G R O W I N G W I T H E F F E C T I V E D I S T R I B U T I O N E X PA N S I O N BY TARGETING TOP 20 PROVINCES BY NIELSEN SALESFORCE ACTIVATION TEAM - Nov 2016 1
THE OPPORTUNITIES Traditional trade is potential 450K TT stores Accounts for 40% FMCG sales 1.4M FMCG Outlets 4.1X 87% Traditional Trade Value SOT 33 Avg. Trip/Week Per Person Avg. Customer/Day Source: Nielsen RES 2014/ Shopper Trend 2014 2
THE CHALLENGES LIMITED SPACE >70% grocery outlets have selling area LESS THAN 20m2 LIMITED CATEGORIES Traditional outlets that have F&B DOMINATE SPACE 40% 20% account 50% of traditional grocery universe. 3
YOUR BUSINESS ONLY KNOWS HALF-TRUTH All large MNC as well local giants believe you have covered all most of influencial stores of their category in Vietnam market. Is it your case? What are sale leaders in Vietnam saying about half-truth? If I have information about the full store list of top stores in my category, it will be useful. However, I think I am currently cover 70% of top stores already, based on my experience, thus I will not invest with huge money HEAD OF SALE OF A LOCAL GIANTS IN BEER IN VN Yes, I think I need to have information about what is the important stores of category; however, I would prefer to use my business sense & experience rather than investment on this kind of information VICE PRESIDENT, EX HEAD OF SALE OF TOP 3 FOOD MANUFACTURER IN VN 4
HOW NIELSEN HELPS WITH THE REST OF TRUTH 69% 33% 31% 25% Category CASE STUDY MNF A DISTRIBUTION STRUCTURE Series2 Bottom stores Series1 Top stores 14% 19% 36% 11% 14% 6% MNF A DistributionDirect HandlerIn-direct Handler Non-Handler The fact is 1. Almost manufacturer only can cover maximum 70% of store universe 2. Matching manufacturers storelist with Nielsen universe always helps to identify GAP to close 3. Can help clients to identify the most influencial stores to convert into direct service which increase app. 50% of revenue vs. indirect one. 5
EXPAND DISTRIBUTION BRINGS TREMENDOUS OPPORTUNITY A business case study by expanding to rural Opportunity of $23M by expansion coverage in Rural PRIORITIZE DISTRICTS IN RURAL (Expand only 10% stores covered 80% weighted distribution) FOCUS ON KEY SKUS 6
COMPETION IS MOVING OUT OF 6 KEY CITIES FROM 6 KEY CITIES 450k TT stores Accounts for 40% FMCG sales TO THE REST OF NATIONWIDE Less competitive (less players & limited portfolio) Still growing; especially Rural 8
BUT HOW TO EXPAND DISTRIBUTION STRATEGICALLY OUTSIDE 6 CITIES? 9
NIELSEN APPROACH TO DEVELOP A TARGETED DISTRIBUTION STRATEGY 5-step approach to expand distribution outside 6 cities 1 2 3 4 5 District Prioritization Top Store Profiling Full Scan of Universe & detect target stores Matching with Client s Direct Stores Snowballing to identify the Wholesaler Replace the subjective guesswork by statistical technique to target right provinces &districts Scan the prioritized districts & provinces to know size of opportunity Detect top stores of the category to identify the opportunity to reallocate resources and manage SKUs Match census result with client s direct store list to find out gap Identify semiretailers/wholesalers to penetrate small retailers For each category Syndicated census By client Syndicated census/ by client 10
CLIENT S BENEFIT FROM THE APPROACH OPTIMIZE COST BY SYNDICATION SAVING TIME BY TAPPING TOP CATEGORY SALES ALLOCATE ENOUGH SALES RESOURCES BY TARGETING RIGHT WHOLESALER 11
DISTRICT PRIORITIZATION USING STATISTICAL METHODOLOGY Identify factor with high correlation with FMCG sales VARIABLES Correlation with FMCG Sales Population 2014 (thousand people) 0.71 Population 2014_URBAN (thousand people) 0.85 Population 2014_RURAL (thousand people) 0.46 Sex ratio of population by province (male/100 females) -0.34 Crude birth rate by province (%o) -0.43 Total fertility rate by province (Children per woman) -0.55 In-migration rate by province (%o) 0.43 out-migration rate by province (%o) 0.45 Net-migration rate by province (%o) 0.33 Labour force at 15 years of age and above by province(thous. Persons) 0.67 Percentage of trained employed workers at 15 years of age and above by province (%) -0.06 Index of industrial production by province (%) -0.07 Total registered capital of Foreign direct investment projects licensed by province (Mil.USD) (Accumulation of projects having 0.58 effect as of 31/12/2014) Total registered capital of Foreign direct investment projects licensed in 2014 by province(mil.usd) 0.33 Hospital 0.19 Number of patient beds in Hospital 0.58 Number of medical staffs under provincial departments of health in 2014 by province-doctor 0.42 Number of medical staffs under provincial departments of health in 2014 by province-physician 0.24 Number of medical staffs under provincial departments of health in 2014 by province-nurse 0.49 VARIABLES Correlation with FMCG Sales Number of medical staffs under provincial departments of health in 2014 by province-midwife 0.54 Number of libraries in 2014 under local management 0.30 Monthly average Income per capita 2014 (thousands VND) 0.66 Poverty rate (%) by province -0.63 Percentage of household using electricity 0.42 kindergartens 0.27 schools of general education 0.26 Market 0.34 Super markets 0.24 commercial centers 0.55 Population Density (person/km2) 2014 0.21 Number of households 0.71 HH having Television 0.71 HH having computer 0.81 HH having Internet 0.77 HH having Telephone (fix/mobile) 0.76 HH having Refridge 0.68 HH having washing machine 0.69 HH having hot water machine 0.17 HH having air conditionner 0.69 HH having motorcycle 0.76 HH having car 0.60 SYNDICATED 12
DISTRICT PRIORITIZATION LET S TARGET TOP 20 PROVINCES Provinces are selected based on retail contribution Region Number of provinces % of region 53% RETAIL SALES Central Highlands 1 48% Mekong River Delta 6 59% North Central Coast 2 50% North East + North West 1 6% Red River Delta 3 62% South Central Coast 3 70% South East 4 74% SYNDICATED 13
DISTRICT PRIORITIZATION AND IMPLEMENT IN A PHASED MANNER Establish the target provinces & districts to cover in each phase of implementation, based on expected category sales and population covered Urban districts are covered 100%. Rural districts near national roads with high population density and cover >50% retail sales of the region will be selected. Prioritize provinces throughout Vietnam Province Region % Projected sale % Retail sale Urban Rural On Premise_Urban Off Premise_Urban On Premise_Rural Off Premise_Rural TOTAL DAK LAK Central Highlands 3% 3% 3,192 2,623 4,899 10,429 21,143 TIEN GIANG Mekong River Delta 2% 3% 2,284 1,777 12,254 14,134 30,449 AN GIANG Mekong River Delta 3% 4% 4,959 3,773 14,596 16,835 40,163 DONG THAP Mekong River Delta 2% 3% 2,893 2,261 11,864 13,684 30,702 LONG AN Mekong River Delta 2% 2% 1,439 1,095 10,823 12,483 25,840 BEN TRE Mekong River Delta 1% 2% 908 691 9,658 11,140 22,397 KIEN GIANG Mekong River Delta 2% 3% 3,505 2,710 11,708 13,504 31,427 THANH HOA North Central Coast 5% 3% 2,224 2,458 8,264 25,491 38,437 NGHE AN North Central Coast 4% 3% 2,842 3,129 6,838 21,091 33,900 BAC GIANG North East + North West 2% 1% 787 764 3,952 12,001 17,504 NAM DINH Red River Delta 1% 1% 2,068 1,866 3,798 11,036 18,768 HAI DUONG Red River Delta 1% 2% 1,818 1,641 3,566 10,363 17,388 THAI BINH Red River Delta 1% 2% 1,300 976 3,891 11,310 17,477 BINH DINH South Central Coast 3% 2% 2,879 2,756 5,525 11,728 22,888 QUANG NAM South Central Coast 3% 2% 2,280 1,583 5,707 12,116 21,686 KHANH HOA South Central Coast 3% 3% 5,423 4,143 3,052 6,477 19,095 DONG NAI South East 6% 6% 7,348 6,754 12,758 16,088 42,948 BINH DUONG South East 4% 5% 1,978 1,834 9,261 11,678 24,751 BA RIA - VUNG TAU South East 2% 2% 3,579 3,245 4,636 5,847 17,307 TAY NINH South East 3% 3% 728 675 7,138 9,001 17,542 TOTAL 53% 54% 54,434 46,754 154,188 256,436 511,812 Top 20% 21%-50% 51%-80% Bottom 20% Map for illustrative purposes only, not an actual indication of prioritized provinces; also will not form part of the deliverable SYNDICATED 14
Target TOP STORE PROFILING PRIORITIZE THE RIGHT STORES Drawing profile of top stores in the market TOP STORE PROFILE Top 50% 20% CHAID ANALYSIS Mid 30% 30% Low 20% 50% Category Sales No. of Stores Use store level Retail Audit data to identify target store tiers Find set of discriminating characteristics that will help identify the target stores in the field Map to census CHAID: CHi-squared Automatic Interaction Detection. Technique to determine which characteristics helps us get to the target stores. All required characteristics like store equipment, selling area, category groups or brands handled are considered in the analysis- no parameters are left out. Sample CUSTOMIZED 15
FULL SCAN OF UNIVERSE & DETECT TARGET STORES IDENTIFYING SIZE OF OPPORTUNITY WITH TRADE DIMENSION Trade Dimensions is the activity of complete enumeration of specific information, being implemented within certain predefined geographical boundaries BENEFITS OUTLET LISTINGS Helps to understand and evaluate trade structure & trends GPS COORDINATES & STORE PICTURES TRADE DIMENSION OUTLET PROFILE Identifies appropriate channels of distribution for your business: Handlers & Non-Handlers/ Direct & Non-direct (Matching DSS store list) Outlet profiles Wholesales vs. Retail sales ratio Helps in optimizing sales routes (using listings/addresses ) OPTIMIZING SALES ROUTES OPTIMIZING PRODUCT MIX Fulfills specific information needs (using different data slices) SYNDICATED 16
FULL SCAN OF UNIVERSE & DETECT TARGET STORES HOW DO WE DO THIS? Stocks Water Beverage turnover of more than 10K pm Has 2 Coolers, 1 Retailer/1 Client Branded Sources product direct/wholesaler & distributor CENSUS STORE PROFILE OUTPUT We walk the streets and gather store location Collect store information through observation & interview Provide insightful and actionable data based on client needs SYNDICATED 17
FULL SCAN OF UNIVERSE & DETECT TARGET STORES OPTIONS FOR PRIORITY INVESTMENT 1. D E T E R M I N E T H E K E Y C I T I E S & R E G I O N S O F I N T E R E S T Regions North (NE/NW, RRD): 4 provinces Central (NCC, SCC, CH): 6 provinces South (SE, MKD): 10 provinces Regions South East: 4 provinces Mekong River Delta: 6 provinces 2. I D E N T I F Y M A R K E T B Y O U T L E T T Y P E Supermarkets Minimart/Convenience stores Traditional Groceries Market Stalls Beverage stores Street Vendor Biscuit and confectionery Eatery/Restaurant Roadside / Sidewalk Café Hotel/Motel/Resort Canteen Entertainment Centre Roadside Tea Upscale Café / Garden Café 3. D E S I G N C O N D I T I O N S T O P R O V I D E F U R T H E R A N A LY S E S T O Y O U R R E A L U N I V E R S E Category Availability Brand Availability Presence of Competition Claimed Store Turnover Claimed Category Turnover Presence of Special Exhibition/Investment (Ref/Cooler/Glass Display/Display Hangar/etc.) SYNDICATED 18
FULL SCAN OF UNIVERSE & DETECT TARGET STORES LIST OF PROVINCES BY REGIONS Region Province Region Province Central Highlands DAK LAK Red River Delta NAM DINH Mekong River Delta TIEN GIANG Red River Delta HAI DUONG Mekong River Delta AN GIANG Red River Delta THAI BINH Mekong River Delta DONG THAP South Central Coast BINH DINH Mekong River Delta LONG AN South Central Coast QUANG NAM Mekong River Delta BEN TRE South Central Coast KHANH HOA Mekong River Delta KIEN GIANG South East DONG NAI North Central Coast THANH HOA South East BINH DUONG North Central Coast NGHE AN South East BA RIA - VUNG TAU North East + North West BAC GIANG South East TAY NINH Notes: If Clients want to select province/districts among each region, additional cost will be applied. 19
FULL SCAN OF UNIVERSE & DETECT TARGET STORES CHANNELS TO BE COVERED To be revised OFF CHANNEL Supermarkets Minimart/Convenience stores Traditional Groceries Market Stalls Milk/Biscuit/Spirit Stores MT Type 1 MT Type 2 Pharmacy Personal & Cosmetic Store Street Vendor Biscuit and confectionery Beverage store Dairy shop Soft Drink/ Ice Cream Outle Cigarette Kiosks ON CHANNEL + Eatery/Restaurant + Roadside / Sidewalk Café + Roadside tea + Sidewalk Eatery + Hotel/Motel/Resort + Billiard & Karaoke + Restaurant fast food + Upscale Café / Garden Café + Wedding Restaurant COMPETITOR S PRESENCE DIRECTLY COVERE D STORES INDIRECT STORES HIGH POTENTIAL STORES SELLING THE CATEGORY NEW BUSINESS AREAS SYNDICATED 20
FULL SCAN OF UNIVERSE & DETECT TARGET STORES STORE INFORMATION TO BE READY It s an enumeration of outlets containing: 1. Store address and contact, location, store size 2. Store facilities & number of categories visibility 3. Store Category Turnover Range 4. Wholesaling activity 5. Category/5 brands penetration 6. Store branding availability 7. Matching client stores with our stores 8. GPS, Outlet picture* * **GEO tagging and picture is optional; GPS in Vietnam is valid within 200meters SYNDICATED 21
FULL SCAN OF UNIVERSE & DETECT TARGET STORES ON FIELD SALES ACTION WITH TD ONLINE Store level data straight into the hands of the sales team Easy to use actionable a LIVE GO TO MARKET TOOL View and search stores nearest to your location picture, GPS code, and landmark Store profiling is client specific ensure actions are targeted Can now do sales teams routing and product Route to Market PROFILE STORES KNOW THE ACTION SEARCH FOR SPECIFIC STORES VIEW NEARBY RESULTS ACCESS STORE DETAILS AND PHOTO Sample 22
FULL SCAN OF UNIVERSE & DETECT TARGET STORES EASY VISUALISATION OF DATA AND ABILITY TO FILTER STORES TD ONLINE ALLOWS VISUALIZATION OF DATA AND EASY SELECTION FOR A CLUSTER OF STORES LIST OF STORES CAN BE FURTHER FILTERED FOR RELEVANT CRITERIA INTERNAL DATA CAN BE INCORPORATED TO ADD A CUSTOMIZED LAYER OF DATA Sample 23
FULL SCAN OF UNIVERSE & DETECT TARGET STORES ENTER THE TOP STORES WE CURRENTLY DO NOT SERVICE DIRECTLY Store list can be exported and shared for offline usage Sample 24
MATCHING WITH CLIENT S DIRECT STORES IDENTIFY UNCOVERED SPACE BY DETECTING DIRECT DISTRIBUTION COVERAGE CLIENT S DIRECT STORE LIST MATCHED DIRECT STORES UNIVERSE CENSUS Unmatched Direct Stores 25
MATCHING WITH CLIENT S DIRECT STORES IDENTIFY UNCOVERED SPACE BY DETECTING DIRECT DISTRIBUTION COVERAGE 3 steps to match Client s direct stores with universe STORE LIST VALIDATION OFFICE MATCHING ON FIELD CHECKING Check store list information: Store name, store type Store address Store owner name, store phone Matching at office base on prioritized criteria: 1. Store address 2. Store owner & store phone Matching on-field for nonmatched store to: Revalidate non-matched store Investigate the reason of nonmatching 26
SNOWBALLING TO IDENTIFY THE WHOLESALER IDENTIFY SEMI-RETAILERS/WHOLESALERS TO PENETRATE SMALL RETAILERS FMCG WHOLESALES FLOW 3% OUTLETS SELL TO OTHER RETAILERS (Called semiretailer/ wholesaler) 41% Turnover comes from Other retailers 18% Turnover comes from Consumer FOCUS ONLY 3% OUTLETS GET 41% DISTRIBUTION COVERAGE PROMOTE OUR PRODUCTS TO CONSUMER AT THE SAME TIME 27
SNOWBALLING TO IDENTIFY THE WHOLESALER SNOWBALLING METHODOLOGY USED TO IDENTIFY THE RIGHT SEMI-RETAILERS/WHOLESALERS TO TARGET WHOLESALERS Full Retail outlet scan Wholesalers with most purchase Wholesalers verification Sales Route Action * Level of information coverage depends on the length of interview which impacts to project investment WHOLESALER INFORMATION COVERAGE* Store information (store name, address, tel, owner name) / store-type No. of years operating, Categories presence Client brand presence Store ACV, Category PCV / Wholesale and % of wholesaling Category volume sale (by crate / carton) Source of purchase No. of fulltime employees by type (eg. saleman / accountant / office staff / warehouse keeper) No. of sale staff (owned by store / manufacturer) Transportation of delivery and No. of owned trucks Geography region of delivery No. of customers per region Warehouse & square in meter No. of offices & office facilities TARGET WS WITH WIDEST COVERAGE Target Stores for Category Nice to have stores for Category Wholesalers A 28
CLIENT INVESTMENT
TIMELINE TO GO!
T H A N K Y O U BY NIELSEN SALESFORCE ACTIVATION TEAM - Nov 2016 34