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21 st March 2007 How to sell to Promiscuous Shoppers Presented by Moxie Market Concepts

How to sell to Promiscuous Shoppers

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How to sell to Promiscuous Shoppers. Presented by Moxie Market Concepts. Today’s Presentation. What is shopper promiscuity worth? Why are suppliers starting to consider shopper promiscuity in their category and channel strategies? Why are shoppers promiscuous? - PowerPoint PPT Presentation

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Page 1: How to sell to Promiscuous Shoppers

21st March 2007

How to sell to Promiscuous Shoppers

Presented by Moxie Market Concepts

Page 2: How to sell to Promiscuous Shoppers

21st March 2007

Today’s Presentation

•What is shopper promiscuity worth?•Why are suppliers starting to consider shopper promiscuity in

their category and channel strategies?•Why are shoppers promiscuous?•What is promiscuous shopper behaviour?•How do we leverage it for profit?

Goal: to increase your share of the pie…

Page 3: How to sell to Promiscuous Shoppers

21st March 2007

What is shopper promiscuity worth? Some key category departments…

Departments 2006 % of total 2005 % growth grocery % of total sales

Total market sales $ mill

Total non grocerys

ales $ mill

Shelf Staple food 7651.4 20.7% 7271.4 5.2% 73% 10,417 2,766

Dairy Case food 6152.0 16.6% 5789.1 6.3% 62% 9,851 3,699

Snacks 4168.3 11.3% 4013.8 3.8% 66% 6,353 2,185

Drink - cold shelf stable 2941.8 7.9% 2730.8 7.7% 54% 5,480 2,538

Frozen Food 2361.2 6.4% 2233.3 5.7% 72% 3,280 918

Drink - hot shelf stable 1053.0 2.8% 967.6 8.8% 81% 1,297 244

Total food 24327.7 65.7% 23006.0 5.7% 66% 36,677 12,349

Cigarettes 3800.0 10.3% 3626.0 4.8% 60% 6,333 2,533

Household Care 3183.8 8.6% 3036.2 4.9% 78% 4,096 912

Personal Care 2804.6 7.6% 2718.5 3.2% 39% 7,162 4,358

Pet Care 1148.7 3.1% 1072.1 7.2% 75% 1,532 383

Baby 811.7 2.2% 776.9 4.5% 57% 1,415 603

Health Care 704.3 1.9% 670.1 5.1% 28% 2,552 1,848

Magazines 232.0 0.6% 223.1 4.0% 30% 773 541

Total non food 12685.0 34.3% 12122.8 4.6% 53% 23,864 11,179

Provisional total 37012.7 100.0% 35128.8 5.4% 61.1% 60541 23528

Pick up percentage 85%     85%

Total centre store 43,544 69.2% 35,129 71,225 27,680

Page 4: How to sell to Promiscuous Shoppers

21st March 2007

Suppliers are increasingly looking to shopper promiscuity to help ‘ease the squeeze’…

Page 5: How to sell to Promiscuous Shoppers

21st March 2007

Page 6: How to sell to Promiscuous Shoppers

21st March 2007

Need

• Increase top line sales whilst reducing channel trade spend, including alternative profit generating initiatives.

• Understanding how to proactively manage range strategy – new lines, deletions and PL

• Understanding how shoppers shop, trends and possible implications for their business

• Reduce the dependence on one channel/two customers

• Reducing CODB including supply chain efficiencies

• Understand how non-grocery channels operate, the competitive environment and what the need sets are

Problem

• Growth of sales and profit in the majority of categories in Grocery is flat. Most available levers (price, promotion, space) have already been pulled

• Retailers believe their point of difference is price, despite evidence to the contrary.

• Grocery retailing is a duopoly and they are squeezing suppliers harder on margin, supply chain, trade spend and ranging including PL

• FMCG suppliers playing in non-grocery channels are there by default, and not really having a strategy to optimize performance

Key needs of suppliers in the grocery channel

Page 7: How to sell to Promiscuous Shoppers

21st March 2007

But what about the shopper?

Need

• Solutions for all touch points around the store. More interactivity and entertainment - shopper communication and education

• Addressing key issues of health

• Want to get in and out quickly - convenience focus

• True convenience stores with broader convenience offers

• Willing to shop in different channels for solutions

• Occasion based solutions

Problem

• No differentiation between retail stores. Grocery shopping is a mundane experience

• Health and convenience trends not adequately addressed

• Shopper visits are

increasing yet basket sizes are decreasing

• Now shop across more channels

• Retailer price focus means they are ignoring other shopper decision criteria

All points to the need to change channel mix and extend beyond grocery.

Page 8: How to sell to Promiscuous Shoppers

21st March 2007

Shoppers are starting to look outside grocery: no longer fulfils their primary shopping needs.

• Despite the fact that grocery looks like it has grown in recent reports, it has been driven by inflation and lateral growth through opening new stores, NOT because people are shopping in grocery more. Overall they are shopping in grocery less. WHY?• Shoppers are becoming promiscuous – grocery can no longer meet

their needs, because the market is no longer comprised of homogenous shoppers. ‘Traditional families’ are now no longer the majority. Single-person households are now 1 in 5 in Australia. There is now a vast diversity of ethnic and socioeconomic groups comprising the Australian population. The rich are getting richer and the poor are getting poorer, so the ‘middle’ has dropped out of the market.• Traditional FMCGs are grounded in the mainstream. But the market

is shifting in to premium, niche, gourmet offers (coffee, coffee, dips). People are trading down in commodity categories to fund them trading up in the categories they care about. And what that means is shoppers are now increasingly about destination because they want specific products for specific occasions. Hence the growth of grocery quick trip instead of main shop.• If the grocery offering continues to be mainstream it will lose share

of shopping occasions to niche / destination category retailers.• Growth of other channels (e.g. Specialty Stores, P&C, DDS, $

Stores) shows that shoppers have more options and are starting to use them.

Page 9: How to sell to Promiscuous Shoppers

21st March 2007

Evidence this is happening…

Sydney Morning Herald, Danielle Teutsch, 24.6.07

AUSTRALIANS are shunning the supermarket aisles and heading to old-fashioned fruit and vegetable shops to buy fresh produce.

Greengrocers are attracting half of all shoppers compared with 43 per cent in 2005, the 2006 Nielsen ShopperTrends Report found.

Bakers, butchers and fishmongers are also becoming more popular, eating away at supermarket patronage.

Nielsen market research client services director Anton van den Berg said supermarkets had lost patronage for fresh food over the past five years. "Speciality food retailers have picked up most of that," he said.

"It's a desire for quality and range of choice. There's a growing emphasis on 'back to the community' type of shopping.“

Mr van den Berg said people also liked going to their local greengrocer or baker for the convenience."By the time you get to the shopping centre, park your car and take the escalator up, you've taken half an hour," he said.

Page 10: How to sell to Promiscuous Shoppers

21st March 2007

What does promiscuous shopper behaviour look like?

• People looking for destinations (e.g. Macro)• People trading down (on low emotion items)

to trade up (on things they care about)• People going premium / niche• People going big box• People supporting my local / community and

relationship focus. Tribalism as a macro trend.• Online shopping (not yet a major trend)

Examples: • I buy my meat and vegies from local butcher and

fruit & veg store because they know me, their food is fresher and I support my local community• I buy my personal care products at the

pharmacy – they always have the brands I buy and I don’t have to negotiate the queue

Page 11: How to sell to Promiscuous Shoppers

21st March 2007

Promiscuous behaviour differs by social segment

Specific groups behave differently:•Higher end punters (e.g. SINKS & DINKS) that have

specific needs, its not about price OR they’ll trade off on commodities to fund premium.• Lower socio-economic households that are promiscuous

because they are driven by low budgets & price. Neutral Bay/ Cremorne vs. Liverpool. They go to discounters.• BUT the REMAINING middle class people are shopping

at Aldi – trading down on low care categories to trade up on high.

Polarizing trend: Big Box vs.

Premium Specialty Stores

Page 12: How to sell to Promiscuous Shoppers

21st March 2007

How do you leverage it?

The BIG question:

What are the shopper & consumption occasions for your category and can they be found outside grocery?

Example occasions:

•meal •treat •instant gratification •destination (e.g. Bunnings) •emergency (e.g. personal care, pharmaceuticals)

Page 13: How to sell to Promiscuous Shoppers

21st March 2007

What are the possible alternative channels for your product?

Example non-grocery channels:• Petroleum and Convenience•Route (independent retailers e.g. butchers, fruit

& veg shops, ‘Ma & Pa’ corner stores, newsagents)• Entertainment & Leisure (cinema, theme parks,

video stores)• Foodservice (restaurants, cafes, takeaway

outlets, quick service restaurants e.g. McDonald’s , hospitals, institutions etc.)• Education (schools, universities)• Liquor• Specialty channels (e.g. Pet Specialty,

Hardware)•Mass discounters (Go Lo, Reject Shop etc.)

Page 14: How to sell to Promiscuous Shoppers

21st March 2007

Workshop

•What are the tell tale signs of a category (or company) that needs to leverage alternative channel potential?•What Shopper signs are there?•Where do you get the data from?•What else do I need to know?

Page 15: How to sell to Promiscuous Shoppers

21st March 2007

Things you need to know when assessing alternative channels

• Size of prize: number of outlets, current market value and what % of that you can realistically get•RTM: economies of scale, ease of

execution versus size of prize• Key purchase drivers in the channel –

both shopper and trade

… and assess brand fit and impact of channel choice on brand positioning

Page 16: How to sell to Promiscuous Shoppers

21st March 2007

How to sell to promiscuous shoppers???

•Match your product to both shopper missions and the channels shoppers are going to fulfill them

• Be where they would expect to find you

• Be relevant to how the shopper shops the channel

Thank you