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Todd HaleConsultant, NielsenPrincipal, Todd Hale LLC
Tracking Trends That Matter
Retail Landscape & Performance
U.S. retail current state
Economic indicators
improving, but headwinds remain
Total store sales soft; growth in
perimeter continues
Retail format no guarantee of
success
Bifurcation of wants:
health & wellness versus indulgence
Total store gains weaken
Source: Nielsen Answers
$790 $806 $829 $838 $841
254 254 255 255 252
52 weeks ending1/4/14
52 weeks ending1/3/15
52 weeks ending1/2/16
52 weeks ending12/31/16
52 weeks ending12/30/17
Billi
ons Dollar Sales
Unit Volume
Total U.S. All Outlets Combined (plus Convenience); All Departments; upc-coded
Dollar Trend +2.0 +2.8 +1.1 +0.3
Unit Trend -0.0 +0.5 +0.1 -1.2
Avg U Price Trend +2.0 +2.3 +1.0 +1.6
% U sold on Promo 32 31 31 31
$ sales up just 0.3% as unit
sales fell 1.2% & despite
moderate price increase of 1.6%
Same-Store-Sales Growth: average latest 52-weeks
Retail format no guarantee of success
-15%
-10%
-5%
0%
5%
10%
Home Depot
Lowe's
Walgreens
CVS
Rite Aid
Costco
Sam's Club
Sprouts
Publix
Kroger
Albertsons
Whole Foods
Dollar General
Dollar Tree
Walm
art
Target
Kmart
Source: Company press releases (excluding gas)
Same-Store-Sales Growth: last six reported quarters
Improving trend for top chains
Source: Company press releases (excluding gas)
-2%0%2%4%6%8%
10%
1st 2nd 3rd 4th 5th 6th(current)
Costco Walmart Kroger
Costco sales heavily skewed to affluent; online sales up 34%in latest 24-weeks
Walmart reported 23% growth in U.S. e-commerce net salesin the 4th quarter, but down from 44% forthe entire year
Kroger reported 90% increase in digital revenue in 2017
All Departments (Dollar Sales & Trend)
Growth slips in all channels
-1.0%
-1.3%
1.4%
1.6%
$0
$50
$100
$150
$200
$250
$300
$350
$400
-2.0% -1.5% -1.0% -0.5% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5%
Billi
ons
1.3%
1.9%
1.9%0.0%
Bold Italics = same period year ago
*Club Stores, Dollar Stores, Mass-Merchandisers, Supercenters, & MilitarySource: Nielsen Answers, Total U.S., 52 weeks ending 12/30/2017 (vs. year ago)
Supermarkets
C-Stores
Drug Stores
Value*
Size of bubble denotes dollar share of Total U.S. xAOC, including Convenience Stores
UPC-coded items
Expansion from all formats but Drug & Mass Merchandisers in 2017 vs. 2016
Small formats & value drive long-term growth
ConvenienceStores Drug Stores Supermarkets
$2MM+ Dollar Stores Supercenters MassMerchandisers
WarehouseClubs
2005 140,655 38,513 31,590 18,579 2,462 4,578 1,0672016 154,535 43,636 34,114 29,415 4,327 3,507 1,3702017 154,958 43,169 34,178 30,873 4,393 3,254 1,387
U.S. Store Counts88% of long-term growth & 389% of short-term growth
from niche formats*
*Niche formats include Aldi, Save-A-Lot, Lidl, Trader Joe’s, Whole Foods, Sprouts, The Fresh Market, and Natural GrocersSource: Nielsen TDLinx, U.S. counts are for open stores during month of December 15, 2017
Increases in U.S. Store Counts: 2017 versus 2007
Small formats dominate the list
285295305335353472519548
740886
1,0951,259
1,5851,8841,994
2,2273,4263,554
6,20211,298
QuikTripGrocery Outlet
Kroger Corp GroceryPilot Flying J
Cumberland FarmsSunoco
AndeavorCasey's
GPM InvestmentsAldi
Walmart BannerAhold Delhaize
Marathon/SpeedwayWalgreensAlbertsons
7-ElevenCVS
Couche TardDollar General
Dollar Tree
10 of top 20 chains adding the most stores were c-stores
Source: Nielsen TDLinx , U.S. counts are for open stores during month of December
DollarC-StoresDrugGroceryMass Merchandisers
U.S. Store Counts for 2017
Small formats winning race for scale
1,7331,8361,9602,011
2,2792,324
2,7923,401
3,6443,809
4,3864,5004,5194,637
6,5947,848
8,3389,732
14,43414,585
AldiTarget - Total
Ahold DelhaizeCasey'sSunoco
AlbertsonsKroger Corp Grocery
Exxon MobilBP
Chevron TexacoMarathon/Speedway
Rite AidShell
Walmart BannerCouche Tard
Walgreens7-Eleven
CVSDollar General
Dollar Tree
DollarC-StoresDrugGroceryMass Merchandisers
Source: Nielsen TDLinx , U.S. counts are for open stores during month of December
9 of top 20 chains with the most stores were c-stores
Geared to meet the needs of the Millennial shopper & attract urban customers
3rd DGX urban small format
• Store locations: Raleigh, Nashville, Philadelphia
• Square footage ranges from 3,400 to 4,800Stores range from
3,400 to 4,800 square feet
Sources: Dollar General; Chain Store Age
Plans to have 100+ by end of 2019
Source: Target
Target Small Formats:• Expand into key urban neighborhoods & college campuses• Customize for each community• Function as stores & hyper-local fulfillment centers
…while “Publix is betting the next big thing will be the continued growth of
organic foods”
Publix plans to open its first newly redesigned GreenWise Market concept store in
Tallahassee, Florida in late 2018 and a second store in Mount Pleasant, South Carolina in
early 2019. “Unlike typical Publix stores, which measure 45,000 square feet … GreenWise
stores will be about half that size, and feature scores of unique items for consumers.”
Ahold Delhaize & Krogerpull back on fresh-focused concept
stores…
Sources: Company websites and Business Observer of Florida
Future Retail Landscape
Who will fall prey to e-commerce next?
-6,425-4,125
-1,066-865-791-638-604-457
2355931,0411,295
2,2492,2652,602
3,4223,528
5,6328,664
11,249
Consumer ElectronicsApparel
BooksOfficeMass
Department StoresHome/Bed/Bath
ToyClub
Sporting GoodsHome Improvement
SupercentersSupermarkets
AutoPet
Discount DepartmentLiquor
DrugConvenience/Gas
Dollar
Difference in Open Store Count 2017 versus 2007
$0$50
$100$150$200$250$300$350$400$450$500
Billi
ons
U.S. E-Commerce Sales
Linear (U.S. E-Commerce Sales)
Vuln
erab
ility
Scal
e
Up $316B since 2007
Sources: Nielsen TDLinx, U.S. counts are for open stores during month of December; U.S. Census Bureau, U.S. Retail E-Commerce Sales (released on 2/16/2018)
“A TSUNAMI OF STORE CLOSINGS”
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
2008 2016 2017 2018 2019
Major Chain Store Closings
2008 2016 2017 2018 2019
CLOSED
Source: businessinsider.com; Cushman & Wakefield
Forecasted
Modifying the box experience“US retailers lure customers with spas, parties and restaurants … After a torrid year of historic bankruptcies and store closures, retailers are getting creative to convince people to buy in store instead of on their laptops at home.”
• Tiffany’s flagship store on Manhattan’s Fifth Avenue offers a restaurant on the fourth floor that for $29 you can have an actual Breakfast at Tiffany’s.
• Saks unveiled a “wellness” spa at its flagship store, complete with a salt bath chamber and fitness classes at a “prison-style boot camp”.
• American Eagle is offering free laundry facilities to students at a new concept store. • Urban Outfitters is selling pizza alongside Adidas hoodies in some shops.• Walmart is hosted 20,000 “holiday parties”, offering a Santa Claus and toy
simulations, to lure people to its stores for the 2017 holiday season.
Audrey Hepburn starred in the movie “Breakfast at Tiffany’s” (1961)
Source: Financial Times
What’s Selling?
Edible Departments (excluding Alcoholic Beverages)
Deli, produce & meat have over delivered
49.0
20.4
12.0 7.7 5.5 3.9 1.5
52 Weeks Ending 12/30/2017
$ Share of Gains from 2013 to 2017
DairyFrozenBakeryMeatDeliProduceGrocery
Performance Index(Share of 2017 gains indexed to
share of sales in 2013)10
33
101
146
445
339
91
Source: Nielsen Answers, Total U.S. – All Outlets Combined (plus Convenience), 52-weeks ending 12/30/2017 versus 4-years ago
But ½ of gains from
grocery
Non-Edibles Departments (including Alcoholic Beverages)
“On the corner of happy & healthy”
26.9
26.1
20.8
10.79.64.41.5
52 Weeks Ending 12/30/2017
$ Share of Gains from 2013 to 2017
Beauty Care
Pet Care
Personal Care
Household Care
Tobacco & Alternatives
Health Care
Alcoholic Beverages
Performance Index(Share of 2017 gains indexed to
share of sales in 2013)28
64
68
55
86
195
166
Source: Nielsen Answers, Total U.S. – All Outlets Combined (plus Convenience), 52-weeks ending 12/30/2017 versus 4-years ago
All Outlets Combined (plus Convenience) – Dollar Trend
Price & demand behind short-term trend
0%-4%
-2%-2%
0%0%
0%0%
1%1%1%
1%2%
2%3%
7%
Total All DepartmentsGeneral Merchandise
Beauty CareDairy
BakeryPersonal Care
Household CareGrocery
Frozen FoodsPet Care
MeatAlcohol
Tobacco & AlternativesHealth Care
ProduceDeli
Source: Nielsen Answers, Total U.S. – All Outlets Combined (plus Convenience), 52 weeks ending 12/30/2017 (vs. year ago)
Largest share in supermarkets but off
19.8
15.2
16.3
3.8
18.4
17.9
15.9
4.7
Supermarkets
Value*
Drug Stores
C-Stores
Private Brands Dollar Share
23.4
18.4
17.4
5.2
22.4
21.5
16.6
6.5
Supermarkets
Value*
Drug Stores
C-Stores
Private Brands Unit Share
52 Weeks Ending: 1/4/2014 1/3/2015 1/2/2016 12/31/2016 12/30/2017
Source: Nielsen Answers, Total U.S.;*Club Stores, Dollar Stores, Mass-Merchandisers, Supercenters, & Military
Food Fight
Out-of-home growth slows
2.2
-4%-2%0%2%4%6%8%
10%12%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Food Services & Drinking Places: U.S. Total
$ % Change vs. Year AgoSource: US Census : Monthly Retail Trade and Food Services, 722: Food Services and Drinking Places: U.S. Total, Seasonally Adjusted Sale, % $ Change vs. Year Ago
Latest Period Ending January 2018
% Comp-Same-Store Sales Growth: latest 52-weeks
What matters: convenience & good prices
0%1%
1%2%
3%3%
4%4%
6%8%
Papa John'sDunkin' Donuts
KFCWendy's N.A.
Burger KingStarbucks Americas
McDonald'sTaco BellChipotle
Domino's
At least 50% or more of sales from the top 3 pizza chains are from digital orders
Source: Company Press Releases – U.S. Results; dominos.com; fools.com
But not all chains are growing
-5%
-3%
-2%
-2%
Applebee's
Sonic Drive-In
Pizza Hut
IHOP
Source: Company Press Releases; fortune.com 2/20/2018
Comp-Same-Store Sales Growth: latest 52-weeks
“Applebee’s isn’t quite done closing restaurants on its way to becoming what it hopes will be a
better performing company.The casual dining chain’s parent
company Dine Brands Global (DIN, +0.44%) said on Tuesday
it would close as many as 80 Applebee’s restaurants this year
on top of the nearly 100 it shuttered last year, while
opening between 10 and 15 as it looks to improve the restaurant’s
fortunes.”
Full-service restaurant & food court
Source: photos by Todd Hale, LLC
You don’t need to go to the center of the store!
Walking the sweet goods gauntlet
Source: photos by Todd Hale, LLC
“relaxing, multi-sensory experience”
Source: Gelson’s Markets; founded in 1951, operates 27 full-service specialty grocery stores in Southern California
“Our aim is to continually create new experiences in our stores and to make them more beautiful, easy to move through, and enjoyable. We want Gelson’s to be a unique place where people can try exciting food concepts, have a drink in a social setting, and feel like a new culinary discovery is just around every corner.” President & CEO Rob McDougall.
“As traditional hangouts shrink, grocery stores are becoming the place where people meet to socialize – even fall in love”
“Finding Love In The Frozen-Food Aisle”
Source: The Wall Street Journal, March 12, 2018; photo by Todd Hale, LLC
“Parents now bring their children here to play,
retirees gather for Bingo, and singles find romance.”
“As traditional hangouts shrink, grocery stores are becoming the place where people meet to socialize – even fall in love”
“Finding Love In The Frozen-Food Aisle”
Source: The Wall Street Journal, March 12, 2018; photo by Todd Hale, LLC
“I once dated a women from the potato section at
Mariano’s”… “The next thing you know we’re
at the wine bar and then we’re dating”
Rutter’s adds 25+ seafood items to extensive menu
Source: Rutter’s
Connecting With Shoppers That Matter
Share of Retail Channel Shopping Trips
Except in c-stores, females drive trips
54% 37% 37% 34% 30% 26% 25%
46% 63% 63% 66% 70% 74% 75%
C-Store Club Grocery Drug Supers Mass Dollar
2004
Males Females
51% 38% 36% 32% 30% 28% 26%
49% 62% 64% 68% 70% 72% 74%
C-Store Club Grocery Drug Supers Mass Dollar
2017
Males Females
Source: Nielsen Homescan, Total U.S., excludes gas-only or Rx-only trips
UPC-coded & non-UPC-coded items
Simply Me Beauty™ was created to appeal to millennial women; all items are affordably priced between $3 and $5
7-Eleven launches private label make-ups
Source: 7-Eleven
Distribution of Dollars – Household Income
Is there an opportunity for upscale c-stores?
11% 6% 11% 11% 13% 14% 21% 24%10%6%
9% 10% 12% 13%16% 17%
9%6%
9% 9%10% 10%
12%12%
9%
7%
8% 8%9% 10%
11% 9%
14%
13%
14% 14%13% 15%
11% 13%17%
18%
17% 17%15%
16%13% 11%31%
43%31% 31% 27% 22% 16% 14%
Total Outlets Club Mass Grocery Drug Supers Conv/Gas Dollar
<$20k $20k-29.9k $30k-39.9k $40k-49.9k $50k-69.9k $70k-99.9k $100k+
Source: Nielsen Homescan, Total U.S., 52-week period ending 12/30/17UPC-coded items
Expanding its delivery service with Grubhub in select locations in NJ
“Wawa growth through it’s restaurant appeal”
“The retailer's first Washington, D.C. location also stands out for being a non-gas location…
With more than 9,000 square feet to work with, Wawafound a lot of room to boast new features — like an interactive social media board and touchscreen order kiosks located throughout the store, not just at the foodservice station — and offer Wawa's newest foodservice initiatives, including built-to-order salads and nitro cold brew coffee.”
“The urban customer is time-strapped and looking to get in and out quickly,” said Chris Gheysens, the company’s president and chief executive. “We’re not thinking about this as a convenience store, but more of a restaurant-style store. Especially when you take out the fuel, it competes with more of a Panera than a 7-11.”
Sources: Wawa and Convenience Store News
Digital Shopping & Digital Retailing
E-commerce growth accelerates Q4 2017, 119
Q4 2017, 16.9
Q4 2017, 9.1
-20%
-10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
$0
$20
$40
$60
$80
$100
$120Q
4 20
00
Q4
2001
Q4
2002
Q4
2003
Q4
2004
Q4
2005
Q4
2006
Q4
2007
Q4
2008
Q4
2009
Q4
2010
Q4
2011
Q4
2012
Q4
2013
Q4
2014
Q4
2015
Q4
2016
Q4
2017
Billi
ons Total U.S. Retail Sales:
• $1,233.9B for Q4 2016• $1,304.3B for Q4 2017
Total U.S. Retail E-Commerce Sales • $101.8B for Q4 2016• $119.0B for Q4 2017
E-Commerce $ %Change vs. Year Ago• 14.4% for Q4 2016• 16.9% for Q4 2017
E-Commerce Share of Total Retail Sales• 8.2% for Q4 2016• 9.1% for Q4 2017
Source: U.S. Census Bureau, Quarterly U.S. Retail E-Commerce Sales (released on February 16, 2018)
Amazon Performance Metrics
Amazon ends 2017 in impressive fashion
Source: Company Reports
27%
22%20% 20%
27%31%
23%25%
34%38%
2012
2013
2014
2015
2016
2017
Q1'
17
Q2'
17
Q3'
17
Q4'
17
% Change in Net Sales
-39
274
-241
596
2,371
3,033
724
197 256
1856
2012
2013
2014
2015
2016
2017
Q1'
17
Q2'
17
Q3'
17
Q4'
17
Net Income (millions)
2016 online dollar sales of supermarket-type products (millions)
Amazon online grocery equivalent to next nine
$291
$300
$347
$600
$725
$788
$795
$833
$2,000
$6,200
Wakefern/ShopRite
Target
Albertsons
Fresh Direct
Costco
Kroger
Blue Apron
Ahold Delhaize
Walmart
Amazon
SN’s Digital Top 10
Source: supermarketnews.com – July 6, 2017
Amazon’s growing physical footprint
“Amazon firing on all cylinders”
• Whole Foods: With the acquisition of Whole Foods, Amazon now owns over 400 grocery stores nationwide.
• Amazon & Whole Foods Markets: Two-hour delivery of natural and organic products from Whole Foods Market through Prime Now in Atlanta, San Francisco, Austin, Cincinnati, Dallas & Virginia Beach with plans for continued expansion across the U.S. throughout 2018. Larger Whole Foods stores to serve as delivery hubs for Amazon orders
• Bookstores: Amazon has opened 14 bookstores since 2015 with others planned for this year.
• Trucks: Amazon & Whole Foods Market announced that Treasure Truck will pop up at various Whole Foods Market locations across the country with new offers and incentives.
• Amazon Go: Amazon Go is a completely cashier-less store that makes check-out free shopping possible and is now open to the public in Seattle. Unclear if others are planned.
• Pop-up stores: There are currently over 40 Amazon pop-up stores across the country, mainly designed to showcase its hardware products.
• Kohl's: Through its partnership with Kohl's, Amazon sells some of its hardware in-store and lets its online purchases make returns through select Kohl's shops.
• Lockers: Amazon has pick-up lockers in thousands of retail stores, including select Whole Foods stores.
• College pick-ups spots: Dozens of schools have set up on-campus pick-up spots for Amazon deliveries.
Sources: Amazon & various media sources (see notes page); slide title credited to CNBC.com (September 19, 2017)
Walmart – no membership fee needed!
In May of 2017, Jim Cramer was “checking to see if WMT could step up in the fight for e-commerce dominance.
Nine months later, in February 2018, Cramer says, “Walmart woes tell me it’s time to buy Amazon; consumers probably gave Walmart’se-commerce wares a try, then switched back to Amazon.”
Source: Walmart.com; cnbc.com; TheStreet.com
Door-to-car, door-to-door, or inside home or fridge
• Amazon opened grocery pickup sites in Seattle for Prime members; exploring ways to deliver items to your car trunk; launched delivery inside your home with Amazon Key
• Walmart plans to expand its online grocery delivery service from six to 100+ U.S. markets, and expand online grocery pickup service from 1,200 stores to more than 2,200 stores, by the end of 2018; testing grocery delivery straight to your fridge while you are not home
• Conversely, Kroger slows ClickList & home delivery expansion with focus on existing customers & their shopping experience
Sources: Yahoo! Finance, Amazon, The Street, Retail Leader, Mashables, Seattle Times
3-store supermarket chain w/mobile app for ordering dine in or carryout pizza
Not just for big players
Sources: dorothylane.com; morningnewsbeat.com
Grocery delivery services catching on
Instacart • “Instacart has quickly scaled to over 190 markets and partnered with
retailers across North America, including popular national chains as well as local, regional grocers.”
Shipt• Claims to be the nation's fastest growing online grocery
marketplace serving “tens of millions of households” across the U.S.
• Target Corp. acquired Shipt on December 13, 2017:• “Target will begin offering same-day delivery of groceries, household essentials, home goods and
electronics through Shipt in the coming months. It plans to have the service up and running from half of its 1,800 stores by this summer and from most of its stores by next winter.”
• On January 25, 2018, Target announced plans to roll out its first Shipt-powered deliveries to 57 stores in Birmingham, AL and South Florida beginning Feb. 1, ahead of a promise to launch the program this springtime.
Sources: Shipt, Instacart, Target, Minneapolis Star Tribune
U.S. E-commerce Share of Dollar Sales
Meaningful sales for non-edibles
31%
28%
14%
11%
9%
3%
2%
2%
1%
1%
1%
1%
Beauty Care
Pet Care
Health Care
Personal Care
Household Care
Packaged Grocery
Produce
Meat
Dairy
Bakery
Alcohol
Frozen Foods
Source: Nielsen e-commerce measurement, 52 weeks ended Oct. 28, 2017. Projected from ~1MM e-commerce FMCG consumers and cooperating ePOS retailers based on reported commodity groups that may not match prior custom or syndicated category definitions. Share of Total FMCG via Nielsen Retail Measurement Services (xAOC+C).
Abundance of meal kitsCampbell Soup invested
$10 million in Chef’d
Unilever invested $9 million in Sun Basket
Albertsons acquired Plated for $200 million
Sources: Company websites & Fast Company
Plans for 2018 …
How will these impact online subscriptions?
Blue Apron plans to sell its meal kits in retail stores
Weight Watchers plans to sell its new fresh quick-prep meal kit in retail stores
Walmart announced it will expand the sales of meal kits from 250 stores to 2,000 stores
Kroger plans to expand sales of its Prep+Pared meal kits to more divisions
Albertsons bought Plated in September 2017 – plans for a nationwide rollout
Amazon meal kits are sold in Amazon Go stores
Sources: FoodDive (12/11/2017), Forbes (3/6/2018, quote for slide title), Albertsons, Kroger, Walmart, Weight Watchers, Reuters
Why go out when you can order in?Grubhub Statistics:• Features more than 80,000 online &
mobile ordering restaurants in over 1,600 U.S. cities & London
Q4 2017 Highlights:• Revenues: $205.1 million,
a 49% year-over-year (YOY) increase
• Net Income: $53.5 million, a 293% YOY increase
• Active Diners were 14.5 million, a 77% YOY increase
• Gross Food Sales were $3.8 billion, a 26% YOY increase
Source: grubhub.com
“war in the $100 billion delivery market”
How will this impact trips to your stores?• “KFC and Taco Bell announced plans to roll out delivery at thousands of
restaurants through a partnership with Grubhub.• McDonald's rolled out delivery with UberEATS at 5,000 locations in the US in 2017,
and says that the service is driving sales.• McDonald's still has the upper hand — but with the Grubhub deal, KFC and Taco
Bell have a major opportunity to enter the fast-food deliver war.”
McDonald's is modernizing — and has a huge
advantage on speed
Taco Bell has been trying everything, while KFC plays
catch up
The Grubhub deal proves KFC and Taco Bell finally
getting serious about delivery
Source: Business Insider, February 8, 2018
Do you go it alone or partner & how do you price to make profitable?
Pick-up & delivery: what do your shoppers want?
Source: Company websites
Predictions
Stars Aligned For Growth – Are you?
Clean Label, Ethnic, Comfort, & Convenience Innovation
Basket Building Personalized Marketing
Fresh Ideas For Center-Store
Department Trip Magnets
Private Brands Resurgence
Strange Bedfellows
Seven Predictions
Todd HaleConsultant, NielsenPrincipal, Todd Hale LLC
