Index:• RETAIL in the 21st Century• Global powers of retailing – Geographical analysis•Top 10 retailers by product sector•General trends in US retail sector•Organized and Un-organized retail•US Economy and its impact on Retail Industry•Gas price impact on retailers•Contribution of various sector in retail trade•Food retailing in 21st century•e-commerce• Major retailers in US•Customer shopping behavior –multi-channel shopping•Most valuable brands in the US, 2012•Scope of analytics in retail industry•Appendix
RETAIL in the 21st CenturyWith the advancement in technology, globalization and the ever increasingcompetition retail is not just selling of goods to the end-user, its more about theoverall shopping experience and customer satisfaction.In era of fierce competition, retailers have to deal with the following barriers togrowth in order to be successful:• Lack of customer demand• Pricing pressures• US dollar strength• Lack of qualified workforce• Staying on top of emerging technologies• Labor costs• Inflation• Energy prices• Regulatory and legislative pressures• Risk management issues• Volatile commodity• Customer satisfaction
Global powers of retailing – Geographical analysisUS retailers occupy a marketshare of 32.4% and accountfor 2/5th of the sales acrossthe globeFor 81 US retailers in the top250 retailers across the globe13.3% of their businesscomes from foreignoperations and rest 86.7%from US itselfSource: Deloitte Global Retail report 2012
Top 10 retailers by product sectorSource: Deloitte Global Retail report 2012
General trends in US retail sectorTrends in the retail environment are governed by the changing nature of US consumersand technological advancement and competitive response to these changesThe most important consumer trends affecting retail are:a) the size of two age cohorts- Baby boomers & Generation Y (Baby Boomers represent 44% of the USpopulation, hold 70% of US disposable income, and buy 49% of total consumer-packaged goods (CPG))b)the growing ethnic diversity of the US populationc)the increasing sophistication of the shoppers (a) (b) (c) Consumers in this group are Retails targeting baby boomers Rather than being assimilated looking for more unique and focus on improvement in in in the dominant US culture the personally meaningful convenience and quality of diverse ethical and racial lifestyles and they have varied shopping experience and groups are proud of their needs for different shopping offering wellness products. cultural identities and desire situations. to maintain a connection with Eg. They want to buy basic Retailer targeting Gen-Y their heritage. This retailers consumables goods at low cost attempt to build honest have to tailor their offerings but when it comes to personal relations with the based on the needs of these decorating the house they are customers in this segment as groups. looking for a retailer that they are less responsive to Eg. Hispanics have become provides best solutions and mass media advertising as the the largest minority group in services. are knowledgeable and the US, so Wal-mart has an This self-expression shopping independent in their choice of entire department dedicated mode is ego-intensive and products. to Hispanic dairy emotional.
Organized and Un-organized retailRetailer have responded to the consumer trends by:a) Reducing their costs to increase the value delivered.b) Targeting the needs specific to various customer segments.c) Offering personalized shopping experience.The advent of customer centric retailing has made the retail sector more and moreorganized leading to decline of unorganized or traditional retail in the US Contribution to Sales in 2012 ised 15% Organised Retail 85% Unorganised Retail
General Retail Industry trends Targeting needs of specific customer segment and Cost reduction personalizing the shopping experienceUS retailers have focused on reducing their While focusing on cost reduction retailers haveoperating costs through the following: also developed offerings directed towards the need of specific customer segments Economies of scale: Many US retailer have Eg. – National retail chains have long adjustedrealized scale economies through aggressive assortment based on climate.internal growth and acquisition BestBuy is promoting high end entertainment Supply Chain: Retailers are managing their systems in the areas with professional high incomesupply chain by collaborating with vendors to households, whereas stores in areas busy witheffectively engage in joint forecasting and planning suburban mothers dedicate more inventory to Big Boxes: Faster growing retailers involve larger a merchandise products like learning softwares andstore sizes eg. Supercentres feature softer colours and , a children’s play area Centralization: Retailers have now centralized and children’s technology department etc.buying functions and use information systems totailor assortment to local tastes Retailers are building and organizing customerAnalytical Methods: While many of the these databases that integrate information about all ofapproaches to cost reduction have reached a point the contacts the retailer has with the customer-of diminishing return for the most sophisticated contacts in store, via Internet , call centers etc.US retailers , a promising new era involving use of By analyzing such data retailers are able to deviseanalytical methods is evolving. customer specific shopping occasions and productBy using analytical methods retailers can optimize offerings.their decisions regarding Inventorymanagement, forecasting sales, campaignmanagement etc.
Over the past few years consumers’ sense of financial security has clearlybeen shaken and the US economy is still in the recovery phase.
Impact of recession on consumersSource: Nielsen Homescan, 52 w/e 10/1/2011 v/s 10/3/2009, excludes gas only and Rx only trips
Contribution of various sectors in retail trade, 2012 Food based retailing accounts for 24% of retail trade followed by Motor vehicles (18%) Food services & drinking Total retail trade 11% in 2012 - $4.89 Non-store retailers Motor vehicle Trillion 9% 18% Food and beverage General merchandise stores stores Gasoline 13% 13% stations 11% Motor vehicle Furniture and home furnishing Electronics & Appliances Building material Food and beverage stores Health and personal care Gasoline stations Clothing & accessories Sporting goods General merchandise stores Miscellaneous store retailers Non-store retailers Food services & drinkingSource: http://www.census.gov/retail/marts/www/marts_current.pdf
Food retailing in 21st centuryThe business of retailing food is going through dramatic, if not revolutionary, change.The causes are simple and complex, visible and hidden. The singular force driving the revolution is the consumer. The consumer’s marketpower is growing strong and ingrained. Competition has never been more vigorous with more than a dozen types of retailersvying for market share. Food retailers today include conventionalsupermarkets, superstores, supercenters, membership clubs, combination (food anddrug) stores, natural and organic outlets, limited assortment stores, conveniencestores, dot-coms and gasoline stations. Consumers have never had more choice invariety, value, nutrition and quality. The competition includes restaurants, especially fast food, which are near themilestone of controlling half the $1 trillion market for food sales. Dual-income couplesand generations X and Y are fueling steady sales growth in “food away from home.”„ Also driving competition is the minimal growth of the U.S. population. Today, foodretailers can grow only by taking business away from competitors.
Store formats which sell “grocery”Virtually, every retailer is now selling groceries, and more than a dozen formats are competingaggressively.Conventional Supermarket — carries about 15,000 items, including a full line of groceries, meat and produce, with at least $2million in annual sales.ƒ Superstore — larger than a conventional supermarket with at least 25,000 items and more nonfoods, such as general merchandiseand health and beauty care (GM/HBC) items.ƒ Combination Store — a superstore and full-line pharmacy with GM/HBC products accounting for at least 15 percent of sales.ƒ Super Warehouse Store — a hybrid warehouse/superstore with 50,000-plus items and the full range of servicedepartments, featuring high-quality perishables and reduced prices.ƒ Limited Assortment Store — a low-price outlet with minimal service and fewer than 2,000 items. It features numerous privatelabel products and is popular among food stamp recipients seeking to stretch their limited dollars. Convenience Store — traditional outlets offer a small selection of dry groceries, beverages, nonfoods and ready-to-heat and -eatfoods. Most are now selling gasoline as well.ƒ Other Traditional Outlets — these include numerous small, family-owned bodegas and retailers, along with upscale and ethnicstores that serve specific demographic niches.ƒ Supercenter — a large food-drug combination store and mass merchandiser. These average more than 170,000 square feet andtypically devote up to 40 percent of the store to grocery items, which are often sold at loss-leader prices.ƒ Wholesale Club — a retail/wholesale hybrid that offers consumers and small businesses a limited and economical selection offood and nonfood products. These measure about 120,000 square feet; 60–70 percent of the space is devoted to bulk sizes ofgrocery and GM/HBC items.ƒ Drug — a pharmacy that generates at least 20 percent of its sales from grocery, GM/HBC and seasonal items, often at discountedprices.ƒ Mass — a large store selling primarily hard goods, such as clothing and electronics, but also grocery items.ƒ Dollar Stores — a traditional format that now sells 20–80 percent of groceries and other consumable products at discountedprices.ƒ Fresh Organic/Natural — includes traditional retail outlets that place a strong emphasis on perishables and natural/organic stores.ƒ Military — commissaries run by the Defense Department that resemble conventional supermarkets but are restricted to enlistedor retired military personnel.
Grocery industry market share by formatSource: http://www.fmi.org/docs/media-backgrounder/foodretailing.pdf?sfvrsn=2
e-Commerce- “Online shopping” According to Goldman Sachs, the global e-commerce market could be worth around $1 trillion in 2013. The US is currently the largest e-retailing market in the world with 170 million users spending on average $1,000 each a year. According to Forrester Inc., 67% of consumers in the US currently shop online and online sales are projected to achieve a 10% compound annual growth rate, generating $279 billion by 2015. “194M Americans, or 90% of the online population, visited retail sites in December 2012” ~COMMSCORE “20% of US consumers researched a home- goods product at a brick and mortar store but purchased it online in 2011” ~ NDP GROUP “61% of consumers want e-Commerce sites to store their personal and payment information to speed up the shopping process” ~ CAPGEMINISource: http://www.pwc.com.ar/es_AR/ar/publicaciones-por-industria/assets/pwc-us-multichannel-shopping-survey.pdfhttp://www.factbrowser.com/tags/ecommerce/
e-Commerce- “m-Commerce”Retailers view mobile commerce not only a sales driver but also a way to engage with specificaudience According to NRF Foundations’ 2011 retail horizons report found 69% of retailersidentified mobile commerce as a top strategic initiative U.S. mobile commerce to reach $31 billion by 2016, growing at a 39% compound rate. But the report says that mobile commerce is only expected to be 7% of overall e-Commerce sales by 2016 and only 1% of general retail sales. “85% of customers use their phone while shopping in-store” ~JIWIRE “Wal-mart estimated that of all visits to their internet shopping site in Dec 2012 was from a mobile device” ~JIWIRE
What is Multi-channel shopping? There are, in fact, three different types of activities in which multichannel shoppers typically engage: Shopping across a number of different channels (bricks and mortar, online, catalogue, TV shopping networks, mobile applications, etc.), i.e., choosing the channel that works best for a particular occasion or type of purchase. Eighty-six percent of our global respondents and 65% of US-based respondents currently shop across at least two channels, while 25% of global respondents and 21% of US respondents are using four or five channels to shop. Buying goods from the same retailer but doing it across more than one channel. Seventy-four percent of US respondents shop more than one channel, and even in the territory where the fewest amount of shoppers "least shop" this way – Hong Kong – the percentage is still relatively high at 45% Using a number of different channels to make a single purchase. An example of this kind of transaction is researching a product online and then buying it in store. In fact, more than 80% of all respondents conduct online research before they buy electronics, computers, books, music, and movies. Eighty-eight percent of US respondents said that they research a product online via their PC before buying (vs. 80% globally) ― and 73% of US respondents report that they research online when buying clothing, footwear, toys, and health and beauty products (vs. 60% globally). In other words, online research doesn‘t just lead to online purchases, it‘s also critical in leading to purchases through other channels and in driving traffic to physical brick and mortar outlets.Source: http://www.pwc.com.ar/es_AR/ar/publicaciones-por-industria/assets/pwc-us-multichannel-shopping-survey.pdf
Top 5 retailers in USSource: http://www.pwc.com.ar/es_AR/ar/publicaciones-por-industria/assets/pwc-us-multichannel-shopping-survey.pdf
Retailers in US having only online presenceSource: http://www.pwc.com.ar/es_AR/ar/publicaciones-por-industria/assets/pwc-us-multichannel-shopping-survey.pdf
Scope of analytics in retail industry- A KPMG Survey KPMG’s survey reflect the response of 100 retail executives from large($ 100 million + annual revenue), U.S. based companies. 35% of responders work for companies with the annual revenue more then $10 billion while 41% represent companies with the annual revenue between $1 Billion and $10 Billion and rest 24% with the revenue in $100 Million to $1 Billion range. 74% companies are publically held and 26% privatelySource: http://www.kpmg.com/US/en/IssuesAndInsights/ArticlesPublications/Documents/2012-kpmg-retail-outlook-cautious-optimism-in-style.pdf
DEFINITIONSUnorganized retail : - The traditional formats of low-cost retailing, for example, thelocal corner shops, owner manned general stores, convenience stores, hand cart andpavement vendors, etc.
Top 250 performers statistics World top 10 RETAILERS Country 2010 group Rank Company of origin revenue (US $ mil) 1 Wal-Mart US $421,849 2Carrefour France $121,519 3Tesco UK $94,244 4Metro AG Germany $89,311 5Kroger US $82,189 6Schwarz Germany $79,199 7Costco US $76,255 8The Home Depot US $67,997 9Walgreen US $67,420 10Aldi Germany $67,112 Out the the Top ten retailer in the world five namely, “Walmart” ,“Kroger”, “Costco”, “The Home Depot” and “Walgreen” belong to the USSource: Deloitte Global Retail report 2012