ECR Russia Forum ‘09. Shopper

Consumer 360 – integrated approach

Ekaterina Monakhova
Regional Business development manager
Nielsen Retail Measurement service
22nd of April, 2009

Confidential & Proprietary • Copyright © 2009 The Nielsen Company

Consumer 360
Consumer Place of purchase
CONSUMER
BEHAVIOUR

CONSUMER DICTRIBUTION
PROFILE

ATTITUDE TO ASSORTMENT
INTEGRATED
ADVERTIZING INSIGHTS

MODELLING & PRICE
FORECASTING

CATEGORY
INNOVATIONS
INSIGHTS

Trends Product

Topic of Presentation April 27, 2009 Page 2 Confidential & Proprietary
Copyright © 2009 The Nielsen Company

Consumer confidence index in Russia : decline
continues
Global Average – 77(March 2009)

112 105 107 104 106 104
99 103
88 82 75

1st Half 2nd Half 1st Half 2nd Half 1st Half 2nd Half 1st Half Sep. 08 Nov. 08 Feb 09 1st Half
05 05 06 06 07 07 08 09
(March)
Change% ▼12 ▲6 ▲2 ▼3 ▼1 ▲3 ▼2 ▼16 ▼6 ▼7
Source: Nielsen Сonsumer Confidence Index Study


Job Security is the major concern

Loosing Job

Loosing
the source of income

Changes in consumption habits

Changes in life style

Source: “Russia through crisis” Nielsen consumer research, 1st wave November-December 2008


14% of consumers claim that their incomes
considerably decreased over last 3 months
Q5: Which of the following statements best describes your family income changes (in rubles) over
the last 3 months? 1%
No answer
14%

My family income has decreased appreciably
over the last 3 months 21%

My family income has slightly decreased over
the last 3 months

My family income has not changed
44%

My family income has slightly increased over
the last 3 months

My family income has increased appreciably 18%
over the last 3 months
Total: all respondents, 524
1%


45% of responders noticed that FMCG prices were
increasing over last 3 months
В13: In your opinion, have FMCG prices changed В14: In your opinion, what has been the average
over the last 3 months? increase in FMCG prices over the last 3 months?

The prices have not 5%
changed over the last 5% increase and
3 months
less
13%
28%
49%
The prices increased 11% -15% increase 16%
slightly over the last 3
months 20%
21% -25% increase 6%
The prices on 45% 9%
average increased 31% increase and
considerably over the
more
8%
last 3 months
Total: all respondents, 524 Total: respondents who noted a price growth of FMCG
products, 497


Consumption is shifting towards more economy channels
like Hypermarkets, Discounters and Cash & Carry
В19: Has the amount of FMCG that you personally buy from the following types of stores changed;
i.e., have you started to buy more from them, less, or the same amount over the last 3 months ?

Get to buy less now than 3 months ago Get to buy more now than 3 months ago
Buy the same amount now as 3 months ago

In hypermarkets [n=426] 19 22 59
In discounters [n=406] 20 16 64
In kiosks/ pavillions [n=273] 22 7 71
In minimarkets [n=373] 24 6 70
In marketplaces [n=346] 25 14 61
In supermarkets [n=380] 26 10 64
In Cash&Carry stores [n=166] 27 14 60
In food stores [n=340] 28 7 65
Total: respondents who generally shop in these channels


Importance of discounters grows in Beer, Milk,
Chocolate, Mineral Water
Volume Share
Nielsen Key Account Index, Moscow & S.-Petersburg

19,7 19,7 19,7 27,5 24,7 23,0 18,1 18,4 18,4 20,1 20,7 20,7 16,7 18,4 15,1 22,0 22,7
31,5 31,2 31,5 29,6 28,7 28,7 32,3 34,4 36,0
31,5 32,3
45,7 46,1 46,1 25,3 39,7 42,6 42,6 35,8
37,2 36,6 35,1 36,9 37,8 37,8 57,1 57,5 57,5 43,7 48,1 49,0 30,3 29,0 55,6 56,4

47,5 50,1 52,6
31,2 32,2 33,4 33,5 33,5 33,5 23,2 22,7 22,7 28,8 27,2 28,0 36,2 35,5 35,5 42,4 35,3 35,0 40,2 36,7 36,7 22,4 20,9

Dec Jan Feb Dec Jan Feb Dec Jan Feb Dec Jan Feb Dec Jan Feb Dec Jan Feb Dec Jan Feb Dec Jan Feb Dec Jan
08 09 09 08 09 09 08 09 09 08 09 09 08 09 09 08 09 09 08 09 09 08 09 09 08 09
Drinkable Mineral Water Vodka Beer Tea Packed Chocolate Coffee Milk
Yoghurt chocolate tablets
pralines
Hypermarkets Discounters Supermarkets
*Milk including pasteurized & sterilized

Source: Nielsen Retail Index


Change in FMCG purchase volume over
the last 3 months
В8: Which of the following statements best В9: Could you please estimate (in per cent)
describes how your FMCG purchase volume has how much less FMCG you buy now than 3
changed over the last 3 months? months ago?

I/my family buy more FMCG now than 3 months ago
Cut down by 5-15%
I/my family buy less FMCG products now than 3 months ago
Cut down by 20%
I/my family buy the same amount of FMCG products now as
3 months ago Cut down by 25% and more

10%
29%
33%

21%

69% 38%
Total: respondents that buy less FMCG now than 3
Total: all respondents, 524 months ago, 111


Purchase of FMCG: Money-saving
strategy
В20: Did you personally become more thrifty when buying FMCG now than 3 months ago?

Surely not 5%

23%

Most likely not

47%
Most likely yes

Surely yes
26%



Consumers in Russia are not reluctant to
switch from brands they got used to in order
not loose in quality
В18: For each of the following products please tell us, if you buy the same brands as 3 months ago,
or you started to buy more expensive or cheaper brands?
I buy cheaper brands I buy more expensive brands I buy the same brands as 3 months ago
Drinking/mineral water [n=395] 9% 6% 85%
Cigarettes [n=279] 10% 7% 83%
Tea [n=512] 11% 11% 78%
Face cream [n=386] 12% 16% 72%
Vodka [n=216] 13% 8% 79%
Chocolate (tablets/bars) [n=448] 13% 8% 80%
Beer [n=311] 13% 7% 80%
Milk [n=478] 13% 6% 81%
Coffee [n=431] 13% 9% 78%
Drinkable yogurt [n=372] 14% 8% 77%
Shampoo [n=502] 14% 14% 72%
Cakes [n=380] 17% 4% 78%
Laundry detergents [n=505] 18% 5% 77%
Total: respondents who purchased goods from these categories 3 months ago and continue to buy them now


Private Label Share did not change in comparison to
September 2008 and Remains at low level

12 Nielsen Key Account Index, Moscow& S.-Petersburg, 110
Private Labe Trends
10 90
73 73 76
8
67 70
51 55
6 51 50
38
4 32 30
2 10
2,3 2,3 2,1 1,8 3,9 3,6 4,7 4,9 3,0 3,1 7,6 6,9 4,2 4,7 0,3 0,3 0,1 0,4
0 -10
Tea Instant CSD Juice Mineral Soft Sweet Drinkable Gum
Coffee Water Cakes Buisquit Yoghurt

PL Volume Share, Sept08 PL Volume Share, Dec08

Price Index, Dec08 (%)


19% of consumers state, that assortments has
narrowed over last 3 months
В15: In your opinion, has the FMCG assortment in stores where you usually shop
changed over the last 3 months?
The FMCG assortment has narrowed
significantly over the last 3 months
2%
19%
The FMCG assortment has somewhat
narrowed over the last 3 months

The FMCG assortment has not changed over
the last 3 months

68%
The FMCG assortment has somewhat
widened over the last 3 months

The FMCG assortment has widened
significantly over the last 3 months
10%


Nearly half of outlet owners/representatives have
faced with the issue of Purchases Prices Change
over last 3 months, and one quarter of the
respondents have suffered from the restrictions in
the payment terms
What problems have you faced in the last 3 months?

45

29
24

10
15 9 9 8

Purc hasing Nothin g o f Paymen t Neces sary Don t Deliv ery Delivery
pric es ab ove lis te d te rms a ssort.de l. know/Difficult p ostponeme n volume
cha nged chan ged problems to an swer p roblems

Source: Nielsen survey “Distribution channels: struggling through crisis”,January 2009


Assortment Change: The Assortment was less affected than stock
volume by Crisis Environment - only 19% of respondents have
claimed that they have reduced the variety of products on shelves.
However the reduction seem not to be very significant– mainly not
more than 15%.
Have you reduced assortment in the How have assortment changed in
last 3 months? the last 3 months ?

Reduced by
not more than 58
15%
No
81%
Reduced by
15% -30% 24

Yes
19% Reduced by
more than 8
30%

Dont
know/Difficult 10
to answer


The Assortment Change Scale: The most
significant decrease in assortment was
recognized in Mini/Supermarkets
How have assortment changed in the last 3 months ?

Total 58 24 8 10
HoReCa 86 0 14
OM 58 17 11 13
Households 63 19 6 13
Drug Specials 52 29 7 12
Kiosks/Pavilions 71 19 36
Food Stores 60 20 8 12
Mini / Supers 36 48 16 0
Reduced by not m ore than 15% Reduced by 15%-30%
Reduced by m ore than 30% Dont know /Difficult to answ er


In case of assortment decreasing, importance
merchandising is increasing: example of Nielsen
Merchandising service project
• Recommendations for energy drinks in supermarkets X
Proposed Plan A Proposed Plan B

Plan А Calculations Target Actual % +/- Calculations Target Actual % +/-
Projected Sales £947.36 £984.98 4.0% Projected Sales £940.52 £990.02 5.3%
Projected Lost Sales £49.86 £12.24 Projected Lost Sales £49.50 £0.00
Projected Units 1,373 1,428 4.0% Projected Units 1,351 1,422 5.3%
Projected Lost Units 72 17 Projected Lost Units 71 0
Sales/Section Mtr £388.26 £403.68 4.0% Sales/Section Mtr £385.46 £405.74 5.3%

Allocated Products 31 31 Allocated Products 29 29
Zero Movement 0 2 Zero Movement 0 2

Per store with this plan: Per store with this plan:
Incremental Sales / Week £45.59 Incremental Sales / Week £50.63
Incremental Sales / Year £2,370.68 Incremental Sales / Year £2,632.76
If in 460 stores: If in 460 stores:
Incremental Sales / Year £1,090,512.80 Incremental Sales / Year £1,211,069.60

Plan’s analyzing
Plan B
Both plans promise rising sales of energy
drinks up to 1 mln £
Plan B is recommended (sales increase
according to plan B is higher than
according to plan A)

Source: Nielsen Merchandising Service data

Confidential & Proprietary

Consumers in Large Russian Cities are
Receptive to Innovations
In Moscow, ~25% of consumers claim that like trying new
products and always look for new brand and product offers.
I love trying new
things - I'm always
I seldom try new on the lookout for
things - I find it is new brands and
far better to know products
what you want 26% I sometimes buy
rather than risk new brands or
buying something products - but
that may not work usually stick to my
out favourites
20% 54%

Source: Nielsen BASES data


Comparing with Europe, in Russia it’s more
difficult to build distribution of new
product, during first periods after launch
distribution grow rate in Russia is much
lower
Median Year 1 distribution build - Russia vs. Europe
80

70
Average weighted distribution

60
RUSSIA*
50
France
40 UK
30 Italy
Spain
20
Germany
10

0
1 2 3 4 5 6 7 8 9 10 11 12 13
Year 1 periods

Source: Nielsen BASES data


Nielsen global data: how do consumers react on
inflation?
What Shoppers ‘do’
What Shoppers ‘say’ What could be
to limit impact of
they do to limit happening in
Inflation across
impact of Inflation Russia?
Europe
Try Not Reduce their
1. to change
1.
Go Less
in Stores 1. Basket

Look for easy Switch
2. Alternatives
2.
Reduce their
Basket 2. Channels

Switch
3. Switch

3.
Switch
Channels ? 3. brands?

Source: Nielsen Europe CPS data


Consumer Behavior Strategies
High share
Wait-and-see Gathering and studying information for
«Observers» position defining further strategies

«I do not know what will happen
further on, that is why I do not
make fuss.». Withdraw cash from bank deposits
and cards so as to avoid losses in
Preventive case of devaluation or denomination
«Panic-stricken» activities Attempt to save their assets: diversify
deposits and change the currency of
their deposits
«Devaluation may occur tomorrow, that
is why we cashed all our accounts to
invest the money in purchasing.»

Getting Cutting on consumption
«Pessimists» prepared for Getting thrifty
the worst

«I remember queuing up for foods and fearing to have nothing
to feed my kid with. Now I have stocked up some food: sugar,
Low share
condensed milk, cereals. Just in case. You never know ....»

Source: Quality research “Current Economic Situation Perception and Influences”, November – December 2008


In the initial crisis period, consumption frequency
decrease without brand change
Initial crisis Deeper crisis
Consumption will not Consumption frequency Switch to cheaper Abstention from
change will decrease without products/ brands category
brand change
• Milk • Chocolate • Milk, kefir • Specialties
• Poultry • Cheese • Premium sausage • Juices and bottled
• Sausages • Meat and fish specialties • Fish water
• Butter/ oil • Fruit • Clothes and shoes • Cakes, pastries,
• Vegetables • Coffee • Domestic biscuits
• Tea • Wine appliances of urgent
In case • Salty snacks and
• Children’s goods • Cosmetics and personal necessity
chewing gum
• Manufactured pet care products • Jewelry
food • Household detergents • Computers
• Going to the theater (washing and cleansing • Holiday trips abroad
• Fitness/ wellness detergents) • Restaurants/ bars
centers (e.g. water • Beauty salons
pool, solarium) • Renewal of clothes
• Renewal of domestic
appliances &
electronics

Source: Quality research “Current Economic Situation Perception and Influences”, November – December 2008


Consumers switch from nice to have to basic need to have
categories: during last 2 periods sales of milk were growing and
sales of other dairy categories were stable/decreasing
National Urban Russia – Sales volume 1000L/kg



What and when influence consumer
decisions?
PRE-STORE IN-STORE

Advertising
Notice
new brands Price
/ variants comparison

Merchandizing Packaging
Buzz

Product Promotions
Browsing

Family
preference

Source: Shopper Modality Customized research (fieldwork in September 2008)


Auto-pilot mode shopping – Can it be
broken?
Thousands of
brands in their
heads

Auto-pilot
Delta
Moments

Delta Moments =
No time to think Omega Ω rules new information,
about them = habit promo,
advertising etc.


Omega Delta ΩΔ profile of
categories/brands:
delta shoppers
omega shoppers Open to new information, word
Consumers who shop on of mouth, advertising, engage in
habitual auto-pilot mode scrutiny mode shopping.
•Omega shoppers •Delta shoppers
•Average •54 •46

•Chocolate •31 •69
•Juice •36 •65
•Yoghurt spoonable •40 •60
•Beer •42 •58
•Mayonnaise •64 •36
•Sweet biscuits •64 •36
•Energy drinks •65 •36
•Cereals •69 •32
•Chewing Gum •72 •28


Which shopping behavior is prevalent in
categories?
In-store Advertising Bargain Buzz Family preference Variety
browsers activated hunters activated activated Seekers

Chocolate 33% 44% 20% 19% 4% 3%
Juice 35% 51% 26% 19% 5% 1%
Yogurt spoon 32% 49% 23% 21% 6% 1%
Beer 38% 59% 26% 30% 1% 4%
Mayonnaise 33% 47% 26% 21% 2% 2%
Sweet biscuits 35% 24% 16% 17% 3% 4%
Energy drinks 28% 57% 22% 28% 2% 3%
Cereals 28% 29% 19% 18% 5% 3%
Chewing Gum 36% 40% 16% 19% 2% 3%



Macro-paradox of consumer market

Dominating trends


Integrated approach to consumer
analyzing
Quantity
researches

Quality Census data
researches

Analyze of
On line consumers: In store
studies integrated observation
approach

New launch Analytical
analysis- consulting
BASES Retail
measurement
service


Thank you for your attention!

Please feel free to contact in case of any questions:

Tel: + 7 495 6633683
E-mail: ekaterina.monakhova@nielsen.com

Confidential & Proprietary • Copyright © 2007 The Nielsen Company

ECR Russia Forum ‘09. Shopper

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