METRO Group's Eastern Europe Expansion Strategy
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CEE – lessons for growth Successful business strategies vary across Europe. What works in Western countries may not necessarily be best for the still fast-growing markets of Central and Eastern Europe. What are the differences and how can strategies be aligned efficiently? Where is the highest potential and what are the threats? Last but not least: how have these emerging markets achieved in two years what it took the “mature” Western European markets 10 years or more to accomplish? With a keynote address by Frans Muller, Member of the Management Board, Metro AG, this special seminar will deliver practical knowledge and best-practice examples from CEE countries and provide ready-to-use, down-to-earth solutions for companies in that region. It is also a great opportunity for participants who would like to learn more about emerging markets and shape their strategies and operations accordingly. Facilitated by ECR Poland and ECR Russia
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METRO Group's Eastern Europe Expansion Strategy
- 1. METRO Group‘s Expansion Strategy and Experiences in Central and Eastern Europe ECR Europe Forum & Marketplace CEE Special Seminar Berlin, 27th May, 2008 Frans W.H. Muller © METRO AG 2008
- 2. 2 METRO Group International Retail Competence More than 2,400 locations 31 countries in Europe, Africa and Asia 270,000 employees Selling space of around 12 million m² © METRO AG 2008
- 3. 3 Sales 2007 (net) Sales 2007 (net) by Regions Asia/Africa 3% 2006 2007 Change bn € bn € in % Eastern Europe METRO Group 58.3 64.3 10.4 24% Germany 24.8 26.3 6.0 Western Europe 19.5 20.5 5.7 2007 (excl. Germany) Eastern Europe 12.6 15.7 24.4 Germany Asia/Africa 1.4 1.8 26.7 41% Western Europe 32% © METRO AG 2008 Source: Annual Report 2007
- 4. 4 Eastern Europe Has the Best Economic Growth Rates Worldwide Average Economic Growth Rate in % p.a. [2007-2012]* Private GDP Consumption Eastern Europe 16.3 16.2 South America 13.6 13.3 Asia 9.0 11.1 Africa 8.2 8.4 Western Europe 6.5 6.8 © METRO AG 2008 North America 5.2 5.2 Source: FERI, Bad Homburg (Status: May 2008), * nominal growth
- 5. 5 Russia and Ukraine Are the Biggest Eastern European Economies with Very Favourable Growth Rates Average Economic Growth Rate in % p.a. [2007-2012]* Private GDP Consumption Russia 9.0 6.3 Ukraine 8.0 6.1 Romania 6.7 5.3 Slovakia 5.9 6.9 Bulgaria 5.1 5.6 Poland 4.7 5.2 Croatia 4.6 4.8 Czech Rep. 4.3 5.0 Serbia 4.2 5.5 © METRO AG 2008 Hungary 2.2 2.8 Source: FERI, Bad Homburg (Status: May 2008), * real growth
- 6. 6 METRO Group’s Presence in Central & Eastern Europe Country Stores Since Stores Since Stores Since Hungary 13 1994 20 1997 Poland 26 1994 50 1997 42 1998 Romania 23 1996 14 2006 Czech Rep. 12 1997 Bulgaria 8 1999 Slovakia 5 2000 Croatia 6 2001 Russia 39 2001 10 2005 11 2006 Ukraine 18 2003 Moldova 3 2004 Serbia 5 2005 © METRO AG 2008 As of 31st December, 2007
- 7. 7 Central & Eastern Europe Provided Excellent Sales Growth in Recent Years: Example METRO Cash & Carry Sales Development [bn €] 29,9 31,7 26,4 28,1 24,0 25,1 21,0 22,7 15,0% 10,2 15,2% 11,7 6,2 16,9% 7,3 21,9% 8,8 5,1 13,1% 5,7 8,5% 4,5 13,3% 5,4% 6,2% 6,5% 6,0% 8,1% 5,5% 4,7% 16,6 17,7 18,3 18,9 19,2 19,3 19,7 20,0 2000 2001 2002 2003 2004 2005 2006 2007 Other MCC Countries MCC Eastern Europe © METRO AG 2008 Region Central & Eastern Europe also includes Greece and Turkey in this chart
- 8. 8 Our Formats in Central & Eastern Europe © METRO AG 2008
- 9. 9 Market Entry Process METRO follows a very systematic international market entry process 2 years Country Screening / Entry Recruiting Feasibility Study Scoring Management qualified local staff © METRO AG 2008
- 10. 10 Key Pillars of METRO Group’s Expansion Strategy Understanding local customer needs Having a clear, internationally transferable format Reaching high expansion speed and securing highly productive locations Hiring qualified local staff Setting up professional back-end solutions Opening new sourcing opportunities and building up a strong and reliable supplier portfolio Dealing with shorter life cycles Transferring solutions and best practises across countries © METRO AG 2008
- 11. 11 METRO Group Contributes to the Growing Economies in Central & Eastern Europe: METRO Cash & Carry MCC makes small local retailers and restaurants more competitive Sourcing from local suppliers Creation of up to 240 jobs per METRO Cash & Carry store Local investment in land and construction Maximum food safety, hygiene and traceability Traffic decongestion through one-stop- shopping, parking area and modern goods receiving facilities Contribution to the establishment of a modern supply chain © METRO AG 2008 Reliable and transparent taxpayer, good corporate citizen
- 12. 12 Reaching High Expansion Speed: 2001 Example Russia Expansion Russland, kommt noch # Stores 2 2 RUSSIA © METRO AG 2008
- 13. 13 Reaching High Expansion Speed: 2002 Example Russia Expansion Russland, kommt noch # Stores 3 3 RUSSIA © METRO AG 2008
- 14. 14 Reaching High Expansion Speed: 2003 Example Russia Expansion Russland, kommt noch # Stores 2 7 5 RUSSIA © METRO AG 2008
- 15. 15 Reaching High Expansion Speed: 2004 Example Russia Expansion Russland, kommt noch # Stores 2 14 6 RUSSIA © METRO AG 2008
- 16. 16 Reaching High Expansion Speed: 2005 Example Russia Expansion Russland, kommt noch # Stores 3 22 3 7 2 RUSSIA © METRO AG 2008
- 17. 17 Reaching High Expansion Speed: 2006 Example Russia Expansion Russland, kommt noch # Stores 3 31 6 8 2 3 RUSSIA © METRO AG 2008
- 18. 18 Reaching High Expansion Speed: 2007 Example Russia Expansion Russland, kommt noch # Stores 3 2 40 4 11 9 11 3 5 2 RUSSIA 2 2 © METRO AG 2008
- 19. 19 Key Learnings in Central & Eastern Europe: Customers & Markets Dealing with shorter life cycles Demand for high frequency of innovation (assortment, merchandising techniques, remodelings etc.) Do not underestimate market size and buying power Openness for private labels and imported goods © METRO AG 2008
- 20. 20 Key Learnings in Central & Eastern Europe: People High level of education Investment in and training of people necessary to understand business model Bringing in expertise from abroad High level of fluctuation Making jobs interesting through challenging tasks, appropriate compensation and national / international perspectives © METRO AG 2008
- 21. 21 Key Learnings in Central & Eastern Europe: Operations High expansion speed important Building up efficient supply chain, quality assurance, and logistics Supporting partners along the value chain (preparing for audits, re- engineering production, education etc.) Be transparent and compliant © METRO AG 2008
- 22. © METRO AG 2008 Customer 22
- 23. Contact Frans W.H. Muller METRO AG Member of the Management Board Metrostrasse 1 40235 Duesseldorf Tel.: +49 (0) 211 969 3103 Fax: +49 (0) 211 969 490 6216 © METRO AG 2008 E-Mail: muller@metro.de Internet: www.metrogroup.de
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- 58. On Shelf Availability in Lenta economy in each purchase. always.
- 59. We work for people in our country live better and wealthier, saving their money every day Nationwide roll- out began Format renovation, first «economy hypermarket» opened 26 Total number of stores in Russia Number of stores outside SPb 13 Oleg Zherebtsov Number of stores in Saint-Petersburg Founder, Chairman of the Board, 13 shareholder +2 stores cash&carry format 3 9 First store opened 6 13 4 10 3 3 3 9 2 2 6 1 1 1 1 1 4 2 3 3 2 3 1 1 1 1 1 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 г. 2007 г. 59 Source: Lenta Functional Meetings economy in each purchase. always.
- 60. Lenta is… Top-10 Hypermarket Food retailers, by Top-10 Hypermarket Food retailers, by annual turnover 2007, $ billion number of stores opened by April 2008 Metro C&C 4,6 Metro C&C 40 Auchan 3,7 Mosmart 29 Lenta 1,6 ALPI 28 Okay 1,2 Lenta 26 Lenta’s annual turnover 2004 Karusel 0,8 - 2007, $ billion Karusel 23 1,559 ALPI 0,8 Auchan 17 Mosmart 0,7 x 3,5 Liniya 17 1,016 Liniya 0,7 Okay 16 0,653 Real 0,5 Vester 15 0,442 Vester 0,4 Perekriostok 15 2004 2005 2006 2007 60 Source: Lenta, desk research, company’s data Functional Meetings economy in each purchase. always.
- 61. Lenta operates in 6 of 7 Federal Districts, in 11 cities DC North-Western FD Central FD Far Eastern FD Privolzhsky FD Ural FD Southern FD DC Siberian FD DC 61 Source: Lenta Functional Meetings economy in each purchase. always.
- 62. Russian market seems to be attractive Share of Top5 retailers by Number of Hypermarkets per 1 country, % million inhabitants Denmark 95 Finland 26 GRDI score, 2007 Norway 92 Germany 20 Finland 82 France 20 Sweden 81 GB 18 Germany 80 Denmark 17 Switzerland 16 Hungary 75 Czech Republic 15 Austria 65 Sweden 14 Switzerland 65 Slovakia 14 UK 63 Ireland 11 Belgium 63 Spain 9 Ireland 59 Austria 9 France 58 Italy 8 Netherlands 57 Hungary 8 Portugal 52 Norway 7 Spain 48 Belgium 7 Czech Republic 39 Portugal 6 Italy 39 Poland 5 321 hypermarkets total (April 2008) Greece 29 Greece 4 Poland 15 Netherland 3 2,23 hypermarkets per 1 million people Russia 10 Russia 2 62 Source: Mintel, RBC, AC Nielsen, AT Kearney Functional Meetings economy in each purchase. always.
- 63. Annual retail turnover growth rate in Russia – 24% (2007) Food retailing growth rate in Europe Russian retail (food + nonfood) growth, and Russia, %, 2006 / 2005 2000 - 2007 Greece 14 36% Russia 10 31% Hungary 9 23% 22% 24% 20% Ireland 8 14% $448 billion Sweden 7 10758 Czech Republic 6 8690 Poland 5 7630 Finland 5 5888 6235 Portugal 5 4750 4577 4062 Netherlands 4 3803 3321 Denmark 4 3099 2374 2463 Spain 4 2031 1669 4870 1271 3568 3940 UK 3 2914 1771 2114 1103 1430 Norway 3 Austria 3 2000 2001 2002 2003 2004 2005 2006 2007 France 2 Total annual retail trade turnover, billion RUB Italy 2 Nonfood annual retail trade turnover, billion RUB Switzerland 1 Food annual retail trade turnover, billion RUB Belgium 1 Total annual retail trade turnover gross rate, % Germany 0,4 63 Source: GKS, Mintel Functional Meetings economy in each purchase. always.
- 64. Russian retail is young and has a huge potential… 142 200 000 of people (official data, 2007) 121 500 rub annual income per capita 17 267 300 000 000 rub ($719 billion) … but there are some peculiarities: North-Western FD Central FD 10% 26% Far Eastern FD 5000 Privolzhsky FD Ural FD km Southern FD 21% 9% 5% 16% Siberian FD 14% 64% of total population live on 13% of total square 9 000 km, 11 days by train 64 Source: GKS Functional Meetings economy in each purchase. always.
- 65. Competition is stronger than official data shows 15% limit of domination (municipal district / region) price control by government bureaucracy & corruption lack of free locations for new hypermarkets lack of effective human resources 65 Functional Meetings economy in each purchase. always.
- 66. In some cities market is oversaturated Structure of steady customers of leading hypermarket nets in SPb (% of customers made main part of purchases in this net) August- January- July- January- July- October- April-June’07 December’05 June’06 December’06 March’07 September’07 December’07 N=455 N=924 N=975 N=966 N=446 N=441 N=403 Покупают 34 30 36 только в Ленте 49 45 49 44 Покупают в 66 70 64 51 55 51 56 Ленте и других магазинах Покупают 34 33 48 43 41 48 42 только в ТК О'Кей Покупают в Т К 66 67 52 58 59 52 58 О'Кей и других магазинах Покупают 39 34 31 35 43 42 только в Т К 52 Карусель Покупают в 66 69 65 57 58 61 Карусели и 48 других магазинах % of customers make main part of purchases in this net % of customers make main part of purchases in other nets 66 Source: Tracking Research by O+K for Lenta Functional Meetings economy in each purchase. always.
- 67. On Shelf Availability is very important today Young, rapidly increasing market Customers become more and more Competition is also rapidly exacting increasing Price become less important for Huge territory people, but are still important Difficult logistics Effective assortment is what people expect to find in hypermarket Low level of market saturation People expect to find items they Regional expansion era began in used to buy 2006-2007 No goods on shelf – no money! 67 Functional Meetings economy in each purchase. always.
- 68. Sometimes customers couldn’t find items they need Food NonFood 89% 11% 44% 56% % of customers buy all goods they need in Lenta % of customers have to visit other stores to buy some items they need Assortment research Competitors price and assortment monitoring Call-center to collect customer’s Trade personnel offers surveys requests 68 Source: Assortment Research by WorkLine for Lenta, December 2007 Meetings Functional economy in each purchase. always.
- 69. Customers should find item they need! Customer couldn’t find SKU it needed SKU is on shelf, but customer SKU is not on shelf couldn’t find it (Out Of Shelf) Navigation / Sections SKU is not SKU is in matrix, layout is not resizing Planograms in matrix SKU is in matrix, is but there is no SKU perfect were changed in store, but not on in store (Out Of shelf (Out Of Shelf) Store) Space planning and ad hoc projects Underorder Underdelivery by Underdelivery by Category management and supplier DC Assortment analysis OSA project + Stocks and orders report Physical audit 69 Functional Meetings economy in each purchase. always.
- 70. Space planning by Strategix oftware Z-Matrix Assortment SAP based tool planning Floor Planning Store space planning by Intactix Optimal stock Space Planning volume for each Shelf space planning by Intactix SKU in each store Optimal layout Intactix Shelf layout execution Knowledge Base Intactix Monitoring and analysis Knowledge Base of the results 70 Functional Meetings economy in each purchase. always.
- 71. Assortment report: SKUs, people wanted to buy in Lenta, but didn’t find them FOOD: позиции, которых покупателям не хватает в ТК Лента, и которые они вынуждены покупать в других магазинах (таблица содержит только те SKU которые респонденты называли 2 и более раз) Город ТК СчетТовар Группа Категория Астрахань 31 1 алкоголь водка-5 озер- Алкогольные напитки Крепкий алкоголь Астрахань 31 1 алкоголь водка-5 озер-бутылка 0,5л Алкогольные напитки Крепкий алкоголь Астрахань 31 1 алкоголь водка кедровая-зеленая марка-1 л Алкогольные напитки Крепкий алкоголь Астрахань 31 1 алкоголь водка-зеленая марка-кедровая 1л Алкогольные напитки Крепкий алкоголь Астрахань 31 1 водка- зеленая марка- кедровая 1 л Алкогольные напитки Крепкий алкоголь Астрахань 31 1 водка зелёная марка кедровая-главспирттрест-1 л Алкогольные напитки Крепкий алкоголь Астрахань 31 1 водка-зелёная марка-1л Алкогольные напитки Крепкий алкоголь Астрахань 31 1 водка-зелёная марка-кедровая 1л Алкогольные напитки Крепкий алкоголь Астрахань 31 1 алкоголь водка-немирофф-перцовая 0,5, 0,7 л Алкогольные напитки Крепкий алкоголь Астрахань 31 1 водка Немиров- Украина- 1 л Алкогольные напитки Крепкий алкоголь Астрахань 31 1 водка-немирофф-0,5л 0,7л Алкогольные напитки Крепкий алкоголь Астрахань 31 1 коньяк-старый кёнигсберг-0,5л Алкогольные напитки Крепкий алкоголь Астрахань 31 1 коньяк-старый кенинсберг-по 0,5 Алкогольные напитки Крепкий алкоголь Волгоград 32 1 водка ВВ- отечественная- 0,5, 1 л Алкогольные напитки Крепкий алкоголь Волгоград 32 1 водка-в/в-0,5л 0,75л Алкогольные напитки Крепкий алкоголь Волгоград 32 1 водка-вв-0,5-0,75л Алкогольные напитки Крепкий алкоголь Волгоград 32 1 водка - немиров - 1л Алкогольные напитки Крепкий алкоголь Волгоград 32 1 водка Немирофф- отечественная- 0,5, 1 л Алкогольные напитки Крепкий алкоголь Волгоград 32 1 водка-немиров-0,5л Алкогольные напитки Крепкий алкоголь Волгоград 32 1 водка-Немиров-1л Алкогольные напитки Крепкий алкоголь Волгоград 32 1 водка-немиров-1л Алкогольные напитки Крепкий алкоголь Волгоград 32 1 водка-Немиров-1л Алкогольные напитки Крепкий алкоголь Волгоград 32 1 водка-немирофф-1 л Алкогольные напитки Крепкий алкоголь Волгоград 32 1 водка-немирофф-1 л Алкогольные напитки Крепкий алкоголь Волгоград 32 1 водка-отеч немирофф-на березовых бруньках Алкогольные напитки Крепкий алкоголь Волгоград 32 1 водка-отеч немирофф-с перцем Алкогольные напитки Крепкий алкоголь Волгоград 32 1 водка - тещины слезы - 0,5 литра, 1 литр Алкогольные напитки Крепкий алкоголь Волгоград 32 1 водка - тещины слезы - 1 литр Алкогольные напитки Крепкий алкоголь 71 Functional Meetings economy in each purchase. always.
- 72. Stocks and orders report 72 Source: Stocks&Orders report, May 2008 Functional Meetings economy in each purchase. always.
- 73. OSA project Since 2005 Data we supply ECR: All of Lenta stores Only some suppliers Weekly update Full or partial Out Of Store Incorrect stocks Out Of Shelf (calculation) Cause analysis Service Level DC covering Undersales losses 73 Functional Meetings economy in each purchase. always.
- 74. OSA project allows us to measure OOS efficiently 25% 20% OOS analytics outsourcing: 26 stores*1 manager + 40 categories * 1 manager + logistic dept. are free from OOS report 15% preparing Out Of Shelf calculation: analytical model 10% to reveal OOShelf cases 5% Benchmarks EDI 0% 23-Apr-06 05-Jul-06 03-May-06 14-May-06 24-May-06 04-Jun-06 14-Jun-06 25-Jun-06 Retailer1 Retailer2 Retailer3 Retailer4 Retailer5 74 Source: OSA report, 2006 Functional Meetings economy in each purchase. always.
- 75. 75 January 2007 25% February 2007 March 2007 Source: OOS report, May 2008 April 2007 20% May 2007 June 2007 July 2007 August 2007 September 2007 Functional Meetings October 2007 Results for Lenta: level of OOS is being reduced November 2007 December 2007 20% January 2008 February 2008 March 2008 April 2008 economy in each purchase. always. 16%
- 76. Thank You For Your Attention! alexey.orlov@lenta.com 76 Functional Meetings economy in each purchase. always.
- 77. Shopper-Based Design Category Management Project Poland : 2007 / 2008 Jerzy Glinka – Tesco Richard Reed – Procter & Gamble Femcare Reinvention in Tesco
- 78. Agenda • PART 1 : ECR Category Management Vision • PART 2 : Market Landscape & Category Challenges • PART 3 : Femcare Reinvention Project • PART 4 : Key Results & Learnings 78
- 79. PART 1 ECR Category Management Vision 79
- 80. Category Management Vision Shopper understanding and JBP ECR Efficient Consumer Response Europe are strategic choices for effective & critical category development at Retail 80
- 81. ECR Efficient Consumer Response Europe Category Management Vision Clarity on strategic alignment Consumer/ Information Fact based Shopper sharing decision making understanding Effective day to day co-operation
- 82. Part 2 Market Landscape & Category Challenges 82
- 83. Market Landscape Tesco Poland in 2008 • 304 stores (49 hypermarkets, 36 compact hypermarkets , 219 supermarkets) • 165 Towns, 5 Distrbution Centres • 23 Petrol Stations • 2 Brands : Tesco and Savia • 4,500,000 Customers a week • 230 MM transactions/year • Appr. 5,4% of Poland FMCG 83
- 84. Tesco Strategy : The Best Shopping Trip In Town • The prices are great • I can get what I want • The staff are great • I don’t queue • Shopping is easy and enjoyable • Tesco : For You And Your Family 84
- 85. Market Landscape P&G in Femcare Poland • Strong value and volume share player in Poland (42%, 35%) • 4 Brands : across Premium and Mid Tiers • Fastest share growth portfolio across last 2 years • Innovation leader in all femcare sub categories (ultra pads, thin pantyliners, scented & soothing femcare products) • Key category growth player across the market (avg. price index. 125%) 85
- 86. Key Femcare Category Challenges in 2007 • Deliver category growth in-line with or ahead of total business growth • Boost category avg. transaction value ahead of key competition • Improve Femcare category perception with Tesco shoppers and ahead of the market • Resolve Out Of Stock issue (esp. in Pantyliners) 86
- 87. Femcare Reinvention Project Built on extensive category-tailored / shopper researches: • Shopper Data I & II • Purchase Decision Tree studies • Segmentation studies • Adjacency research • Category knowledge / Focus groups (FDG) learnings • Out Of Stock shopper behaviours • Other regular industry sources eg Nielsen
- 88. Shopper Data Analyses BASIC SHOPPER UNDERSTANDING Shopper I Shopper II Household Panel Data + Questionnaire What shoppers do ! What shoppers think ! Strategic Direction = Strategy & Plan 31 Shopper I – quantitive data Shopper II – qualitative data Polish households Polish shoppers 88
- 89. Tesco Femcare sSopper vs. Key Competitors Analysis 2006 Loyalty Average number of visits Average amount spent per visit 2005 2006 Index 2006 Index 2006 Index Tesco 30,4 105 3,0 102 5,4 101 Auchan 26,6 104 2,6 100 6,4 111 Carrefour 30,4 113 3,2 111 5,6 111 Kaufland 24,1 106 3,2 110 4,6 99 Real (Hypermarket) 26,8 80 2,9 86 6,0 100 100 20,5 80 55,5 60 39,2 40 25,5 20 40,3 19,0 0 As % of Total Shoppers As % of Total Turnover 100 80 7,1 24,9 Loyals Hoppers Occasionals Tesco Femcare 58,6 60 40 – frequent visits but low spendings 68,1 25,2 20 16,1 0 As % of Total Shoppers Loyals Hoppers Occasionals As % of Total Turnover 89
- 90. Tesco Femcare Shoppers Rating 70 65,2 64,6 62,4 60 61,7 OVERALL 54 50 51% 52% 48% RATING 46% Area of 40 improvement 30 26% 20 10 0 Tesco Auchan Carrefour Kaufland Real (Hypermarket) % answers excellent/v.good Average Overall Rating 70 63,7 62,8 VALUE for MONEY 60 60,1 61,5 53,6 RATING 50 48% 47% 45% 41% Area of 40 30 Improvement 24% 20 10 0 Tesco Auchan Carrefour Kaufland Real (Hypermarket) % answers excellent/v.good Average Value for Money Rating 90
- 91. Tesco Femcare Category Perception Study Poland 2007 - Catamenials - Close enough - # Normalized Data Carrefo ur real,- Tesco Carrefour real,- Tesco Sklep oferuje duzy wybór rozmairów 2 opakowań różnych marek kobiecych 1 1 -2 1 -2 1 1 produktów do higieny intymnej Sklep oferuje dużą różnorodność kobiecych 3 produktów do higieny intymnej (podpasek, 2 1 -1 4 -1 1 4 wkładek, tamponów) Sklep oferuje wystarczający wybór dobrze 4 znanych marek kobiecych produktów higieny 3 -2 1 -1 -2 -1 1 intymnej Najnowsze produkty do higieny intymnej są 6 szybko dostępne w tym sklepie 4 1 3 0 0 1 3 7 Sklep oferuje szeroki wybór podpasek 5 2 -1 1 -1 1 2 8 Sklep oferuje szeroki wybór wkładek 6 2 1 0 0 1 2 9 Sklep oferuje szeroki wybór tamponów 7 3 1 1 1 1 3 Łatwo jest znaleźć na półce szukane przeze 15 mnie kobiece produkty do higieny intymnej 8 -3 -1 -4-4 -3 -1 Ceny promocyjne na kobiece produkty do 18 higieny intymnej są dobrze oznakowane 9 2 0 1 0 1 2 Pólki z produktami kobiecymi do higieny 19 intymnej są dobrze zorganizowane i ładnie 10 1 -3 -4 -4 -3 1 wyglądają Kobiece produkty do higieny intymnej w 22 promocji są zawsze dostępne - nie ma braków 11 -2 1 3 -2 1 3 towaru na promocji Wiem że w tym sklepie mogę zaufać jakości -4 -4 -1 0 26 kobiecych produktów do higieny intymnej 12 0 -1 Mogę całkowicie zaspokoic własne potrzeby -4 -2 0 27 jak również potrzeby mojej rodziny 13 -4 0 -2 Zdecydowanie mogę polecić moim znajomym/przyjacielom dokonywanie zakupów -5 -1 0 28 kobiecych produktów do higieny intymnej w 14 -1 -5 0 -5 0 5 tym sklepie 91
- 92. Shelf OOS shopper reaction study In case of OOS, Tesco loses more then 1/3 rd of potential shoppers Loss for Retailer 38,4 % 35,5 % Decline in intended expenditures Buy another brand in this 2,9 % store Don’t buy 34,7 % at all They buy Decline in 31,8% another intended version/size of expenditures this brand in this store They buy the Buy the brand brand in in this store at another store 21,9 % next buying trip 7,8% Shopper II Study 92
- 93. PART 3 Femcare Re-Invention Project 93
- 94. Femcare Reinvention Project Category Definition Key challenges Success Criteria Category Role 3 Month Category Review Category Assessment Range Review Plan Category Scorecard Data analysis Category Recommendation Category Strategies Process Final Reinvention Category Tactics In-store Implementation Plan Implementation 94
- 95. Femcare Reinvention Project Key project objectives: •Build CATEGORY VALUE (converting shoppers to higher tiers) => +4% increase of total category in 6M •Improve SHOPPER SATISFACTION (as defined in shopper study) => improve Tesco Fempro Value Share from 5.3% to 5.8% Reduce SHELF OUT OF STOCKS via assortment and shopper-based design shelving) => 4% OOS reduction 95
- 96. Femcare Category Strategies • Easiness - simplify shopper purchase decision at the SHELF • Trade-In - convince shoppers to start using Femcare Care products which they were not using before via driving awareness • Trade-Up - convince shoppers to buy more and better performing products • Trade-Across - convince shoppers to cross-shop through logical adjacencies and system usage education on-shelf 96
- 97. Category Tactics 1. Efficient Assortment: Category Recommendation base on: cumulative % of total sub_catego brand line_up SKU EAN 2007 Total sell-out sell-out PANTILINERSBELLA TRIO BELLA PANT ######## 334 218 zł 334 218 zł 8% PANTILINERSBELLA TRIO BELLA PANT ######## 293 897 zł 628 115 zł 14% OOS PANTILINERSBELLA SINGLE BELLA PANT ######## 260 022 zł 888 137 zł 20% PANTILINERSCAREFREE TRIO CAREFREE A ######## 209 789 zł 1 097 926 zł 25% PANTILINERSNATURELLA DUO NATURELLA ######## 202 532 zł 1 300 459 zł 29% reduction PANTILINERSBELLA SINGLE BELLA PANT ######## 182 288 zł 1 482 746 zł 34% PANTILINERSTESCO DUO TESCO PANT ######## 162 365 zł 1 645 111 zł 37% PANTILINERSCAREFREE TRIO CAREFREE PA######## 141 542 zł 1 786 653 zł 41% – SKU PANTILINERSLIBRESSE DUO LIBRESSE PA ######## 129 326 zł 1 915 978 zł 43% PANTILINERSCAREFREE TRIO CAREFREE A ######## 128 565 zł 2 044 543 zł 46% PANTILINERSDISCREET DUO ALLDAYS DIS######## 116 844 zł 2 161 387 zł 49% productivity PANTILINERSDISCREET DUO ALLDAYS DIS######## 88 555 zł 2 249 942 zł 51% PANTILINERSCAREFREE SINGLE CAREFREE M ######## 82 081 zł 2 332 023 zł 53% PANTILINERSBELLA SINGLE BELLA PANT ######## 78 930 zł 2 410 953 zł 55% PANTILINERS PANTILINERS PANTILINERS BELLA LIBRESSE ALWAYS SINGLE SINGLE DUO BELLA SLIM P######## LIBRESSE PA ######## ALWAYS NO ######## 75 167 zł 69 333 zł 68 275 zł 2 486 120 zł 2 555 453 zł 2 623 728 zł 56% 58% 59% analysis PANTILINERSLIBRESSE SINGLE LIBRESSE PA ######## 65 790 zł 2 689 518 zł 61% PANTILINERSDISCREET SINGLE ALLDAYS DIS######## 62 025 zł 2 751 543 zł 62% PANTILINERSCAREFREE SINGLE CAREFREE M ######## 60 373 zł 2 811 915 zł 64% PANTILINERSDISCREET TRIO ALLDAYS DIS######## 59 686 zł 2 871 602 zł 65% PANTILINERSBELLA SINGLE BELLA PANT ######## 57 625 zł 2 929 227 zł 66% PANTILINERSCAREFREE SINGLE CAREFREE FL######## 57 368 zł 2 986 595 zł 68% PANTILINERSDISCREET DUO ALLDAYS DIS######## 53 448 zł 3 040 042 zł 69% PANTILINERSDISCREET TRIO ALLDAYS DIS######## 52 364 zł 3 092 407 zł 70% PANTILINERSDISCREET TRIO ALLDAYS DIS######## 49 292 zł 3 141 699 zł 71% PANTILINERSBELLA DUO BELLA SLIM B######## 46 325 zł 3 188 024 zł 72% 97
- 98. Category Tactics 2. Efficient Shelving: Layout Recommendation based on: •Shopper Purchase Decision Trees •Shopper Based Design - category principles •Tesco “golden-shelf merchandising rules” •Formats design by category / store format to fit space & strategy 98
- 99. Implementation Plan, Actions & Owners What Who When Category Analysis & Vision P&G Innovation/ Jun’07 Tesco Commercial Range & Space Review Tesco Commercial/ Jul-Aug’07 P&G CBD Initial Reco for P&G – Tesco Commercial Sep’07 Assortment&Space Final category&planogram Tesco Range&Space Dept Oct’07 Stores Roll-out Tesco Operations/ Oct’07 P&G Operations 99
- 100. PART 4 Key Results & Learnings 100
- 101. Results: Femcare Reinvention implemented in 79 Tesco stores in October 2007 101
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- 104. Results: Category value growth Total category value grew by 6% after joint reinvention Cat value 34 500 000 34 000 000 33 500 000 33 000 000 Cat value 32 500 000 32 000 000 31 500 000 JAS-OND'06 JAS-OND'07 104
- 105. Results: OOS Reduction Avg. shelf availability improved by 4 % points and continues to improve. 96% 94% 92% 90% 88% 86% 84% 82% 2007-06-08 2007-06-22 2007-07-06 2007-07-20 2007-08-03 2007-08-17 2007-08-31 2007-09-14 2007-09-28 2007-10-12 2007-10-26 2007-11-09 2007-11-23 2007-12-07 2007-12-21 2008-01-04 2008-01-18 Source : weekly shelf availability checks by 3rd party audit agency 105
- 106. Next Steps: Shelf Optimization To include : overhead category signage, sub-category shelf dividers, on-shelf navigation/education, testers, “new’’section etc. (estimated additional Total Category growth : +4%) 106
- 107. Key Learnings Shopper-Based Insights = starting point for the work – „think like a Shopper” approach to highlight real opportunities Mutual Collaboration & Data Sharing = success driver Category Re-Invention = core business process - not just a range, space and layout project; not a “one off”. Excellence of Execution = a pre-requisite for success - a “make-it or break-it” factor for the category result 107
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- 109. • Thank you for your attention • Opportunity for questions 109