2. Consumer dynamics are shifting...
Yesterday Today Tomorrow
Aged 60+
Ethnic Minority
Demographics
34%
8%
36%
14%
40%
20-30%
We’re becoming
older and more
diverse
Spending
Choices
Proportion of Spend on
Retail
Proportion of Spend on
Housing2
24%
20%
23%
28%
22%
29%
We’re spending
proportionately
less on retail and
more on housing
Spending
Potential
Household Income
Growth
Mass Affluent1
0.9%
19%
3.8%
25%
3-4%
29%
Wealth
polarisation is
likely to continue
Source: Euromonitor, ONS, Datamonitor , Policy Exchange, OC&C analysis
1. £50k - £1m Assets, % of population
2. Expenditure on actual rentals for housing, imputed rentals for housing, maintenance and repair of dwellings, water and sewerage and electricity, gas and other fuels
3. ...and technology has changed the way we shop
Yesterday Today Tomorrow
Connected Devices per
Person, #
Media Consumption
(hours / day)
% People who use
internet to research
goods / services
Connectivity
–
7.3
58%
3.1
9.1
73%
5
–
82%¹
We’re connected
and will be more
so ...
... With
significant
implications for
the last mile
% Home Delivery2
% Click & Collect2
Channels
4%
–
17%
4%
25-30%
15-25%
Source: Euromonitor, Mintel, ONS, Statista eMarketer, Frost & Sullivan, Verdict, Forrester, OC&C analysis
1. OC&C Estimate
2. % out of total UK retail excluding Food and Grocery
4. Growth in retail is hard to come by
Real Consumer Expenditure
% CAGR
1.7%
-1.1%
0.1%
0.8%
1.3%
1.9%
2.2%
2011-14 2014-25
1.9%
1.2%
1.4%
1.0%
2.0%
2.2%
2.1%
Total
Source: Economic Intelligence Unit, OC&C analysis
5. Growth Leaders outperform 17X
Average Growth of Retailers, 2011-13
% CAGR, n = 550
0.9%
15.5%
1.1%
40.0%
1.2%
18.7%
1.6%
16.5%
2.9%
Total
16.9%
1.3%
14.4%
-0.3%
16.6%
Growth Leaders
Typical Retailer
Retailers >£200m with publicly available financials1
Source: OC&C Retail Database 2015
1. Growth Leaders, excluding the 14 companies that grew through Acquisition
6. Multichannel leads the way, particularly from the UK & USA
Overview of Top 100 Growth Leaders
UK
33
France 9
Germany 7
Other 5
US
34
Netherlands 3
Nordics 9
International Expansion
23
Sports & Outdoors 10
By Channel
Online Pureplay 9
Domestic Expansion
35
100
Bricks & Mortar
24
by Category By Growth
100
Health & Beauty 8
Multichannel
67
By Country
Clothing & Footwear
22
Healthy Food & Vitamins 5
New Categories 3
Other 11 New Channel 3
LfL
22
Grocery
13
General Merchandiser
13
DIY, Furniture &
Household 14
100
Electricals 4
100
Acquisition
14
...but “bricks”
have not run
out of steam
Multichannel
players are
winning...
A third of the
fastest growing
retailers are
UK -based
Growth is spread
across categories...
...driven by both
domestic and
International
expansion
Source: OC&C Retail Database 2015
1. Available on BvD
2. 6 companies categorised as Other in ‘By Country’ composed of 2 companies from Japan, 2 from Canada, 1 from Italy, and 1 from Spain
Retailers >£200m with publicly available financials1
7. Rank Retailer Country Category
Latest
CAGR
Avg. Revenue
Uplift p.a. (£bn)
Latest Revenue
(£bn)
1 Apple US Technology 26% 19.3 106
2 Amazon US General Merchandiser 24% 8.0 45
3 Casino FR Grocery 19% 5.9 41
4 Costco US Grocery 9% 5.2 68
5 Aldi group GER Grocery 7% 3.1 46
6 7-Eleven JAP Grocery 8% 2.5 33
7 eBay US General Merchandiser 17% 1.3 10
8 Jumbo NL Grocery 46% 1.3 5
9 TJ/TK Maxx US Clothing 9% 1.3 17
10 Inditex ESP Clothing 10% 1.2 14
The Top 10 have posted between 7% and 46% growth
Source: OC&C Retail Database 2015
1. Latest available year
Retailers >£200m with publicly available financials1
3 of top 10 are tech-based
3 of the top 10 are tech-led
businesses
Grocery continues to
perform well
Grocery continues to
perform well
Retailers are spread
internationally
8. Some have grasped the ‘magic formula’
Revenue Growth Rate vs Profitability, by Retailer
Latest Available, % CAGR, % EBIT
Average
EBIT =
8.5%
Source: OC&C Retail Database 2015
1. Available on BvD
Retailers >£200m with publicly available financials1
Average Revenue
Growth = 16.9%
Magic
Formula
Investing to Grow
0 5 10 15 20 25 30 35 40 45 50
Net-a-porter
AO.com
Pandora
Lulu Lemon
Prada
eBay
Amazon
Apple
2011-13 Revenue % CAGR
2013EBIT%
9. Who are the Growth Leaders?
Top Growth Leaders by Country, Latest Available
% CAGR, Average Annual £bn Change
Growth Leaders
Aldi UK 38% 1.3
Waitrose 7% 0.4
Growth Leaders
Apple 26% 19.4
Amazon 24% 8.0
Growth Leaders
H&M 8% 0.9
Rema 1000 16% 0.6
Growth Leaders
Tom Tailor 48% 0.2
Hugo Boss 9% 0.2
Growth Leaders
Jumbo 46% 0.3
Action 26% 0.2
Growth Leaders
Casino 19% 6.0
Decathlon 7% 0.4
Source: OC&C Retail Database 2015
10. In the UK, Discount and Premium/Luxury are in the lead
Overview of UK Growth Leaders
Retailer
Avg. Annual
Revenue Uplift
(£m)
Latest
CAGR
11 Poundland 110 13%
12 Ocado 100 15%
13 The Range 85 25%
14 AO.com 85 36%
15 Net-a-porter 80 20%
16 Harrods 75 11%
17 Screwfix 75 14%
18 Costcutter 70 11%
19 Poundworld 70 29%
20 Dunelm Mill 70 12%
Retailer
Avg. Annual
Revenue Uplift
(£m)
Latest
CAGR
1 Aldi 1,250 38%
2 Waitrose 360 7%
3 Sports Direct 290 17%
4 Primark 240 11%
5 Burberry 235 12%
6 John Lewis 195 7%
7 Home Bargains 170 21%
8 B&M Retail 140 18%
9 ASOS 135 25%
10 JD Sports 135 12%
Source: OC&C Retail Database 2015
1. Available on BvD
12. The nature of shopping missions is changing
39%
53%
25%
26%
20122009
Twice per
week
3+ times
per week
Frequency of Grocery Shopping
% of Consumers
14%
40%
25%
16%
Early: 7am - 9am
2%
Afternoon: 1pm - 7pm
3%
Evening: 7pm - 9pm
Morning: 9am - 1pm
After Midnight
Late Eve: 9pm - midnight
Time of Online Purchases
% Purchases, n=2,495
59% online
purchases are
made outside
of typical high
street retail
opening hours
Source: OC&C Experience, OC&C analysis
13. Growth Leaders let customers shop on their own terms
Example RetailersRange of store formats
Optimised web / mobile accessibility
Speedy delivery and collection options
Ownership of last mile delivery
Integrated subscription models
Average
Growth = 23%
14. Growth Leaders are exposed to 6 key tailwinds
2
Beyond The
Product
1
Convenience
15. Services and experiences augment the retail offer
In FY14 salon revenue
increased 20% vs FY13, inline
with total sales
Each of the 230 stores has its
own schedule of events and
cooking classes
Webinars are regularly used to
share knowledge
16. Example Retailers Average
Growth = 22%Combining products with services
Training and developing colleagues
Web that deepens customer knowledge
In-store activities and events
Leaders take every opportunity to reinforce specialism
17. Growth Leaders are exposed to 6 key tailwinds
2
Beyond The
Product
1
Convenience
3
Importance Of
Value
18. Shopping at discounters is a democratic phenomenon
Hard Discounter Share of Grocery Retailing
% Retail Value
Usage of Discounters, by Income Band
%
36%
42%
45%
Under
£25k
£25k - £50k
£50k or
Above
Source: Euromonitor, Mintel, OC&C Analysis
6%
9%
2019
+3.2%
2014 +26.9%
36%
9%
36%
19. “Value” has multiple guises
“No frills”
primary focus on
low prices
“Thrills” focus
on quality and
value; luxurious
food made
affordable
20. Example Retailers Average
Growth = 19%
Tight range and choice architecture
Lean operations and supply chain
Understand and eliminate waste across
the value chain
Successful discount is founded on extreme simplicity
21. Growth Leaders are exposed to 6 key tailwinds
2
Beyond The
Product
1
Convenience
3
Importance Of
Value
4
Aspiration
22. Example Retailers
Premium Growth Leaders cater to the growing “affluents”
<$50K
$50K - $1M
> $1M
2018
3,968
3,569
388
11
2014
3,785
3,450
326
9
2006
3,345
3,102
237
6
Population by Liquid Asset Band1, Global
# millions
CAGR
5.0%
4.2%
1.2%
Source: Datamonitor, OC&C Analysis
1. Onshore liquid assets, 64 large economies covered by Datamonitor
Average
Growth = 13%
23. Growth Leaders are exposed to 6 key tailwinds
2
Beyond The
Product
1
Convenience
3
Importance Of
Value
5
Wellbeing
4
Aspiration
24. Wellbeing is front of mind
UK Google Search Volumes, by Word
Indexed: 2015 Volume=100
2004 2015
"Chia"
"Yoga"
"Gym"
"Running"
"Quinoa"
"Superfood"
Source: Google Trends, OC&C Analysis
Example Retailers Average
Growth = 18%
25. Growth Leaders are exposed to 6 key tailwinds
2
Beyond The
Product
1
Convenience
3
Importance Of
Value
5
Wellbeing
4
Aspiration
6
Adornment
26. Example Retailers
Customer share of spend on adornment is growing
Growth In Consumer Household Expenditure
% CAGR, 2007-2013
Source: ONS, OC&C Analysis
5.2%
4.5%
1.9%
Housing & Home
Improvement
Other Household
Consumer
Spending
Clothing &
Footwear
Average
Growth = 17%
27. What does this mean for retailers?
How well
have you
exposed
yourself to
the
tailwinds?
How clear are
you about what
makes your
customer offer
distinctive?
How
confident
are you
about your
value
promise?
