Best Practices for Vendors to Lead in Retail in Multiple Markets

Transcription

1 Best Practices for Vendors to Lead in Retail in Multiple Markets Presented by: David Marcotte Vice President - Retail Insights October 2011

2 Kantar Retail Innovation and Action Springs from our Heritage Combining the best of WPP s retail insight and consultancy businesses to bring clients better solutions from Insight to Strategy to Execution

3 Growth and the Latin American Retail Market Key Points for Vendors to Get Ahead The World Shifted: Latin America and Emerging Regions Benefit The Strength of Retailers and Vendors is they have seen all types of Consumers And have seen change How is the Vendor to get ahead of that change and manage it proactively for the Retailer? 3

4 Stay Ahead in Retail The Movement of Retail The Kantar Retail Market Evolution Model Using the Model to Stay One Step Ahead 4

5 GDP Change 2009 to 2012 Slowing out of Recovery New IMF Projections for Select Countries BRIC s Source: IMF Sept

6 Advanced Economies GDP Projections are running a full 1pt to 1.5 pts behind projection which is weak as is Percentage change Quarterly Prior Year Sept 2011 IMF Projections Source: Sept 2011 IMF Restatement 6

7 Key Cost increase in Commodities Generally Favored Canada for the Past 6 Years 7

8 Global Indicators of Trade Baltic Dry Index as of June 2011 The Baltic Dry Index (BDI) is a number issued daily by the Londonbased Baltic Exchange. The index provides an assessment of the price of moving major raw materials by sea. Source: Investment Tools.com & The Baltic Exchange Source: Kantar Retail Research 8

9 Container Traffic Shift: East Coast to West Coast Walmart and Others are Invested in Global Sourcing 2014 Panama will open the Third Locks which will make passage for the Very Large Container Ships Source: Kantar Retail analysis, Lloyds' 9

10 Container Traffic Import/Export Latin America Major Increases But (TEU ) 10

11 Global Banking drives Global Decisions Ten Years was a Long Time The Shift Means Cash where Growth is Happening Now! Market capitalization, in USD billions Source: Financial Times of London June 2010 Report 11

12 Global Life Expectancy Increasingly into the 80 s as a norm ??????? Source: Kantar Retail analysis, indexmundi.com 12

13 The Emergent Market Worker Boom Has a Profile much like Mexico going forward Despite slowing population growth, retail shoppers will increase in next 15 years Source: Walmex Investor Presentation, July

14 Global Banking drives Global Decisions Ten Years was a Long Time The Shift Means Cash where Growth is Happening Now! Market capitalization, in USD billions Source: Financial Times of London June 2010 Report 14

15 Historical Growth and Forecasted Growth Regional CAGR s for Hypermart/Supermarket/Mass CAGR CAGR Sales Added '06-11E Sales Added '11E-16E Region (Total HSM) ('06-'11E) ('11E-'16E) (USD millions) (USD millions) Asia 9.7% 6.0% $ 109,283.7 $ 123,806.2 South America* 8.1% 4.6% $ 29,245.1 $ 28,364.8 Africa 9.9% 3.4% $ 9,585.0 $ 5,696.0 Europe** 3.1% 3.1% $ 120,652.5 $ 168,754.9 North America*** 2.6% 2.7% $ 97,172.4 $ 139,974.2 Australasia 9.3% 2.2% $ 28,284.1 $ 11,078.3 Grand Total 4.1% 3.4% $ 394,222.8 $ 477,674.5 *incl. Central, Mexico & Carib. **incl. Russia ***incl. PR, excl. Mexico Note: Regions ranked by 11E- 16E CAGR Source: Kantar Retail analysis 15

16 A Closer Look: South America Growth , projected CAGR ('06-'11E) CAGR ('11E-'16E) Hypermarket 8.2% 6.2% Supermarket 8.0% 4.6% Mass Merch -6.9% 1.7% Region 8.1% 5.6% Top 5 Hypermarkets 2011E Sales (USD millions) Note: Channels and retailers ranked by 11E- 16E CAGR CAGR ('11E-'16E) Chedraui $ 3, % Almacenes LA 14 $ % Walmart $ 19, % CBD $ 6, % Olimpica $ % Top 5 Mass Merch 2011E Sales (USD millions) CAGR ('11E-'16E) Walmart $ % Sears Holdings $ % Top 5 Supermarkets 2011E Sales (USD millions) CAGR ('11E-'16E) Central Detallista $ % Chedraui $ % Irmaos Muffato $ 1, % Condor $ % CBD $ 3, % Including Central America, Mexico, & Caribbean Source: Kantar Retail analysis 16

17 Stay Ahead in Retail The Movement of Retail The Kantar Retail Market Evolution Model Using the Model to Stay One Step Ahead 17

18 Overview: Kantar Retail s Market Evolution Model (MEM) The What An assessment tool with a framework built on KR analytics, market data, and data-driven insight The model is validated using primary and secondary research In-market teams can leverage the tool and framework to: Identify their evolution pace Build a growth roadmap Drive enablers The How Tracks 3 key drivers/factors: Consumer changes Retail consolidation Disruptive factors (government & external influences) Each factor has a set of enablers that determine the velocity of evolution 18

19 Kantar Retail Model: 3 Key Drivers Influence Market Evolution Key Enabler 1 Consumer Drivers Demographic shifts Disposable income Product availability Price Trip aggregation Product quality Shopping experience 2 Why do consumers shift their spending away from the traditional vendor environment to a chain-based environment? 2 Consolidation Drivers What conditions facilitate OT consolidation or concentration? Access to capital Geography & population density Competitive information systems Supplier relations Supply chain Wholesale structures Homogeneous consumer Disruptive Factors What external factors disrupt the pace/stage of development? Taxation & duties Election cycles Organized interests Labor markets Economy Legislation The pace of change of Consumer, Consolidation, Disruptive drivers determines a market s evolution velocity. 3 19

20 Kantar Retail s Market Evolution Model: Markets are Predictable Exploration Concentration Penetration Maturation Post-Modern 25% 40% 50% 60% 70% Gradual Transition Gradual Transition Pioneers Category Specialists, Hypermarkets, Cash & Carry, and Local Food Chains Adjacent Nation, Primary Formats Discounters & C-Stores = new growth formats; Hypers and C&C largest growth formats Adjacent Nation, Pioneers, and Secondary Formats Traditional Trade now impacted Pure Secondary Formats, Multi-formats Drug, Supermarket, Category Specialists Multi-Format Dominant High-capability Drug, Supermarkets & Category Specialists. Regrowth of Specialty Chains, Mom n Pops with Demographic Focus 20

21 Market Evolution Model (MEM): Mapping to Country Stage Key Processes Start and Evolve to Stages Exploration Concentration Penetration Maturation Post-Modern Supply Chain Brand Management Chain Store Management / Credit Consumer / Shopper Insight Research Merchandise Planning Trade Spend Management Private Label Management Category Management Retailer CRM 21

22 Market Evolution Model (MEM): Mapping to Latin America Key Processes Start and Evolve to Stages Exploration Concentration Penetration Maturation Post-Modern Supply Chain Generally Internationals pushes the country groups faster than existing reality. However, often these initiatives fail if too in advance. C.America Brand Management Chain Store Management / Credit Consumer / Shopper Insight Research Merchandise Planning Trade Spend Management Private Label Management Category Management Brazil Retailer CRM Venezuela Peru Argentina Mexico Chile 22

23 Suppliers have to realize the speed that international retail can move into a market Carrefour, e 95 billion in 40 countries, highly likely to move in and out of at least 5 countries in 2012 Walmart, e400 billion in 15 countries, 16 by end of 2011, 18 by end of 2012? Casino, e29 billion dollars in 10 markets in 10 formats, likely to be in 11 markets by end of 2011 Tesco, e64 billion in 13 countries, leaving Japan, likely to open in another country in Eastern Europe ALDI, e50 billion globally in 10 countries by 2012 expect to be in two more 23

24 For Chile the Tipping Points were often quite clear and the evolution rapid what did Retailers & Vendors Learn? Exploration Concentration Penetration Maturation Post-Modern Consumer Public pension program and work boom commodities Opening of country to finished good export market Access to more forms of credit, stable work Expansion of malls, reworking of inner city shopping Stable middle class, rapid real estate growth Retailer Department Stores Hypermarts Supermarkets Multi-Format Smaller Disruption Political changes, banking rebuild Government with focus on investment in infrastructure Major upswing in infrastructure and credit security laws Shift to public health and higher education in policy to support smaller businesses while managing consolidation Rapid Transition Present

25 Stay Ahead in Retail The Movement of Retail The Kantar Retail Market Evolution Model Using the Model to Stay One Step Ahead 25

26 The MEM is three-way dance of Retailer, Consumer, and Disruptions what is the Vendors Role Of all the players in the Market Evolution Model, the Vendors are the one that is most capable of planning ahead. All others are reacting Latin America has all the stages of MEM inside the Region, there is plenty for the Vendor to learn from 26

27 Suppliers need to be agile in adjusting only new capability requirements, but as they change with the market Exploration Concentration Penetration Maturation Post-Modern Supply Chain Tipping Points Consumer / Shopper Insight Research Collaborative Planning with Retailers Evolution of Capabilities Trade Spend Management Category Management Source: Kantar Retail analysis 27

28 Suppliers need to be agile in adjusting only new capability requirements, but as they change with the market Exploration Concentration Penetration Maturation Post-Modern Supply Chain Source: Kantar Retail analysis 28

29 Suppliers need to be agile in adjusting only new capability requirements, but as they change with the market Exploration Concentration Penetration Maturation Post-Modern Consumer / Shopper Insight Research Source: Kantar Retail analysis 29

30 Suppliers need to respond to Collaborative Planning Requests in Different Ways Exploration Concentration Penetration Maturation Post-Modern Collaborative Planning with Retailers Source: Kantar Retail analysis 30

31 Suppliers need to be agile in adjusting only new capability requirements, but as they change with the market Exploration Concentration Penetration Maturation Post-Modern Supply Chain Consumer / Shopper Insight Research Collaborative Planning with Retailers First collaborative use of vendor funds to support promotion Systematic use of vendor funds by retailers to product profit and sales Co-Marketing is planned on annual basis with product support as needed Funds defined to overall category profitability and portfolio support Category Management Source: Kantar Retail analysis 31

32 Trade Spend evolves but is subject to International Retail pressures in-market Exploration Concentration Penetration Maturation Post-Modern Trade Spend Management Source: Kantar Retail analysis 32

33 As MEM and Retailers develop more complex data and analytical functions their metrics become more advanced Post-Modern Maturation Penetration Concentration Exploration Most Retailers are Here Source: MVI research and company reports 33

34 Category Management is always an area of tension as retailer pursue best practice before they are ready Exploration Concentration Penetration Maturation Post-Modern Category Management Source: Kantar Retail analysis 34

35 Vendor Organizations also Impacted Example: Exploration Most markets does not exist (exception is often Asia) Corporate EVP Global Sales Key Account Dir Finance/Trade Training Planning Supply Chain Regional Regional Mgr (Direct) Regional Mgr (In-Direct) COE Shopper Insight Marketing Projects Distributor Training Regional Distributors Country Country Manager Finance Marketing Trade Spend Supply Chain Key Account / Distributors International Retailer Distributor Distributor DC s DC s Developing Retailer General Sales / Field Sales Corporate Field Mgmt Third Party Sales 35

36 Peru Two Phase Country Exploration = North / Highlands, Penetration = Rest of Country Exploration Penetration Penetration 36

37 Tipping Points to Consider for Vendors: Driving Profitable MT Growth as Your Market Evolves Market Phase Key Question Exploration Which formats / customers will modernize the trade and at what velocity? Concentration How will we drive profitable Formal Market growth in the next 3-5 years? Penetration Can we adapt to ongoing consolidation, increase competition, and the required sophistication for partnership? 37

38 Supplier Implications: (continued) Driving Profitable MT Growth as Your Market Evolves Market Phase Key Question How to Get There Maturation Are we fully aligned to master sophisticated retailers operating multi-formats? Anticipate eclipse of Traditional by Formal Post-Modern Can we be selective to our when and when we allocate our portfolio of products? Can we operate in a multi-tier Private Label market? Can we balance the large box with the small? 38

39 Stay Ahead in Retail The Movement of Retail Countries and Populations are Changing Are you ahead to these trends to shape these markets? The Kantar Retail Market Evolution Model Changes in Markets are predictable once the interaction of events occur Do you know where the market is and where it is going? Using the Model to Stay One Step Ahead Tipping Points and Capabilities Are you organized for success? 39

40 David Marcotte Vice President Retail Insights 245 First Street Floor 10 Cambridge, MA D C F