Private Brand Summit Master Presentation
Transcription
Private Brand Summit Master Presentation
October 22-23, 2015 Arlington, VA Agenda- Day 1 Welcome and Introductions Ric Alvarez & Bob Cutler Doug Baker Guest Speaker Mike Taylor, FDA Guest Speaker Senator Hoeven Government Relations Jennifer Hatcher & Team IX-One Bruce Kern Rise of the Discounters Mark Baum & Oliver Wyman • • • • • • FMI Antitrust Compliance Policy Nutrition Facts Panel FSMA Menu Labeling Facts Up Front (presented by FMI) H.R. 1599 • Regulatory Update • Getting Involved in Your State • 2016 WIC Priorities Dinner & Night-Time Monument Tour Guest Speakers Mike Taylor, FDA Kari Barrett Facts Up Front Update The number of moms aware of FUF has increased over the course of the campaign Both on an unaided and aided basis, moms are becoming increasingly aware of the FUF campaign. Unaided Awareness of Facts Up Front 24%↑ 14% 15% Gen Pop Moms Aided Awareness of Facts Up Front 65% 75% 28% 32% 30% 19% 16% African American Moms 82% 81%↑ Gen Pop Moms 14% Hispanic Moms ↑ 62% 63% African American Moms Base: Total Respondents; Gen Pop Moms (W3 N=1021 , W2 N=1007, W1 N=1406), African American Moms (W3 N=113 ,W2 N=122, W1 N=249), Hispanic Moms (W3 N=143 ,W2 N=140, W1 N=241) Q800 Are you aware of a new nutrition labeling on food and beverage packages called Facts Up Front? Q810 Recently, some companies have been adding nutrition labels to the front of food or beverage packages summarizing information from the Nutrition Facts Panel. This label is called “Facts Up Front” and looks like this. Have you seen this labeling while grocery shopping? 71% 80% 85% ■ Wave 1 ■ Wave 2 ■ Wave 3 ↑ Hispanic Moms ↑/↓Indicates statistically higher/lower proportion from wave 1 Most Understanding Measures have Increased Since Benchmark FUF’s ease of use has been the top aspect since the start and has directionally improved as moms have become more aware of the program. Agreement with Statement (Top 2 Box) Information is easy to use Wave 1 67% Wave 2 69% Wave 3 71% Change W1-W3 +4 Helps me be more informed about amount of calories in products 60% 61% 63% +3 Make me more knowledgeable about nutrition content of product 56% 56% 59% +3 51% 52% 56% +5 Helps me be more informed about amount of sodium in products 51% 53% 55% +4 Helps me find and purchase foods that fit my nutrition needs 50% 48% 55% +5 45% 45% 50% +5 Makes me curious to learn more about food I’m eating 45% 44% 49% +4 Helps me decide what foods to buy 43% 44% 49% +6 Pay attention to the info Helps me make quicker purchase decisions ↑/↓Indicates statistically higher/lower proportion from wave 1 Top 2 Box (Rated 6/7 on 7 pt. scale) Base: Aware of FUF; Gen Pop Moms (Wave 3 N=819, Wave 2 N=729, Wave 1 N=927) Q905 Please indicate how much you agree or disagree with each using a scale from 1 to 7 where 7 is “strongly agree” and 1 is “strongly disagree.” Facts Up Front.org Retail.factsupfront.org Guest Speaker, Senator Hoeven H.R. 1599 Jennifer Hatcher SVP FMI Government Relations Stephanie Barnes FMI Regulatory Counsel Pat Davis VP Government Relations Hannah Walker Director, Government Relations Responding to the rise of the discounters: As Aldi expands and Lidl enters, how and when should incumbent American grocers react? October 22, 2015 Our Guest Speakers Need Chris’ Photo George Faigen Chris Baker Roland Neuwald Partner, North American Retail & CPG Practice at Oliver Wyman Partner, North American Retail & CPG Practice at Oliver Wyman Former CEO of Real, Germany, Member of Metro Group Private Brands Summit 15 Agenda Item Speaker Introduction Mark Baum George Faigen Discounters and their relevance to North America George Faigen Discounters’ successes in other geographies. How did they do it? George Faigen Live Interview: Lessons from a Pro George Faigen Roland Neuwald What does this mean for you and your company? George Faigen Question & answer session George Faigen Private Brands Summit 16 Discounters have entered and won in mature markets across the world – Aldi and Lidl have plans to make a big push in the US Private Brands Summit 17 Both of these companies have had massive success in other geographies… Company Facts Europe’s largest grocery chain 3x the size of Walmart in private label; already 16th largest food retailer in US and Canada • 11,500+ stores • 10,500+ stores • 26 countries; EU only • 17 countries; EU, AUS, US • $87BN revenue (No. 1 in EU) • $75BN revenue (No. 4 in EU) • EBIT margin > 3% • EBIT margin > 4% • ~1,600 SKUs including leading brands • ~1,500 SKUs (still) focused on private label • Average 9,800 sq. ft. stores • Average 9,800 sq. ft. stores • Highly flexible • Highly flexible Private Brands Summit 18 …and the magnitude of their ambitions for the US appears substantial indeed Plans in the United States • 100 US stores opening in 2017/18 • $3 BN investment planned in the US • HQ established in Arlington, VA • Adding 530 stores prior to 2019 • Store sites being purchased Private Brands Summit • Expanding to CA by mid-2016 19 But they start from a low base in a nation not used to this style of grocer retailing – is there really any cause for concern? US Market by Channel $1,500 BN Liquor stores Drug stores Warehouse clubs Convenience stores Discounters 4% Mass merchant Supermarkets / grocery Note: All data for 2014 Private Brands Summit 20 The German discount model is simple but powerful Lowest possible prices Matching discounters on price is not an option. Aldi’s extraordinarily lean operating model allows them to run approximately 7% EBITDA despite up to 12% gross margin disadvantage Very high level of store efficiency Discounters use store-specific mixed cases and pack sizes with display ready packaging, including bar codes on all four corners to enable quick scanning; they have very high turnover, and deliver a unexpectedly high level of service with a minimum number of staff Excellent product quality and value Low cost, but high quality private label products, including fresh products “Bulls Eye” lines Hard discounters use a single or very small number of products designed to pull in volume from the entire category. They design private label products that deliver equal to or better quality to national brands, sold at prices 30 to 60% less. Sophisticated talent management Top school hiring, paying highest salaries in the industry Private Brands Summit 21 The range will start with shockingly inexpensive products, but evolve and soon be very credibly adapted to the local market Sweden UK Private Brands Summit 22 They will look to take over baskets one step at a time… • At it’s core is a targeted “basket erosion strategy” – Bridgehead categories – Focused on KVIs – Ultimately, taking over the entire basket Private Brands Summit 23 …and go aggressively after the Fresh categories – Lidl will move aggressively into branded promotions on key SKUs Private Brands Summit 24 Both will seek to drive footfall using so-called “in-outs” – great value promotions on non-food products outside the core range Private Brands Summit 25 Their aim will be to establish “unbeatable” credibility on value while continually moving up the food chain on “offer” Customer perception mapping Discounters quickly improve their offer Mass channel Weak Offer Strong + - Traditional grocery / supermarkets - Private Brands Summit Weak Discounters Value Strong + 26 In Germany, this strategy has moved them from irrelevance to dominance German grocery market shares 100% Discounters 90% 80% 70% Neighborhood grocery 60% 50% 40% 30% Supermarkets 20% Mass merchants 10% 0% 197 0 198 0 199 0 200 0 201 0 201 4 Source: EHI, GfK; Note: Excludes specialty stores Private Brands Summit 27 It took 20 years, but it is now happening in the UK - explosive ID sales growth and expansion at a breathtaking pace Number of stores Market share Aldi market share, number of stores UK (1990 – 2012) Market share growth: new stores Market share growth: like-for-like Recession : 1990 Q3 to 1991 Q3 Financial crisis recessions 3.5% 500 450 3.0% 2.5% 350 300 2.0% 250 1.5% 200 150 1.0% Number of stores Market share 400 100 0.5% 50 0.0% 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Source: Planet Retail, Kantar, ONS Private Brands Summit 28 If you leave an open flank, it may take time, but discounters will exploit it – and they are very willing to play the long game Germany UK United States Are the discounters present? Were/are consumers looking for value? Were/are the discounters poised for growth? 40% 20%* 4%+ What market share have the discounters achieved? *: UK market share estimate includes Asda Private Brands Summit 29 The early format in the US is easy to look down upon – but it will improve as they expand Early format (US) Polished format (Germany / UK / Australia) • Standard, uninspiring assortment • Localized often exciting assortments • Very basic store interiors • Expanded non-food assortment to clothing and other goods, similar to mass merchants • Limited fresh selection • Non-mainstream practices (e.g. no credit card acceptance, pay-for-use shopping carts) • Excellent customer service • In-store practices are mainstream in the markets • UK Supermarket of the Year 2012 & 2013 • Lowest prices, lowered every year • Lowest prices Private Brands Summit 30 Incumbent complacency is the discounter’s best friend Mindset Reality “The discounters are serving a different market segment” “We sell national brands, and they don’t!” The demographics of the customer sets are nearly identical Discounters offer brand names too, and their private label product is often preferred “We are just as cheap. Consumers just don’t get it!” Discounters can offer cheap prices, without compromising on quality “Our promotional program can match the discounters value. We get paid handsomely to run promotions. So it´s a win-win!” EDLP has a stronger value perception than promotions Source: EHI; Note: Excludes specialty stores Private Brands Summit 31 Live Interview with George Faigen and Roland Neuwald Private Brands Summit 32 What might this mean to you? 1 2 3 4 5 Understand the threat Discounters will grow their presence in the U.S. and steal market share from incumbent players. You need to understand where you are on the customer perception map vs. discounters Resist before discounters become a serious threat Do not wait until the discounters have become a strong presence in your territory Drive out costs relentlessly Aldi is going to be here for the long term. You’ll have to lower your cost basis or else you’ll struggle to invest in price Focus on the right assortment How strong a connection do you have between what you offer and what customers expect, including private label Improve and leverage fresh departments You can continue to differentiate on the fresh offer, but it’s no guarantee. Just having a produce department isn’t good enough Private Brands Summit 33 Discounter growth and market penetration follows a broadly predictable pattern – even though the timing varies by country Progression of discounters Discounter improves assortment, signs of localization Improved Fresh proposition at the discounter Opening in your market Announcement of broad market entry No discounter presence / immediate threat Discounter buys real estate / hires team Declining sales in your most price sensitive shoppers Declining sales in your KVIs Declining trips from your customers Where do you fall on the timeline? Private Brands Summit 34 An effective discounter strategy involves improving not only on price but also on offer Customer perception map Mass channel Weak Offer Strong + - YOU Traditional grocery / supermarkets - Private Brands Summit Weak Discounters Value Strong + 35 What if mulligans were possible in countries where discounters took off? Full-range traditional grocers would… • …take the discounters very seriously early on • …spend a lot more time understanding what really is happening underneath the surface • …realistically assess their competitive positioning relative to the discounters • …prioritize sales and cash profit growth over percentage-margins • …invest in shelf prices instead of raising them whenever they can • …use promotions as an element of their strategy, not its absolute core • …communicate value and price competitiveness • …seriously upgrade the range offering, service, friendliness, shopability, check out times • …introduce value brands immediately and narrowed the price gap to brands • …introduce store brands, lifestyle brands, organics, kids brands – all with good value for money Private Brands Summit 36 What does this mean for private label manufacturers? A number of possible upsides…. … and a few risks or downsides • Opportunity to become a contractor for Aldi and Lidl • Traditional approach to private label could become more esoteric • Opportunity to invest in capacity, innovation, new product lines • Risk of losing power by adopting Aldi or Lidl approach • Aldi and Lidl could drive an increased interest in private label and, over time, create greater demand for private label vs. national brands With so much potential upside, what do you do next? Private Brands Summit 37 Questions from the group Private Brands Summit 38 An Industry Solution for Store Brands Bruce Kern The Global Food Distribution Challenge: The Global Food Distribution Challenge: How do you manage large packaged food programs without accurate supplier and product information? How do you eliminate the redundancies of maintaining nonstandardized data for each trading partner? When it comes to managing and sharing product data and images, the entire Supply Chain traditionally waste valuable resources (both time and money) trying to do it themselves. The Store Brand Challenge: The Store Brand Challenge: How do you reduce operating costs for manufacturers by developing one-way-of-working for creating and sharing product information and images for all of their clients, ultimately lowering acquisition costs? How do you bring efficiency to retailers by having consistent, complete and standardized information and images from each of their Store Brand manufacturers? The Idea: Create ONE solution with the goal to enhance the supply chain through the efficient sharing of complete, standardized and accurate product data and images. © 2015 The Data Council All Rights Reserved. How It Works: Outsource the collection of product data from retail or DC locations – use an expert with leading-edge capability to physically weigh, measure and image every product. Use that expert to extract ALL information from the saleable unit and it’s case, engage manufacturers for nonpackaging information and organize it in a searchable database. Align specific data points to drive efficient management of Quality Assurance Programs, Certification Compliance and more, across the organization. © 2015 The Data Council All Rights Reserved. How Is It Done?: Work with member’s products directly to get the data and images straight from the source. 3-step process ensures complete, accurate and standardized data. 1. Images and Measurements 2. Data Collection 3. Access and Experience © 2015 The Data Council All Rights Reserved. What Information Is Captured?: Over 800 different data points, and up to 30 images per product from all levels of packaging including case, inner pack and unit. © 2015 The Data Council All Rights Reserved. The Benefit of IX-ONE Store Brands: ONE Comprehensive Version of the current store brand data and image portfolio, removing the redundancies of maintaining non-standardized data for each trading partner and streamlining supply chain access to product data and images. © 2015 The Data Council All Rights Reserved. The Value Proposition: We do all of the work… Suppliers, retailers or distributors send products to one of our fixed imaging locations or work can be accomplished at the warehouse or store level All product, except perishable, can be returned to saleable inventory We weigh, measure and image with state-of-the-art equipment We extract all information printed on case, inner pack and unit We perform a minimum of 4 quality checks on images and data The Membership team reviews product files with brand owners to insure correct content before it is made available for use WE DELIVER “One version of the Truth” for images and data © 2015 The Data Council All Rights Reserved. Thank you for your time! For more information or you would like to arrange a demonstration, please email or call. Address 10475 Fortune Parkway, Building 100, Suite 110 Jacksonville, Florida 32256 Contact Info tbenscoter@thedatacouncil.com Telephone Office: 904.512.3200 Rise of the Discounters Mark Baum, SVP Industry Relations George Faigen, Partner, Oliver Wyman Chris Baker, Partner, Oliver Wyman Roland Nuewald, Former CEO, Real Germany Dinner & Night-time Monument Tour Agenda- Day 2 Trading Partner Alliance Updates • • Consumer Information Transparency Initiative Hazardous Waste & On Shelf Availability Doug Baker Daniel Triott Food Safety Hilary Thesmar Safe Quality Food Institute John Schulz Consumer Affairs David Fikes Digimarc/GS1 Private Brands at FMI Connect 2015 Goals & Objectives Review & 2016 Plan Review & Recap Consumer Information Transparency Initiative SMARTLABEL™ www.smartlabel.org Objective - Starting with the end in mind We would like your brands to participate in the SmartLabel™ program as soon as possible but no later than December 2017 Benefits fall into three primary categories: • As a Brand Owner*: The potential trust, reputation and loyalty building capability of product ingredient, nutritional, health & safety, social and environmental transparency. • As a Brand Owner*: The value of mitigating consumers concerns and potential legislative action through self-reporting. • For Retailing, as a data provider and as a data recipient: Material benefits from operational simplicity by eliminating duplicative data management processes and facilitating a more seamless, accurate information flow between brand owners and other data recipients like retailers and third party data aggregators. * Applicable to National, Regional. Local or Private Label Brands The Purpose of Our Initiative Responding to the information needs of today’s consumer, the Information Transparency Initiative will enable brand owners to provide consumers the detailed information they seek about the food, beverage and consumer products they use and/or consume. A consistent, digital format will be used to provide clear, accurate and easily accessible information via “Search” or “Mobile Scanning”. 57 A collaborative effort from 90+ Companies 1WS Abbott ACC Accenture ACI Action Co (The) Ahold Amazon.com Amway Corporation Arylessence Big Heart Pet Brands Bimbo Bum.Bee Campbells Cargill Clorox Coke Colgate ConAgra CSPA Deloitte DuPont 58 ES3 FCPC Ferrero Firmenich FMI FONA GenMills Geo Pac Givaudan GMA Gravity Tank GS1 Harris Teeter Hershey Hormel House-Autry Mills, Inc. Idahoan IFF IFRA JMSmucker Kellogg Kraft Kroger Kwikee Land O'Lakes L'Oreal Mars McCormick Meijer Mondelez Monsanto Nestle Ocean Spray Cranberries P&G PCPC PepsiCo Pharmavite Pheonix Brnds Post RB Reily Fds Revlon RILA RQA SCJ Seventh Gen. ShopWell Snet Stibo Sun Products Sunny D Sustainability Consortium Symbology Syngenta Target Tate&Lyle Topco Trace1 TraceOne TROY Group Tyson Foods U.Labs Unilever Wakefern Walgreens Walmart WhiteWave Wrigley The Work Will Get Done Through Four Working Groups Food Data Attributes Co-Chairs Ahold General Mills PepsiCo, Unilever PCHP Data Attributes Consumer Experience Data Management Co-Chairs L’Oreal P&G Co-Chairs Clorox Coca Cola Hershey’s Wakefern Co-Chairs ConAgra Kraft Kroger Nestle Topco •115+ person Food Attribute work group •65+ person Non-Food Attribute work group •65+ person work group •95+ person work group •Consumer Expertise •Regulatory Expertise •Regulatory Expertise •Regulatory Expertise •Data Management Expertise •Consumer Expertise •Consumer Expertise •Clearly defined tasks •E-Commerce Expertise •Clearly defined tasks •Clearly defined tasks •Clearly defined deliverables •Clearly defined tasks •Clearly defined deliverables •Clearly defined deliverables •Set expectations •Clearly defined deliverables •Set expectations Facilitator: Deloitte Facilitator: Deloitte Facilitator: gravitytank Facilitator: Accenture 325 People from 90 Companies / Organizations 59 Today we call it the Consumer Information Transparency Initiative Gen. 1.0 60 Tomorrow Consumers will know it as 61 How it Works Brand 1____ 2____ 3____ 4____ 5____ 6____ 7____ 8____ Brand 1____ 2____ 3____ 4____ 5____ 6____ 7____ 8____ Brand 1____ 2____ 3____ 4____ 5____ 6____ 7____ 8____ Brand 1____ 2____ 3____ 4____ 5____ 6____ 7____ 8____ Brand 1____ 2____ 3____ 4____ 5____ 6____ 7____ 8____ Brand 1____ 2____ 3____ 4____ 5____ 6____ 7____ 8____ 62 • Credible • Trustworthy • Memorable • Motivates That “attribute” is stored and maintained in ONE PLACE ONE PLACE can feed identified recipients including the ITI Landing Page The vast majority of data consumers want we already provide % that must know that piece of information 63 Current requirement New information FOUNDATIONAttributes Social Responsibility Food attributes: 52 required, 189 voluntary Non-Food attributes: 51 required, 57 voluntary Pet Care attributes: 28 required, 91 voluntary 64 ESSENCE – The Landing Page 6 5 ESSENCE – The Landing Page • Maintains a dashboard of information to give consumers info right away without requiring more clicks • All Gen.1 attributes have been mapped to these five tabs • Easy and fast to navigate from one section to another with tabs across the top Five Food Tabs • Nutrition • Ingredients • Allergens • Other Information • Company / Brand 6 6 ENGINE- Consumer Path to Landing Page via a Brand SEARCH ENGINE- Consumer Path to Landing Page via a Brand SEARCH Via a Brand Website ENGINE- Consumer Path to Landing Page via a Retailer SEARCH Via a retailing website Or app ENGINE- SCAN Consumer Path to Landing Page ENGINE- Consumer Path to Landing Page SCAN using a QR Code * ENGINE- Via a Certified APP or Retailing Web Site Consumer Path to Landing Page ENGINE- Global Data Synchronization Network ILSI Nutritional Data Base 7 3 www.smartlabel.org • SmartLabel.org website up and running • CONSUMERS will be able to access a searchable database of participating SmartLabel™ items • BRANDS will be directed to a “Prospective Participant” site brands@smartlabel.org Participating Brands • Register as a “Participating Brand” Via brands@smartlabel.org • Execute a SmartLabel™ Trademark License agreement with GMA – $5.00 per item (defined as unique SmartLabel™ Landing Page for GMA & FMI members, $15.00 per item for non-members • Provides access to the Participating Brands Sharepoint site containing – Access to SmartLabel™ Landing Page Plug & Play tool – Trademark agreement – Other Best Practice resources 75 Hazardous Waste Hazardous Waste An Industry Wide Challenge • Significant issue impacting all Trading Partners – – – • Complex, ever changing and inconsistent landscape – – – • Regulatory Operations Compliance Federal State Local Absence of clear guidelines – – – – Transportation Reverse logistics Reclamation Lack of execution understanding • High compliance cost throughout the supply chain • Absence of industry product data base in a fast changing environment Key Industry Priorities • Address lack of reliable data to identify products considered as hazardous waste – Upstream, from often insufficient, inaccurate and inconsistent identification on the product. – Downstream from absence of a comprehensive, accurate and accessible data base. • Fix/Improve Product design to minimize risks ( e.g.: Aerosol cans activator issues) • Address the disposal issue (process and compliance) to minimize costs – What are the Activity Based Cost Key metrics? – How to prevent waste in shipping and handling? – What is the manufacturer’s guidance on how to dispose of waste? • Develop Best Practices to 1) Identify, 2) Handle 3) Transport 4) Dispose of hazardous waste. – Key components of what is considered hazardous to be regulatory compliant, how it Impact store operations. – Train retailer associates on best practices. • Regulatory issues: – Better understand and collaborate with regulatory agencies such as EPA.. FMI Hazardous Waste Task Force • An opportunity to lead the industry and address the challenge – – – • Retailers Suppliers Service Providers Task Force Benefits – – – – – – Supply chain processes simplification. Costs reduction. Increased collaboration between trading partners. Increased cooperation with Federal and State Agencies. Development of best practices . Consumer satisfaction and food safety improvements. On Shelf Availability Business Challenge • OSA and loyalty with the joint shopper have become an industry imperative. • Metrics do not match shopper’s experiences . Retailers and Manufacturers are losing. – 8 % failure rate: 1 of every 12 items. – 8-10% potential revenue loss. – Response to repetitive OSA issues: 3 strikes you are out ! • 1st time : 70% Substitute. • 2nd time equally likely to substitute as to make no purchase or change store. • 3rd time 70% change store/retailer. Critical Gaps Current Practices vs. Desired Performance • Metrics/Data : No standard definition of OSA. • Process/Practice: Poor event planning synchronization between trading partners. • Organizational: No clear inventory owner among retailers. • Technology Integration: Over 78 percent of manufacturers say they do not use retailer forecasts for production and deployment planning. Call For Action • Zero on Hand Baseline Definition • One Demand Signal to drive One Supply Chain • Collaboration to better align timing of event forecast plans & commitments • Joint high and low side contingency plans. Trading Partner Alliance On Shelf Availability Journey • Phase I (2013-2014) – – – • Phase II (2014-2015) – – – – • Good Better Best future framework across the End To End Supply Chain. Model for Partner Interaction. Learning's shared at 2014 Supply Chain Conference. Critical Gaps: Metrics/Data, Process/Practice, Organizational/Technology. Call for Action: White Paper published at 2015 Supply Chain Conference. Industry Wide Communication Plan to maximize awareness and adoption. Phase III ( 2015..) – – – Develop and begin activation against the phase III journey to bring OSA to 98%. Validate and Provide learning/education through Retailer/Supplier Pilots. Develop industry communication plan to share progress, pilot results and maximize adoption.