Hot Topic: Listing Brand Products in Discounts from the View of Shoppers

Transcription

1 1 Hot Topic: Listing Brand Products in Discounts from the View of Shoppers Retail in Detail, 27 th of September 2011, Praha Dr. Jochen Hartl, Advanced Business Solutions (ABS) GfK Austria

2 GfK Consumer Tracking Hot Topic: Listing Brand Products in Discounts from the View of Shoppers September 2011 Initial situation: Stagnating discounter shares in many developed (CEE) markets after period of growth 2 Discounter value shares in % Germany * Austria 2006 Czech Republic Hungary Source: GfK ConsumerScan, Household Panel, Base: Basket of measured categories, * Base: Total till roll, FMCG 2009 Slovakia 2010 Poland

3 Discounters react by increasingly upgrading their services, including by listing more brands 3 Saturation Revitalise growth Upgrade stores Advertising Diversification Fresh meat/produce Premium lines Organic/Fairtrade Listing manufacturers brands

4 Discounters react by increasingly upgrading their services, including by listing more brands 4 Saturation Revitalise growth Saturation Upgrade stores Budget segment getting saturated Fresh meat/produce Margin pressure Premium lines Search for profitable segment Organic/Fairtrade International expansion Advertising Diversification Listing manufacturers brands

5 Discounters enforce their brand activities, for instance Hofer 5 Hofer Austria: 52 brand listings in 2008 (thereof: 45 in-out promotions) Austria 59 brand listings in 2009 (thereof: 47 in-out promotions)

6 Discounters prominently communicate their brand activities 6 Austria

7 Brand products have indeed an impact on customer loyalty at discounters, although to a lower extent than PL 7 Impact on loyalty at discounters in Austria Easy to reach Private labels Well arranged Customer-oriented staff Customer loyalty programs Big selection Price-performance ratio Offer sausage/cheese/bread Organic/fair-trade products Offer fresh food Brand Brand products Supporter of tradition Offer fruits/vegetables Short waiting times Low price level Regional products Innovative products Healthy nutrition Articles always available Promotions easy to find Price promotions Others 5,0% 4,8% 4,2% 4,2% 4,0% 3,4% 2,9% 2,8% 2,2% 2,0% 2,0% 1,9% 1,7% 1,5% 1,3% 1,3% 1,1% 0,6% 17,3% 8,0% 11,0% 16,5% High impact No impact Source: Driver analysis, relative importance (genizi-method), N = evaluations

8 Opportunities and threats of listing a brand at a discounter 8 Manufacturer perspective Increase total market sales Counter margin pressure in other retail channels Counter PL growth Grasp the opportunity Discounter perspective Increase category sales Increase shop loyalty Attract more profitable buyers Channel cannibalization Negative pressure on margins Negative effects on brand image Retaliation from existing retail partners Product cannibalization Discount positioning may blur Negative effects on margins Increasing dependence on manufacturers

9 So the key business question is: How to know if a listing is worth the effort? 9 GfK solution: Simulate the effects of a brand listing on volume and sales within the market before the listing starts with the Listing Impact Analysis (LIA) Because there are risks that can be avoided!

10 GfK Listing Impact Analysis (LIA) gives answers to important listing questions 10 Manufacturer perspective Which effects would a listing have on: volume and sales of my brand in the total market? competitors volume and sales at retailer and total market level? market shares in the total market?! Discounter perspective Which effects would a listing have on: volume and sales of the category at the discounter? volume and sales of PL at the discounter? the account market shares within the category? Target: Assessment of the (risk) potential resulting from the (de-) listing of my brand Target: Assessment of the (risk) potential for the discounter s category

11 GfK Listing Impact Analysis (LIA) is based on the real shopper behavior measured in the GfK household panel 11 The panel measures WHO buys WHEN WHAT WHERE

12 Model 12 Input: Model: Output: Purchase acts from the panel for a category Marketing Mix GfK-LIA Parameters: - Price level and promotion activities - Brand/retailer loyalty - Distribution - Seasonal factors Simulated purchase acts Scenario: Product line changes ((de-)listing)

13 The model consists of four sub-models that reflect purchase behavior 13 WHEN? volume of / time elapsed since last purchase, seasonal factors, category price level and promotions WHERE? retailer loyalty, depth and breadth of product range, price level and promotion activities of retailers WHAT? brand loyalty, prices and promotions of brands, distribution HOW MUCH? average purchase volume, seasonal factors, prices and promotions of brands, (temperature)

14 Model Benefits 14 Full market model rather than a brand model Benefit: Consideration of all relevant brands/retailers within the focus category incl. brand and account switches Benefit: Consideration of the relevant set as well as loyalty of each household as very important drivers of purchase decisions Model based on individual purchase acts of the households Benefit: Differentiate results by target groups possible Consideration of the complete marketing mix of manufacturers and retailers Benefit: High validity of the model

15 Two examples 15 What would be the impact of a cereal brand K listing in Hofer? Cereal K What would be the impact of a coffee brand J delisting in Lidl? Coffee J

16 Listing cereal brand K in Hofer would be a Win-Win: Manufacturer of brand K would gain 10,5% sales in Austria Hofer would gain 5,8% sales in the cereal category Listing of several sub-brands of cereal manufacturer K in Hofer at average market price 16 Manufacturer Perspective Cereal brand K in total market Retailer Perspective Trad. cereals total at Hofer 10,5% Growth in %, 5,8% Value (%) Value ( ) Value (%) Value ( ) Effects in one year Effects in one year Source: GfK ConsumerScan / Austria / Cereals / MAT May 2010

17 Only 3 Hofer PL variants would have significant losses in case of listing Brand K at Hofer (Knusperone variants Choco Balls, Honey Wheats and Vollk. FIMF) Listing of several sub-brands of cereal manufacturer K in Hofer at average market price 17 Retailer Perspective Trad. cereals total at Hofer Value Change in CEREALIEN TOTAL KNUSPERONE TOTAL Knusperone Choco Balls Knusperone Choco Chips Knusperone Cornflakes Knusperone Honey Wheat Knusperone Nougat Bits 0 Knsupeone Nut Crisp Knsuperone Zimt Chips Effects in one Year Knusperone Vollk. Fl.M.F Hofer Rest CEREAL BRAND K Sub-brand A Sub-brand B Sub-brand C Sub-brand D Source: GfK ConsumerScan / Austria / Cereals / MAT May 2010

18 Some general learnings from LIA simulations 18 Listing is particular successful for a retailer if his category assortment is narrow Lower brand switching at the discounter due to reduced availability of alternatives Higher boost for the category as listing contributes more to a complete range of goods Higher risk of cannibalization for (sub-)brands that are already widely distributed Higher risk that buyers just switch channels New buyer acquisition already limited Setting price level close to the average market level rather beneficial Lower odds that brand draws market share from PL Less likely to face retaliation from other retailers

19 Two examples 19 What would be the impact of a cereal brand K listing in Hofer? Cereal K What would be the impact of a coffee brand J delisting in Lidl? Coffee J

20 Delisting of coffee brand J leads to a significant loss in turnover for the manufacturer and for the R&G coffee category in Lidl Delisting of coffee brand J in Lidl 20 Manufacturer Perspective Coffee brand J in total market Retailer Perspective R&G coffee in Lidl Growth in % -8-9 Volume Value Volume Value Effects in one year Effects in one year Source: GfK ConsumerScan / Germany / Trad. RG / Year 2008

21 Validation of the LIA scenario: Simulation close to the real effects Delisting of coffee brand J in Lidl 21 LIA Effect in Scenario Coffee brand J in total market Real development as observed by GfK Consumer Panel Coffee brand J in total market Volume growth in % March April March April Source: GfK ConsumerScan / Germany / Trad. RG / Year 2008 and April, May 2009

22 Listing cereal brand K in Hofer (Austria) 10,5% Value Win in Austria! Cereal K 927 T Value Win for cereal brand K Delisting of coffee brand J in Lidl 16% Value Loss in Germany! Coffee J 28 Mio. Value Loss for coffee brand J!

23 Benefits of Listing Impact Analysis 23 Effects Effects of various (de-)listing scenarios can be predicted Effects of (de-)listings can be identified from the manufacturer s point of view as well as from the retailer s point of view Differentiated consideration Differentiated consideration of effects according to target groups (e.g. regular buyers of a brand, families with children etc.) possible. Objectification Objectification of (de-)listing discussions (internally as well as with the retailer)

24 We are able to conduct Listing Impact Analysis in most CEE countries IMPORTANT: Feasibility check beforehand 24 Countries with LIA projects Countries where LIA is possible

25 Key take-aways 25 Listing brands can be a legit way to re-initiate discounter growth Assessment of the (risk) potential possible before the listing takes place with GfK LIA Listing Impact Analysis The performance of listing various (sub-)brands at various price levels can be assessed Listings are more successful when a retailer s category assortment is rather narrow current distribution of listed (sub-)brands is rather low price level remains close to the average market price But: Detailed assessment on a case-by-case base necessary!

26 Contact 26 Dr. Jochen Hartl Advanced Business Solutions GfK Austria Ungargasse 37, 1030 Wien jochen.hartl@gfk.com

27 27 Thank you for your Attention

28 Initial situation: Increasing discounter shares in many developing CEE markets Discounter valu ue shares in % Croatia Romania Bulgaria Russia Ukraine Source: GfK ConsumerScan, Household Panel, Base: Basket of measured categories

29 Same picture in terms of outlet numbers

30 Discounters react by increasingly upgrading their services, also by listing more brands 30 Environment Effect on retailscape Saturation Rekindle growth Growing Trust in PLs Slow growth in disposable income Favorable reports on discounter quality Smart shopping Growth of discounters Mainstream retailers develop budget PL Mainstream retailers develop own discount fascias Budget segment getting saturated Margin Pressure Search for profitable segment International Expansion Upgrade Stores Premium lines Fresh meat/produce Organic/Fairtrade Advertising Introduce manufacturers brands

31 No real need for further outlets in Austria 31 Penetrat tion in % HH-Distribution < 5 min min min min. > 20 min. 59% 47% 40% 45% 27% 19% 17% 14% 11% 11% 12% 11% 6% 9% 8% 8% 12% 13% 14% 6% Source: GfK ConsumerScan 2,800 households; category: FMCG total (Overall Till roll); Fact: Penetration %; Period: Year 2010; Distance in driving minutes

32 Aldi caught in a double bind sales losses in two directions 32 Quality-oriented consumers Price-oriented consumers 46 Mio 74 Mio 28 Mio 26 Mio 69 Mio other discounters 43 Mio Source: GfK ConsumerScan, Gain & Loss MAT 03/2011 vs MAT 03/2010

33 How (Not) to Fight Discounters 33

34 References 34

35 Simulation of (de-)listings 35 WHEN? WHERE? WHAT? Brand HOW MUCH? WHAT IF?

36 Listing of sub-brands A, B, C and D would not draw much market share away from the other sub-brands of cereal brand K Listing of several sub-brands of cereal manufacturer K in Hofer at average market price 36 Manufacturer Perspective Cereal brand K in total market Value Change in CEREAL BRAND K Sub-brand A Sub-brand B Sub-brand C Sub-brand D Sub-brand E Sub-brand F Sub-brand G Sub-brand H Sub-brand I Sub-brand J Sub-brand K Sub-brand L Effects in one Year Sub-brand M BRAND X KNUSPERONE 172 LIDL REST Source: GfK ConsumerScan / Austria / Cereals / MAT May 2010

37 We are able to conduct Listing Impact Analysis in most CEE countries 37 HR Countries with LIA projects Countries where LIA is possible

38 Consumers panels in CEE Country Panel size Established Austria Hungary Czech Republic Slovakia Poland Russia Romania Bulgaria Ukraine Croatia Serbia Bosnia+Herzegowina Kazakhstan

39 In-home scanning + sample boosts CEE HU PL RUS RUS AUT RO SER HR CZ SK TUR UA Scanning HU, PL Scanning Rollout (urban RUS) Panel Boost RUS (n= ) Scanning + Boost RO Individual Panel PL (n=7.000) Early 2011 Panel Boost AUT (n= ) Scanning SER/HR Scanning CZ + SK Scanning TUR (n=10.000) Scanning UA