GROWTH CHANNELS THE IMPACT ON CHECKOUT CATEGORIES Bryan

GROWTH CHANNELS & THE IMPACT ON CHECKOUT CATEGORIES Bryan. roberts@kantarretail. com November 2012 Twitter: Bryan. Roberts 72 www. kantarretailiq. eu

Shoppers Driving Discounter & Online Growth Discounters and online to drive growth € 1, 951 € 1, 548 € 1, 357 *Chains: Data represents the over 500 European retail chains that Kantar Retail tracks and forecasts, generally these are chains with annual turnover exceeding EUR 1 billion Source: Kantar. Retail. IQ. eu © Copyright 2012 Kantar Retail 2

The Impact of ‘Where’ Within global grocery, smaller stores are winning © Copyright 2012

Big Boxes Not a Great Deal of Fun in Mature Markets Source: Carrefour ©

Reasons for the Big Box Decline § Non-food lines available through price-competitive online channels § Better service-led offer from specialist retailers § Some categories (music, DVD, gaming) are transitioning to non-physical delivery/consumption § Economic pressures are impacting discretionary spending/non-food demand § Shoppers are less willing to devote time travelling to out-oftown stores or navigating a 10, 000 square metre store © Copyright 2012 Kantar Retail 5

Reasons for the Big Box Decline § Rising numbers of grocery trips are transitioning to online/Drive § Aging populations less amenable to big box experience § Petrol prices making out-of-town travel more expensive § Decline in meal planning/large basket trips § Reluctance from shoppers to invest in household inventory © Copyright 2012 Kantar Retail 6

This Trend is Bad News for the Hotzone 7 © Copyright 2012 Kantar Retail

Other Checkout Trends are Equally Dispiriting § 64% of self-checkout grocery shoppers said retailers who offer self-checkout options provide better customer service § 78% of self-checkout users prefer them because they are faster § Certain impulse items can be found in 5% of baskets processed through regular checkouts, but in only 2% of selfcheckout baskets Source: NCR; Kantar Retail 8 © Copyright 2012 Kantar Retail

The Lure of Proximity – the Shopper § § § Urbanization Longer working hours – little & often trips Rising petrol prices Growth in out-of-home food & drink Decline in home meal planning Decline in pantry/trolley shopping - e. g. average of nine grocery shopping trips per household per week in the UK © Copyright 2012 Kantar Retail 9

This Trend is Also Bad News for the Hotzone © Copyright 2012 Kantar Retail

Rapid Discount Growth Creates Issues Some Signs of Progress … § Fewer checkouts than supers & hypermarkets § Skew towards PL at checkout § Historically poor at impulse / checkout shopper marketing – Aldi has installed branded confectionery / gum © Copyright 2012 Kantar Retail 11

Explosive Growth of Online is a Worry § Shopper marketing less advanced online § Lack of impulse / adjacency § Compete: 32% of shoppers prefer online, as it removes temptation § Few retailers successfully recommend linked items § Trip disruption! - Example: Ocado theoretically removes six million shopping trips per year from the UK market © Copyright 2012 Kantar Retail 12

Some Positives Though § Non-food click & collect will drive traffic § Smaller stores increasingly part of the multichannel solution § Pick-up points often at impulseheavy check-outs § 70% of pick-up shoppers make instore purchase § Increasing use of pick-up lockers by the likes of Amazon § Likely to drive footfall into impulserich c-stores, CTNs & drugstores © Copyright 2012 Kantar Retail 1 3

Now What? § Acknowledge that hypermarket traffic will be stagnant or declining in many markets: perhaps consider devoting more shopper marketing resource to other channels § Develop counter-top merchandising solutions for smaller stores § Improve abilities to develop FSDUs for use in proximity stores § Clip-strips—when executed correctly—are excellent for creating impulse in the small store environment © Copyright 2012 Kantar Retail 14

Now What? § Create merchandising solutions for queuing areas for both regular and self-checkouts § Implement an impulse strategy for the discount channel— FSDUs and checkout displays are options here § Collaborate with retailers to create impulse/adjacency in the online environment § Development of merchandising solutions for Click & Collect pick-up points? © Copyright 2012 Kantar Retail 15

Now What? § Monitor the implementation of Amazon Lockers – will there be greater impulse opportunities at Amazon’s retailer partners? § Consider on-screen impulse merchandising for selfcheckouts § Work with retailers and/or self-checkout vendors to develop merchandising solutions for self-checkout units § Create smartphone marketing strategies to anticipate the adoption of smartphone self-scanning by more retailers/shoppers © Copyright 2012 Kantar Retail 16