joint value creation - grocery manufacturers association€¦ · metro and roland berger shopper...

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Metro and Roland Berger Shopper Momentum 2010 presentation_ FINAL

VERSIONPATO CHECK.pptx

Shopper Momentum 2010

Naples, FL – November 10th 2010

Joint Value Creation –How Retailers and Manufacturers use Customers Insights to Capture Value

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2Metro and Roland Berger Shopper Momentum 2010 presentation_ FINAL VERSIONPATO CHECK.pptx

AGENDA

Joint value creation using CCR at Metro Group

PRESENTATION

How will CCR shape future cooperation between retailers and manufacturers?

DISCUSSION

SHORT INTRODUCTION

Who we are and why we are here

1.

2. 3.

1. SHORT INTRODUCTION

Who we are and why we are here

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Tim Manasseh, Roland BergerPartner, Consumer Goods & Retail Global Leadership Team

André Pallinger, Metro GroupHead of Corporate Development & Strategic CM, real,- Group

Patrick Müller-Sarmiento, Roland BergerPartner, Consumer Goods & Retail Global Leadership Team

Introductions


http://www.rolandberger.com/expertise/experts/expert_profile/rbsc-exp-profile_Patrick_Mueller-Sarmiento.html

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Founded in 1967 in Germany by Roland Berger

37 offices in 26 countries, with approx. 2,000 employees

180 Partners currently serving approximately 1,000 international clients

Among the top 5 global strategy consultants in the world

and the only 1 of European origin

Roland Berger Strategy Consultants is a global consulting firm –We provide strategic advice to the world's top decision makers

Our profile


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METRO GROUP 2009

Sales EUR 68 bn

EBIT EUR 1.7 bn

Countries with presence 33

Number of staff 290'000

Metro Group is one of the biggest retailers in the world



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real,- is the leading hypermarket chain in Germany

STRATEGY

> Leading hypermarket chain in Germany

> Focus on one-stop shopping

> Successful new marketing campaign ("Just one store. You won't need more")

> Comprehensive turnaround process since 2008

Sales EUR 11 bn

# of Stores 444

# of Articles up to 80'000

Number of Staff 58'000

Sales ares 4' – 18'000 sqm

group at a glance


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The key trends in the German retail landscape are relevant to the US

GERMANY

Consumers are very price driven1Highly consolidated market, on supplier and retailer side2High discounter share >40% although stagnating3Own brands already with high markets shares (about 25%)4New channels (e.g. online) with high growth rates5

USA

Consumers increasingly price sensitive

Ongoing consolidation decreases number of players in the market

Discount concept of increasing relevance to certain segments

Strong growth of own brands in traditional retail channels

New channels already widely developed, and surging ahead


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2. PRESENTATION

Joint value creation using CCR at Metro Group


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Unsatisfied customers, declining sales and excessive promotional activity had created a negative spiral

Negative sales trend

Greater pressure on margins

Unsatisfied customers

Stores attempt to offset with higher regular prices

Declining customer numbers

Rise in promotional activity


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Vision and target positioning of real,-

Competent food provider with a focus on freshness and an attractive non-food range – which customers only find at real,-


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The real,- brand needed to be sharpened and made attractive in order to improve customer perception

Target-customer-specific marketing

1 2 3 4More customer-friendly

Optimized product range, price andpromotion

Private labels established


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The permanent turnaround of real,- is based on three strategic pillars

Taking account of the sales and cost side

Sharpening the real,-brand Optimizing

branch portfolio Adjusting costs and structures

A.B.

C.


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CCR has been the most important element for the turnaround of real,-

ASharpening the real,- brand

CCR50%

SCM25%

Rest25%

PROFIT CONTRIBUTION

Projects based on CCR contribute

50% to the profit

increase of the turnaround process


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Customer Centric Retailing follows four clear steps

1 2 3 4Understanding

the customer

Customer

segmentationDeriving and

testing measures

POS data

Loyalty card data

Optimization of our entire Marketing mix…

> Store layout> Assortment > Pricing > Promotion > Placement

1Conservative & demanding

Healthy nutrition2

Young and fast cuisine3

Cold kitchen4

Discount price level5

Smart budget family6

Hoarding consumer7

Bottle store (reusable)9

Small present10

Young family with child8

Involving

industry partners

Source: Roland Berger

Consumer panel data


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We derived eight clear improvement levers for the usage of customer insights


Store layout

Organization/processes

Brand

Marketing mix

Product assortment

Price

Promotion

Placement

1 We identified 10 customer segments and their growth potential

2 We aligned our entire communication to our target customer segments

3 We optimize the store layouts based on the individual customer "DNA"

4 We identify the potential for private labels and branded goods

5 We know which items to offer to our customers at the best price

6 We select the items for our flyers to attract most target customers

7We adjust shelf layouts and chronology according to the shopping behavior of our customers

We set up a customer-centric organization

Cus-tomer

8


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The old customer segmentation has been replaced with a new, needs-based segmentation

Few insights into needs and behavior of customers

OLD

SEGMENTATION

> Socio-demographic

characteristics

formed the basis

for segmentation

> Result:

Two segments

– Family

Managers

– Best Agers

1 CUSTOMER


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The old customer segmentation has been replaced with a new, needs-based segmentation

OLD

SEGMENTATION

> Socio-demographic

characteristics

formed the basis

for segmentation

> Result:

Two segments

– Family

Managers

– Best Agers

NEW

SEGMENTATION

> Shopping behavior,

irrespective of socio-

demographic characteristics,

forms the basis of the

segmentation

Selective needs-based customer segments with major relevance to purchasing behavior

1 CUSTOMER


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5

6

7

10

10

10

12

13

13

14

5

4

7

10

7

12

9

14

16

16

Based on the loyalty card data we formed 10 selective customer segments according to their purchase behavior

Conservative & demanding1

Cold kitchen4

Discount price level5

Smart Budget Family6

Hoarding consumer7

Bottle store (reusable)9

Small present10

Young family with child8

Healthy nutrition2

Young and fast cuisine3

Share of sales [%]

Customer share [%]

Share of promotion [%]

18

16

19

26

18

23

17

25

30

23


1 CUSTOMER


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At category level, the value potential in each segment was identified

1 CUSTOMER

12995938992114

138102798290100

1029990102100107

Distribution of spending on laundry detergent vs. total market – Outline

Hyper-

market

real,-

Super-

market

Dis-

counter

2.5%

2.1%

2.5%

2.1%

TOTAL

Conservative & demanding

Healthy nutrition

Discount price level

Cold kitchen

Young family with

child

Young and fast cuisine

126657090

65110

Source: GfK comparison, Roland Berger


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We clustered our stores based on their individual customer "DNA" and size

3 STORE LAYOUT OPTIMIZATION

STORE cluster

LOCATION portfolioI II

PRODUCT range alignment III

Customer segment distribution [%]Store A Store B Store C …

1 22 17 31

2 17 32 19

3 12 19 9

4 19 12 7

5 22 9 12

6 8 11 22

Bo

nn

sto

re Strong

affinity

Weak

affinity

Fruit & vege-table

Fish

Pizza

Ready meals

… …

10

stores… …

9

stores… …

Customer cluster

APremium

BStandard

CBasic

<3,000m2

3,000-5000

>5,000m2

20 stores


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We are optimizing our product range with the help of the customer data

Product range optimization – Outline

Soft drink cate-gory

Customer needs

Coca Cola (80 items)

Innovations (10 items)

Low price (60 items)

Growth trend

Units sold

Loyalty

Interesting items for private label development

SAMPLE ANALYSES

FIND NEW PRODUCTS

Identify the product range gaps

1 OPTIMIZE CURRENT ASSORTMENT

Define possible delisting candidates to

develop private labels

2

CUSTOMER DATA HELP

4 PRODUCT ASSORTMENT


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Customer data is helping us to increase loyalty and customer reach of our entire assortment

4 PRODUCT ASSORTMENT

EXAMPLE: NOODLES

75% of branded

products with low customer relevance

Clear strategies for low relevance products:

1. Increase loyalty and reach with CCR levers

2. Delisting to free shelf space for other brands

3. Replace with private label items

high

Customer

reach [%]

Ø

low

highØlow

rQ SPAGHETTI NO.5

rQ LASAGNE Brand B LASAGNE

Brand B SPAGHETTI

Brand A LA COLLEZIONE LASAGNE

Brand A SPAGHETTI

Brand C SPAGHETTI

Loyalty [Index 0-100]



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Pricing adjustments enable us to target our key customer segments and subsequently increase sales

NEGATIVE SPIRAL

Best relevant

prices

PRINCIPLE

5 PRICING OPTIMIZATION

Segment specific

shopping

baskets

Price

sensitivity of

segments

Competitor

prices


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For our flyers we selected the right items for the right customer segments

6 PROMOTION STRATEGY

PRINCIPLE

Maximizing

gross profit

Advertising

share

Normal sales/

customer

Frequency


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By switching out certain items in our flyer we increased its attractiveness for key segments

6 PROMOTION STRATEGY

ACTUAL NATIONAL FLYER ACTUAL TEST FLYER

Reacti-vation

Cust.Reach

Ø receipt Cust.Reach

Ø receipt

3% 1% EUR 34 4 % 2% EUR 47

Customer segmentCR index

Week 25


CS4

77

CS3

38

CS2

57

CS1

102

Reacti-vation

95

CS1

148

CS2

72

CS3

95

CS4

Reacti-vation

Cust.Reach

Ø receipt


Cust.Reach

Ø receipt

3 % 2 % EUR 38 5 % 3% EUR 38

Reacti-vation


Week26

96

CS4

93

CS3

95

CS2

92

CS1

13791166108

CS4CS3CS2CS1


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All our store planograms were reviewed and optimized based on available customer data

7 PRODUCT PLACEMENT

CUSTOMER ANALYSIS ACTION TO OPTIMIZE PLANOGRAM

Adidas, Axe, Cliff

Low price + value brandsNivea & mild gels

Basic brands

FaDuschdas

Alternative gels

Adidas

Axe/Cliff

Nivea

Low price

Mild gels

Alt. gels

Basic M.

OL

D

Adidas, Axe, Cliff

Nivea & mild gels

Low price + value brands

Axe/Cliff

Adidas

Mild gels

Nivea

Basic brands

Fa Duschdas

Low price

Alternative gels

NE

W

Low price

Duschdas

Fa

Axe/Cliff

Nivea

Mild gels

Alternative gels

Adidas

Basic brands


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Together with an industry partner we completely refurbished the FHC category

PROJECT EXAMPLE

BEFORE AFTER


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The results speak for themselves!

Further enhance usage of customer insightsI

Grow in new ChannelsII

Secure and increase profitabilityIII

PROVEN TURNAROUND CLEAR WAY FORWARD 2015

2008 200920072003

3.5%

2012

Target

3%

2010

POSITIVE INDICATORS

> Overall satisfaction

improved:

– Price perception

– Product

presentation

– Service

> Brand perception

improved

> Outperformed the

market


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3. DISCUSSION

How will CCR shape future cooperation between retailers and manufacturers?


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We see two ways for collaboration based on Customer Centric Retailing

2 CUSTOMER INSIGHTS

> Focus on extending current data base of fmcg players

> Marketing and product development optimization

> Retailer as insight supplier

1 JOINT VALUE CREATION

> Collaboration with suppliers to create joint growth through common data base

> Complete category optimization

> All demand and supply levers used -not only promotion

> Detached from regular negotiations


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DISCUSSION

Will Customer Centric Retailing be the future or is it just an academic discussion?

How can customer insights help to capture value for retailers and manufacturers?

How will CCR shape the future collabo-ration between retailers & manufacturers???

? ?KEY QUESTIONS


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Metro and Roland Berger Shopper Momentum 2010 presentation_ FINAL

VERSIONPATO CHECK.pptx

Delivering results

joint value creation - grocery manufacturers association€¦ · metro and roland berger shopper...

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