This document summarizes trends in food retailing presented by Prof. Gino Van Ossel on September 20, 2011. It discusses decreasing brand loyalty and increasing price sensitivity among shoppers. It also examines retail trends such as managing price perception through promotions, reducing costs, rethinking product ranges through private label growth and offering fewer SKUs, and dedicating more space to non-food products and services. The conclusion states that the future will be challenging in the short to medium term due to economic conditions, and retailers must search for growth, margins, and differentiation through price management, cost reduction, and differentiation strategies.

1. 20-9-2011
Simplicity or the shopper in control ?
Trends in (food) retailing
Prof. Gino Van Ossel
20th September 2011
Gino.VanOssel@Vlerick.com
agenda
1. shopper trends
2. retail trends
3. conclusion
2|
1

2. 20-9-2011
shopper trends:
decreasing loyalty
1
shopper trends:
decreasing loyalty
4|
2

3. 20-9-2011
shopper trends:
decreasing loyalty – 1st level
the Berlusconi syndrom:
from brand loyalty to brand sensitivity
5|
shopper trends:
decreasing loyalty – 2nd level
6|
3

4. 20-9-2011
shopper trends:
decreasing loyalty – 2nd level
A brand lovers
A brands represent >70% in purchased units
switchers
A brands represent between 40 and 69% in purchased units
PL lovers
A brands represent <40 % in purchased units
7| source: GfK panel services Belgium
shopper trends:
decreasing loyalty – 2nd level
33,0 32,3 31,6 30,3 29,1 28,0 26,4 26,6 26,6
40,0 40,6 41,3 42,2 42,9 42,6 43,3
38,9 39,5
28,1 28,2 28,4 29,1 29,6 29,8 30,7 30,8 30,1
MAT MAT MAT MAT MAT MAT MAT MAT MAT
sep07 dec07 mar08 jun08 sep08 dec08 apr'09 jun'09 sep'09
PL lovers Switchers A-brands lovers
(index 107) (index 111) (index 81)
8| source: GfK panel services Belgium
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5. 20-9-2011
shopper trends:
decreasing loyalty – 2nd level
from brand sensitivity to indifference
9|
shopper trends:
increasing price sensitivity
2
5

6. 20-9-2011
shopper trends: increasing price sensitivity
growth of discount
20
19,5
15
10,1
10
13,3 hard
5,0
5 soft
5,1 total
6,2
0
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
market share discount – Western Europe
(source: Nielsen)
shopper trends: increasing price sensitivity
growth of private label
37,2% 37,9%
36,7%
35,6%
34,7%
33,3%
32,1%
31,3%
31,4%
30,1% 30,6%
28,7% 29,3%
27,4% 28,0%
27,0%
market share private label – Western Europe Value share
(source: Nielsen) Volume share
2001 2002 2003 2004 2005 2006 2007 2008
12 |
6

7. 20-9-2011
shopper trends: increasing price sensitivity
increasing promotion intensity
22,0
2008
19,9
2009
20,0
2010
17,5
18,0 16,8 16,6
16,1 16,2
15,8 15,7 15,8 15,6 15,4 15,4 15,2
16,0 15,1
14,3
13,8
14,0 13,3 13,1 13,1
12,8 12,8
13,5
12,0 12,9 12,7
12,0 11,9 11,7 11,9
11,5
11,2
10,0 10,5 10,5
10,4 10,1
8,0
6,0
P1 P2 P3 P4 P5 P6 P7 P8 P9 P10 P11 P12 P13
source: GfK panel services Netherlands
shopper trends:
choice stress
3
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8. 20-9-2011
shopper trends:
choice stress
300 varieties of jam
250 varieties of mustard
75 varieties of olive oil
Sheena S. Iyengar & Mark R. Lepper, “When Choice is Demotivating: Can One Desire Too Much of
a Good Thing?,” in: Journal of Personality and Social Psychology, 2000, Vol. 79, No. 6, 995-1006
shopper trends:
choice stress
aisle traffic
242 260
1.65% 11.92%
(index 722)
conversion
(# of buyers) 4 31
16 |
8

9. 20-9-2011
shopper trends:
choice stress
less is more
17 |
shopper trends:
in short…
decreasing increasing choice
loyalty price stress
sensitivity
9

10. 20-9-2011
agenda
1. shopper trends
2. retail trends
3. conclusion
19 |
retail trends:
managing price perception
1
10

11. 20-9-2011
source: investor relations meeting, Greece, 3rd December 2009
retail trends:
cost management
2
11

12. 20-9-2011
source: investor relations meeting, Greece, 3rd December 2009
24 |
12

13. 20-9-2011
25 |
retail trends:
rethinking product ranges
3
13

14. 20-9-2011
retail trends:
rethinking product ranges
less is more
SKU’s - 7.5%
source: investor relations meeting, Greece, 3rd December 2009
14

15. 20-9-2011
Source: Carrefour half year results, 30th August 2010
De Standaard
11 Feb 09
15

16. 20-9-2011
retail trends:
rethinking product ranges
less is more
search for differentiation
32 |
16

17. 20-9-2011
retail trends:
rethinking product ranges
more is more
33 |
retail trends:
rethinking product ranges
true variety # sku’s
“more is more” “less is more”
(to some extent) (most of the time)
34 |
17

18. 20-9-2011
retail trends:
rethinking product ranges
35 |
retail trends:
rethinking product ranges
less is more
search for differentiation
private label proliferation
18

19. 20-9-2011
retail trends:
rethinking product ranges: private label proliferation
correlation between changes in # PL SKU’s and PL value share
sales
value growth
SKU
growth
Nielsen, MAT week 37 change 2009 vs. 2007, Belgium
7300 SKUs
(38% of total)
19

20. 20-9-2011
39 |
Source: Carrefour half year results, 30th August 2010
20

21. 20-9-2011
Source: Carrefour half year results, 30th August 2010
retail trends:
rethinking product ranges
less is more
search for differentiation
private label proliferation
more space for non-food & services
21

22. 20-9-2011
44 |
22

23. 20-9-2011
45 |
46 |
23

24. 20-9-2011
retail trends:
in short…
managing rethinking
price efficiency
product ranges
perception
agenda
1. shopper trends
2. retail trends
3. conclusion
48 |
24

25. 20-9-2011
49 | © Vlerick Leuven Gent Management School
conclusion
search for growth, margin
and differentiation !
50 |
25

26. 20-9-2011
conclusion
the future will be challenging
short (& medium?) term: consumer confidence & economic climate ?
2
0
-2
-4
-6
-8
-10
51 |
source: NBB
conclusion
the future will be challenging
short (& medium?) term: consumer confidence & economic climate
the strategic dilemma
price perception management & cost reduction
search for differentiation
how about non-food ?
short (& medium?) term: outlook even more challenging
in particular:
multi-brand retailing: same strategic dilemma
trend towards integrated retailers
impact of the internet:
new entrants
additional costs
intensifying price competition
52 |
26

27. 20-9-2011
53 |
conclusion
if this were a weather forecast…
…rain with major risk of thunderstorms
27

28. 20-9-2011
Retail & Trade Marketing Research Centre:
• training
• workshops
• entertrainment
• (contract)research
Gino.VanOssel@Vlerick.com
#ginovanossel
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