Conference "Retail Innovations 2018”: „Space aware assortment optimization“, Saulius Stirbys, „Nielsen“, Assortment & Space Optimization Leader Baltics

SPACE AWARE ASSORTMENT
OPTIMIZATION
Saulius Stirbys
ASO leader Baltics
January 2018

2
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• Market overview
• Nielsen innovations
• Space-aware assortment optimization

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Copyright©2017TheNielsenCompany(US),LLC.Confidentialandproprietary.Donotdistribute.Copyright©2017TheNielsenCompany.Confidentialandproprietary.
MARKET STRUCTURE IN LITHUANIA SETTLED
CHANNEL DYNAMICS FMCG – BALTICS
34% 37%
41%
43%
17%
16%
4%
4% 3%
2008 2017
DRUG+PHARM
PETR+CONV
Gros <100
SSM+SR 100-1000
HM+LSM >1000
19%
30%
47%
47%
22%
16%
5%
3%7% 4%
2008 2017
34%
52%
46%
39%
13%
5%5% 2%3% 2%
2008 2017

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CHANNEL DYNAMICS IN 2017
Nielsen TSR total 2017.
Bubble size – market share.
>1000 sq m
400-1000sq m
100-400 sq m
Convenience
Drug stores
Pharmacies
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
-0.4 -0.3 -0.2 -0.1 0.0 0.1 0.2 0.3
Market share change pp
Value change % LY

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WHERE DID YOU SHOP LAST TIME?
CATEGORY FUNDAMENTALS STUDY 2017
BASED ON PURCHASES OF 31 CATEGORIES
39%
14%
13%
10%
8%
2%
5%
2%
1%
5%
MAXIMA
IKI
LIDL
NORFA
RIMI
AIBE
OTHER STORES
OPEN MARKET
INTERNET
OTHER CHANNELS

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FMCG MARKET DYNAMICS
*Lithuania Modern Trade – scanning data excl Norfa, LIDL
Change vs. the same period last year; Nielsen measured food and near-food categories, excluding cigarettes.
2.6
1.4
2.1 1.7
2.8
8.0
5.5
9.3
8.8
9.1
1.9
2.9 1.8
-0.4
-3.4
-5.9
-8.9
-6.4 -4.0 -4.4
4.5 4.4 3.9
1.4
-0.5
2.1
-3.4
2.9
4.8 4.7
-9.0
-7.0
-5.0
-3.0
-1.0
1.0
3.0
5.0
7.0
9.0
2012 2013 2014 2015 2016 2017 Q1 2017 Q2 2017 Q3 2017 Q4 2017
UNIT VALUE CHANGE VOLUME CHANGE NOMINAL VALUE GROWTH

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SALES CHANGE % IN CATEGORY GROUPS
2017 vs. 2016
-5.6
-17.1
-2.8
-12.5
-1.9
-0.2
-0.3
2.1
-4.6
3.1
2.9
-6.1
-0.7
0.4
3.5
-1.9
1.8
11.4
3.8
2.0
-2.5
2.3
-2.3
7.4
3.9
-4.2
2.1
0.6
Dairy
Strong Alcohol
Processed Meat and Fish
Light Alcohol
Non-Alcoholic Ready To Drink…
Confectionery
Food preparation and condiments
Coffee Tea and Cocoa Drinks
Bakery
Snacks
Pet care
Cereal Products
Frozen Food
Baby Food
-7.7
-1.6
2.8
0.2
-0.1
2.8
-2.1
0.5
Tobacco products
Personal Care
Household
products
Paper/Rolls/Serviet
tes
Volume change Value change

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MAIN CONCERN – INCREASING FOOD PRICES
Q3 2013 Q3 2014 Q3 2015 Q3 2016 Q3 2017
Health
Increasing food prices
Children education
Q3 2013 Q3 2014 Q3 2015 Q3 2016 Q3 2017
Health
Increasing utility bills
Q3 2013 Q3 2014 Q3 2015 Q3 2016 Q3 2017
Health
Economy

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MORE PEOPLE PUTTING INTO SAVINGS
2017 Q3
54%
% change
habits to
save
33%
21%
39%
20%
Put into savings Do not have spare cash

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BRAND LOYALTY VS PROMO HUNTING
34%
Loyal to brands
Promotions do not change their brand
choice or buy on promos only when they
like brand.
66%
Promo hunters
Change stores, actively search for
promotions, buy different brands
which are promoted.

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PROMO SHARE IN LITHUANIA DECLINED
+1 p.p.
-6 p.p.
-1 p.p.
-1 p.p.
59%
54%
46% 45% 45% 44%
41%
39%
36% 35% 35% 35% 34%
32%
30% 29% 27% 26%
21%
16% 15%
SLOVAKIA
CZECHREPUBLIC
PORTUGAL
HUNGARY
RUSSIA*
LATVIA
LITHUANIA
AUSTRIA
ESTONIA
GREECE*
ITALY
DENMARK
UK
POLAND
SWITZERLAND*
EUROPE
TURKEY
NETHERLANDS
GERMANY
SPAIN
NORWAY

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33
38
42
45
46
45
43
49 49
52
52
53
44
50 53
49
41
25
38
40
42
40
42
39
47
53
55
51
53
49
20
25
30
35
40
45
50
55
2012 2013 2014 2015 2016 YTD TY
PROMO SHARE ACROSS CATEGORIES
Alcoholic drinks
Personal care
Food
Household
Non alco drinks
%

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Nielsen retail measurement data
91%
77%
65%
92%
80%
69%
89%
78%
66%
9%
14%
12%
8%
12%
10%
11%
15%
12%
9%
13%
8%
12%
8%
12%
10% 9% 10%
2014 2015 2016 2014 2015 2016 2014 2015 2016
2016 NEW
PRODUCTS
2015 NEW
PRODUCTS
2014 NEW
PRODUCTS
ESTABLISHED
PRODUCTS
13 780
18 636
17 233
Val % shr of total FMCG
RE-INNOVATING ASSORTMENT
New products in 2016

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Vodka
Brandy / Cognac
Beer
Wine
Juices / Nectars
Carbonated Soft Drinks
Bottled Mineral Water
Coffee
Processed Meat Products
Fresh Meat
Bread
Chocolate / Chocolate
sweets
Milk / Kefir
Butter / Margarine
Yogurt
Cheese
Curd Countlines / Quark
Curd Desserts
Grains / Cereal Flakes
Baby Food
Shampoos
Face & Body Skin Care
products
Hygienic Paper
Laundry Detergents
Pet food
Source : Consumer Research & SCANTRACK
NEW PRODUCT LAUNCH IN LITHUANIA
MANY CHANGES,
NOTICED CHANGES
% new sku’s introduced in past year
CONSUMERPERCEPTIONOF
CATEGORYINNOVATION/CHANGE
MANY CHANGES,
UNNOTICEDLESS CHANGES,
UNNOTICED
LESS CHANGES,
NOTICED

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RANK #5RANK #4
Friend or family told me about it
Saw it in a store
Active internet searching
TV ad
Received a free sample
Newspaper or magazine
Brand/manufacturer website
Expert told me about it
Social media posting
Internet ads
58%
56%
48%
45%
38%
27%
26%
23%
20%
19%
RANK #3RANK #1 RANK #2
TOP SOURCES OF NEW PRODUCT DISCOVERY FOR EUROPEAN CONSUMERS
STORE IS A KEY DRIVER OF NEW PRODUCT DISCOVERY
Source: Nielsen Global Innovation Survey, 2015

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FINAL DECISION IS MADE IN THE STORE
„I always plan what to buy
before going to store “
LT - 78%
LV - 64%
EE - 72%
LT - 77%
LV – 58%
EE - 63%
„Although I plan, I always end
up buying additional groceries“

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SPACE MANAGEMENT INNOVATIONS

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Copyright©2017TheNielsenCompany(US),LLC.Confidentialandproprietary.Donotdistribute.Copyright©2017TheNielsenCompany.Confidentialand
proprietary.
SPACEMAN V12
Manage stock levels, visualize layouts, evaluate performance, create custom reports, integrates with clients‘
databases, replenishment systems.

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proprietary.
NEW IN 2017 – SPACEMAN AUTOMATION
1. PRIORITY
2. BLOCKS
3. ORDER
4. FACINGS
5. MIN/MAX
6. ADVANCED
7. PLACE
STORE 1 STORE 2

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NEW IN 2018: MOBILE SHELF PLANNER
TRACK
Measure both execution and
sales performance against plan
Finalize and publish live
planograms easily and
efficiently.
IMPLEMENT
Push live, interactive
planograms to store
personnel, allowing feedback
on execution vs. plan
PUBLISH

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NEW IN 2018: MOBILE SHELF PLANNER

UNLOCK GROWTH AT THE SHELF
with Nielsen Assortment & Space Optimization Solutions

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proprietary.
BUSINESS CASES
• “Select best assortment fitting into the current fixture”
• “If we expand total/reduce the category space by one bay which would
be the best assortment and what are its expected sales?”
• “In order to build my planogram, how much % space should I give to each
segment? And to each brand?”
• “What is the ideal stock on shelf and facings by SKU in the proposal?
• “ I want to have the best combination of items fitting into the current
fixture, but locking in some items”

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WHAT IS ASO?
✓ SPACE-AWARE ASSORTMENT OPTIMIZES RANGE AND
SPACE SEAMLESSLY
✓ PREDICTIVE ANALYTICS - MAKE SMARTER & FASTER
BUSINESS DECISIONS
✓ DATA - REFRESHED AND AVAILABLE TO DRIVE NEW
MODELS AS NEEDED – FULL USE OF MARKET AND
RETAILER DATA
✓ ONE TOOL INSTEAD OF MANY - ACCESS ONE PORTAL
VIA THE CLOUD (SAAS) FOR EASY COLLABORATION
✓ LINKS DIRECTLY TO PLANOGRAM SOFTWARE

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proprietary.
SOLVING COMPLEXITY THROUGH
EXCELLENT ANALYTICS

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ASSORTMENT POTENTIAL

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IMAGINE IF YOU COULD OPTIMIZE ASSORTMENT AND
SPACE AT THE SAME TIME
Wrong mix and stock by product
40 items
Potential Sales: $5,990
OOS Loss: $440
Right mix and stock by product
39 items
Potential Sales: $6,100
OOS Loss: $0.00
864
802
814
877
661

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CATEGORY
BRAND
FLAVOUR
SKU
CATEGORY
BRAND
FLAVOUR
SKU
EXAMPLE A EXAMPLE B
Which flavours are most incremental to the
category? Where should we look to develop?
Within our brand, which flavours should have
a larger share of the assortment?
THE “TREE STRUCTURE” DETERMINES HOW YOU CAN
ADDRESS DIFFERENT BUSINESS ISSUES

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PREDICTIVE, CONTINUOUS ANALYTICS
Integrated with Nielsen’s retail
measurement data, gives the ability
to optimize assortment plans
against the latest sales data, and
track sales performance on an
ongoing basis, resulting in more
accurate and better plan, using
best-in-class predictive analytics.

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EASY TEAM COLLABORATION & PUBLISHING
Easy to share results, story,
recommendations and get
feedback from your team.

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ASO KEY BENEFITS
ANALYSIS OPTIMIZATION ACTIVATION
➔ Assortment Potential
➔ Incremental Impact
➔ Incremental Contribution
➔ Category Performance
➔ Space to Sales Analysis
➔ What if scenario building
➔ Product add/drop
➔ Complex rules based
scenarios
➔ Optimisation comparison
➔ Planogram creation
➔ Assortment Tracking

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MAKING
PEOPLE
WANT OUR
STUFF

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MAKING
STUFF THAT
PEOPLE
WANT

Conference "Retail Innovations 2018”: „Space aware assortment optimization“, Saulius Stirbys, „Nielsen“, Assortment & Space Optimization Leader Baltics

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Conference "Retail Innovations 2018”: „Space aware assortment optimization“, Saulius Stirbys, „Nielsen“, Assortment & Space Optimization Leader Baltics