Buehler`s Template - Customer Insights

Voice of the Customer
Retail Shifts and Packaging Impacts
November 11, 2015
Christopher Buehler
Customer Insights
Buehler’s Fresh Foods
cbuehler@buehlers.com
Presentation Overview
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Introduction
Changes in the Demographic Landscape
Customer-Retailer Relationship
Grocery eCommerce Paradigm
Packaging Implications, including private label
Wrap-Up and Questions
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Introduction.
• 4th generation family member
• Maastricht University
– MSc Int’l Business Strategy & Innovation
– Lecturer
• Buehler’s Customer Insights
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Customer feedback; market research
Loyalty card
Target marketing
eCommerce, digital initiatives
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Introduction to Buehler’s.
• Based in Wooster, OH
• E&H Family Group
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– Buehler’s Fresh Foods (15 locations)
– E&H Hardware (16 locations)
UPS Stores and State Liquor
Agencies
Beer growler stations, coffee
shops, restaurants
Community meeting rooms,
recycling centers
Online shopping (click and
collect) since 2007
Why the pineapple logo? Symbol of hospitality and welcoming stemming from Colonial America.
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Demand for local at Buehler’s
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Changes in the Demographic Landscape
2015: year of the Millennial generation
Population (US) in Millions by
Generation
90
• Aging population? Yes, but…
• +100 million people by 2050
• Millennials 56 years old by 2036
80
70
60
50
40
– Immigration of Millennials to U.S. will outpace mortality for another 35 years
30
20
• Shift being felt by retailers
10
0
2014
– Boomers traditional source of income
2021
Silent
2028
Boomer
Source: Pew Research, 2015
2036
Gen X
2043
2050
Millennial
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Changes in the Demographic Landscape
-16%
38%
% of Total CPG Dollar Volume
40%
35%
30%
+70%
32%
29%
25%
20%
 Impacts to CPGs
 Impacts to packaging
17%
 Increased options, ease of use packaging
(i.e. laundry and dish detergent pods)
 Conscientious of environment impact of
packaging, but willingness to pay more is
minimal
 Bright colors resonate
15%
10%
5%
0%
Millennials
Boomers
2014
Source: Nielsen, 2015
Purchasing power decreasing with
Boomers, but quickly increasing for
younger generation w/families
2020
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Changes in the Demographic Landscape
The minority is the majority by 2050
90
85
80
70
% of Total
• Minorities coming to the U.S. in
increasing numbers
• 51% of U.S. population by 2050
• Higher minority birth rates means
increasing families
• International/ethnic assortments
opoprtunities in supermarket
63
60
50
47
40
29
30
17
20
10
3.5
0.6
0
White
Hispanic
1960
Source: Pew Research; Census Bureau, 2011
11 12 13
2011
Black
9
5
Asian
2050
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Younger shoppers are changing the way we look at food
Traditional
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“Foodies”
Consumer segment seeking more experience in their food at home and away
Embracing home cooking again. 75% cook multiple times per week  opportunities for grocers
88% prefer to shop at grocery store where they can see, touch food and interact with others
Technology = sharing  check phones 150X per day; 95% of Millennials have phone 100% of time
Source: GMA, 2015
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Healthy selections take center stage
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Healthy means so much more today. Fresh, minimally-processed, organic, transparency,
locally-sourced.
Visual elements important in packaging, including health claims on foods already considered
healthy
44%
22%
…shoppers purchasing “healthy”
foods despite higher price
(+5% from 2014)
…shoppers purchasing organic
on typical shopping trip (+11%
from 2013)
Source: Retail Leader, 2015
51%
…families purchasing “healthy”
despite higher price
28%
…families purchasing organic on
typical shopping trip
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Economic realities keep aspirations “at bay”
• Realities of income limitations keep shoppers
selective
– Example: Millennials with children choosing
convenience and health for babies
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Pouches +7%, traditional -2%
Organic +26% (prev. 2 years), non-organic -6%
• SKU optimization and targeted marketing by
retailers and CPGs critical
• Limited budgets = greater cross-shopping
– 10% of customers have no primary store
Source: Nielsen, 2015
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Retailer – Customer Relationship
A world of constant distractions and shifting consumer demands…how are
supermarket retailers reacting?
RETHINKING
PERSONALIZE
traditional loyalty
programs
customer
promotions &
messages
Attain greater
customer
INTERACTION
“You’ve got my data. Use it to my advantage, and to make me feel good – and keep it secure.”
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Nielsen Consumer Study, 2015
Source: Catalina Marketing, 2015; Progressive Grocer Independent, June 2014; Progressive Grocer, April 2015
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Harnessing the hidden power of customer data
(via customer analytics)
Almost 70% of independents have
loyalty program
Price still dominant, but…
• 48% shop due to convenience
• 32% shop because of loyalty program
Source: Retail Leader, “Personal Tech Shapes Shopping”, 2015
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Mobile
E-mail
In-store
eCommerce
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Grocery eCommerce Paradigm
Source: Instore, July/August 2015
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Grocery eCommerce Paradigm
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2015 becoming year of online grocery shopping
Start-ups flooding into market
Only 1/3 of top 75 U.S. grocery stores have eCommerce
11% of food purchases by 2025 will be online
Driven primarily by convenience
Convenience
Customer Drivers of
Online Grocery Ordering
Budgeting
Time Savings
Source: Instore, July/August 2015
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Who is the “online grocery shopper”?
• Early technology adopters? Not necessarily.
• Highly educated females, 25-44 years old, with families
Other frequent users include:
– Limited mobility due to illness,
surgeries, disabilities
– Those that view grocery shopping
as a necessary chore
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Businesses have grocery needs, too
• Business sales relatively untapped and untargeted
• In-house charge program caters to business needs
– Charge card and loyalty card in one
• Customized online shopping experience to business
customers
• Personal relationship with businesses
• Leverage purchase data
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Opportunities in Grocery eCommerce
• Convenience & time savings are huge motivators
– Suggests broader mid-market reach
– Retain price-insensitive customers looking for easier shopping solutions
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Suggestive selling efficiencies at every step
“Omni-channel” experience with mobile apps, web, in-store
Scalability
Integrated meal solutions & planning
Dampens store location issues
Source: Forbes, “What’s the Future for Online Grocery Shopping?”, June 2015; Oliver Wyman, October 2014
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Challenges in Grocery eCommerce
• Logistical complexities and overall costs
– Smaller independents struggle to implement
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Population densities
Traditional merchandising methods (i.e. impulse buys)
Order fulfillment and packing
Pace of technology innovation
Payment security
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eCommerce Packaging Implications
• Temporary storage of orders and limited delivery
vehicle space demand effective packaging
• Prepared foods ordered online
– Temperature regulation
• Robust packaging to withstand second round of
shipping (i.e. grocery delivery)
• Product size, shelf-life considerations for B2B
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Store-wide packaging
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Convenience-driven (example: dish detergents)
Access to greater retail-ready packaging
Excess packaging waste (sustainability perspective)
Health claims on packages
Sizes/portions
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Private Label Packing Considerations
• Price remains dominant reason for primary store
selection
– Private label seen as important part of pricing strategy
• Demand for differentiation minimal
• Selection/variety concerns for retailer
• Greater value-pack, institutional availability
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Wrap Up & Questions
Thank you for your time and attention!
Any questions?
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