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ECR Europe Forum '05. Case Study L'Oréal - Asda

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ECR Europe Forum '05. Case Study L'Oréal - Asda

  1. 1. Case Study Summary – Primary Success Factors Each factor is a key driver or barrier if not pursued purposefully 1. Willingness to Innovate & Change • Creation of Shopper Value • Collaborative Understanding of Partner’s business / Information Sharing • Aligned Goals & Objectives • Aligned Measures & Incentives  2005
  2. 2. Your Quick ECR Scorecard for Today 1. Do you have demonstrable examples of Yes Many Yes Few No collaborative working? eg, significant information sharing 2. Do you & your Trading Partners use Category Mgt Yes Starting No principles to deliver differentiated shopper offerings? 3. Do you set promotional success criteria and jointly Yes Some- No Always times evaluate against them with your Trading Partners? 4. Are you able to see & replenish in line with your Yes In time Not in No Time No customers daily demand? 5. Do you have aligned ECR vision, objectives and Yes Some No All measures within your business? Source: Extracted from Entry Level Scorecard on www.globalscorecard.net  2005
  3. 3. Project Components  2005
  4. 4. Value Chain Analysis - What Did We Do? Deep-dive analysis across major companies combined with IBM data Cost structures of companies analysed using standard set of activities Manufacturer and retailer benefit for each ECR area quantified Key output, expressed in terms of: • Potential Cost Savings • Potential Inventory Reductions • Potential Growth  2005
  5. 5. VCA Results – Breakdown by ECR Improvement Concept Cost Reductions ECR Improvement Concept Demand Integrated Demand Driven Supply Supply Enablers Integrators (2 000) 2 000 4 000 6 000 8 000 10 000 Total value chain product category: All Values in €m Europe Manufacturers Europe Retailers  2005
  6. 6. VCA Results – Breakdown by ECR Improvement Concept Inventory Reductions ECR Improvement Concept Responsive Replenishment Demand Supply Enablers Integrators 5 000 10 000 15 000 20 000 Total value chain product category: All Values in €m Europe Manufacturers Europe Retailers  2005
  7. 7. VCA Results – Breakdown by ECR Improvement Concept Combined Potential Growth Collaborative Responsive Global Shopper Optimise Replenishment Data Value Creation Promotions Synchronisation Europe +4.9% Optimise Optimise Operational Assortments New Product Excellence Introductions 0 1 2 3 4 5 6 Growth (%)  2005
  8. 8.  2005
  9. 9. Project Components  2005
  10. 10. Macro-Economic Analysis - What Did We Do? Defined relevant indicators Sourced data from existing databases and companies Interpreted economic indices Explored correlations between ECR and category performance  2005
  11. 11. Market Development Retail sales share of wallet is in decline – consumers shift France Retail Sales / Consumer Spending Germany (Index 1994=1) Italy 1.15 Spain 1.10 UK 1.05 Iceland Finland 1.00 Denmark 0.95 Belgium Austria 0.90 Greece Switzerland 0.85 Sweden 0.80 Portugal Norway 0.75 Netherlands 0.70 Luxembourg 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Ireland Source: Planet Retail, 2005  2005
  12. 12. Market Development Modern grocery formats have grown share within this environment France Modern Grocery Distr (Grocery Sales) / Retail Sales Germany (Index 1994=1) 1.25 Italy UK 1.20 Austria Greece 1.15 Switzerland Sweden 1.10 Portugal Norway 1.05 Netherlands Luxembourg 1.00 Ireland Iceland 0.95 Finland Belgium 0.90 Spain 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Denmark Source: Planet Retail, 2005  2005
  13. 13. Manufacturer Performance ECR adopting manufacturers have driven category growth Sales Index 1.40 ECR adopter sales Total category sales 1.20 1.00 1999 2004 Source: based on several manufacturers‘ market research data  2005
  14. 14. Macro-Economic Summary Share of wallet shift away from retail has slowed consumer sales Most ECR adopting retailers can offset the above through share growth The consequences of ECR adoption are noticeable for shoppers ECR adopting manufacturers are proven to drive category growth As grocery sales show limited potential for growth, efficiencies & collaborative shopper value creation remain key… ECR can drive both  2005
  15. 15. Project Components  2005
  16. 16. Belgium’s annual consumer sales Carrefour’s European annual sales Cosmetics & toiletries market in Western Europe  2005
  17. 17.  2005
  18. 18. ECR Implementation Pyramid Align Measures & Incentives Align Goals & Objectives Cultural Intervention Plan Evaluate  2005
  19. 19. ECR Implementation Pyramid 1. Evaluate the opportunity for greater ECR adoption within your business “Quick ECR check-list” is a start! Assess your business using full GCI Scorecard Question: what does ECR mean to us? ... what should it mean to us?  2005
  20. 20. ECR Implementation Pyramid 1. Evaluate the opportunity for greater ECR adoption within your business 2. Plan to incorporate proven ECR improvement concepts into your business strategy Maintain focus against cost & inventory reductions Increase emphasis on creating Shopper Value • Shopper based Joint Business Plans • Shopper based Value Chain • Consumer Driven Innovation  2005
  21. 21. ECR Implementation Pyramid 1. Evaluate the opportunity for greater ECR adoption within your business 2. Plan to incorporate proven ECR improvement concepts into your business strategy 3. Cultural Intervention of the 5 Primary Success Factors Willingness to innovate and change Collaborative understanding of partner’s business Information sharing  2005
  22. 22. ECR Implementation Pyramid 1. Evaluate the opportunity for greater ECR adoption within your business 2. Plan to incorporate proven ECR improvement concepts into your business strategy 3. Cultural Intervention of the 5 Primary Success Factors 4. Align Goals & Objectives Firstly within your own organisation – vertically & horizontally With your business partners  2005
  23. 23. ECR Implementation Pyramid 1. Evaluate the opportunity for greater ECR adoption within your business 2. Plan to incorporate proven ECR improvement concepts into your business strategy 3. Cultural Intervention of the 5 Primary Success Factors Align Goals & Objectives 4. Align Goals & Objectives 5. Align Measures & Incentives Internally & externally  2005
  24. 24.  2005
  25. 25. European Market Growth – Last 10 Years & Projected European Grocery Sales 1 200 000 Projected CAGR = 3.7% 1 000 000 800 000 Historic CAGR = 5.2% € billiions 600 000 400 000 200 000 0 ’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 Year  2005
  26. 26. Context of growth - Industry Revenue Additional 4.9% / €42 Billion European Grocery Sales 1 200 000 1 000 000 800 000 € billiions 600 000 400 000 200 000 0 ’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 Year Incremental growth from ECR Implementation  2005
  27. 27. Context of growth - Industry Profit Additional 3.3% / €28 Billion European Grocery Profit 130 110 € billiions 90 70 50 30 10 ’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’09 ’10 Year Incremental from ECR Cost Reduction  2005
  28. 28.  2005
  29. 29. In Summary ECR has delivered clear benefits over the last 10 years Significant opportunity for ECR remains • Drive cost out of the supply chain • Stimulate and drive significant growth Economic environment remains challenging Proven recommendations to accelerate and reap ECR benefits Jointly satisfying shopper needs at the core It’s now down to us…  2005
  30. 30.  2005
  31. 31.  2005

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