Consumer Trends and Private Label - UGentusers.ugent.be/~xgellync/Rob/priavte labels.pdf · Water...
Transcript of Consumer Trends and Private Label - UGentusers.ugent.be/~xgellync/Rob/priavte labels.pdf · Water...
Consumer Trends and Private Label
John KrohnDirector, Category Management & Insight
Today’s Topics
Consumer TrendsFactors Driving DemandWhat’s Coming
Private LabelGlobal ImpactDomestic ImpactPrivate Label EvolutionTrends in Product Development
What’s Driving the Consumer
SOURCE: Hartman Group Study on Shopper Insights 2005
Cultural Trends Driving Shopping Occasions11 Distinct Shopping Motivators
•After-Work
•Party Fixings•Traditional Weekly
•Destination
•Random Emergency
•Crafting Recipes
•Recreation
•Coffee Shop Experience
•Workout Fuel
•Socializing with Friends
•Meal Eaten in Store
What motivates Consumers?How do we fulfill their needs?
Cultural Occasions Driving Demand
0102030405060708090
100Tr
aditio
nal W
eekly
Destin
ation
Rando
m E
merge
ncy
Craftin
g a R
ecipe
After-W
ork S
upple
ment
Recra
tion
Coffee
Sho
p Exp
erien
ceMea
l In S
tore
Party
Fixing
s
Social
izing
w/ F
riend
sW
orkou
t Fue
l
In Past Month Most RecentP
erce
nt o
f Trip
s
SOURCE: Hartman Group, Shopper Insights 2005
Household Definitions are Changing
Independent singlesIncrease in Men and Women living alone
Family structure is changingIncreased divorce ratesSignificant decrease in Married Couples with Children
Current US Consumer Trends:Natural & Organic US Diversity Shift
• 66% of Americans have used Organic products in the past year, up from 55% in 2000.
• 61% of consumers who purchase natural and organic foods buy them in supermarkets
• By 2040, Hispanic, Asian, and African Americans will represent over 50% of the US Population.
SOURCE: The Hartman Group
Consumer Education
An Educated Consumer…
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
2004
2001
1998
1995
1992
1989
1986
1983
1980
1977
1974
1971
1968
1965
Less than High School1-3 years High School4 years High School1-3 years College4 years or more College
Years of Education Among All People Aged 25 or Older (U.S. Only)
Source: U.S. Census Bureau
The Food Network: Impacting ConsumersConsumer choice and shopping motivation inspired by top chefs, are seeking out new
recipes and authentic ingredients
Travel Abroad: New Culture, New Experience
-123456789
10
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
2004
Mill
ions
# of U.S. Passports Issued Annually
Experiencing Other Cultures with Food & Taste
2%Africa
3%Oceania
4%Middle East
4%Eastern Europe
7%Central America
9%South America
18%Caribbean
19%Asia
40%Western Europe
22%Nightclub/ Dancing22%Water Sports/Sunbathing28%Art Gallery, Museum31%Cultural Heritage Sights
35%Touring the Countryside43%Sightseeing in Cities43%Visit Small Towns/Villages
51%Visit Historical Places75%Shopping84%Dining in Restaurants
Top Destinations
SOURCE: U.S. Department of Commerce, ITA, Office of Travel & Tourism Industries, "In-Flight Survey," May 2005
Top Recreational Activities
Among US Resident Travelers to Overseas Destinations…
The Aging Consumer
To Put it in Perspective…
“No challenge is as certain as global aging, and none is as likely to have as large and enduring an effect –on the size and shape of government budgets, on the future growth of living standards, and on the stability of the global economy and even the world order.”
-- Center for Strategic & International Studies
Aging: Income & EducationThe Most Affluent Retirees in History, But Not All
Age 50+ individuals own 80% of U.S. Financial assets & dispose of 50% of discretionary income.Today’s workers feel optimistic about the future, but real savings are declining and people are not planning for retirement.Resources that many boomers are counting on to fund retirement are likely to be cut drastically.The aging population will more sharply divide into haves and have nots.
10%
25%
40%
25%
Poverty Less than $35K $35K-$95K More than $95K
Baby Boomer Households
Source: “Enhancing Volunteerism Among Aging Boomers”, AARP 2003, AARP via Nielsen 360, www.marketingresearch.com
Current US Consumer Trends:Baby Boomer/Aging Consumer Trends
•By 2030, the percentage of persons 65+ in the US will almost double, growing from the current 12.5% to 23%
•The Boomers are expected to utilize Drug stores for health needs, and convenience for groceries.
0
2
4
6
8
10
12
14
Under 25 25-34 35-44 45-54 55-64 65+
Age Groups
% o
f Exp
endi
ture
s
Health Care
Food at Home
Food Away From Home
SOURCE: Willard Bishop; Competitive Edge Report Dec2004
VNU: The Aging U.S. Population
Behavioral Trends in the Aging
Resulting EffectsBehavior Trend
Boomers will redecorate, renovate, and even move or buy second homes in less metropolitan or rural areas.
Cocooning, Enjoying the Home
As the nest empties, couples with more time and money will turn eating into a leisure activity seeking healthier, tastier foods and cooking for two for fun.
Healthy Eating
Affluent Boomers will spend more money than ever before on health and appearance.
Do Not Want to Look or Feel Old
More working out, traveling, leisure, entertainmentContinue to Seek Adventure
Working past traditional working years, alternative careers are starting earlier, The chance to contribute to society.
Desire to Stay Young & Active
As their children leave the home, empty nesters are finding moretime and money to spend on themselves.
Continued Desire for Comfort
Convenience Meets Lifestyle Need1. Easy I.D.
The name of the drug is printed on the top of the bottle, so it’s visible if kept in a drawer.
2. Code red.The red color of the bottle is Target’s signature— and a universal symbol for caution.
3. Information hierarchy.Adler divided the label into primary and secondary positions, separated by a horizontal line.
4. Upside down to save paper.Klaus Rosburg, a Brooklyn-based industrial designer hired by Target, came up with an upside-down version that stands on its cap, so that the label can be wrapped around the top.
5. Green is for Grandma.Adler and Rosburg developed a system of six colored rubber rings that attach to the neck of the bottle.
6. An info card that’s hard to lose.A card with more detailed information on a drug (common uses, side effects) is now tucked behind the label.
7. Take “daily.”Adler avoided using the word once on the label, since it means eleven in Spanish.
SOURCE: New York Magazine
Health and Wellness
To Put it in Perspective…
“For the first time in human history, the number of overweight people rivals the number of underweight people. ... While the world’s underfed population has declined slightly since 1980 to 1.1 billion, the number of overweight people has surged to 1.1 billion.”
-- American Obesity Society
Source: American Obesity Society
Barriers to Eating Healthy
Cost34% of shoppers say that the cost of healthful foods deters them to from eating better.
Conflicting/Confusing information on healthful foods
Atkins diet, low-carb dietsDespite these barriers, shoppers tend to make purchases based on health and nutritional claims on the package
Source: Food Marketing Institute 2005
Health and Wellness
Shoppers believe that supermarkets are not the best outlets for meeting their health needs. The group mostly like to move away from supermarkets are the young shoppers. Shoppers want information, convenience, and products that help them to lose weight.
Gen.Y Gen. X Boomers Matures
Health prepared foods
46 59 52 50 34
Foods without trans-fatty acids
45 52 43 51 36
Low fat foods 40 48 42 40 36
Low-carbohydrate foods
39 48 40 40 32
Information about weight loss
36 43 40 37 29
Organic foods 34 40 40 34 28
Herbal and natural remedies
33 40 34 40 21
Vitamin and mineral
27 37 33 27 22
Generation %Want my store to
offer moreTotal
%
Proportion of Shoppers Who Want Their Store to Offer More of Each Product of service
Source: Food Marketing Institute 2005
The Organic Consumer
The Hartman group reports that 66% have tried organic food and beverages.
Mainstream is moving the demographic profile of the organic consumer The Organic Shopper has less to do with demographic and more to do with attitude toward food and health concerns
Source: Food Marketing Institute 2005
43%
15% 14% 14%11%
Gro
cery
Sup
erm
arke
ts+
Dis
coun
t
Spe
cila
ity
Farm
ers
Mkt
s
Hea
lth F
ood
Sto
res
% of Shoppers who Purchase Organic Foods by Outlet:
Natural & Organic Now Mainstream
Private Label Worldwide
Private Label EvolutionPrivate Label Evolution1970s–Generic
Private Label Evolution1980s–“Me Too”
Private Label Evolution1990s–Premium
Private Label EvolutionToday–Unique
Global Impact
$108B Global Grocery SalesGlobal Growth 3% All Categories
Private Label up 5%National Brands up only 2%
Discount Retailers have seen the fastest growth in Private LabelMature markets (Germany & Spain) are still experiencing strong growth2/3rd of Consumers Consider PL “Good Alternative”
North America & Western Europe 4/5th
SOURCE: ACNielsen “Power of Private Label 2005”
Reuters: “Fighting Private Label in Germany” AiMark/Europanel
Datamonitor: “How to Resist the Private Label Threat in 2006”
Private Label by Region
2%
4%
6%
16%
23%
17%
Latin America
Asia Pacific
Emerging Markets
North America
Europe
Global
5%
5%
11%
7%
4%
5%
Latin America
Asia Pacific
Emerging Markets
North America
Europe
Global
Private Label Dollar Share Private Label Dollar Growth
SOURCE: ACNielsen “The Power of Private Label 2005”
Room for Growth
SOURCE: Reuters, Business Insights, “Fighting Private Label in Germany” 2005
Private Label Defined
Private Label DefinedExclusive Products only available at a specific chain of storesNot limited to Food and Drug IndustryNot defined by GeographyPrivate Brands are Everywhere
Brand Tiers
Banana Republic is known for casual luxury, with high-quality apparel for men and women and sophisticated seasonal collections of accessories, shoes, personal care products, intimate apparel and gifts for the home. The brand's timeless style and luxurious fabrications capture a modern interpretation of classic fashion. Customers can expect exceptional service from Banana Republic
Old Navy makes shopping fun again! With great fashion at great prices for adults, kids and babies, Old Navy is famous for the best in denim, graphic tees, cargos, Performance Fleece, plus the Old Navy Item of the Week; each and every week, a special item at a special price.
Gap has provided its customers with clothing and accessories that enhance personal style. What began as one brand has grown to include Gap, GapKids, babyGap and GapBody. By providing great style, value and service.
Brand Tiers
Gap has provided its customers with clothing and accessories thatenhance personal style. What began as one brand has grown to include Gap, GapKids, babyGap and GapBody. By providing great style, value and service.
Banana Republic is known for casual luxury, with high-quality apparelfor men and women and sophisticated seasonal collections of accessories, shoes, personal care products, intimate apparel and gifts for the home. The brand's timeless style and luxurious fabrications capture a modern interpretation of classic fashion. Customers can expect exceptional service from Banana Republic
Old Navy makes shopping fun again! With great fashion at great prices for adults, kids and babies, Old Navy is famous for the best in denim, graphic tees, cargos, Performance Fleece, plus the Old Navy Item of the Week; each and every week, a special item at a special price. Value
Mainstream
Premium
Private Label Growth
PRIVATE LABEL GROWTH 2004
Private Label Growth Factors
Growth is outpacing National Brands Breaking into new and diverse categories and channels of trade Positioned to meet changing consumers demands Adding excitement to the consumers retail experienceGood and/or Better Quality as compared to the National Brands
Private Label Growth in Categories
Private Label has become the category share leader in 95 categories over the past 8 years.
SOURCE: ACNielsen Homescan; Total US, All Outlets; Share measured in dollars
Total # of Categories
# of Categories with Private Label
# of Categories w/Private Label Ranked # 1a
1997 2005
1,022
709
146
1,062
832
241
Global Private Label Product Development
SOURCE: Mintel, Global New Products Database 2006
Almost 12,000 New Private Label Items launched in the last yearTop two -USA (25%), UK (20%)
Canada, France & Germany Rounded out Top 5
26% of the Food items were positioned as “healthier”
Consumer Reports – August 2004“Big name detergents aren’t much better cleaners… But they cost 2 to 3 times as much”
Tide with Bleach Alternative $0.31 /Load
Kirkland Signature$0.11 /Load
3 of the 6 “Best Buys” were Own Brand Laundry Detergents
Kirkland Signature (Costco) was the highest overall rated detergent based on quality and value. Only product to get “Excellent” score in all categories.Winn-Dixie and Sears Own Brand were also rated “CR Best Buys”
Consumer Reports – August 2005
Tested 65 products in six categories including: facial tissues, paper towels, plastic bags, canned peaches, french fries, and yogurt
Many store brands are at least as good as national brands.Switching to a store brand can cut the cost of a product by as much as half.The companies that make store brands are often household names. Our behind-the-scenes peek shows that they include Sara Lee, Del Monte, and Birds Eye.
Source: GNPD, Private Label Prices from Retail Audits
Brands are Positioning Themselves
Charmin Basic“Soft, Strong, Sensible.“
KRAFTProduct Reformulations
SKU Rationalization
Over 33,000 New Products introduced last year:Only 22 generated over $50 million in annual retail salesMajority of which were line extensions, new flavors/scents, or “Me Too”Few meaningful to the Consumer
Major Brands are consolidating their Portfolios Retailers are increasingly able to differentiate their products and drive category innovation.
Private Label Brand Loyalty
Out-of-StoreEnvironment
Direct Mail
Advertising
OutDoor
Promotions
RetailerPositioning
In-StoreEnvironment
Employees
Destination
Marketing/POP
Promotions
Retail Solutions
Demos
Creating a Consistent Brand Experience
Private Label Portfolio
Product
Package
Tiers
Consumer Understanding
Changing Attitudes Toward Private Label
THENCheap goods, low qualityBlue collar, downscale familiesNot educatedNecessity
NOWNBE or better w/ consistent qualityEveryone buys itSmart, awareChoice
No longer a homogenous view of the “typical” private label shopper
Food Enthusiast• Enjoy Cooking• Try new Products/Recipes• Prefer Food Presented as
an Art form• Tend to watch Food Network,
Martha Stewart Living or Read Food & Wine, Bon Appetite, and also Shop at Williams-Sonoma
Core Corporate Brand Shopper•Have purchased a specific combination of PL items from both High and Low Penetrated categories
Consumer UnderstandingThe Premium Target Consumer
Customer Consumer Skew• HH Income $50K+• Some College Education• 2+ Person HH
The Premium
Consumer Target
Findings based on Simmons 2003
Consumer UnderstandingMarketing to the Premium Private Label Consumer
Family & Career Oriented:Enjoy Entertaining People at HomeLike Spending Time with FamilyLook at Work as a Career, not just a Job
Food Enthusiast:Prefer Authentic Foreign, Gourmet, and Spicy FoodsThoroughly Enjoy Cooking and Trying New Recipes and New Food Products. Always look for the Freshest Ingredients when CookingThe Stores Environment makes a Difference whether I shop there or not.
Health Conscious:Regularly Diet and ExerciseMake a conscious effort to Monitor Product Ingredients on Packaging
Though these consumers try to maintain a healthy lifestyle, they also agree that “there is nothing wrong with indulging in fattening foods”.
What’s to Come?
Building Loyalty
Private Label Innovation
Private Label Going Up-Scale
Expanding Categories
Thank You