2. 2 / Retail Indaba
Consumer versus Shopper
Consumer
• Consumers become
shoppers when embarking
on a purchase path
• Consumers have a different
mind-set to shoppers
• Shoppers indeed need not
necessarily be one in the
same as consumers
• Consumers use/consume a
product or service
• Consumer marketing
focuses on building brand
awareness
Shopper
• Consumers are more
concerned about the brand
& aspirations whilst the
shopper seeks convenient
solutions, value &
differentiations
• Shoppers shop/buy a
product or service
• Shopper marketing, targets
consumer in a shopper
mind-set, aiming at decision
making process in store
4. 4 / Retail Indaba
South African Consumers Under Fire
• Economist warn inflation will
rise to 9% by end 2013
• Weaker Rand, high electricity
& fuel prices, labour costs &
droughts are to blame- in turn
grain & red meat expected to
rise, placing consumers
under stress as these are
staple foods
• Food price hikes will further
burden those struggling to
pay for electricity, health
insurance & school fees
• Due to high food, petrol,
electricity, transport and
labour costs, South Africans
have been counting on debt
to get them through the
month
• Consumers are increasingly
loaning to survive, often to
pay for lifestyles they cant
afford
5. 5 / Retail Indaba
South African Consumers Under Fire (Continued)
• Petrol price adding pressure
on indebted consumers,
having short & long term
effects;
• Short Term: Consumer will
have less disposable income
as many SA’s already live
below the breadline
• Long Term: Knock-on effect,
a price increase on food,
transport, electricity & other
necessities
• Due to high food, petrol,
electricity, transport and
labour costs, South Africans
have been counting on debt
to get them through the
month
• Consumers are increasingly
loaning to survive, often to
pay for lifestyles they cant
afford
6. 6 / Retail Indaba
South African Consumers Under Fire (Continued)
• Due to high food, petrol,
electricity, transport & labour
costs, SAs are relying on
debt to get them through the
month
• Consumers are increasingly
becoming indebted to
survive, often to pay for
lifestyles they can’t afford
“Consumers will be counting their coins this year as high food inflation, spiralling electricity cost and fuel
price hike bite hard. However, despite the pressure on wallets, retailers are not likely to change their
game plans”- Mail and Guardian, January 4th, 2013
7. 7 / Retail Indaba
Weighing on Retailers in South Africa in 2013
1) Price
Strategies
2) Ranging
3) Right
Sizing
4) Inflationary
• Pressure on carrying accurate
KVI’s at store level
• Discarding low profit contributors
• Understanding key price points
• Reducing pack sizes & retaining
price points
• Effective price increase
• Price sensitivity
• Price points
• Promotions (Depth & Length)
• Hybrid of EDLP & HILO
• Pressure on prices
• Energy inflation on manufacture &
logistics
• Fuel inflation in RM & FG
• Weakening Rand placing
additional inflation on imports
8. 8 / Retail Indaba
Consumer/Shopper and the Shelf Face
Wage inflation stagnant versus rising grocery basket
inflation
Seeking Value: Buying on promo & trip missions are
geared around promotions
Household usage is changing as consumers use
less and reduce waste
Trading down or across categories to extend value
on grocery basket
Trading down to smaller pack sizes due to the lower
price points
Trading across to lower valued categories effectively
substituting
Consumer/Shopper’s Reality Impact on Shelf Face
Basket spend is capped, change in
basket composition
Basket
Consumers are actively seeking the
promo deals
Deals
Stretching consumption of products:
Micro ROI approach
Usage
Moving down to lower tiered
offerings
Tier Steps
Sizes
Smaller pack sizes in more demand
Pack
Sizes
Switching categories & brandsSubs
9. 9 / Retail Indaba
Consumer/Shopper using Technology
Growing internet usage among consumers &
shoppers
Info savvy shoppers comparing price in real time
Brand & product information awareness at
unprecedented levels
Consumer /Shopper’s Reality Impact on Retailers
• Web offering need growing with
internet users
E-Com
• Web pricing versus in-store, needs
to correlate
Pricing
• Retailers have to respond & engage
with consumers in more compelling
conversations
Transparent
10. 10 / Retail Indaba
Understanding the Shopper
People shop in different ways and have different
needs
They are also likely to be shopping at different times
of the month and on different occasions
The way they shop different categories are also likely
to vary
These differences in behaviour highlight a need for
tailored target marketing for effectively engagement
with shoppers
Shopper’s Behaviour How to better understand the Shopper
Shopper characteristics in terms of
demographics and lifestyle
Who
Channels or retailers of choice,
identifying drivers & motivators
Where
Purchasing as well as consumption
or usage occasions
When
Category choice, frequency & spend
What
Pre-store planning & in-store
behaviour
How
Reasons for category & brand
choice
Why
12. 12 / Retail Indaba
Professional Shopper
Consumers
challenging the way
retailers package,
price & distribute
products
Using resources like
smartphone apps,
websites, cut-out
coupons, QR codes,
broad sheets & loyalty
cards to find best value
deals
Protracted economic
pressure &
technological
advances, bring rise to
this motivated, tech-
savvy & informed
shopper
Retailers are bundling
products together like
adding value to loyalty
programmes, offering
deals & investing more
in their PL to attract
consumers
70 % of shoppers
make shopping lists
prior to going to stores
whilst others download
coupons (U.S.)
Digital deals &
shoppers making use
of traditional tools
such as broadsheets,
cut-out coupons &
newspapers inserts are
on the rise
People will map out a
route to buy various
items from a number of
different retailers to get
the best deal
Reward programmes
also remain a key retail
strategy in SA, with an
estimated 10 million
people carrying at least
one loyalty card
13. 13 / Retail Indaba
Professional Shopper (continued)
Source: Daily Mail: “Rise of the ‘Professional Shoppers’: The Penny-Saving Consumers Making Supermarkets Nervous”, 9 March, 2013
“Supermarket consumer who approaches the weekly shop
with military precision in a bid to save money, taking no
prisoners when it comes to sniffing out a bargains. Those
who hunt out and share information online on the best
deals. Type of customers who will take to social networking
sites to communicate their penny-saving experiences”.
15. 15 / Retail Indaba
Private Label Growth
Private Label challenging national manufacturer
brands
Private Label share increased throughout Europe in
Q1 2013
Retailers moving to multi-tiered Private Label
offerings
Packaging plays a significant role in Private Label
success
Private Label focus for retailer
Private Label Activity Insights
Helping shoppers reduce their
weekly shop
Why
Shoppers willing to switch brands for
value/savings
Value
PL previously view as Econo offer,
now able to shift perceptions
Driver
Shoppers focus on quality of
packaging when evaluating PL
Pack
Profit, catman influence, purchasing
power, brand equity
WIFM
16. 16 / Retail Indaba
European Private Label Trends
Private Label
Share
• PL’s share growing across Europe with its value share up 0.5% at 35.6% & unit
share also up 0.5% at 45.1%
Unit Market
Share
• Manufacturers are fighting hard to protect their value & unit market share with
clever promotion & pricing strategies
Creativity &
Value
• Creativity & new value is a powerful sales driver & differentiator especially in
such a long economic slump
Trend Description
18. 18 / Retail Indaba
The Consumer and Recession
Post 2009 recession, SA consumers seem to have changed their consumption habits:
Consumers began to
“Down Trade”
Then “Product
Substitution” as Down
Trading was no longer
effective
Unrelenting economic
pressure has pushed
some consumers to
“No Trading”, where
they just cease buying
& consuming
19. 19 / Retail Indaba
Global Consumer Trends (Eurocentric)
Growing inflation driving grocery basket upwards on
cost curve
Shopper wallet not growing in relation to rising
inflation
Shift away from non-food as food becomes priority
Consumption patterns shifting as consumers adjust
to the times
Consumer and Shopper Trends Retail Implication
Cost push factors, energy &
resources
Pricing
Shoppers have to spend more effort
& energy in seeking value
Basket
Food purchasing prioritised over
non-food
Basics
• Using less product
• More multipurpose products
• Less wastage
• Less stock, more on demand
Change
in Usage
Patterns
20. 20 / Retail Indaba
Global Consumer Trends Involving Technology
On/Off Shopping is where the shopper seeks online
experience/data while in-store
Online pricing comparisons are becoming a key
measure of retailer competitiveness
Click and Collect: Ordering online but collecting your
purchases at the store
Loyalty cards are important to shoppers because this
supports the value aspirations
Consumer and Shopper Trends Retailer Implication
Retailers need to offer in-store web
portals with online offer
Tech
Webscraping competitor web sites to
compare pricing offers
Real time
Retailers developed a dedicated
drive through lane for collections
Adapting
• Basket analytics
• Trip mission analytics
• Targeted promotions by store
• Significant analytics skills
Shopper
analytics
21. 21 / Retail Indaba
Shopper in Europe 2013 Q1
Shopper in Europe is adapting to tough times
Struggling South Africa consumer’s woes perhaps light compared to heavy European woes, but the local
burden may increase
“Smart Shopper”
price cautious:
High promotion
activity
Strong presence
of PL
Price war
Shoppers are
extremely price
sensitive
Price is the heart
of the battle
Shoppers are
willing to buy
value for money
Non Food
categories are
the victim of the
tough times
22. 22 / Retail Indaba
Promotion in Europe 2013 Q1
• UK remains the champion with 52,7% of volumes sales on promotion
• Germany, solid discounter & PL culture, remains the country with lowest promotion
• Growth of hypermarkets, which is impacting hard discounters
Unprecedented Promotional Activity
Trend already reflecting in SA & will continue to grow as the mechanic of discounting becomes a key retail
strategy for success
23. 23 / Retail Indaba
Consumer Trends
Seeking Value
• Searching for best prices, using all available resources
• Promotional purchases
Consumption
Patterns
• “Down Trading”
• “Product Substitution”
• “No Trading”
Basket Changes
• Smaller basket numerically
• Increased frequency of trips
Household Debt
Rising
• PCE pressure
• Rising inflation vs flat income
Tech Savvy
• Growth in smartphone sales will increase e-commerce from its present infancy
• Price apps providing shoppers with pricing & product comparisons at store level
are growing
Product usage
• Using less
• Using multi-usable products
• Reducing wastage
• Lower stock levels
Trend Description
24. 24 / Retail Indaba
What it all means, so what ?
“Understand and respond to all the dynamics at play at the Shelf Face which affect your strategy”
• Shoppers seeking value, so huge focus on accuracy of pricing and promotions
• PL will continue to grow and develop in SA (opportunity)
• Manufacturers will be fighting to protect their share of sales (innovation crucial)
• Right sizing will continue, can create innovative opportunities
• Price points insight is key to strategy (supported by price sensitivity data)
• Promotions – level of discount, length of promotion & product combinations
• Pricing strategy needs to be dynamic & executed in real time
• Basket Analytics is a growing strategic tool required to discern consumption & buying
patterns
• Ranging accuracy at store level growing factor as ROI at Shelf Face receives focus
• E –Commerce effect is going to grow strongly as Smart Phone sales grow
Actionable items for retail players seeking success
