Personalization is driving growth in digital food retailing as shoppers embrace omni-channel commerce. Grocery retailers are focusing on personalized promotions, offers, and interactions that reflect each shopper's preferences in order to increase sales and customer satisfaction in the evolving digital landscape. Technologies like analytics, machine learning, and artificial intelligence are critical for retailers to personalize at scale and maintain relationships with individual shoppers.

1. Personalization is Driving Digital Food Retailing
Brian Crain, Head of Global Business Development, Precima
Jon Duke, VP of Research, Retail Insights, IDC

3. Today’s Presenters
Brian Crain
Head of Global Business
Development
Jon Duke
Research Vice President
IDC Retail Insights

4. Actionable Takeaways from this session:
• Seize opportunities for personalization as grocery shoppers embrace omni-channel commerce.
Develop a portfolioof digital services, leveraging your loyalty program, to amplify ROI on promotions
and discounts through personalized interactions.
• Close communication gaps with shoppers by reaching them across home, mobile, and in-store checkout to
deliver the right inspirational content and product suggestions, with just enough discount for each shopper.
• Leverage shopper data and implement an analytics foundation to serve the “segment of one.” Develop
competencies in analytics, precision, and orchestration to know, reach, and engage today’s digital grocery
shopper. Set a longer-term strategy to incorporatemachine learning and artificial intelligence in these efforts.
• Optimize advertising and media spending to complement your shift to personalized communications
and digital services.

5. Shifting consumer behaviors are met by new agile and innovative business models across industries that create
compelling choices for consumers and competitive challenges for traditional retailers across segments.
5
Shifting Consumers and New Competitors

6. eCommerce Growth
(Revenue YoY%)
8%Apparel & Accessories Stores
19%Electronics & Appliance Stores
1%Sporting Goods & Hobby Stores
14%Furniture & Home Stores
37%Food & Beverage Stores
Relative eCommerce
Penetration
Retail Segment
eCommerce Penetration and Growth
Different segments are at various stages of eCommerce penetration. Food retail has historically
been more insulated from eCommerce, but the segment is now witnessing transformation firsthand.

7. Digital Transformation in Retail
Omni-Channel Commerce
• Experiential Commerce
• Intelligent Order Fulfillment & Returns
• Virtual & Augmented Engagement
Curated Merchandise
Lifecycle Management
• Intelligent Product Design
• Curated Product Assortment & Positioning
• Product Innovation
Omni-Experience
Customer Management
• Next-Gen Customer Care
• Customer Experience Analytics
• Contextualized Experience
Digital Supply Chain Optimization
• Optimized Supply Networks
• Optimized Fulfillment Operations
• Supply Chain Accountability
Operational Scale and Agility
• Mobile Enterprise
• Connected Workforce
• Secure Omni-Channel Operations
• Profitability Optimization
Strategic Priorities Programs
In retail, transformation drives toward experiential retail where customer experience is the focus of innovation.
Personalization cuts across programs and initiatives on the transformation roadmap.

8. Personalization in Retail
8
Time of Day & Location
Offer Preferences and Product
History
Individual Shopping Frequency
Product Predictions
Offers with Likely Conversion
Product Substitutes or basket
builders
With ever-increasing digital interactions combined with technology and analytics that enable one-to-one
engagement in the digital universe, it is essential to understand customer expectations of personalization.

9. Personalization in Digital Food Retail–
Shoppers Expect More
An IDC InfoBrief, Sponsored by Precima May 2019

10. Shoppers’ expectations are complex
And, they’ll set their standards based on all their best digital experiences – not just those as food shoppers.
Let’s start with the basics. In-store prices still matter, but not by a wide margin.
Pay attention
to in-store prices
Say they respond to
in-store promotions
Want the right
assortment in
nearby stores
65% 63% 62% 61% 45%
Getting everything right, as often as possible, can pay off big.
Shoppers spend about 72% of their grocery budget with their primary store,
leaving 28 cents on every dollar up for grabs – by their go-to stores or others.
Say personalization
is important
Expect high-quality
products
Most of tomorrow’s shoppers are already shopping today.
Their expectations for shopping modalities and services that suit them better in every context will only increase.

11. 93% of shoppers participate in their primary grocery retailer’s loyalty program.
Orchestrating these demand drivers through loyalty programs will amplify the ROI on promotions and discounts.
Reaching customers when and where they want
amplifies ROI in promotions and discounts
What Shoppers Want
57% Loyalty rewarded with product suggestions
49% Contact on the right device or channel
48% Product suggestions matching tastes and preference
43% Contact at the right time and frequency
39% Inspiring content (recipes, healthy eating tips, and video)
*On average #US45037519 Sponsored byPrecima
Sales Lift Retailers Expect*
6.4%
6.5%
6.4%
6.3%
6.0%
Most shoppers (76%) want discounts and promotions, and retailers expect, on average, a 7% sales lift with this pricing strategy. But retailers are buying
that lift with margin dollars or vendor trade funds, always hidden in product costs. There are other ways, costing much less, to increase sales.

12. Retailers must reach shoppers using
their preferred communications mode
Shoppers Prefer Personalized Communications
66% Loaded to their card
55% Mailed at their home
54% Printed at register when checking out
45% Via their own mobile app*
35% Via in-store kiosks
*69% of Gen Z and 58% of Gen Y #US45037519 Sponsored byPrecima
Retailers Doing Personalization
46%
25%
32%
37%
21%
Virtual assistants like Amazon Alexa, Google Home, and Apple Siri will join this list soon.
These devices are important in shopping for 38% of Gen Z and 35% of Gen X.

13. Technology enables personalization at scale,
driving near-term success
Important capabilities for retailers over next three years
Artificial intelligence (AI) and machine learning (ML) are also vital.
Globally, retailers will spend $6.3 billion in 2019 and $8.7 billion in 2020 on such technologies.
Retailers understand that personalization technologies are essential to know, reach, and engage today’s digital grocery
shoppers in their individual context of concerns and aspirations.
Analytics Precision Orchestration
Platform for
customer dataand
personalization
analytics
80%
Next-bestaction
optimization alongthe
customerjourney
79%
Personalized offers
for eachcustomer's
shopping patternsand
productpreferences
83%
Effectivewebsitesfor
demandgeneration
and customer
engagement
81%
Smartphoneshopping
appsfor in-placeand
in-the-moment
relevance
79%
Digital
interactions
in thestore
79%

14. Retailers can create satisfying experiences with the shopper’s smartphone combined
with their own digital services and devices… but only with the right personalized touch.
52%
44%
FAQservices
37%
Click to chat/texthelp
29%
Shopping list apps
Access to loyalty programs
Evaluating
52%
Ratings and reviews
Product info andpictures
Recipes and inspiring content
Front of store self-checkout
58%
Mobile personalized promotions
59%
In-store productfindersPersonalized promotions Storelocator
54%
Selecting Traveling Shopping
60%
Digital stored-value loyalty cards
58%
Self-checkout in store shopping area
51%
Checking out
Food shoppers want digital services
Most shoppers today are digital residents, even if they’re not digital natives, carrying their digital identity along their food shopping journey. They already
benefit daily, even if unknowingly, from AI, ML, and social networks in many digital services. It’s important to make digital services easy for all shoppers.
Important digital services along the shopper’s journey

15. Invest in key technologies to enable personalized
interaction and promotions for customers
Percentage of retailers planning to increase investment within three years:
Customer data
and analytics
platform
Smartphone
apps
Next-best action
optimization
46% 45% 42% 39%
Promotion/offer
personalization

16. 0
10
20
30
40
50
60
70
80
0 10 20 30 40 50 60 70 80
CustomerSatisfaction(%Top2Box)
Importance to Customers (% Top 2 Box)
Promotions/Offers That Reflect
My Shopping Patterns &
Product Preferences
Useful, Helpful WebsiteIn-store Digital Tech
Home Delivery
BOPIS
Product Recommendations on Website or App
Voice Assistance (e.g. Alexa, Google Home, Siri)
Critical Capabilities:
Customer Importance vs Satisfaction
Almost 2/3 of consumers rate personalized promotions and offers as important,
but less than half are satisfied with how their primary grocery retailer is delivering this capability today.

17. 59.2%
58.4%
54.4%
52.0%
50.9%
43.6%
41.5%
36.7%
0% 20% 40% 60% 80% 100%
Personalized promotions
Product information and pictures
Store Locator
Ratings and reviews of goods
Dedicated loyal customer area
Frequently Asked Questions (FAQs)
Inspiring content (e.g. recipes, events, etc.)
Click to chat/text helpdesk
Top 2 Box 3 - Neutral Bottom 2 Box
Website Features and Capabilities
When it comes to capabilities on a grocery retailer’s website, consumers rate personalized promotions as critically
important to a useful & helpful shopping experience – slightly more than basic product information and pictures.

18. Personalization opportunities are shifting rapidly to digital
as grocery shoppers embrace omni-channel commerce
Grocery retailers should shift investments toward
digital customer engagement strategies.
Within a year, up to a third of consumers will spend
more than 40% of their monthly grocery budget online.
Amazon is a strong digital competitor:
But mobile apps
are a tie:And grocery buying is going digital:
of shoppers prefer
their primary grocery
retailer’s website
56% Prefer
Amazon’s
49% prefer Amazon’s or
their primary grocery
retailer’s app
38%of shoppers buy
online(of those,
59% do so at least
once a month)
44% are considering
buying online
20%

19. Grocery retailers can use well-executed personalization
to increase their value todigital shoppers
Respondents saying these are useful and helpful in grocery shopping:
Consistency creates trust in any relationship, and grocery shoppers expect it at every interaction.
Mobile
loyalty apps
Promotions
71% 70%
Personalized offers
57%
Pricing
81%
60% 58% 58%
Digital
loyalty cards
Mobile personalized
promotions
Say they respond to
in-store promotions

20. The imperative to reimagine stores is gathering steam. Retailers must reposition store assortments, sizes, formats, and locations. This shift requires
more than incremental “add/drop” category resets. Getting whole-store and whole-fleet omni-channel optimization right is key to success.
Shopper preferences
will drive store configurations:
Shoppers who spend 26%-40%
of their budgets online:
Meeting shoppers’ preferences requires rethinking
the store within its omni-channel context
10%
Yearago Now
33%
Year from now
36%
would prefer to
buy at least some
fresh items online
27% would prefer to buy
packaged, bottled,
and canned food
items online
30% would prefer to buy
paper products,
health and beauty,
cleaning supplies,
and other non-food
items online
34%

21. Smaller store format:
Reduce space for
Shoppers are far from having consistent preferences
for new store formats, assortments, and operations
non-food items such
as paper products,
health andbeauty,
cleaningsupplies
Reduce space for
fresh items including
fruits, vegetables,
meats, fish, dairy,
and bakery
53%
Reduce space for
packaged, bottled,
and canned food
items sold in
center aisles
19%
28%
As grocery shopping moves online,
retailers will have to:
• Shrink some stores
• Reallocate space across departments
• Expand some departments
• Add new categories like food kits
• Utilize stores as fulfillment centers
• Balance endless-aisle assortments
If retailers made their stores smaller, which space would you reduce?

22. Fresh/Chilled/Prepared Departments Shelf-stable/GM/HBC Departments
84%82%
76%
56%55%55%53%
56%
48%
81%
Meat Delicatessen
vegetable
Fresh fruit/ Bakery Frozen Dairy General Home Health
and beauty
products
Shelf-stable
categories merchandise products
23% 24%
21%
16%
25%
17%
30% 31%
39% 38%
Grocery retailers need to adjust store assortments
and space as shoppers increase online spend
The tipping point is near. A majority of shoppers say they are very likely to purchase fresh/chilled/prepared products online soon.
The change will be even more profound across shelf-stable, general merchandise, and health beauty care (HBC) departments.
Expect to see at least 75% of shoppers buying these products online quite soon.
Shoppers buying online now or likely to within 12 months Retailers that think category will migrate online in next 3-5 years
Most retailers don't see it coming. Only 25% expect this trend in fresh/chilled/prepared departments
within three years, and fewer than 40% see it in general merchandise.

23. Retailers need to better understand
what matters to shoppers online
82%
67%
Good quality fresh food
66%
Lower prices
80%
Breadth of assortment
80%
Good promotions/deals
Shopper rates important
85%
Retailer thinks important for shoppers
One-in-five retailers don’t recognize these preferences.
Nearly half (48%) of retailers miss the mark
on something that’s important to nearly
two-thirds (63%) of consumers.
Most shoppers say good quality of fresh food, low prices, breadth of assortment,
and good promotions are important when deciding to shop online.
63%
62%

24. 83% of retailers will focus on
personalized promotions and offers
that reflect customer shopping
patterns and product preferences.
80% will use a customer
database and analytics
platform to analyze
customers.
What’s next? Retailers will focus on
personalized promotions and offers
In the next three years:
Retailers see the following as critical to success:
81% Improve assortments through localization, rationalized for productivity and customer satisfaction.
80% Optimize personalization of products presented, content, pricing, channels, etc.
78% Optimize advertising and media spending.

25. Summary of findings
Most of tomorrow’s shoppers are already shopping today. Their complex expectations go beyond assortments, quality, and
price. They want the convenience and control of personal digital shopping services.
Shoppers are embracing omni-channel commerce: 44% buy groceries online now and 20% more are thinking about it. In this context,
digital services are becoming the best opportunities to personalize your relationship with each shopper.
Grocery retailers won’t leave their stores behind in their digital transformation journeys. Shoppers’ omni-channel preferences and
digital expectations require rethinking multiple aspects of the store. From store footprints and macro-space allocation to digital
services throughout the store, grocery retailers will differentiate to complement their ecommerce strategies.
Grocery retailers understand that in the digital age, expertise in technologies enabling personalization at scale will drive
near-term success. They’re also investing to enable personalized interactions and promotions for each customer’s preferences.

26. • Gut Feel
• Basic Math
• Customer-focused
• Rules-Based
• Product-Focused
• Xls-Based
• Category Optimization
• Driven by margin & competition
• Software
• Segmentation
Evolution of Merchandising

27. Next Step: Making the Leap to Personalization

28. Personalized Promotions: Changing the Game

29. Category Price Management - Traditional Software
Brick & Mortar Personalized Pricing: Total Store Price
Optimization
Price Elasticity
Category Prices
Price Management Price Execution
Customer-Centric
Pricing
Strategic Pricing
Insights
“What are KVCs/KVIs for
Best Customers and
Optimal Pricing
Strategy?”
“What are Optimal Prices
in Category & Forecasted
Impact”
“How do I Manage Weekly
Prices based on Costs,
Rules, etc..”
“How to Implement
Weekly Price Changes in
Store”
Strategic Pricing
Total Store Price
Optimization
“How do I Optimize ALL
Prices to Drive Sales,
Profit & CPI”

30. Empowering retailers to deliver personalized e-prices
intelligently
$1.89
$1.85
$1.95
$1.80
$1.75
$1.80
$1.65
$1.69
$1.79
$1.89
Price
Current
Value
high
high
med
high
high
high
med
high
med
high
Potential
Value
low
med
high
low
low
med
high
low
high
low
Intent
Defend & retain
Retain & grow
Grow
Defend & retain
Defend & retain
Retain & grow
Grow
Defend & retain
Grow
Defend & retain

31. Case study: Precima’s Personalization Engine Drives
Next-Generation Loyalty Program
The program was a big success,
generating consistent and strong
results over a 1 year pilot period
Program
Launch
Program Stores
Control Stores
+2.3% Lift
Personal offers were delivered
bi-weekly to all customers via
App and email

32. Store-specific assortments
based on consumer behavior
Brick & Mortar
Personalizing
assortments in an
endless isle environment
eCommerce
Personalized Assortment
New customer product recommendations with introductory price points and onboarding to profitability

33. AI & Analytics leverage each interaction to maximize impact
Scoring
Optimization
App Email POS Online
1 to 1 omni-channel personalization
Customer Content
• Lifestyle / stage
• Preferences
• Products
• Interests
• Responses
• Products / categories
• Promo’s / Offers
• Tips/Ideas
• Social
• Event Ads
Optimized against KPI’s and budget:
• Most relevant categories, products & brands
• Optimal discounts recommended
• Highest probability of purchase
• Delivered through best channel
• Learning from each campaign
Customer behavior

34. 1-to-1 Optimization: Driving Customer Engagement

35. Precima: Industry-Leading Insight & Data Sharing
Platform Platform Powered by AI & Delivered via SaaS
An Integrated and Holistic Suite –
Uniquely Enables our Clients to:
• Leverage deep customer insights across price,
promotion, assortment, marketing, and supplier
collaboration
• Empower decision-makers to make insight-driven,
performance-enhancing decisions
• Transform their marketing and merchandising teams
into “customer-first” industry leaders
• Combine people, process, and SAAS tools to facilitate
the transformation of strategy into actionable high
value action

36. For more information
Download the InfoBrief at www.precima.com under Insights
• Precima: Brian Crain bcrain@precima.com
• IDC: Jon Duke jduke@idc.com

37. Coming up
See you at FMI Midwinter 2020
in Phoenix, AZ.
January 24-27, 2020