Issuu on Google+

WHAT’S HAPPENING IN THE FOOD MARKETING ENVIRONMENT? “CATCH THE NEXT WAVE!”


Dr. Richard J. George Professor & Chair Food Marketing IFDA/Gerald E. Peck Fellow Haub School of Business Saint Joseph’s University

Celebrating 50 Years of Food Marketing Education (1962-2012)


“The ability to learn faster & act quicker than the competition is often the only sustainable competitive advantage a company can have�

Arie de Geus


FOLLOW THE $$$$$


RETAIL TRENDS

Competition heats up!


Everyone Will Try To Sell Consumers Their Next Meal!!!


Many Different Trade Channels Competing for Consumers


Those With Winning Streaks Are Innovating & Communicating On More Than Just Value 10

% Change in Same-Store-Sales

Discretionary Spending

Value & Convenience

Stock-Up & Save

8 6

4 2 Sam's Club

Costco

WholeFoods

Source: company press releases; *from 2008 through latest monthly or quarterly news releases – excluding gas

Kroger

Q Quarters

Safeway

14 15 14

SUPERVALU

DollarGeneral

6

M Months

FamilyDollar

Winning Streaks*

DollarTree

14 11

Target

6

Kmart

CVS

22 24

Walmart

Rite Aid

Walgreens

Nordstrom

Macy's

Kohl's

2011

JCPenney

-4

HomeDepot

-2

Lowe's

0

3

14

7

15 20


Drug & Small Box Dominate List Of Chains Adding Most Stores 2,610

Walgreens

1,816

CVS

1,648

Dollar General

1,355

Rite-Aid

1,239

Dollar Tree

1,177

Chevron Texaco

1,104

7 Eleven

974

Family Dollar

875

SUPERVALU Couche Tard

Drug Dollar C-Store Grocery

657

Change in store count 2005 to mid-2011 Source: Nielsen TDLinx Copyright Š 2011 The Nielsen Company. Confidential and proprietary.


A Brief History Lesson!


Overview of Walmart’s Formats in the US Launched Store Name

1962

1983

1988

1998

2008

2009

2011 * As of Jan. 31, 2011

Average size Store count*

106,000 sq. ft

133,000 sq. ft

184,000 sq. ft

42,000 sq. ft

17,000 sq. ft

39,000 sq. ft

~3,000 sq. ft

708

609

2,907

182

4

2

1

Detail General merchandise discount store with approx. 120,000 items Warehouse club with approx. 5,500 items General merchandiser with a full grocery, has approx. 142,000 items Grocery store with approx. 29,000 items Limited assortment, quick-service grocery store Hispanic focused grocery store, carries approx. 13,000 products Convenience store for college student audience


Store Operations: Then vs. Now 2006

2009 2010


By Q2 2010, the Pallets Were Coming Back – Variation among stores – Pallets returned to Action Alley, and throughout the box

“The store manager will have a little bit more autonomy in what goes into the store and a lot more autonomy on how those things that go into the store are featured and displayed”- Bill Simon, March. 2011


Pallets: How it Looks Today‌

70% = Headquarters 30% = local store decision


Walmart Express to Open in Q2 To compete with Dollar General? Walgreens? – Walmart Express stores will be: • Approximately 15,000 sq ft • Designed for urban & rural locations – Chicago – Reportedly to be at 83rd St & Stewart Ave

– Arkansas – Will be near Bentonville

“When we get this thing • Some will include a pharmacy right, these are going to • Grocery, including frozen and refrigerated come real fast and foods – “Varying levels” of fresh

we're real excited ” – Bill Simon, March 2011


Walmart on Campus Opened in Jan 2011 Thoughtfully assorted for college students • • • •

~ 3,000 sq ft store U of A, Fayetteville Campus ~2,800 SKUs (~50% grocery) Categories included: • Edible grocery • Non-edible grocery • Health & beauty • Home – cookware & dishware • Sporting goods • Electronics • UofA apparel

• Services: • photo processing • pharmacy

“It's doing way better than anybody anticipated” – Bill Simon, March 2011


By End Of 2011, Target Will Have Added Fresh Grocery To 850 Stores

Photos: Bill Porter/Milwaukee Journal Sentinel & Bill Wippert/Buffalo News


TARGET IS NOT FINISHED INNOVATING: NEXT ARE THE URBAN STORES

Target plans to open four urban stores in 2012 & 2013 (Chicago, Seattle, Los Angeles & San Francisco) Photos: Bill Porter/Milwaukee Journal Sentinel & Bill Wippert/Buffalo News


“More Than 2,000 People Were In Line Prior To The 7 A.M. Opening” 1/3rd of Wegmans’ new store devoted to prepared foods, 15k liquor dept & 300-seat cafe

“70,000 products, including 300 cheeses, 700 varieties of fruits and vegetables and 2,500 varieties of wine.” Source: Facebook (Tobias Biedenkopf) & allevatoarchitects.com


A Fun Place To Go For Food – Shoppers Use Touch Screens To Place Orders

Source: Public Domain (store interior), Company Website (small images), Gary M. Baranec/Associated Press (touch screen)


Food Fight: Grocers Seize The Opportunity A new wave of lifestyle store formats

Source: Company websites; supermarketnews.com


“Traditional” Food Retailer Innovations


What Is a Pharmacy These Days?


Know What Business You Are In • “We’re not a drug store. Rather we are a convenience store with this thing in the back called a pharmacy.” – An Eckerd’s executive


Robo Shops Are In Japan And England And Slowly Entering the US


Dollar Stores & Limited Assortment Stores: Fastest Growing Format


Dollar Formats U.S. fastest growing retail segment Double-digit sales increases per year for each of past 5-years $50+ Billion industry +13.8% increase last year


Dollar Shoppers 32% of U.S. consumers now shop in Dollar stores monthly. 1 in 5 households â&#x20AC;&#x201C; heavy shoppers Accounts for 84% of sales 56% have incomes < $25,000 26% have incomes $25K to $45K 61% penetration â&#x20AC;&#x201C; total U.S.


Goal of More Food in Dollar Stores Customers purchase food more frequently, therefore visit stores more oftenâ&#x20AC;Śfood gets them in the door to explore other products.


Dollar General Market 20000 total square feet 8,000 square feet of grocery Produce first in line â&#x20AC;&#x201C; bagged Limited processed meat Pre-packaged meat


Perhaps a Bigger Threat to C Stores A neighborhood convenience store without the convenience store prices.


Amazon Adds Soup To Its Online Offerings The retailer’s US customers can now buy over 20,000 basic packaged foods online, including… 12-packs of Campbell’s Chicken with White and Wild Rice for $12.99. 4-Schwan’s Chicken Pot Pies for $9.99. “We look on this as a drug store, and you are going to find food items in a drug store.”


Amazon – A Year Later Originally 2000, Now 22000 items 10% available at a 15% discount in a program called “Subscribe & Save.” Routine items – coffee pods, shampoo, laundry detergent, toilet paper, razors, etc. Customized delivery schedule – 1, 2, 3, or 6 months. “Pay as You Go,” Free shipping, email reminders, no customer commitment.


How Big Will the Internet Be For Food? 2006 â&#x20AC;&#x201C; Food & Beverage 2011 â&#x20AC;&#x201C; Food & Beverage (est.)

$6.2B $13.7B

Compare to the biggest online category of computer hardware & software $24.8 Plus every on-line purchase takes trips out of the store!


Selling Foods That Go With Their Products

For example, they sell Raoâ&#x20AC;&#x2122;s Homemade Pasta Sauce with the pots, utensils, spices, and oils.


Doesnâ&#x20AC;&#x2122;t It Make Sense to Sell Food When You Display the Dream Kitchen?


IKEA & FOOD Food sales over $1 billion (4.5% of total revenue of $22 billion). Customers who visit IKEA restaurants spend an extra $40.00 on average on furniture.

Now launching IKEA branded easy-toassemble meals.


BUYING TRENDS

Changing Value Proposition!


Walmart Partners With Manufacturers On “Family Meals For Less”

Source: www.walmart.com/familymeals


Great Pizza War Continues & Frozen Pizza Units Off 5% In Food Retailers

Source: Domino’s, Papa John’s, Pizza Hut (in alpha order); Nielsen Scantrack, Total U.S. FDM (including Walmart


One Million Purchased!

Source: Living Social


Strong Focus On Easy Meals With How-to Videos

Source: Dollar General


Value Is Not About Price, Itâ&#x20AC;&#x2122;s About The Balance Between Price & Benefits Value Consumer = Price Remaining Yogurt

Dollar Sales -6% Unit Sales -5%

Value Consumer = Benefits/Price Total Greek Yogurt

Avg Price 107% higher Dollar Sales +133% Unit Sales +117%

Source: Nielsen Scantrack, Total U.S. FDM (including Walmart) 52 weeks ending 09/03/2011 (vs. prior year); UPC-coded


Value Is Not About Price, Itâ&#x20AC;&#x2122;s About The Balance Between Price & Benefits Value Consumer = Price

Value Consumer = Benefits/Price

Regular Eggs

Specialty Eggs

Dollar Sales +9% Carton Sales -0%

Avg Price 44% higher Dollar Sales +16% Carton Sales +12%

Designer Eggs

Avg Price 76% higher Dollar Sales +16% Carton Sales +14%

Source: Nielsen Scantrack, Total U.S. FDM (excluding Walmart) 52 weeks ending 09/03/2011 (vs. prior year); UPC-coded


CONVENIENT CONSUMER SOLUTIONS

Technology & Social Media Lead the Way!


Food: The Social Network Of The Ages Cookbook sales +10% Total Book sales -6%

Primetime viewing of the Food Network reached 1.15 million individuals; average viewing minutes at 64

Food & cooking websites attracting 66 to 86 million unique monthly visitors

Source: Nielsen BookScan; Nielsen NetView, Home & Work; Nielsen Media Photos: Food Network; Thinkstock.com;


Walmart Funneling People Online With Expanded Assortment & Home Delivery

Source: Walmart.com Copyright Š 2011 The Nielsen Company. Confidential and proprietary.


Toronto-based Richtree Market Restaurants Inc. Opens First OneStop Restaurant & Organic Market

ChicagoMag.com reported in August 2011—

“Westfield Old Orchard mall turns the food court concept on its head with this culinary theme park made up of open-kitchen-type food stations and a 6,000-square-foot grocery store.” Source: Cindy Kurman (photos)


Retailers Partnering With Restaurants

The Detroit News reported on Oct. 1, 2011—

“Quiznos to open store inside Meijer Partnership parallels Wal-Mart's Subways.”

Source: Detroit News Copyright © 2011 The Nielsen Company. Confidential and proprietary.


SUMMARY

CHANGE OR DIE!!!


An Eating Occasion Will Occur Whenever & Wherever “Hunger & Convenience” Collide.


Are Food Marketers Ignoring the Emerging Food Distribution Channels?

Are they putting all their eggs in one basket?


UpdateRetail & Outlook 2015 Copyright Š 2011 The Nielsen Company. Confidential and proprietary.


Dr. Richard J. George Professor & Chair Food Marketing IFDA/Gerald E. Peck Fellow Haub School of Business Saint Josephâ&#x20AC;&#x2122;s University

Celebrating 50 Years of Food Marketing Education (1962-2012)


Истории успеха ритейл-сетей США