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US RETAIL TRENDS Future Trends & Forces

November 2012

PLMA Private Label Trade Show 2012 Chicago, USA

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1. Who is Planet Retail?

2. Onmi-channel retailing

3. Reinvigorating the City

4. E-commerce Retailing

5. The Future of Private Label

Agenda

1. Who is Planet Retail?

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1. Who is Planet Retail?

Who is Planet Retail?

Planet Retail is a provider of digital retail intelligence.

What does Planet Retail do?

Planet Retail provides retail intelligence that helps businesses to uncover opportunities and power decisions that turn potential into profit.

What makes Planet Retail different?

The breadth and depth of data.

Specific expertise in retail technology and private label.

Team of Analysts around the world.

2. Omni-channel Retailing

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Once considered ‘alternative,’ the warehouse club and value channels are growing sales faster than traditional channels, i.e. supermarkets and supercenters (mass).

Some channels are no longer ‘alternative.’

2. Omni-channel Retailing – Future Forces

469

381

202

169

125

47

524

443

211 201

163

69

622

531

252 237

207

103

0

100

200

300

400

500

600

700

Supermarkets Mass channel Drugstores Convenience stores* Warehouse clubs Value channel

Sale

s (U

SD b

n)

US: Channel Sizes by Sales, 2007-2017f (USD bn) 2007

2012f

2017f

*Note: Convenience store sales represent merchandise sales only; f – forecast. Source: US Department of Commerce, National Association of Convenience Stores and Planet Retail

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Non-traditional channels and formats continue to encroach.

2. Omni-channel Retailing – Future Forces

Target’s PFresh

Warehouse Club

Family Dollar

E-commerce Grocery

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Fragmentation – US grocery retailing is transitioning from retailers operating single banner/same footprint to instead managing portfolios of smaller, more fragmented formats, each with its own unique footprint.

2. Omni-channel Retailing – Top Trends: Fragmentation

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Multi-channel: Combining bricks and mortar with digital technology will be the norm by 2017. Site-to-store services – essentially using outlets as online purchase pickup depots – will increase in popularity.

2. Omni-channel Retailing – Anytime/Anywhere Shopping

“It’s time to leverage our size and global footprint to take advantage of this evolving customer trend.”

3. Reinvigorating the City

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Urbanization – Urban is one of few US expansion opportunities remaining for big-box retailers. The land rush is on as a host of retailers look to fill the gaps in urban food deserts in the coming years.

3. Reinvigorating the City – Top Trends: Urbanization

Walmart Express stores.

CityTarget launched in July 2012.

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Localization – The new ‘convenience’ stores will be those offering localized assortments and solutions that reflect surrounding neighborhood demographics and shopper needs.

3. Reinvigorating the City – Top Trends: Localization

Fresh Prepared

Upscale beauty

desination

Grab & Go cooler wall

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Food Deserts: “A low-income census tract where a substantial number or share of residents has low access to a supermarket or large grocery store.” – USDA definition.

3. Reinvigorating the City – Top Trends: Food Deserts

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More “buzz” in 2011 but retailers are now in the execution phase.

3. Reinvigorating the City – Top Trends: Food Deserts

4. E-commerce Retailing

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E-commerce share of retail spend is growing - Led by customer desire for convenience and new technology.

4. E-commerce Retailing – Online Trends

Online 4%

Traditional 96%

Sales: Online vs. Traditional, 2012-2017 (%)

Source: Planet Retail

Online 8%

Traditional 92%

2017 2012

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Digitalization – Future shopper generations are growing up with technology, tools and apps that will revolutionize grocery shopping. Watch as more routine replenishment (stock-up) shopping moves online.

4. E-commerce Retailing – Top Trends: Digitization

Peapod QR codes

Quidsi offers ‘mylists’ making reorders fast

and easy.

Amazon.com Subscribe & Save

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Multi-channel retailers are seeing online sales soar. Getting e-commerce operations right is essential.

4. E-commerce Retailing – Online Trends

Sales: Online Growth, 2012-2017

In Store Online

+217%

+103%

+107%

-1%

+23%

+20%

+200%

Source: Planet Retail

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Concept also popular in Germany and growing the UK.

Implications:

Defend threat of pure play e-commerce retailer.

Limits impulse opportunities.

320 outlets at the end of 2010 with net sales of EUR8.44 billion (USD11.18 billion).

France has 1,700 Grocery drive-thru locations.

4. E-commerce Retailing – France: The home of the drive-thru!

Chronodrive (Auchan) Advert from Carrefour website

5. The Future of Private Label

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1. Will continue to grow post recession

2. Managed as a brand by the retailer

3. Consumer endorsement

4. Transparency

5. Niche and higher end products

6. Best practices

5. The Future of Private Label

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With shoppers looking for ‘value’ in developed markets, retailers looked to develop new niche and premium ranges to target specific consumer groups.

Leading grocery retailers looked to launch, or re-launch, private label ranges in 2011.

5. The Future of Private Label – Consumer Endorsement

SEP 2010 OCT 2010 DEC 2010 JUN 2011 AUG 2011 SEP 2011 OCT 2011

UK

Walmart’s Asda: Chosen by You

Austria, Italy, Slovenia

SPAR (Austria): SPAR Premium

UK

John Lewis Waitrose: mid-price healthy food PL – Love Life.

Tesco: Tesco Venture Brands

France

Casino: healthy living range Bien pour Vous! (food & non-food).

Carrefour: Halal PL USA

Walgreens: grocery umbrella PL Nice!

Rewe Group: non-food PL - Vivess

UK

Walmart’s Asda: Chosen by You Scotland

South Africa

Pick n Pay: Finest premium PL

DEC 2011

USA

Kroger: The Truly Awesome

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Shopper engagement requires new levels of transparency.

5. The Future of Private Label – Transparency

Asda (Walmart) in the UK embracing transparency installing webcams with the live feeds viewable to the public.

In 2011, Aldi Germany pro-actively offered traceability information for fresh meat.

Ito-Yokado (Seven & I) in Japan offers shoppers the ability to scan a QR code on its private label products.

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PL food concessions cropping up in new places, e.g. inside other retailer stores, workplaces, theme parks, etc.

Social media interaction – using as a focus group for suggestions, voting for products, allowing fans/followers to sample, input into marketing campaigns, etc.

Shop-in-shop concept for private label, e.g. Ocado.

Amazon – private label shops within Amazon sites, taking care of logistics on behalf of other retailers, e.g. Migros in Germany, dm in Germany, ELC in UK.

E-commerce sites suggesting PL alternatives to products in basket, e.g. Sainsbury’s Switch & Save.

Promote heritage of PL – similar to M&S campaign or Sainsbury’s tying up with Kellogg’s to introduce retro packaging for Diamond Jubilee.

Venture brands going into other stores as ‘brands’, e.g. Tesco venture brands could do this.

Private Label Marketing ideas from Europe.

5. The Future of Private Label – Best Practices

Kellogg’s brought in retro packaging to coincide with the Diamond Jubilee.

Renowned British illustrators were asked by M&S to design commemorative tins for the Diamond Jubilee.

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Collaboration between PL brands and manufacturers, e.g. coffee maker manufacturer including coupon in box for free or money-off Sainsbury’s PL coffee.

Trusted PL brands continuing to branch out into becoming service providers, e.g. John Lewis insurance/holidays, Tesco Mobile/banking.

Loyalty points: retailers could offer double points for PL brands.

Celebrity endorsement continuing to evolve, e.g. Delia Smith & Heston Blumenthal at Waitrose, Gok Wan at Sainsbury’s.

Television advertising for private label as if it were a premium brand – mini series campaign linking to social media or more comparative advertising campaigns, e.g. Aldi’s “I like this ketchup but I also like this one.”

Product placement: Very.co.uk sponsored X Factor – dressed contestants, allowed purchasing via QR codes/website/mobile app.

Private Label Marketing ideas from Europe.

5. The Future of Private Label – Best Practices

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5. The Future of Private Label – Implications

Change =

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Researched and published by Planet Retail Limited

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