VALUE REDEFINED: Boosting Margins in Western European Retailing

© 2013 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL 1

VALUE REDEFINED:

Boosting Margins in Western

European Retailing


A PLANET RETAIL WIPRO Report

HIGHLIGHTS

The economic climate of Western Europe remains

difficult which poses challenges for both retailers

and shoppers, but it also provides scope for the

retailers to explore new opportunities and

innovative customer centric solutions.

Success depends of how retailers add value to

consumers which is more complex because of

sophistication in the need and preferences of the

consumer.

For the retailers to convey value to the consumer,

they must first know the answer to the question -

What do their shoppers actually WANT ?

The continued rise of e-commerce means that the

competitive stakes are even higher


Operating Environment in Western Europe

Rising Fuel Prices

Saturation Weak non-food

sales

Regulations Urbanization

Rise of e-

commerce

Challenging economic outlook Changing retail landscape

The economic outlook across Western

Europe remains challenging and real

GDP growth across this area remains

low

The general economic situation also is

showing no signs of improving anytime

soon. If anything, things are getting

worse, for the short term at least.

Retailers are looking beyond just low

prices to include convenience, in-store

shopping experiences and “retail-

tainment” and anytime, anywhere

shopping

Hypermarkets, and to a lesser degree supermarkets,

are getting squeezed.

There is continued growth for convenience stores &

grocery formats–shows that there is more to value

than just low price

Typically big product assortment and lower prices -

relative to convenience stores at least - are no longer

enough on their own to win with consumers

Convenience and proximity to where consumers live

or work has become significant


The Changing Consumer Landscape

Consumers are demanding more. Across Western Europe still want to treat themselves on day to day

essentials like food and beverage, and will still spend more on items – as well as in retailers - that provide

good value regardless of price

DEMANDING Convenience

Personalized

Uncertain

Economy

Aging

Population

Single

Households

Fast paced

lifestyles

Tech-savvy

Value

Value


Path to Purchase in the saturated markets

Establishing such clarity has become even more crucial given that the grocery sector in

Western Europe is extremely saturated. The only Western European markets where the top

5 players do not hold a share of more than 60% are Italy, Spain and Portugal

Is it routine,

a top up,

something more

urgent or a

bit more

leisurely?

For what

purpose or

occasion are

they

shopping?

Who are

they? Are

they men,

women, old,

young,

singletons,

parents?

Where?

In which channel?

How & When?

Retailers must understand who their core shoppers are and how they define value. They

must know their shoppers’ different needs, missions and purchase occasions


Retailer Perspective: The Role of Retail Technology

For operational excellence, retailers can use automation and self-service technologies

Optimization tools based on predictive analytics, to streamline supply chain efficiency.

To understand consumer demands and improve merchandise planning, big data using predictive

analytics can be used.

And to serve customers seamlessly across channels, (near) real-time data access is now mandatory.

SELF SERVICE IN STORES OPTIMIZATION SOLUTIONS BASED ON

PREDICTIVE ANALYTICS

REAL TIME ACCESS TO INVENTORY AND

CUSTOMER INFORMATION ACROSS CHANNELS

SHOPPER INTERACTION

Improve margins and on-shelf availability Reduces labor costs and copes with traffic

peaks

Enable a seamless shopping experience

and optimize inventory

Analyze shopping behavior and target

consumers in a more personalized way


Focus on Germany: Illustrating the Nuances of Value

Norway(480mn), Germany(337mn), Denmark(405mn) and Austria(441mn)- stores per million population- are the four

Western European markets where the discount channels claims the highest share of overall food retail sales. Taken

together, the top five grocers account for more than 80% of food retail format sales in Germany, and show just how

consolidated the competitive landscape has become

At present, convenience retailing remains completely underdeveloped in Germany

2. Oversaturation of retail outlets supports discount channel

1. Consumer focus on low prices

3. Most German retailers privately owned

According to Anglo-Dutch FMCG giant Unilever,

Germany’s grocery retail landscape is “the hardest

in the world”. WHY?

The answer to that question lies in the fundamental nature of

Germany’s retail marketplace, which is characterized by three

key factors despite being Europe’s most populous nation:


Focus on Germany: Illustrating the Nuances of Value

Is change looming on Germany’s retail horizon ?

Open up to brands:

create new, added

value shopping

environments

Products:

accelerating their

innovation cycles

VALUE

Justify Value:

convince skeptical

shoppers of product

quality and ‘added

value

Convenience: to

become a viable

grocery channel

CASE IN POINT:

Rewe Group’s supermarkets, for

example, co-operate with

regional farmers to distribute

their products to local

consumers.

The group is now experimenting

with its Rewe to go concept at

several locations. One of the key

learnings for the grocer has

been that shoppers want a

seating area attached to the

store to facilitate food

consumption on-the-go


Future Channel Directions for Western European Retailing

To continue offering value, retailers must adapt their businesses to consumer demands as they evolve,

using technology to help with efficiency, pricing, product assortment and, ultimately, shopper interaction

E-commerce will drive regional

grocery sales

Proximity and convenience are

the new value

Discounters must move beyond

price and private labels

Hypermarkets must make most

of space

GEORGES PLASSAT

CEO, Carrefour

Multi-channel is key to success

“The hypermarket has lost its

human touch. It must become attractive

again [...] with an offer that answers clearly

identified needs and customer

expectations.”


Proximity and convenience are the new value

Discounters must move beyond price

and private labels and hypermarkets

must make the most of space

Europe: Discounters Retail Sales Prospects, 2013-2018

Europe: Convenience Store Retail Sales Prospects,

2013-2018


The Hybrid Shopping Experience: Planet Retail’s Vision

Source: The Planet Retail Value Redefined report 2013

The future of retailing belongs to those who can best integrate e-commerce with their bricks and mortar

stores. By incorporating in-store and e-commerce elements, retailers can create a hybrid shopping

experience that caters to customers’ every need

Serviced

Counters

Focus on

fresh food

Automatically

picked and

packed

Multiple

checkout

options

Last minute

orders can be

added on site

Encouraging

impulsive

buys

Supports the

drive pick-up


Conclusion

Due to the ever changing grocery landscape in Western

Europe, “value” can no longer be simply defined as the

lowest possible retail price. Shoppers now demand other

value propositions including convenience, enhanced

shopper experience and engagement, customisation and

personalisation

With consumers becoming ever more tech-savvy, retailers

must satisfy anytime, anywhere shopping and technology

can help retailers win with shoppers anytime and anywhere.

Optimising the real-time interaction between the customer,

the product and the retailer; delivering the right message,

offer, product, recommendation at the right time via the right

channel to the individual; all in real-time is critical


For more details please visit the link below:

http://www.wipro.com/Documents/value-redefined-boosting-

margins-in-western-European-retailing.pdf

http://www.wipro.com/Documents/value-redefined-boosting-margins-in-western-European-retailing.pdf
















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