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© IGD 2014
IGD – delivering insights and best practice
• IGD is a research and training charity that helps the food and consumer goods industry deliver the needs of the public
• 800 members globally from the consumer goods industry
• IGD is inclusive and works across the whole supply chain
Future Proofing & Innovation
Retail & Channel
Strategies
Commercial & Category Excellence
Efficient & Sustainable
Supply Chains
Source: IGD Research
© IGD 2014
Agenda
Trends influencing grocery retailing in Europe
Strategies of the top five grocers in Europe
Final thoughts…
Source: IGD Research
© IGD 2014
Trends influencing grocery retailing in Europe
Strategies of the top five grocers in Europe
Final thoughts…
Source: IGD Research
© IGD 2014
We continue to live in exciting times…
Source: IGD Research
3 This has big implications for suppliers
It’s a generational shift… and strategies are having to change 2
1 Several forces are hitting the largest retailers at once
© IGD 2014
Macro trend one: shoppers
Source: IGD Research
1 Shoppers everywhere are aspirational
3 Access to technology is empowering shoppers
4 Rising transport costs and congestion discourages long journeys
2 Economic uncertainty affects almost everyone
5 Ethical concerns are on the rise
Five global truths about shoppers…
© IGD 2014
Macro trend two: disruptive technologies
Source: IGD Research
Smartphones and tablets
The high tech home
The internet
© IGD 2014
Macro trend three: fragmenting shopper journeys
Source: IGD Research
MULTICHANNEL ONLINE STORE BASED
© IGD 2014
Macro trend four: uncertain supplies
Source: IGD Research
Climate
Fish
Energy
Water
© IGD 2014
Macro trend five: reputational risks
Source: IGD Research, Daily Dish, Financial Times, Marketing Week
© IGD 2014
Pressure on Europe’s largest grocers is clear
Source: IGD Research
0.6%
-0.6% -0.7%
-1.1%
-0.7%
-1.4%
-1.1%
-2.0%
-1.5%
-1.0%
-0.5%
0.0%
0.5%
1.0%
Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013
Ave
rage
like
-fo
r-lik
e g
row
th r
ate
(%
)
Average like-for-like growth rate
© IGD 2014
Trends influencing grocery retailing in Europe
Strategies of the top five grocers in Europe
Final thoughts…
Source: IGD Research
© IGD 2014
Five winning strategies
Investing in operations at
home
Delegating responsibility to the ‘right’
person
Continuing focus on price
Investing in winning formats
Growing multichannel
expertise
Source: IGD Research
© IGD 2014
Re-localisation – is globalisation over?
Source: IGD Research. Flags represent markets that retailers have exited.
© IGD 2014
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013
LFL sales growth (excl. fuel)
Hypermarkets Supermarkets
Re-focusing on growth at home
Source: IGD Research, Carrefour
“Never underestimate the power of domestic rivals…”
George Plassat World Retail Congress 2013 Paris
© IGD 2014
Investing in home market operations
Source: IGD Research, Carrefour, Rewe, Tesco
2013 Capital expenditure
€2.3 billion
2014 Capital expenditure
€1.6 billion
2012/2013 Capital expenditure
€1.2 billion
Remodel 150 hypermarkets in the
next three years
Monitor performance and test new concepts
Six part plan to ‘Build a Better
Tesco’ in UK
Evolution of hypermarkets to
continue
Focus on convenience and improving Penny
Establishing multichannel
leadership
© IGD 2014
Simplifying structures, delegating responsibility
Product differences
Range differences
Promotional differences
Lack of autonomy
Slow to react
Bureaucracy costs
Source: IGD Research
© IGD 2014
Carrefour hands responsibility down
Source: IGD Research
“Excessive centralisation… killed store based
initiatives” George Plassat – interview
with LSA
Investment in people
Management decentralisation
and empowerment
Franchising in convenience
© IGD 2014
Rewe targets local shoppers
Source: IGD Research
© IGD 2014
Continuing focus on price
Source: IGD Research, Eurostat
© IGD 2014
Carrefour: delivering a balanced approach to price
Source: IGD Research
© IGD 2014
In the science of pricing: flexibility will be key
Source: IGD Research
© IGD 2014
Price matching, more than a UK phenomenon
Source: IGD Research
Amazon Price Checker E Leclerc
© IGD 2014
But… trend is evolving from value to values
Source: IGD Research
© IGD 2014
But… trend is evolving from value to values
Source: IGD Research
© IGD 2014
Discounters are driving this change too
Source: IGD Research
Lidl, Czech Republic Lidl, Portugal
More than half of the groceries we sell are Irish.
© IGD 2014
Investing in winning formats
Source: IGD Research
CORE FORMATS GROWTH FORMATS
© IGD 2014
Tesco: maximising existing stores
Source: IGD Research
Dedicated food-to-go area
Enhanced and softer signage Baby category
Premium fixtures and ranges in H&B Food first strategy
Multichannel ingrained
© IGD 2014
Estate tailoring Focus on fresh Food-to-go
Local Value
Focus on convenience is growing
Source: IGD Research
© IGD 2014
Rewe highlighting focus on fresh and food-to-go
Source: IGD Research
Fixtures create softer-looking category
Fresh, a strong area of focus Salad bar food-to-go option
Coffee station attracts shoppers Innovative packaging solutions Extensive range of food-to-go
© IGD 2014 Source: IGD Research
2013 4.0%
2018 7.0%
Growth 2013-18
124%
Cash Gain 2013-18 +£8 bn
2013 £6.5 billion
2013 16%
Growing multichannel expertise: A focus on the UK
© IGD 2014
Tesco’s evolving multichannel offer
Source: IGD Research
Pick in-store Click & Collect Delivery only
Tesco
Dark stores Click & Collect in Express stores Click & Collect anywhere
© IGD 2014 Source: IGD Research
1.5m online GM orders, up
25%
Over 3m online grocery
orders, up
11%
Online clothing
sales
+70%
Tesco’s multichannel 2013 Christmas
Source: IGD Research, Tesco (sales for six weeks to 4 January 2014 unless stated)
70% of online GM
customers used Click & Collect
© IGD 2014
Netherlands: channel and scale can grow quickly
Source: IGD Research
2012 2013 2014
Oct Jan March Nov Feb May September
© IGD 2014
Trends influencing grocery retailing in Europe
Strategies of the top five grocers in Europe
Final thoughts…
Source: IGD Research
© IGD 2014
Final thoughts on the future…
Source: IGD Research
The winners of the future are no longer so obvious…
And how they are going to win is changing
Channel specific strategies are increasingly in focus
Shoppers’ promotional fatigue creates opportunities
Value and values allows retailers to differentiate
Large retailers are looking for advice to target their offer
1
2
3
4
5
6
© IGD 2014
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