2 nd Annual CONSUMER Value Study

Transcription

1 Webinar Series 2 nd Annual CONSUMER Value Study Consumables Tuesday, November 4, 2014 Presented to POI Conference

2 Our Mission: Use Analytical Innovation to Simplify and Improve the way sales analysis is conducted in the CPG industry Category Management Retail Space Optimization QuickTABS TABS CatMan TABS Catman Advantage TABS Surge Team TABS RetailWorks TABS ProfitMaster Adjacency Optimization Category Priority Model Trade Promotion Global Analytics TABS PromoMaster Plus TABS Promo Advantage TABS WorldView Global Opportunity Assessment 2

3 TABS Group Expertise and Thought Leadership in Trade Promotion Recordings of TABS Group webcasts can be found at webinars.tabsgroup.com Next Webinar DECEMBER 10, 2014, 2:00 PM EST 1 st Annual Cosmetics Market Study 3

4 METHODOLOGY Survey fielded by TNS to 1,000 Adults August 13 and 14. Areas of Questioning: Consumables Categories Purchased and Frequency of Purchase (15 Categories) Consumables Categories Candy, Carb Bev, Salty Snacks, Ice Cream, Yogurt, Cereal, Refrig Drink, Fruit Juice, Cookies, Crackers Strong Agreement on Types of Deal Tactics Utilized (10 Tactics) Outlets where purchase Consumables Regularly (No specific Grocery breaks) TABS Group Tests and Checks for: Internal Data Validity External Industry Corroboration (correlate data to Purchase Frequency by Category) 4

5 BACKDROP Sluggish CPG sales, Industry Vets blaming Trade Promotions, Lower Sales from Millennials and Weaker Trade Promotion Efforts (Quality, not Quantity) 4.2% 4.0% 3.2% 2.3% 1.5% SOFT SALES AMONG MILLENIALS Why New Car Sales to the Youngest Generation of Drivers Slowed in 2013 Edmunds.com Millennials reject soft drinks, embrace energy drinks Motley Fool Consumption Food/Bev (AOC) Consumption Food/Bev (All) Food/Bev (AOC) Pop! How Mondelez lost millennial gum chewers Crain s Chicago Business McDonald s Faces Millennial Challenge Wall Street Journal DESERT OF DESPAIR PROMOTIONS A PROBLEM Pinnacle Foods Mondelez Kraft Foods General Mills Church & Dwight Source: US Bureau of Economic Analysis, Nielsen 5

6 TABS Consumer Value Study corroborates industry trends showing flat sales for Consumables. Avg. Reported Annual Purchases per Respondent % -1% +2% -1% -3% +5% -2% % +4% +5% +4% -1% +3% CARB BEV SALTY SNACK CEREAL YOGURT WATER ICE CREAM COOKIES FRUIT JUICE REFRIG JUICE CRACKERS FROZ PIZZA Total Consumables Purchases FLAT vs. YAG FROZ NOVELTY CANDY POPCORN ISOTONIC

7 The divergent gender trends among Millennials is notable. Female -14%; Male +6% 7

8 Demographic and Macroeconomic Trends of Millennial Women Living at home longer Higher share of spending to tech Married later 8

9 14 of 15 Categories show Sharp Declines among Female Millennials. F18-34 Reported Purchasing by Consumables Category (15% of Pop) CARB BEV SALTY SNACK CEREAL YOGURT WATER ICE CREAM COOKIES FRUIT JUICE REFRIG JUICE CRACKERS FROZ PIZZA FROZ NOVELTY CANDY POPCORN ISOTONIC -18% -14% -8% -9% -15% -22% -16% -10% -15% -14% -1% -13% -30% -10% -10% Total Consumables Purchases -14% vs. YAG

10 DISTRIBUTION CURVE - % of Total Respondents 16% 14% 12% 10% 8% 6% 4% 2% 0% Total Deal Tactics Utilized % 8% 13% 13% 15% 13% 13% 10% 6% 2% 2% % 11% 12% 13% 14% 13% 11% 8% 6% 3% 2% 92% of Shoppers Use at least 1 Deal Tactic; 42% Use at Least 5 110% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% CUMULATIVE - % of Total Respondents % 15% 27% 40% 54% 68% 80% 90% 96% 98% 100% % 19% 31% 44% 58% 71% 82% 90% 95% 99% 100%

11 Lower participation in 8 of 10 Deal Tactics... EDLP 68% 66% YET Shoppers increased their Deal Search activity across multiple retailers. % of Respondents Using Specific Deal Tactics TIER 1 TIER 2 TIER 3 TIER 4 SHOP FOR DEALS CIRCULAR PVL PURCH FSI LOYALTY DIGITAL CPN LRG SIZES BONUS PK REBATE -3% +3% -5% -10% -2% -7% -6% -6% -6% +15% 49% 51% 50% 47% 49% 45% 45% 44% 42% 38% 38% 36% 35% 33% 32% 30% 11% 12%

12 Deal participation across both Active and Passive strategies, but Passive drops more pronounced. % of Respondents Using Deal Tactics: Active vs. Passive 49% 51% 50% 47% 45% ACTIVE % Chg -2% 44% 42% 38% 38% 36% 68% 66% 49% PASSIVE % Chg -6% 45% 35% 33% 32% 30% +3% -5% -2% -7% -6% +15% -3% -10% -6% -6% 11% 12% SHOP FOR DEALS CIRCULAR FSI LOYALTY DIGITAL CPN REBATE EDLP PVL PURCH LRG SIZES BONUS PK

13 Higher outlet counts, in general, with clear uptick in shopping at smaller format outlets: Drug, Value, and C-store. % of Respondents Making that Purchase at Outlet Regularly % +11% +2% -19% -14% +9% +6% +4% NA % -2% 72% 72% 64% 63% 31% 31% 23% 19% 20% 17% 17% 17% 17% 18% 16% 16% 11% 12% 9% 10% 7% 8% 5% 6% 6% 6% 5% 5% 4% 4%

14 Traditional channels still dominate the Consumable landscape. The hyped outlets of Natural Food and Online are only 5% of the sector sales. Online -3% vs. YAG. Share of Mentions for Outlets Where Purchase Consumables Regularly -2% -2% -2% +31% +9% % -16% +9% +4% +2% +39% -1% % 24% 23% 21% 21% 10% 10% 7% 6% 6% 6% 5% 7% 6% 5% 5% 5% 4% 4% 3% 3% 2% 3% 1% 2% 2% 2% 2% 2% 1% 1% GROCERY WALMART TARGET DOLLAR WALGREENS CVS COSTCO SAMS NTRL FOOD CSTORE RITE AID OTHER BJS OTHER MASS ONLINE Adj 14

15 Clear Cause and Effect between higher deal activity and higher purchasing. For clarity: MORE PROMOTIONS MEANS MORE SALES 15

16 Heaviest Deal Users Account for more than 70% higher Consumables purchases per buyer than the Lightest Deal Users. 16

17 Demographic Profile of Heavy Deal Buyers 35% 30% 25% 20% 15% 10% 5% 0% F18-34 F35-44 F45-54 F55-64 F65+ M18-34 % of Group Heavy Deal Users (7-10 Tactics) US AVG = 18.4% M35-44 M45-54 M55-64 M65+ Female Male Female Alone Female Female w_non w_rela Relativ tive e Husba nd & Wife Male Alone Male w_non Relativ e % 33% 24% 25% 13% 10% 17% 21% 15% 15% 21% 16% 14% 7% 17% 21% 18% 15% 15% 16% 16% 19% 21% 28% Male w_rela tive 1 Memb er 2 Memb er 3 Memb er 4 Memb er 5+ Memb er Meaningful skew to Larger Households with Kids and certain Regions % of Group Heavy Deal Users (7-10 Tactics) 30% 25% 20% 15% 10% 5% 0% <$30,0 00 $30, ,999 $50, ,999 $75,00 0+ Kids No Kids Never Marrie Marrie d d Former Marrie d A County B County C County D County White Black Asian Hispani c % 19% 17% 19% 23% 17% 15% 21% 14% 18% 20% 20% 15% 20% 7% 6% 13% 18% 19% 22% 29% 11% 20% 9% 19% 17% New Englan d Mid Atlanti c South Atlanti c East South Cent West South Cent US AVG = 18.4% East North Cent West North Cent Mount ain Pacific

18 All shoppers purchase across multiple outlets, with Active 3 s being much more vigorous in their cross-outlet purchase behavior. % of Active Buyer Group Making that Purchase at Outlet Regularly 84% 81% 73% 59% 60% 58% Avg Outlets per Active Buyer Group % Chg Active % Active % Active % 39% 25% 34% 30% 29% 26% 23% 22% 20% 20% 17% 16% 17% 13% 13% 13% 13% 13% 13% 11% 11% 11% 10% 12% 10% 10% 7% 8% 9% 5% 6% 6% 7% 4% 5% 2% 3% 4% 2% GROCERY WALMART TARGET DOLLAR WALGREENS CVS COSTCO SAMS NTRL FOOD CSTORE RITE AID OTHER BJS OTHER MASS ACTIVE 1 ACTIVE 2 ACTIVE 3 ONLINE 18

19 We see Walmart losing share of purchases among the more Active Deal seekers. Drug is the primary beneficiary of this share shift. Share of Outlet Mentions by Active Buyer Group 26% 23% 24% 21% 19% 18% 11% 10% 10% 7% 7% 8% 7% 6% 5% 7% 5% 5% 6% 5% 5% 6% 4% 4% 5% 4% 4% 3% 2% 3% 3% 3% 2% 2% 2% 2% 2% 3% 2% 1% 1% 2% 1% 2% 1% ACTIVE 1 ACTIVE 2 ACTIVE 3 19

20 We see a different pattern of changes in cross-outlet purchasing when we look at Passive Groups, with only Passive 2 s and 3 s increasing their cross-outlet activity. % of Passive Buyer Group Making that Purchase at Outlet Regularly 83% 77% 77% 70% 63% 51% Avg Outlets per Passive Buyer Group % Chg Passive Passive % Passive % 36% 36% 31% 29% 26% 24% 25% 23% 13% 13% 19% 19% 20% 17% 14% 15% 14% 15% 10% 11% 12% 13% 12% 10% 10% 5% 7% 7% 8% 7% 7% 8% 8% 5% 5% 6% 7% 1% 2% PASSIVE 1 PASSIVE 2 PASSIVE 3 20

21 It is Grocery that loses among heavier Passive Deal Groups, with Dollar and Sam s showing gains. Share of Outlet Mentions by Passive Buyer Group 26% 23% 21% 21% 21% 20% Natural Foods Share by Income <$150K per Year 3% $150K+ per Year 9% 12% 9% 9% 9% 8% 7% 6% 5% 5% 6% 6% 6% 5% 5% 4% 6% 5% 4% 4% 4% 3% 3% 4% 2% 3% 2% 3% 2% 2% 2% 2% 2% 2% 2% 3% 2% 2% 1% 1% PASSIVE 1 PASSIVE 2 PASSIVE 3 21

22 CONCLUSIONS CPG Trends Most of industry weakness due to sharp declines in purchasing among Female Millennials AND weaker deal offers to shoppers. The Millennial dropoff explained by numerous macro trends Higher percentage living at Home Higher unemployment Delayed marriage and motherhood Substitution effect in consumption to tech and entertainment The weaker deals primarily a function of significant shift towards loyalty and online promotions, which are less preferred and effective (Source: webinars.tabsgroup.com). Households with Kids and Females continue to be the lifeblood of the industry. 22

23 CONCLUSIONS Deal Purchase Behavior Just about every industry paradigm with respect to consumers reaction to deals is flawed Consumers are not trained to buy on deal; securing deals are a fundamental, irreplaceable need of most shoppers. Deal purchasing leads to more, not less or same, overall purchasing MUCH more. Loyalty is an illusory concept in CPG retail. Shoppers actively purchase across outlets, and that behavior is increasing, not decreasing. Higher Deal Quantity is not the culprit of weak sales and lower profits among CPG manufacturers; IT S THE WEAKER QUALITY OF THOSE DEALS 23

24 CONCLUSIONS Outlet Shopping Patterns Clear shift of Consumables shopping to smaller format channels. Deal Activity appears to be a contributor in that shift. Dollar channel picking up heavy users of Passive Deals; Drug channel picking up heavy users of Active Deals. Deal activity explains several other retailer trends: EDLP strategy inhibiting Walmart share among the heavier Active Deal buyers. Lack of EDLP or credible hybrid strategy inhibiting many Grocers (explains Aldi growth) Similarly, Natural Food will struggle to secure sales among heavy Deal shoppers. With a 1.3% share and down slightly from 2013, Online still many years away from being a factor in Consumables

25 RECOMMENDATIONS EMBRACE the fact that consumers will always want and need deals. Meet those needs by prioritizing a promotional strategy that includes by Active and Passive Deals tactics. ESTABLISH promotional quality over quantity in your promotional strategy. INCLUDE straight-forward and aggressive promotional discounting as part of that strategy. EDLP-only or Passive Deals-only limits the upside. ACCEPT that Loyalty programs don t really build loyalty, but ACKNOWLEDGE that these Rewards programs can be one of several effective and profitable deal tactics. SUPPRESS your aspirations of being the next Futurist. Online is a non-factor in Consumables, Millennials are declining and relatively less important, and Old School deal tactics still draw better than New School. FOCUS on what matters right now: Mass Market retailing, Broad-reach media, Households with Kids, Females and regular and compelling promotions to shoppers