Retail and CPG Industry Trends DemandBetter 2010 Analyst Day

Transcription

1 Retail and CPG Industry Trends DemandBetter 2010 Analyst Day May 20,

2 Welcome & Agenda Overview Retail Industry Trends Dan Moe Partner, The ROIG Group Understanding the Guest: Category & Guest Insights Shelley Hyytinen - VP Merchandising Process & System Development, Target Stores CPG Industry Trends Chris Boever - VP Sales Planning and Operations, ConAgra Foods, Inc. Mike Noonan - VP Price & Promotion Analytic Consulting, Nielsen DemandTec Strategy Update Dan Fishback - President & CEO, DemandTec DemandTec Financial Update Q&A Mark Culhane - EVP & CFO, DemandTec 1

3 Safe Harbor Forward-Looking Statements This presentation includes forward-looking statements relating to matters that are not historical facts, including statements regarding DemandTec's future financial performance, target financial model, and short- and long-term growth strategies. In some cases, such forward-looking statements are identified by words such as "anticipate," "believe," "plan," "estimate," "expect," "strive," "future," "intend" and similar expressions. Although DemandTec's management believes that the expectations reflected in the forward-looking statements are reasonable, such statements involve known and unknown risks, uncertainties and other factors that may cause DemandTec's actual results to be different from any future results expressed or implied by these statements, including the risks described in DemandTec's quarterly reports on Form 10- Q and annual reports on Form 10-K. We caution you that no forward-looking statement is a guarantee of future performance, and you should not place undue reliance on these forward-looking statements which reflect the view of DemandTec's management only as of the date of this presentation. We assume no obligation to update any forward-looking statements contained in this presentation as a result of new information or future events or developments. 2

4 Retail Industry Trends Dan Moe, Partner, The ROIG Group

5 Retail Complex Business Operational Complexity Lots of Data from multiple sources Art and Science of merchandising and marketing Multiple functions must be routinely addressed strategy, assortment, transition, pricing, promotion, forecasting, vendor management, allowance control, and more all interconnect and have dependencies. Take a deeper look at assortment 4

6 Assortment Considerations Space Advertising Strategy Returns Consumer Awareness External Market Intelligence Solutions Gross Margin Supplier Programs Price Band Attribute Brand Strategy Vendor Performance 5

7 All retailers must focus on the customer mass is becoming personal Mining customer records Creating segments At Best Buy Jill, Buzz, Barry, Ray followed by lifestyle Retailers must be customer centric This too is complex and moves faster than the merchants ability to keep up 6

8 Processes and Tools are Treated as Individual Parts - I Believe nextgen Brings Them Together Pricing Allowances Forecasting Integrated Promotional Planning Assortment / Transition Management 7

9 Retail Adoption Increasing Leading Retailers Pave the Way The Rest of Retail will Follow or be at a Competitive Disadvantage 8

10 Understanding the Guest: Category & Guest Insights Shelley Hyytinen, VP Merchandising Process & System Development, Target

11 Importance of Guest Insights Can t be Everything to Everyone The Best Retailers Focus on Understanding Their Guests Targeting Those Specific Guest Segments Too Many Channels and Competitors to be Undifferentiated and Survive 10

12 Challenges to Understanding the Guest Leverage Insights at the point of decision and not separate silos Large Amounts of Data Actionable Insights Required 11

13 Delivering on Those Insights Understanding Subtle Changes in Guest Behavior Identify Clear Opportunities to Capture Market Share Price Perception to Create Customer Loyalty Store Design, Promotions and Marketing Programs 12

14 CPG Industry Trends Trade Promotions Chris Boever, VP Sales Planning & Operations, ConAgra Foods 13

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16 Our Brands ConAgra Foods Portfolio FROZEN GROCERY REFRIGERATED SNACKS COMMERCIAL 15

17 CP Companies Invest ~15% of Revenue on Trade Promotions Estimates the total annual amount spent on trade promotion in the U.S. between $125B to $175B Second largest expense, retailer and manufacturer emphasis on ROI Improved data and services are delivering advanced analytics Source: 2009 Cannondale Associates research 16

18 Trending to the Future Current State Repeating prior plans Limited post-analysis Debates about the value of a promotion Differing objectives Short-term minded Escalating trade investment Trade spending in the sales silo Desired State Joint Business Planning Predicting programs and plans On-going review of results, adjust tactics with speed Continuous results improvement from trade investment Win-Win outcomes that deliver brand and category objectives 17

19 Migration from Transactional TPM to Predictive Analytics Source: 2007 Aberdeen Group Research 18

20 Shopper-Centricity as a Competitive Advantage Source: 2007 Aberdeen Group Research 19

21 CPG Competing Post Recession Mike Noonan, VP Price & Promotion Analytic Consulting, Nielsen

22 Industry Trends Reactions to the Great Recession Winning Companies will Compete on Analytics Look for Solutions Connecting CPG Marketing, Sales and Retailers Focus on Customer Centric Marketing 21

23 Consumer Reaction to the Great Recession What didn t change? Big trends continue Focus on Health & Wellness Valuing convenience Increased segment targeting (aging, ethnic, haves vs. have nots) What did change? Near-term trade-offs Re-ordering shopping lists: Back to Basics Redefining discretionary vs. essential spending Changing where & how they shop More Dining In Trading down or buying on sale 22

24 Winning Companies will Compete on Analytics Five Stages of Corporate Analytical Capability Stage STAGE 5 Analytical Competitors Questions What s next? What s possible? How do we stay ahead? STAGE 4 Analytical Companies How can we use analytics to innovate, differentiate? STAGE 3 Analytical Aspirations STAGE 2 Localized Analytics STAGE 1 Analytically Impaired Can we extrapolate existing trends? Can we improve this activity? How can we understand our business? What happened in our business? 23

25 Winning Companies Looking for Solutions connecting CPG Marketing, Sales and Retailers HEADQUARTERS Link Strategy to Tactics STRATEGIC PLANNING & TARGETS CUSTOMER Improved Trade Spend efficiency and ROI PERFORMANCE ANALYSIS HEADQUARTERS E TACTICAL PLANNING CUSTOMER PREDICTIVE SIMULATION One number system between HQ and Sales teams Single system rollup and drill down RETAIL CUSTOMERS Increased efficiency in Planning and Evaluation EXECUTION CPG INTERNAL Improve collaborative relationships with retail 24

26 Consumer Centric Marketing Frequent Shopper defined consumer segments Targeted programs communications and to increase loyalty (trips) and basket size Product assortments and in-store communications addressing consumer ethnicity (e.g. Asian, Hispanic) and life stage (e.g. seniors) 25

27 Customer Centric Marketing Identifies Opportunities by Segment Frequent Shopper data defined consumer segments Targeted promotion and communications and to increase loyalty (trips) and basket size Product assortments and in-store signage addressing segments Category X Non-Retailer A Shopper Retailer A Shopper Segment 1 Segment 2 Segment 3 Segment 4 Segment 5 Retailer A Stores chg $ chg % - - -$ 7.8M - 9.2% - $1.5M -11.1% -$2.7M -11.4% -$2.1M -10.5% -$1.3M - 7.1% - $970k -12.4% Remaining Market chg $ chg % +$9.5M + 8.5% -$11.5M - 6.6% -$290k -5.2% +$820k + 8.5% -$2.3M -13.0% -$4.5M -8.8% -$5.2M -5.7% 26

28 DemandTec Strategy Update Dan Fishback, President & CEO, DemandTec, Inc.

29 DemandTec is Global 4 Continents 11 Countries 5 Languages 28

30 and the DemandTec Community is Growing 100+ Retail Banners 55,000+ Stores 50+ CPG Account Teams 29

31 DemandTec Invests in Innovation and Growth ($MM) Revenue $120M in R&D investment 37% 30

32 DemandTec TradePoint Network Pricing Space Promotion Shopper Insights Assortment Direct Marketing 31

33 DemandTec TradePoint Network is Revolutionizing Decision Making 12,000+ Users 3 Million+ Deals 15 Billion+ Prices 50,000+ CP Promos 32

34 Dedicated to Revolutionizing Decision Making 4 Releases, 200+ Feature Enhancements Assortment Optimization National Price Segment-Level Simulator for Advertising HQ & Analytics Marketing Execution 200+ Additional Enhancements 33

35 Dedicated to Revolutionizing Decision Making Assortment Optimization National Price Simulator Segment-Level for HQAdvertising & Analytics Marketing Execution 200+ Additional Enhancements 34

36 Dedicated to Revolutionizing Decision Making Embedded Post- Event Analysis Assortment Optimization Segment-Level Advertising & Analytics Marketing Execution 200+ Additional Enhancements 35

37 Dedicated to Revolutionizing Decision Making National Price Simulator for HQ Assortment Optimization 200+ Additional Enhancements Shopper Advertising Insight- & Marketing on-demandtec Execution 36

38 Dedicated to Revolutionizing Decision Making Segment-Level National Price Assortment Analytics Simulator for HQ Optimization 200+ Additional Enhancements Analytics in Promotion Planning & Management 37

39 Dedicated to Revolutionizing Decision Making National Price Assortment Simulator for HQ Optimization Segment-Level Advertising & Marketing Analytics Execution Allowance Billing 38

40 is Revolutionizing Decision Making Shopper Segmentation & Insights Price, Promotion, Assortment Optimization Manufacturer-Retailer Collaboration 39

41 is Revolutionizing Decision Making 40

42 DemandTec Financial Update Mark Culhane, EVP & CFO DemandTec, Inc.

43 FY 2010 Highlights Total Revenue $79.1 million up 5.4% Y/Y Non-GAAP Gross margins 72% Non-GAAP Operating Income $2.1 million = 2.7% Op Margin Cash and Cash Equivalents $67.3 million * Non-GAAP results exclude stock compensation expense and amortization of intangibles 42

44 Fiscal 2010 Challenging Year Macro Economic Environment New Business Renewals * Non-GAAP results exclude stock compensation expense and amortization of intangibles 43

45 Fiscal 2011 Cautious Optimism Retail and CP End Markets Better Sales Pipeline Growth * Non-GAAP results exclude stock compensation expense and amortization of intangibles 44

46 Q1 FY 2011 Guidance Revenue range from $17.6 million to $17.8 million Non-GAAP* operating loss from $2.0 million to $2.5 million Non-GAAP* loss per share from $0.06 to $0.08 * Non-GAAP results exclude stock compensation expense and amortization of intangibles 45

47 Q&A 46

48 Retail and CPG Industry Trends DemandBetter 2010 Analyst Day May 20,