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21 August 2013
Retail Indaba: Consumer Trends 2013
Presented by Gareth Pearson
2 / Retail Indaba
Consumer versus Shopper
Consumer
• Consumers become
shoppers when embarking
on a purchase path
• Consume...
South African Consumers Under Fire
4 / Retail Indaba
South African Consumers Under Fire
• Economist warn inflation will
rise to 9% by end 2013
• Weaker Rand,...
5 / Retail Indaba
South African Consumers Under Fire (Continued)
• Petrol price adding pressure
on indebted consumers,
hav...
6 / Retail Indaba
South African Consumers Under Fire (Continued)
• Due to high food, petrol,
electricity, transport & labo...
7 / Retail Indaba
Weighing on Retailers in South Africa in 2013
1) Price
Strategies
2) Ranging
3) Right
Sizing
4) Inflatio...
8 / Retail Indaba
Consumer/Shopper and the Shelf Face
Wage inflation stagnant versus rising grocery basket
inflation
Seeki...
9 / Retail Indaba
Consumer/Shopper using Technology
Growing internet usage among consumers &
shoppers
Info savvy shoppers ...
10 / Retail Indaba
Understanding the Shopper
People shop in different ways and have different
needs
They are also likely t...
The Professional Shopper Seeking Value
12 / Retail Indaba
Professional Shopper
Consumers
challenging the way
retailers package,
price & distribute
products
Using...
13 / Retail Indaba
Professional Shopper (continued)
Source: Daily Mail: “Rise of the ‘Professional Shoppers’: The Penny-Sa...
Private Label
15 / Retail Indaba
Private Label Growth
Private Label challenging national manufacturer
brands
Private Label share increas...
16 / Retail Indaba
European Private Label Trends
Private Label
Share
• PL’s share growing across Europe with its value sha...
Consumer Trends
18 / Retail Indaba
The Consumer and Recession
Post 2009 recession, SA consumers seem to have changed their consumption hab...
19 / Retail Indaba
Global Consumer Trends (Eurocentric)
Growing inflation driving grocery basket upwards on
cost curve
Sho...
20 / Retail Indaba
Global Consumer Trends Involving Technology
On/Off Shopping is where the shopper seeks online
experienc...
21 / Retail Indaba
Shopper in Europe 2013 Q1
Shopper in Europe is adapting to tough times
Struggling South Africa consumer...
22 / Retail Indaba
Promotion in Europe 2013 Q1
• UK remains the champion with 52,7% of volumes sales on promotion
• German...
23 / Retail Indaba
Consumer Trends
Seeking Value
• Searching for best prices, using all available resources
• Promotional ...
24 / Retail Indaba
What it all means, so what ?
“Understand and respond to all the dynamics at play at the Shelf Face whic...
Thank you
www.bmi.co.za
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Bmi retail indaba delegates

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Transcript of "Bmi retail indaba delegates"

  1. 1. 21 August 2013 Retail Indaba: Consumer Trends 2013 Presented by Gareth Pearson
  2. 2. 2 / Retail Indaba Consumer versus Shopper Consumer • Consumers become shoppers when embarking on a purchase path • Consumers have a different mind-set to shoppers • Shoppers indeed need not necessarily be one in the same as consumers • Consumers use/consume a product or service • Consumer marketing focuses on building brand awareness Shopper • Consumers are more concerned about the brand & aspirations whilst the shopper seeks convenient solutions, value & differentiations • Shoppers shop/buy a product or service • Shopper marketing, targets consumer in a shopper mind-set, aiming at decision making process in store
  3. 3. South African Consumers Under Fire
  4. 4. 4 / Retail Indaba South African Consumers Under Fire • Economist warn inflation will rise to 9% by end 2013 • Weaker Rand, high electricity & fuel prices, labour costs & droughts are to blame- in turn grain & red meat expected to rise, placing consumers under stress as these are staple foods • Food price hikes will further burden those struggling to pay for electricity, health insurance & school fees • Due to high food, petrol, electricity, transport and labour costs, South Africans have been counting on debt to get them through the month • Consumers are increasingly loaning to survive, often to pay for lifestyles they cant afford
  5. 5. 5 / Retail Indaba South African Consumers Under Fire (Continued) • Petrol price adding pressure on indebted consumers, having short & long term effects; • Short Term: Consumer will have less disposable income as many SA’s already live below the breadline • Long Term: Knock-on effect, a price increase on food, transport, electricity & other necessities • Due to high food, petrol, electricity, transport and labour costs, South Africans have been counting on debt to get them through the month • Consumers are increasingly loaning to survive, often to pay for lifestyles they cant afford
  6. 6. 6 / Retail Indaba South African Consumers Under Fire (Continued) • Due to high food, petrol, electricity, transport & labour costs, SAs are relying on debt to get them through the month • Consumers are increasingly becoming indebted to survive, often to pay for lifestyles they can’t afford “Consumers will be counting their coins this year as high food inflation, spiralling electricity cost and fuel price hike bite hard. However, despite the pressure on wallets, retailers are not likely to change their game plans”- Mail and Guardian, January 4th, 2013
  7. 7. 7 / Retail Indaba Weighing on Retailers in South Africa in 2013 1) Price Strategies 2) Ranging 3) Right Sizing 4) Inflationary • Pressure on carrying accurate KVI’s at store level • Discarding low profit contributors • Understanding key price points • Reducing pack sizes & retaining price points • Effective price increase • Price sensitivity • Price points • Promotions (Depth & Length) • Hybrid of EDLP & HILO • Pressure on prices • Energy inflation on manufacture & logistics • Fuel inflation in RM & FG • Weakening Rand placing additional inflation on imports
  8. 8. 8 / Retail Indaba Consumer/Shopper and the Shelf Face Wage inflation stagnant versus rising grocery basket inflation Seeking Value: Buying on promo & trip missions are geared around promotions Household usage is changing as consumers use less and reduce waste Trading down or across categories to extend value on grocery basket Trading down to smaller pack sizes due to the lower price points Trading across to lower valued categories effectively substituting Consumer/Shopper’s Reality Impact on Shelf Face Basket spend is capped, change in basket composition Basket Consumers are actively seeking the promo deals Deals Stretching consumption of products: Micro ROI approach Usage Moving down to lower tiered offerings Tier Steps Sizes Smaller pack sizes in more demand Pack Sizes Switching categories & brandsSubs
  9. 9. 9 / Retail Indaba Consumer/Shopper using Technology Growing internet usage among consumers & shoppers Info savvy shoppers comparing price in real time Brand & product information awareness at unprecedented levels Consumer /Shopper’s Reality Impact on Retailers • Web offering need growing with internet users E-Com • Web pricing versus in-store, needs to correlate Pricing • Retailers have to respond & engage with consumers in more compelling conversations Transparent
  10. 10. 10 / Retail Indaba Understanding the Shopper People shop in different ways and have different needs They are also likely to be shopping at different times of the month and on different occasions The way they shop different categories are also likely to vary These differences in behaviour highlight a need for tailored target marketing for effectively engagement with shoppers Shopper’s Behaviour How to better understand the Shopper Shopper characteristics in terms of demographics and lifestyle Who Channels or retailers of choice, identifying drivers & motivators Where Purchasing as well as consumption or usage occasions When Category choice, frequency & spend What Pre-store planning & in-store behaviour How Reasons for category & brand choice Why
  11. 11. The Professional Shopper Seeking Value
  12. 12. 12 / Retail Indaba Professional Shopper Consumers challenging the way retailers package, price & distribute products Using resources like smartphone apps, websites, cut-out coupons, QR codes, broad sheets & loyalty cards to find best value deals Protracted economic pressure & technological advances, bring rise to this motivated, tech- savvy & informed shopper Retailers are bundling products together like adding value to loyalty programmes, offering deals & investing more in their PL to attract consumers 70 % of shoppers make shopping lists prior to going to stores whilst others download coupons (U.S.) Digital deals & shoppers making use of traditional tools such as broadsheets, cut-out coupons & newspapers inserts are on the rise People will map out a route to buy various items from a number of different retailers to get the best deal Reward programmes also remain a key retail strategy in SA, with an estimated 10 million people carrying at least one loyalty card
  13. 13. 13 / Retail Indaba Professional Shopper (continued) Source: Daily Mail: “Rise of the ‘Professional Shoppers’: The Penny-Saving Consumers Making Supermarkets Nervous”, 9 March, 2013 “Supermarket consumer who approaches the weekly shop with military precision in a bid to save money, taking no prisoners when it comes to sniffing out a bargains. Those who hunt out and share information online on the best deals. Type of customers who will take to social networking sites to communicate their penny-saving experiences”.
  14. 14. Private Label
  15. 15. 15 / Retail Indaba Private Label Growth Private Label challenging national manufacturer brands Private Label share increased throughout Europe in Q1 2013 Retailers moving to multi-tiered Private Label offerings Packaging plays a significant role in Private Label success Private Label focus for retailer Private Label Activity Insights Helping shoppers reduce their weekly shop Why Shoppers willing to switch brands for value/savings Value PL previously view as Econo offer, now able to shift perceptions Driver Shoppers focus on quality of packaging when evaluating PL Pack Profit, catman influence, purchasing power, brand equity WIFM
  16. 16. 16 / Retail Indaba European Private Label Trends Private Label Share • PL’s share growing across Europe with its value share up 0.5% at 35.6% & unit share also up 0.5% at 45.1% Unit Market Share • Manufacturers are fighting hard to protect their value & unit market share with clever promotion & pricing strategies Creativity & Value • Creativity & new value is a powerful sales driver & differentiator especially in such a long economic slump Trend Description
  17. 17. Consumer Trends
  18. 18. 18 / Retail Indaba The Consumer and Recession Post 2009 recession, SA consumers seem to have changed their consumption habits: Consumers began to “Down Trade” Then “Product Substitution” as Down Trading was no longer effective Unrelenting economic pressure has pushed some consumers to “No Trading”, where they just cease buying & consuming
  19. 19. 19 / Retail Indaba Global Consumer Trends (Eurocentric) Growing inflation driving grocery basket upwards on cost curve Shopper wallet not growing in relation to rising inflation Shift away from non-food as food becomes priority Consumption patterns shifting as consumers adjust to the times Consumer and Shopper Trends Retail Implication Cost push factors, energy & resources Pricing Shoppers have to spend more effort & energy in seeking value Basket Food purchasing prioritised over non-food Basics • Using less product • More multipurpose products • Less wastage • Less stock, more on demand Change in Usage Patterns
  20. 20. 20 / Retail Indaba Global Consumer Trends Involving Technology On/Off Shopping is where the shopper seeks online experience/data while in-store Online pricing comparisons are becoming a key measure of retailer competitiveness Click and Collect: Ordering online but collecting your purchases at the store Loyalty cards are important to shoppers because this supports the value aspirations Consumer and Shopper Trends Retailer Implication Retailers need to offer in-store web portals with online offer Tech Webscraping competitor web sites to compare pricing offers Real time Retailers developed a dedicated drive through lane for collections Adapting • Basket analytics • Trip mission analytics • Targeted promotions by store • Significant analytics skills Shopper analytics
  21. 21. 21 / Retail Indaba Shopper in Europe 2013 Q1 Shopper in Europe is adapting to tough times Struggling South Africa consumer’s woes perhaps light compared to heavy European woes, but the local burden may increase “Smart Shopper” price cautious: High promotion activity Strong presence of PL Price war Shoppers are extremely price sensitive Price is the heart of the battle Shoppers are willing to buy value for money Non Food categories are the victim of the tough times
  22. 22. 22 / Retail Indaba Promotion in Europe 2013 Q1 • UK remains the champion with 52,7% of volumes sales on promotion • Germany, solid discounter & PL culture, remains the country with lowest promotion • Growth of hypermarkets, which is impacting hard discounters Unprecedented Promotional Activity Trend already reflecting in SA & will continue to grow as the mechanic of discounting becomes a key retail strategy for success
  23. 23. 23 / Retail Indaba Consumer Trends Seeking Value • Searching for best prices, using all available resources • Promotional purchases Consumption Patterns • “Down Trading” • “Product Substitution” • “No Trading” Basket Changes • Smaller basket numerically • Increased frequency of trips Household Debt Rising • PCE pressure • Rising inflation vs flat income Tech Savvy • Growth in smartphone sales will increase e-commerce from its present infancy • Price apps providing shoppers with pricing & product comparisons at store level are growing Product usage • Using less • Using multi-usable products • Reducing wastage • Lower stock levels Trend Description
  24. 24. 24 / Retail Indaba What it all means, so what ? “Understand and respond to all the dynamics at play at the Shelf Face which affect your strategy” • Shoppers seeking value, so huge focus on accuracy of pricing and promotions • PL will continue to grow and develop in SA (opportunity) • Manufacturers will be fighting to protect their share of sales (innovation crucial) • Right sizing will continue, can create innovative opportunities • Price points insight is key to strategy (supported by price sensitivity data) • Promotions – level of discount, length of promotion & product combinations • Pricing strategy needs to be dynamic & executed in real time • Basket Analytics is a growing strategic tool required to discern consumption & buying patterns • Ranging accuracy at store level growing factor as ROI at Shelf Face receives focus • E –Commerce effect is going to grow strongly as Smart Phone sales grow Actionable items for retail players seeking success
  25. 25. Thank you www.bmi.co.za
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