking at how Shoppers were buying across the store
Refrigerated Juice Shelf Stable Juice

7 Loyalty programs introduced
New metrics like top shopper, trips, frequency, basket affinity, conversion, etc

8 Most do not align loyalty analytics to the category management process
Who are my Shoppers? Segment Loyalty Other What are their purchase Behaviors? Trips Frequency Basket Programs Loyalty offers Category Priority, Roles and Strategies and Tactics. Assessment Assortment, Pricing, Merchandising, Shelf Placement, and Scorecards Promotions Price reductions Features Displays

9 Need to move analytics from just a category focus to shopper focus
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10 Our process is to continue the transition from traditional category management as retailers place more focus on their shoppers Store Category TODAY YESTERDAY Path to Purchase CATEGORY TA CATEGORY ROM Convenient, easy to shop, good variety. Consumer Store Category High quality products, fun to shop, low prices. Home Delivery Store Category Convenient, easy to shop, good variety, low prices. Low prices, especially on HBC and Paper Products. Driven by shopper insights along the path to purchase, and is more holistic to include the aisle, department, and store.

11 New shopper based analytical approach
Strategic Tactical Discovery Phase Understand the macro-environmental trends impacting Shoppers Identify Shopper traits of the Category & Brand Identify Shopper traits of the Retailer and their position in the marketplace Opportunity Phase Measure the retailer on the basis of Shopper KPI’s Evaluate the size of the opportunity based on favorable changes Define a strategic purpose Diagnostic Phase Measure the Retailer and Category on Shopper KPI’s Measure the Category and Brand on Sales KPI’s Dive deeper on the levers truly impacting the business Execution Phase Outline the key insights from each phase Establish importance & implications of each insight Provide recommendations to achieve a positive return Report Progress & Adjust As Needed

12 Environmental Influence
Discovery Phase Product Shopper DNA Retailer Shopper DNA Environmental Influence What Discoveries can be made: Who does my product appeal to? What need do I fulfill? How am I purchased? How/when am I consumed? Who does my store appeal to? What is my position in the marketplace? How is my store shopped? What external factors are affecting households? What is important to the shopper? What does the path to purchase look like? Objective: Better understand who the shopper is at the Product and Retailer level, how they purchase the Product and shop the Retailer, and identify environmental issues that are affecting purchasing decisions.

13 Key Trends Impacting Our Industry
Shopper Landscape is Changing Digital is Here and Growing Quickly Retail Landscape is Changing Marketing Spend is Shifting Success is Driven by Innovative Growth Strategies 4/12/2017 Slide 13

14 Tale of Two Shoppers Generational Economic Multi-cultural
Millennial Boomer Generation Generational <$45k per year >$100k per year Economic One of the major themes of our recent publication is the “tale of 2 shoppers” We looked at this from 3 different segments of the population to better understand Their attitudes and behaviors toward shopping, technology and a number of other things. Multi-Cultural General Population Multi-cultural Source:AMGSA WBTB

15 Shoppers “Older consumers tend to use the new technology to do old things. Younger consumers use the new technology to do new things.” -Antone Gonsalves, “Gen Y Taking Technology to New Level” Shoppers

16 Digital is Here and Growing Quickly
The typical consumer spent 4% of their grocery budget over the internet 52% of shoppers are using digital tools on the path to obtaining grocery goods 32% of shoppers said they reclaimed online coupons 31% used mobile phones for making lists, searching for recipes, and similar activities 23% checked prices at multiple stores on the web before buying Shoppers are buying online mainly for convenience (both shopping and delivery) and lower prices The Web Has “Quietly Encroached” on the Grocery Sector 4/12/2017 Slide 16

17 Many changes in how shoppers view the shopping landscape
Grab & Go at CVS Dollar General (*Prototype) Walgreens Expands Fresh Target pFresh Increased Food Offerings Value Stores Online Replenishment Urban / multiple formats Changes in the Competitive Landscape. In the years 2008‐2011, capital expenditure allocations dropped because of economic uncertainty. Retailers delayed, altered, or dropped major retail development projects. In 2012, all indications point to a flurry of new, high profile development projects. In nearly every corner of the country, new stores or remodeled stores will pop up presenting new challenges in understanding the local competitive landscape. Value Stores. Value stores such as Dollar General, Family Dollar, and Aldi have seen remarkable performances over the last few years. They have consistently turned this growth into larger and larger investments in stores could see the largest number of values stores opened of any year – even better than the pace set in the early period of growth (1997‐2004). Increased Food Offerings. Drug, Dollar, and Mass continue to evolve to offer more assortment in food in order to drive trips (away from Grocery and Mass Supercenters, and even Club). Dollar General prototype CVS Grab and Go Walgreens expanded fresh Target pFresh Online Replenishment Models. A large number of retailers are investing a greater share of their capital in online replenishment programs that are connected either directly to distribution centers or to stores. Amazon.com opened 17 fulfillment centers in They are increasing spend for Target re‐launched their website in 2011. Urban / Small Box. Retailers such as Walmart and Target are investing heavily in “urban food /mass merch convenience” – at an experimental level. The first ‘CityTargets’ will open in National chain drugstores – Walgreens and CVS – continue to roll out urban convenience at a fast rate. Fresh and Easy launched a new format in LA- 4,000 sq feet urban grocery store. => Net Effect. Retailers big and small will see many new ideas come to life in Retailers are starting to invest again could break records for the highest levels of capital expenditures. Among the Top 15 food retailers, Kantar Retail expects Capital Expenditure to nearly reach 2008 levels of spending. Source: Kantar Retail , Nielsen

18 Opportunity Phase Objective:
Buyer Conversion Share of Wallet Leakage Is the Retailer converting Shoppers into buyers? What is the value of increasing conversion rates? How much of the Shoppers’ spend is captured by the Retailer? If the sale is not captured at the Retailer, where is it going? How does the competition treat the category? Objective: Establish consistent measures to benchmark Retailer store performance And identify areas of opportunity. Define a strategic purpose and quantify the value potential for the retailer.

19 Starting with a more holistic view shows shoppers are buying different categories more often at competitive retailers These are important categories that drive trips and larger baskets

20 Comparison of top 25 categories
Retailer Source: IRI Reviews Latest 52 WE 1/22/12

21 If Retailer could convert Pet Food buyers at the same rate as competitors, sales would increase by $4.5MM. Supercenters and pet are capturing roughly half of all lost Pet Food sales from Schnucks. Value and assortment (esp from Pet) are most likely driving lost sales. Retailer buyer conversion = 33.7% Avg conversion for other similar retailers= 40.2% $693,025 x 6.5= $4.5MM Source: Nielsen Channel Facts L52 WE 7/2/2011, Nielsen Planners 52 Weeks Ending 12/24/2011

22 Correlation between Pet sales to Supercenter proximity
Opportunity to drive additional sales in stores within three miles of Supercenter Correlation between Pet sales to Supercenter proximity Sales 24% higher Stores less than three miles Stores more than three miles Source: ACNielsen: Spectra

23 Diagnostic Phase Objective: Evaluate category performance on the basis of Shopper and traditional sales metrics to identify the levers of sales results.

24 Execution Phase Opportunity Discovery Diagnostic WHAT do we know? WHY is it important? NOW WHAT do we do? What is the cost? Objective: Articulate the key insights driving the business, the opportunity if addressed, and provide a clear and actionable recommendation that can be followed to close the gaps.

25 Bret Thurston Category Leadership

26 Hillshire Brands Customer Development Focus
Category Leadership Shopper Marketing Capability Shopper Insights Shopper Informed Pricing and Promotion Expertise KPI’s Against Shopper and Category Shopper Integration into Category Leadership Platform Promotional Shopper Insights Shopper ROI’s via Shopper Marketing Development Link Insights to Solutions Change Management Improved Communication Specific KPI improvement

27 Advantaged Process for Shopper Development
Market Structure Custom Shopper & Trip Segmentation Proprietary Insight into Shopper Barriers Supported by Well-developed Marketing and Advertising Support Shopper Insights Category Leadership Precision Merch. Shopper Marketing Consumer Needs Enhanced Platforms Infused by Shopper Insight Adv. Insight into Value & Promotion Level Up customer loyalty Merge Shopper, Category, and Retailer Needs with Insight Shopper/Demand Based Assortment Shelf Optimization and Theater Driven by Barriers

28 The Shopper’s Journey Pre-Shop Shop Post Shop
The journey is where we learn about consumer & shopper’s emotional and rational dynamics and identify the shopper’s triggers, barriers and opportunities Pre-Shop Shop Post Shop Influence of occasions and cultural assumptions about the category Occasion, category and brand implications Importance of promotion which drives channel and store choice Understanding of the trip mission How the store frames the choice and directs behavior Store layout Assortment modeling, Planograms Fixture design Shopper Marketing Programs How consumption, storage, packaging delights or frustrates Promotional ROI Product developments Packaging development

29 Hillshire Brands’ Commitment to Shopper Focused Category Leadership
Shopper Capabilities enable our strategies Customer Focused engagement strategies enable our partnerships Shopper Focused activation enables our success

30 Hillshire Brands Category Leadership Guiding Principles
4/12/ :01 AM Hillshire Brands Category Leadership Guiding Principles Strong Category Leadership platforms informed with shopper/category/customer insights Clear understanding of and alignment to the customers’ category planning cycles, operational requirements, and category goals Investment in customer-facing category teams charged with driving retail partnerships and customizing our category leadership platforms to create unique activation plans for customers Disciplined approach to measuring results in order to ensure success Not just shopper… shopper, category, and customer. Align to customers business needs. Day00_Speaker_Topic_v00.pptx

31 Integrate & Manage Data Develop Insights & Recommendations
Hillshire Brands 2012 Hillshire Brands Building Capability to Ensure reaches all customers 4/12/ :01 AM POS ACNielsen IRI Panel Shipments Integrate & Manage Data Develop Insights & Recommendations Customize. Present. Win. Data Updates Presentation Updates Data Updates Hillshire Brands Category Leadership Key Customers Data Analysts Business Support, IT Acosta Partners Wal-Mart, Kroger, Safeway, SuperValu, strategic growth accounts… Day00_Speaker_Topic_v00.pptx

32 Enable customization and ensure ROI
Hillshire Brands 2012 4/12/ :01 AM Enable customization and ensure ROI Align with the customer to a level we are able to support well Fully engage in the areas where it makes sense to invest Ensure that we have a point of view on each of the customer’s strategies and tactics Become experts in areas that drive our business model forward with our customers Align to what customer needs… align strategically. Invest in capabilities completely where return is. Have point of view and broader perspective across customer strategies Do not give the house away… Become experts in areas that drive business… and meet customer objectives. Day00_Speaker_Topic_v00.pptx

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34 Closing thoughts

35 Industry needs to focus on delivering new analytics to drive business insights
Rich Diagnostics driving hypothesis and begin understanding the why and prescribing what next Insights Basic analysis, tell what the data says, Smart text when possible, getting to the who, what, when, and where Observation Common when possible, automated, national and local Reporting Multiple sources, store level upc to total store, syndicated, panel, third party observation, etc. Data

36 Need to develop new metrics and common language
Item ranking retailer productivity by point of distribution Item ranking retailer vs market * High ACV is>=50%, High Velocity is SPPD > Ctgry avg. WATCH OUT High ACV/Low Velocity CONT TO GROW High ACV/High Velocity AT RISK Low ACV/Low Velocity GROW Low ACV/High Velocity ACV Velocity ACV Old New

37 A learning environment is critical for consistency and to deliver the insights to participate as an “advisor”


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