A Number Of Forces, Trends, and Pressures Are Affecting Shopper Behavior Source: The World According to Shoppers, 2004 As consumers grow more time-starved, we are seeing changes in their preferences and behaviors
Almost two thirds of consumers do not feel there is enough time in the day to meet all their commitments, with 36% feeling strongly that this is true.*
Americans are spending more than three times as much time sitting in traffic than they did 20 years ago. The average delay per person per year is 36 hours now vs. 11 hours in 1982.**
*Source: Mintel/TechnoMetrica **Source: Texas Transportation Institute, Urban Mobility Study 2001 Shopper Insights
Not Important Important Source: Meyers Research and MVI, August 2004 Important considerations for shoppers when deciding where to shop How are these lifestyle changes affecting the shopper’s behavior? “ Shop-Ability” Impacts Where Consumers Decide to Shop First to offer new products Store brand/private label items Quality name brand products Best selection of products for me Special deals or promotions Convenient location Broad product assortment Easy to shop Fast checkout Products always in stock Good customer service Shopper Insights
60% of supermarket purchase decisions are completely unplanned
(i.e. category not in consideration set in advance of trip)
Higher Shop-ability Greater Potential to Drive Unplanned Purchases = Shopable stores are better positioned to capture unplanned purchases Source:POPAI Consumer Buying Habits Study, MVI Shop-ability = “Anything that enables the shopper to make a faster, easier, better decision” Shopper Insights
Consumer Pressures are Forcing Shopper Needs to Evolve Evolving shopper need states… Trends driving shopping patterns among consumers… Care for Family Smart budget shopping Efficient stock-up Discovery Bargain Hunting Specific Item Reluctance Grab & Go Immediate Consumption Care for Family Money Time Personal
Savings (good price) Important
Store Hopping is Common
Many are Paycheck-driven
Less Tolerant of Delays
Fast Checkout is a Must
“ Take Care of Me”
More Focus on Family
Shopping Provides a Connection Point
Fill-In Quick Mission Traditional Shopping Need States 27% 16% 18% 9% 10% 9% 4% 5% 2% % of Grocery Spend Source: “The World According to Shoppers” Advanced Shopper Insights Stock-up Shopper Insights
Need States – Large Dollar Rings $110 Average spending per shopping trip 19% Percentage of grocery shopping trips Care for Family Driven to do the best they can for their families “ I buy what people ask for and what I think will please them, but I always make a decision that ensures it’s good for them.” Efficient Stock-Up Laying in supplies to minimize the number of times they have to go to the store “ I don’t like to grocery shop, so on my major trips, I buy everything I can $95 13% Smart Budget- Shopping Want to do the right thing for the family, but saving money is important in their decisions “ I’m laying in supplies for the long term. I want the store to make it easy for me to find savings.” $93 15% Discovery Explorers hoping to find something new $90 7% “ I like to browse during my grocery shopping trips. Every trip is a little different. I look for new ideas, new recipes, new foods—& non-grocery products like clothes.” Source: “The World According to Shoppers” Shopper Insights
Need States – Medium Dollar Rings $57 13% $60 11% $58 8% Bargain-Hunting Among Stores Specific Item Reluctance “ I just don’t want to be here. I’d rather have somebody else do my shopping or go online.” Focus first and foremost on one or two urgently needed items “ I need something right away; a specific food, ingredient, prescription medicine, or alcoholic beverage. If it’s not on the shelf, I’m likely to go to the next store.” Don’t want to grocery shop and seek as little involvement as possible Look for tactical bargains on specific items as opposed to overall savings “ I take pride in what I do. I like to tell my friends about the deals I find.” Advanced Shopper Insights Source: “The World According to Shoppers” Average spending per shopping trip Percentage of grocery shopping trips Shopper Insights
Need States – Small Dollar Rings Small-Basket Grab & Go Want to get in, grab a short list of items, and get out in a hurry “ Bread, milk, bananas, and beer. In and out in 10-minutes. That’s what I’m here for.” $41 Average spending per shopping trip 9% Percentage of grocery shopping trips Immediate Consumption “ I’m thirsty, I’m hungry, or I need cigarettes.” Seek to satisfy a craving $32 5% Source: “The World According to Shoppers” Shopper Insights
Two Need States Indexing High for Non-Alcoholic Beverages (%) = Frequency of purchase (#) = Frequency of purchases in need state/avg. frequency of purchases across all need states. Source: “The World According to Shoppers” $32 Average spending per shopping trip 5% Percentage of grocery shopping trips $110 19% Care for Family Immediate Consumption Fresh prepared food (162) Cigarettes (143) Magazines (113) Imported cheese (157) Fresh fish (163) Refrigerated prepared food (158) Fresh baked goods (152) Non-alcoholic beverage (152) High Indexing Products Snacks/candy/gum (39%) Non-alcoholic beverage (26%) Dairy (26%) Produce (22%) Frozen Food (21%) Dairy (72%) Produce (70%) Packaged food (66%) Frozen food (64%) Fresh meat (60%) Top 5 Categories Purchased Shopper Insights
8 Beverage Categories 40 Retail Customers 7 Channels 50 DMAs across the U.S. Methodology Size One of the largest surveys we have ever conducted Breadth Unprecedented cross channel view Depth Deep view of customers never done before 60,000 online respondents, 1,200 in-store interviews 115,000+ shopping occasions Shopper Insights
Connecting with the Shoppers’ Needs and Motivation helps Builds Loyalty and Sales It all begins with the NEEDS of the SHOPPER CONSUMPTION Grocery, Clubs, Supercenters, Drug, CR, Mass; Value PURCHASE CHOICE SHOPPING EXPERIENCE OCCASION BASED CHANNEL CHOICE SHOPPING NEED Shopper Insights
Cleanliness, Selection and Convenience are Very Important in Store Choice Cleanliness and neatness of the store Source: Landmark Study, October 2005 Is close to where I live or work Freshness of produce and meats Does not run out of stock of products I want 38% 40% 22% 20% Source: Landmark Shopper Shopper Insights
Health & Wellness Focus is critical Across a Variety of Areas Q55. For each statement please indicate how much you agree or disagree that the statement describes you and your household. Source: Landmark Shopper Study, October 2005 = over index 120+ = under index of at least 80 25% of Shoppers are Extremely Mindful of Health & Wellness when making choices of foods, beverages, and level of physical activity Shopper Insights
Shoppers are Pressed for Time across all shopping segments Supermarkets have the opportunity to satisfy time starved grocery shoppers by ensuring high household penetration and high purchase frequency products are in stock on shelf and display and these categories are easy to shop. Q55. For each statement please indicate how much you agree or disagree that the statement describes you and your household. Source: Landmark Shopper Study, October 2005 = over index 120+ = under index of at least 80 Shopper Insights
The Grocery Channel Satisfies a Variety of Functional Needs for Shoppers Q27. What needs were you trying to satisfy when you went to [store] on this occasion? Source: Landmark Shopper Study, October 2005 = over index 120+ = under index of at least 80 Shopper Insights
Beverages are Staples on the Heavy Basket Shopper Trips Q33a: Which of the following types of non-alcoholic beverages did you buy on this shopping trip Source: Landmark Shopper Study, October 2005
Light Grocery Trip = $1 to $40 (roughly 50% of Grocery trips)
Medium Grocery Trip = $41 to $84 (roughly 30% of Grocery trips)
Heavy Grocery Trip = $85 and higher (roughly 20% of Grocery trips)
= over index 120+ = under index of at least 80 225 125 50 Yogurt Drink 175 100 50 RTD Tea (not hot) 183 100 50 Sports Drinks or Fitness Water Heavy Grocery Trips Medium Grocery Trips Light Grocery Trips Incidence Index for Beverage Purchases on Light, Medium and Heavy Shopping Trips 36 73 142 No Beverages 131 113 79 Any Beverage 300 200 100 Meal Replacement Beverages 250 150 50 RTD Coffee (not hot) 250 150 50 Energy Drinks 154 108 69 Flavored or Fortified Milk or Milk Drink 194 125 56 Bottled Water or Flavored Water 178 113 61 Juices, Juice drinks, Fruit Smoothie 156 116 67 Carbonated Soft Drinks or Sodas Shopper Insights
Coca-Cola leads in Insights and Research used to Understand the Shopper, Industry and Category
Home Meal Replacement Study
Cross Category Shelf Space Comparison
Role of the CSD Category in Supermarkets
Beverage Market Structure Study
Coca-Cola Retailing Research Council Studies
ACN Channel Blurring
Store Optimization Research
RFID Shopper Insights
Shared Ad Analysis
Insights to Action Shopper Insights Actions Insights Retailer focus on “shop-ability” will help attract and maintain loyal shoppers. As consumers grow more time-starved, we are seeing changes in their preferences and behaviors. Utilize in-store messaging to help consumers effectively navigate categories and store. Cleanliness, Selection and Convenience are very important in Store Choice. Shoppers feel strongly that there is not enough time in the day to meet all their commitments. Emphasize perimeter selections and fast checkouts. Shopper Insights
Clear Segments CSD MILK BEER JUICE POWDERED DRINKS INSTANT COFFEE TEA Treat, Fun Nutrition Relax Perk Up Social Reward Cheap for Kids Breakfast 1984 Now - Many New “Categories” and Further Segmenting BEER Spirits Diet MILK Reg. JUICE Juice Drinks Bottled Water Flavored Milk Energy Drinks Sports D ri nks Mixers Tap Water Purified Water INSTANT COFFEE Herbal Teas Café Coffee Flavored Coffees 2007 Flavored Sparkling Water Diet Flavored Mineral Water Yogurt Drinks Premium Wine TEA Fruit Teas Fresh Coffee CSD Regular Imported Light Imported Light Soy Drinks Powdered Drinks 2% Skim Consumers Have More Beverage Choices Than Ever Before Category Insights
Share Of Stomach – Total U.S. Reflects consumption rates and importance of categories Source: Beverage Digest Fact Book 2007, BD/Maxwell CSD 27.9 (-.4) Tea 3.9 (+.1) Juices 4.4 (-.3) Bottled Water 11.5 (+.8) Coffee 8.9 (-.1) Milk 10.7 (-.3) Beer 11.9 (+.2) Sports Drinks / Energy 2.6 (+.3) Wine 1.3 (+.1) Tap Water 14.8 (-.5) Share (Share chg. vs. Prior) 155 Total Annual Gallons per Person = 54oz. Per Day Category Insights
CSD 56.5 (-0.7%) The Size and Value of the Nonalcoholic Beverage Category in all measured channels is growing >$2.3B +6.0% Category Value (Dollar) Share / Dollar % Change Source: Nielsen All Measured Channels Total US 12 months ending 3/31/2007 Sports Drinks 10.0 (+6.8%) Single Serve Water 14.7 (+14.1%) Energy Drinks 8.5 (+30.3%) RTD Tea Bottle/Can 4.3 (+19.6%) RTD Coffee 1.5 (+14.4%) Juice & Drinks 4.4 (-1.4%) Total Nonalcoholic Beverages = $39B, of which $22B is CSD Category Insights
The Beverage Category is very Important: More Consumers say they drink CSDs Daily or Weekly than any other non-tap Water Beverage Source: USA BevCAT 2005 Survey Beverage Category Consumption Frequency Category Insights
Carbonated Soft Drinks Total U.S. Corporate Share and Brand Rankings Retail / Fountain / Vending Channels Source: Beverage Digest Fact Book 2007 Includes Retail, Fountain and Vending Channels Coca-Cola Pepsi-Cola Dr Pepper / Cadbury Cott National Beverage All Other Corporate Share Category Insights
The Soft Drink Category is very important to Shoppers: In addition to high buying rate, Soft Drinks Purchase Frequency ranks second only to Bread
Annually, shoppers spend 51% more dollars on Soft Drinks than on any other top 10 center store category - 28% of the Shopper trips include Soft Drinks.
Bread is the only center store category that surpasses Soft Drinks purchase frequency.
$41.38 $29.35 $28.97 $46.71 $72.17 $26.85 $29.54 $22.11 $26.18 $58.01 21 7 9 8 5 7 14 18 8 10 7 Soft Drinks Bread & Baked Goods Cookies Crackers RTE Cereal Snacks Candy Shelf Stable Juice Soup Bottled Water Coffee Buying Rate ($) Purchase Frequency $109.65 Buying Rate = Annual Category $ per Household. Purchase Frequency = Average number of shopping trips (purchase occasions) on which the Category was purchased. Penetration = % of Households Buying the Category at least once per year in any outlet. Incidence = % of ALL trips made by all shoppers that include a purchase of the item/category Source: Nielsen Homescan TOTAL U.S. - TOTAL GROCERY $2MM- 52 WEEKS ENDING 12/31/06 Incidence: HH Penetration: Category Insights
Nonalcoholic Beverage Categories can be grouped into four Consumer Need States Performance Beverages Functional CSDs and Refreshing Alternatives Convenient Refreshment “ Enjoyable Refreshment” CSDs “ Healthy Refreshment” Fruit Drinks (<10% Juice) “ Versatile Refreshment” RTD Teas “ Refreshing Alternatives” Shelf Stable Juices & Drinks ( > 10% Juice) Sports Drinks Sports Hydration Energy Drinks Water Hydration On-the-Go Single-Serve Water: At Home Gallons Enhanced Sparkling Purified Spring Imported Juice/Drink Shelf Stable Health & Wellness Youth Family Adult Shelf Stable Juices & Drinks (>10% Juice) Category Insights
Clear Organization and Messaging helps Drive Shopper Conversion within the Need States CSDs Water Performance Beverages Convenient Refreshment Hydration Functional “ Navigating the store and simply finding the desired product easily becomes a more important consideration” - MVI Sports Drinks, Sports Hydration, and Energy Drinks Purified, Spring, Imported, and Enhanced Sparkling Juice / Juice Drink Health & Wellness Shelf Stable Juices & Drinks (>10% Juice) Category Insights
Enjoyment Today Feel Good Today Feel Good Tomorrow Hunger & Digestion Sensory Pleasure & Food Enhancement Having a Good Time Confidence & Individuality Energy / Stimulation Active Replenishment Mental Renewal Health, Beauty & Nutrition Comfort & Relaxation Routine Refreshment Power Opportunity White Space Top Coca-Cola Brands in each need state Coca-Cola’s Innovation Strategy Is Focused On Meeting Consumption Need States Of Your Consumers Category Insights
Insights to Action Category Insights Actions Insights Armed with Advanced Shopper Insights, Retailers can evolve with Consumers. Consumer need states and occasions drive beverage tastes, preferences and consumption. Non-Alcoholic Beverages can be organized into Consumer Need States. Each beverage need state is unique, serving different consumer needs. Clear messaging provides navigation, information and drives Shopper Conversion. Consumer needs are evolving with more beverage choices than ever before. Category Insights
As Many Retailers Focus On Perimeter Categories In Their Efforts To Differentiate, Total Labor Costs Will Increase Even More
“ The total dollar value of labor costs for the perimeter can nearly triple those of center store items, driving down margins.”*
*Source: 2005 GMA Center of Store Study; True Profit from WBC SuperStudy True Profit = Adjusted Gross Profit - Activity Based Costing Financial Analysis
The Coca-Cola System Recognizes that Getting Center Store & Non-Alcoholic Beverages Right is Essential
3 of top 10 center store categories are Non-Alcoholic Beverages
Source: Willard Bishop Consulting 2005 Supermarket Retailer Survey & WBC SuperStudy Adj. Gross Profit $ per Store per Week $63,983 Center Store Perimeter 65% 35% $118,299 Retail Executives say: “There are too many sales at take; perishables can’t grow fast enough to overcome center-store losses” Total Retail Dollars (Billions) Top Center Store Dollar Categories Source: Nielsen Strategic Planner; Supermarkets $2mm+, 52 WE 9/9/06 Financial Analysis
Soft Drinks are an Important Component to “Center Store” Profitability $3,449 $3,539 $2,560 $1,896 $2,314 $1,839 $1,754 $1,472 $1,469 $1,081 Based on Weekly Sales, Soft Drinks rank second in Adjusted Gross Profit. Source: Bishop Consulting (3) Chain Average Super Study – (Adjusted Gross Profit = GP – Trade & Terms) Soft Drinks Bread Cookies & Crackers RTE Cereal Salty Snacks Candy Shelf Stable Juice Soup Bottled Water Coffee Top Ten Center Store Categories Center Store Adjusted Gross Profit Adjusted Gross Profit= Gross Profit + Terms + Trade Dollars Financial Analysis
Soft Drinks are One of the Most Productive Categories in “Center Store” Source:2005 WBC Super Study: *AGMROII:Adjusted Gross Profit (Gross Profit+Terms+Trade dollars) / Avg Inventory $ on Hand (Adjusted Gross Margin Return on Inventory Investment) $11.92 $12.59 $17.41 $20.82 $25.81 $27.66 $34.30 $62.48 $63.67 $72.85 Coffee Candy Cookies & crackers Soup Ready-To-Eat Cereals Shelf stable juice Salty snacks Soft Drinks Bottled water Bread AGMROII Top Ten $ Categories Financial Analysis
Insights to Action Financial Analysis Actions Insights Add value to make center store easier to shop with relevant product information and convenience features. Evaluate store real estate dedicated to products with high Gross Margin Return on Investment. Leverage the strength of Soft Drinks to drive traffic to Center Store. “ Center Store” contributes significantly to results and is critical to Supermarket Profit. Source:2005 WBC Super Study: Soft Drinks are an Important Component to “Center Store” Profitability. “ Center Store” departments deliver 65% of Adj. Gross Profit. Financial Analysis
Soft Drink Pricing and Ad Presence Play a Significant Role in the Category’s Ability to Drive Traffic
Soft Drink brand strength is a much stronger draw for shoppers than for other categories.
Disproportionately important to shoppers to have Soft Drinks in ad Q.1c: Still thinking about your next trip to purchase grocery items, which of the following are reasons you will go to the store for each of the items listed? Source: 2005 Shopper Pricing Perception Study Top Reasons Why Shoppers Say Specific Categories Draw Them To their Supermarket % of Shoppers Need to replenish home stock To get the best price A family member asked for a specific item Saw item on sale in a newspaper/flyer Soft Drinks Dairy (Milk, Eggs, Cheese) Fresh Meat/Fish Produce (Fresh Fruit and vegetables) 94 39 32 23 96 27 3 14 88 40 2 14 83 18 17 2 Pricing & Promotion Analysis
Promotional Planning Modeler 12pk Cans Retail Price Package Planning Tool linked to Sales Forecasting System for developing a Retailer Promotional Plan by Package versus Prior Data Source: KAEP – Key Account Event Planning Pricing & Promotion Analysis
Nielsen Based Elasticity Model Retail Price Package Planning Tool for Evaluating and Analyzing Elasticity over time Data Source: Nielsen Pricing & Promotion Analysis
Nielsen Volume Throw Model Retail Price Package Planning Tool for Analyzing Volume lifts by price point across time Data Source: Nielsen Pricing & Promotion Analysis
Expanding Category Sales and Profits are mutually beneficial It is not about dividing the pie between . . . It is about growing the total pie Zero Sum Game Win – Win Game Manufacturer Retailer Retailer Manufacturer Pricing & Promotion Analysis
Together We Can Improve Category Profitability, even in a rising cost environment Traffic Driving Packages Profit Packages Creating Value for the Retailer Our Packages Play Various Category Roles in Balancing Traffic Building and Profit Generation Pricing & Promotion Analysis
Insights to Action Pricing & Promotion Analysis Actions Insights Utilize Soft Drinks to maintain and grow trips, as well as increase basket size. Soft Drink pricing is an important factor in driving shoppers to the store. Set pricing and profitability goals and measure performance against them. 76% of shoppers believe mid priced Soft Drinks are reflective of total store pricing. Total Basket Price Image is Closely Aligned with Soft Drink Price Image. Use tools like RPA to jointly develop Profitable Retail Price Package Plans. Pricing & Promotion Analysis
The Shopper Segmented Merchandising Opportunity Shopper Segmented Merchandising: Delivering beverage solutions matched to each store’s DNA Store A’s “Shopper DNA” Each store serves a different mix of Shoppers, Occasions & Needs Each store has a unique DNA Market Evaluation
U.S. Census and BLS, 2003; Yankelovich Monitor, 2005; *GMA Study – Reducing Out of Stocks in the Grocery Channel, 2002 . . . of U.S. households may now be counted as “Traditional” families – a married couple with at least one child – vs. 44.3% in 1960
. . . of women are now in the workforce
. . .first year that Hispanics will control more disposable income than any other U.S. minority group.
Only 60% 2007
Given the competitive environment & total shopping trips are down, each retailer has fewer opportunities to reach the shopper, so merchandising needs to match your shoppers when they are in your store
Fewer Out-Of-Stocks is one of the top 3 items identified by shoppers to improve the shopping experience*
Instead of creating one solution for millions of shoppers, develop smaller shopper segments and tailor solutions to these segments
For Beverages, segmentation drives assortment on Shelf, Displays and Coolers: Right Brand, Right Package, Right Price, Right Occasion in the Right Store
Your Shopper Base Clusters Impact At Store Level Market Evaluation
Shopper Segmented Merchandising Methodology 5 0 1 1 Store 4 7 12 7 7 Store 5 7 2 13 4 Store. . . 9 3 14 2 Store 6 15 2 1 Segment … 0 6 5 Segment 3 3 6 5 Segment 2 3 Store 3 12 Store 2 10 Store 1 Segment 1 110K+ Households . .clustered into 59 Beverage Purchase Segments 90,000 stores are scored on 59 Beverage Segments Stores with similar scores are grouped together to form 5 Store Clusters Water Sports Drinks Segments are based on beverage Purchase Drivers and demographics Scoring is based on demographic fit between store shoppers and beverage Purchase Drivers Dynamic Clustering: Grouping together stores with similar beverage opportunities Nielsen panel households Beverage Segments SS Juice Energy Tea Beverage Segments 90,000 stores in Spectra database: Grocery, Mass, Club, Drug, and Dollar formats 2 3 4 5 59 SSD 90,000 store profiles Utilizing Nielsen’s new Dynamic Clustering Model , Shopper Purchase Segments are mapped to Store Clusters to drive store-level changes Store level changes Market Evaluation
What Are The Coca-Cola Beverage Clusters? Source: Nielsen Homescan Panel; AO Beverages includes RTD Coffee, Dairy Alternatives, Vegetable Drinks, Powdered Soft Drinks, Drinkable Yogurts, Baby Juice, Non-Carbonated Mixers and Meal Replacement beverages Rural
Late adopters of new beverage categories
Sparkling Soft Drinks 53% of Beverages—62% of Sparkling is Regular
High Citrus and 24 pack cans
Middle-of-the road beverage preferences
Sparkling Soft Drinks 46% of Beverages—60% of Sparkling is Regular
Average brands and packages
Early adopters of new beverage brands & categories
Sparkling Soft Drinks 37% of Beverages, 14% is Juice/Juice Drinks
High Ginger Ale and 2 liter
Strong users of all beverage categories
Sparkling Soft Drinks 42% of Beverages—46% of Sparkling is Diet
High Diet Cola and Tea
Strong users of beverages with flavor
Sparkling Soft Drinks 42% of Beverages, 65% of Sparkling is Regular
How Can Beverage Assortment Differ by Segment? Deliver “Store Level” Merchandising and Marketing Solutions C luster 3: Suburban Upscale C luster 5: Urban Flavor Right Brands Right Packages Right Occasions Urgent Items HH Stock-up Speedy Fill-in JIT Meals HH Stock-up Everyday Savings Right Brands Right Packages Right Occasions Market Evaluation
Proven success in Latin America: +8.5% in Coca-Cola Sales
SKU rationalization by cluster
New SKU launches to meet shopper needs
Planogram resets by shopper cluster
Initial test results in the U.S. very positive
Tienda (Hispanic) small store program in LA: +23% sales growth
Denver market large format resets based on shopper clusters: +5.8% sales growth
Shopper Segmentation of Enviga brand launch: Target key shopper segments and stores for the brand introduction
Launched New Package to Target Consumer +10.6% ! Activated Convenience Package +13.1% ! Market Evaluation
Insights to Action Market Evaluation Actions Insights Convert Shopper knowledge into information in action, information focused on results (i.e., Store tailored planograms to maximize sales and reduce out of stocks). Each store has a unique DNA (Shoppers, Occasions & Needs). Extensive shopper research & insights drive store level assortment changes. Segment shoppers based on their beverage purchases with five actionable store clusters. Segment shoppers in a way that would lead to meaningful & actionable changes at a store level. Develop smaller shopper segments and tailor solutions to these segments. Implement merchandising solutions that reflect these differences. Market Evaluation
Supermarket visits are focused on today’s needs Source: 2005 Coca-Cola RFID PathTracker Study Note: Visuals do not represent only traffic pattern by visit segment. Visuals represent examples of types of visits. 20 Minute+ Trips (42% of all visits) 88% of these trips visit more than 1/4 of the store 58% of Trips Are Less Than 20 Minutes 10-20 Minute Trips (21% of all visits) 28% of these trips visit more than 1/4 of the store <10 Minute Trips (37% of all visits) 1% of these trips visit more than 1/4 of the Store Advanced Merchandising
Rear endcaps receive more shopper traffic than front endcaps
Products that are in the gondola will receive more shopper exposure if they are positioned towards the back
Traffic flow in most aisles (including CSD aisle) tends to run back to front, with shoppers buying mostly on their left. Implication: Shoppers spend a significant amount of time in the back perimeter, shopping aisles from back to front. Source: 2005 Supermarket RFID Study Shoppers shop in a dominant, counter-clockwise pattern, shopping aisles from back to front Advanced Merchandising
Hot Spots: Mostly on the perimeter and a few center of store aisles leading to the checkouts: produce, meat, dairy and frozen food
Dead Zones: Much of the center of store has light traffic
Shopper Density Map Implication: The front and first quadrant of the store offer the greatest number of shopper exposures for messaging & displays High Density Low Density The earliest part of the trip provides exposure to the most shoppers Source: 2005 Supermarket RFID Study Advanced Merchandising
Early Progression Shoppers Total Store Shoppers Quicker Decision Shoppers CSD In-store merchandising efforts should align with shopper behavior and motivations
Early Progression Shoppers:
Message to the shopper’s needs.
Cross-promote with center store or higher margin perimeter categories.
Showcase new products and variety (brand & pkg.).
Total Store Shoppers:
Cross-promote (e.g. tie-in center store categories).
Drive new product awareness.
Showcase variety (brand & pkg.).
Message to the shopper’s needs.
Improve shopper navigation.
Provide product information.
Quicker Decision Shoppers:
Merchandise high frequency items to make them easy to find and purchase.
Cross-merchandise items frequently purchased in combination.
Communicate promotional information (e.g. hot pricing) to capture unplanned purchases.
The three most influential factors in a shopper’s purchase decision from a display are: Price, Brand and Variety.
Two-thirds of shoppers say displays help them to stop and look at different products.
Shoppers say CSD displays help remind them to shop for that category.
Carbonated soft drinks are the category shoppers claim to purchase most often when they see it on display.
Shoppers say that they purchase almost half of the soft drinks they buy from a display.
Shoppers frequently purchase categories when seen on display Source: Shopper Display Intercept Study 2006: Integrated Research Associates Advanced Merchandising
Traditional “New Age” Sections are a Hodge-Podge of DSD Items Advanced Merchandising
Redefine Categories Based on Consumer Need States CSDs and Refreshing Alternatives Juice/Drink Shelf Stable Water Performance Beverages Convenient Refreshment Health & Wellness Hydration Functional
CREATE A “REFRESHMENT CENTER” CSD's and “New Age” SKU’s meet the Convenient Refreshment Need State and should be grouped together
Redefine the Antiquated “New Age” Category as “Refreshing Alternatives” to Better Meet Consumers Needs for “Healthy” and “Versatile” Refreshment
Shelve CSDs (“Enjoyable” Refreshment) on One Side of the Aisle and Refreshing Alternatives across from CSDs when possible
Move Non Carbs from CSD set to Refreshing Alternatives
IMPROVE ORGANIZATION OF WATER CATEGORY Group items together that meet the Hydration Benefit Need State
Move Sports Water (e.g. Propel) from Water Aisle into Performance Beverages
Reallocate space from declining Gallons to fast growing Single Serve
Segment the Water aisle by Enhanced, Sparkling, Imports, Purified, Spring and Gallons
ENHANCE JUICE & JUICE DRINK CATEGORY Group items together that meet the Health and Wellness Need state
Relocate All Drink Items That Contain 10% or More Juice Content to this Aisle Regardless of Route-to-Market
Evolve the Consumer Usage Set to Include the Emerging PET Segment Between Aseptics (Youth) and Multi-Serve
CREATE A “PERFORMANCE BEVERAGE” CATEGORY Functional Benefit Need State has grown in importance and redefining category will help consumers find the products they want and create excitement in the aisle.
Co-locate All Functional or Performance Beverage Categories Together (Regular Sports Drinks, Sports Hydration, Energy Drinks)
Shelve Where Sports Drinks Are Currently Located in Your Store
Specific Steps to Reorganize Categories to Better Meet Consumers Needs
Create NEW “Performance Beverages” Set
Move Propel from Water Aisle and create Sports Hydration Segment which includes PowerAde Option
Move Energy Drinks from New Age to Performance Beverages
Move High Velocity Single-Serve Items Currently in New Age to Cold Equipment
Move RTD Coffee from New Age to Coffee Aisle
Reorganize New Age to Create NEW “Refreshing Alternatives” Section That Includes Fruit Drinks & Teas Previously in CSD Section
<10% Fruit Drinks (Healthy Refreshment)
RTD Teas (Versatile Refreshment)
Use Vacated CSD Space for Innovation and Highly Productive SKUs
Performance Beverage Benefits Performance Beverages - Functional Beverages Segment Sports Drinks Sports Hydration Energy Product (s) Consumed during physical activity during the day or during a light to moderate workout Consumed during social or other activities when energy is desired Used as a lower calorie alternative drink with added vitamins and electrolytes during workouts Consumer Benefits Retailer Benefits
Improve shop-ability of the aisle
Sports Drinks, Sports Hydration, Energy:
Align like products
Improve ‘Center Store’ productivity
Differentiate versus competition
Convert shoppers into buyers
Drive excitement into stores
Create and define emerging categories
Products Can Then be Grouped Within this Segmentation
Clear segmentation allows the shelf to be organized and easy to shop For My Family (All Ages) 12oz/12pk Cans, Multi-Pack Bottles, 1L-3L For Me (Teens/Adults) Single- Serve and Multi-Serve Bottles Product (s) Segment Teas Fruit Drinks Teas Fruit Drinks Advanced Merchandising
Segmentation and Products in the Water Category
Clear segmentation allows the shelf to be organized and easy to shop Single Serve Multi Serve Segment Enhanced Sparkling Imported Purified Spring Gallons Product (s) Advanced Merchandising
Insights to Action Advanced Merchandising Actions Insights Shoppers spend a significant amount of time in the back perimeter, shopping aisles from back to front. Display new products, Cross-Merchandising category tie-ins, and utilize Promotional messaging . Message to the shopper’s needs and Cross-promote with center store or higher margin perimeter categories. Engage the shopper early - Merchandise high frequency items to make them easy to find and purchase. The First Third of the Supermarket Shopping Trip provides exposure to the most shoppers - Higher Traffic and Slower Shop Times. Shoppers shop in a dominant, counter-clockwise pattern, shopping aisles from back to front. Traditional “New Age” Sections are a Hodge-Podge of DSD Items. Redefine Categories Based on Consumer Need States and Segmentation. Advanced Merchandising
Efficient Assortment (Too Many SKUs, Limited Space) In-Store Space In Supermarkets Has Not Expanded As Quickly As SKUs CPG Manufacturers Have Responded With A Record Number Of New SKU(s) Expansion of Coca-Cola SKU(s) From 1986 to 2006 Impact Of Inventory-to-Sales and Assortment On System Value Chain Efficient Assortment
EIA Combines industry-standard methodologies for Efficient Assortment
As established by the Joint Industry Committees on Efficient Consumer Response
… And JDA’s industry-leading merchandising/software development expertise
Set Market Coverage Level Confirm/Validate Additions/Deletions/ Retentions Review and Finalize Assortment Assortment Quantification Fit Assortment to Shelf Gather the Data Calculate Assortment Category Management Basics Efficient Assortment
Insights to Action Efficient Assortment Actions Insights Assess new products and positioning. Brand and Package innovation - Increasing SKU proliferation. Perform comprehensive analyses & interpretation of category performance. Evolving brands - missed sales and revenue opportunity to reach full potential. Initiate and execute efficient assortment process. Consumer demand for variety may lead to “Variety Confusion”. Efficient Assortment
Out-of-Date Product Excessive Cash Tied up in Inventory Quality Assurance Issue Even Sell Downs Maximizes Cash Flow Maintains/grows consumer base The Proper Allocation of Products at the Point-of-Sale to Minimize Out-of-Stocks and Excessive Inventory and Maximize Category Profit, Share and Volume. Space Management Inadequate Inventory Excessive Inventory Proper Inventory Proper Inventory
Space Management (Principles: Art and Science) ART Space Management
C:/data/customer/ACFS/ACFS2 6/4/99 ( ) Space Management (Principles: Art and Science) Data Sources Store Specific or Cluster POG Measures SCIENCE ADD / DELETE Days of Supply Space to Sales GP/LINEAR FT. CROSS POG ANALYSIS NEW ITEM PLACEMENT EFFICIENT ASSORTMENT VALIDATION Space Management
Space Management (Getting “IT” Right at the Shelf) EIA Space Management
Insights to Action Space Management Actions Insights Sales / Category / Space analysis. Pressure on permanent space and effective inventory levels. Continuous Assessment of each SKU performance. Exciting new CSD category innovation has “Squeezed” core CSD brand space. Tight Space has stunted core CSD brand growth and expansion opportunities. Develop and implement a course of action for product introductions. Space Management
Summary - Coca-Cola is Focused on Understanding the Shopper
We are engaging every aspect of our system to become a shopper-insights led, shopper marketing-driven organization.
We are driven to help customers differentiate themselves by targeting shoppers based on their unique needs states and occasions.
We are working with retailers to develop segmented business solutions that will better differentiate their stores and increase beverage category and total store sales.
We are converting Shopper knowledge into information in action, information focused on results.