Big data analytics: is only option to grow with assortment optmisation
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The document discusses how companies in the consumer goods sector, particularly Tiger Brands, can optimize their product offerings and grow by leveraging analytics and technology. It highlights the overabundance of products, the need for multichannel strategies, and the challenges faced by manufacturers and retailers in simplifying their assortments. The emphasis is on focusing on shopper preferences and attributes to drive better sales and customer engagement in a competitive marketplace.
Big data analytics: is only option to grow with assortment optmisation
- 1. SHRINK TO GROW USE ANALYTICS AND TECHNOLOGY TO OPTIMISE YOUR LINE-UP Brenda Koornneef Business Executive, Group Marketing & Corporate Strategy, Tiger Brands José Carlos González-Hurtado President of IRI International 15th-17th June 2016, Consumer Goods Forum Global Summit 2016
- 2. AGENDA CONTENTS 1 HOT TOPIC ON YOUR AGENDA 2 THE TIGER BRANDS SUCCESS STORY 3 HOW TO WIN
- 3. HOT TOPIC ON YOUR AGENDA
- 4. Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 4 CHOICE IS A KEY DRIVER TO WIN CLIENTS "WHY HAVE YOU SELECTED THIS SHOP TODAY FOR YOUR GROCERY SHOPPING?" Source: IRI Shopper Survey France 2015 Price Selection of products Point of sales comfort and clarity of the offer Promotions Private labels New products * Except proximity from your home or work 30% 25% 20% 15% 10% 5% 0%
- 5. Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 5 BUT CURRENT OVERABUNDANCE OF PRODUCT OFFERING… In suppliers price list In a large hypermarket In a supermarket Bought in a year by household In an average basket SM/HM Number of FMCG items available – average per store (supermarkets) Europe and US 400.000 SKU’s (US = 970 000) 20.000 to 50.000 SKU’s 6.000 to 9.000 SKU’s 300 SKU’S (US 600) 10 to 50 SKU’s MARKET SITUATION
- 6. Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 6 AND THE MULTI-CHANNEL REVOLUTION… M-commerce for a rebirth of loyalty programs and in- store personalization Demand for fresh products and short time delivery is increasing Different trip missions with different banners at different times of the week Online/Click & Collect (Drive) growth Convenience is growing in importance On-the-go shopping with QR code - Shopping walls is growing Emergence of pure players in FMCG
- 7. Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 7 AND THE MULTI-CHANNEL REVOLUTION… M-commerce for a rebirth of loyalty programs and in- store personalization Demand for fresh products and short time delivery is increasing Different trip missions with different banners at different times of the week Online/Click & Collect (Drive) growth Convenience is growing in importance On-the-go shopping with QR code - Shopping walls is growing Emergence of pure players in FMCG
- 8. Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 8 FORCES RETAILERS TO RETHINK ASSORTMENT TESCO CUTS RANGE BY 30% TO SIMPLIFY SHOPPING BY REDUCING NUMBER OF PRODUCTS FROM 90,000, SUPERMARKET WILL BE ABLE TO CUT PRICES AND IMPROVE AVAILABILITY ON ITS SHELVES Friday 30 January 2015
- 9. Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 9 …AND MANUFACTURERS TO FACE NEW CHALLENGES LIMITED SHELF SPACE RETAILERS REJECT "ME TOO" PRODUCTS SHOPPER IS MORE DEMANDING THE PRIVATE LABEL PRESSURE MORE DIFFICULT TO STAND OUT OF THE SHELF
- 10. THE TIGER BRANDS SUCCESS STORY
- 11. Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 11 A top 40 JSE (JHB Stock Exchange) listed company Leading FMCG Manufacturer in SA: • Baby Care • Beverages • Grains • Groceries • Perishables • Personal Care • Home Care • Snacks & Treats Present in > 22 African countries Founded in 1921 16,800 employees across Africa KOO won favourite brand in SA in 2015 “LEADING MANUFACTURER IN ALMOST EVERY CATEGORY IN WHICH WE PLAY”
- 12. Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 12 GROWTH THROUGH FOCUS Portfolio complexity is often the root cause of symptoms faced by consumer goods companies in developed markets BRANDS SKUs SPECS CHANGES High Overheads Low Speed (decisions, launches) Low Marketing ROI Poor in Store Execution Low Purchasing Scale Low Supply Costs High Capex
- 13. Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 13 GROWTH THROUGH FOCUS High speed implement- ation High marketing ROI High purchasing scale Competitive supply chain costs Capex for Growth Perfect in Store execution Optimum overheads GROWTH THROUGH FOCUSED PORTFOLIO
- 14. Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 14 HALF THE JAMS SOLD IN THE MARKET* WILL BE A TIGER BRANDS JAM *Defined Market i.e. formal trade & wholesalers “Tastes real good, like good food should” Most valuable jam brand in SA Within top 5 jam brands in SA Discontinued in 2015
- 15. Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 15 THE BURNING QUESTIONS How do we drive growth in a mature segment? What is the optimum assortment for each of our brands within the different retailers? Can we launch new products without one brand cannibalizing the other? Which product attributes (flavour, size, format etc.) do our products need and which do shoppers want?
- 16. Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 16 17% 12% 28% 51% 22% 29% 77% 79% 64% 48% 75% 66% 6% 9% 8% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Spar PnP Checkers Shoprite Makro Total Mkt Quality Grade Attribute Importance by Retailer: Latest Year Economy Everyday Premium THERE IS A CLEAR DISTINCTION IN THE TYPES OF JAMS THAT DIFFERENT RETAILERS SELL Source: IRI Retailer 1 Retailer 2 Retailer 3 Retailer 4 Retailer 5 Total Market Brand + FlavourBalancedPrice + Size Dependant
- 17. Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 17 METHODOLOGY: HOW DO WE DO IT? Sales Figures + Distribution Figures Product Attributes + Store Level + Dynamic Product Mix Importance per Attribute + Incremental Sales Incremental Volume Transferable volume TRADITIONAL APPROACH COMPETITIVE EDGE 25% 75% New Performing Approach
- 18. Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 18 ASSORTMENT OPTIMIZATION 2.0 TO SPOT INCREMENTAL AND TRANSFERABLE SALES 25% 75% Incremental Sales Non transferable (Drives market size) Transferable (Drives market share) Gains from the added item (uniqueness) Sales substitutable with other products Total new item’s sales
- 19. Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 19 ATTRIBUTE IMPORTANCE DIFFER BY RETAILER 22.0 16.9 15.5 14.4 14.1 9.7 7.4 Packtype Flavour Brand PriceBin Size SKU‐Count Consiste… 32.2 23.8 16.3 9.8 8.9 6.3 2.7 Lifestyle Flavour Brand Size PriceBin Consist… Packtype 25.5 21.8 19.3 15.2 12.2 3.2 2.9 Brand Size Flavour PriceBin Lifestyle Consisten… Packtype 28.6 19.9 18.2 15.7 9.6 4.9 3.1 Brand Lifestyle Flavour PriceBin Size Packtype Consist… 19.1 18.7 16.9 14.1 13.3 11.6 6.3 Size Brand Flavour Lifestyle Packty… Consist… PriceBin Retailer 1 Retailer 2 Retailer 3 Retailer 4 Retailer 5
- 20. Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 20 PLANETARY SYSTEM INDICATES UNIQUENESS AND INTERCHANGEABILITY OF BRANDS Uniqueness: Brand map Product mapping is a visual representation of attribute interaction, where proximity of attribute values implies strong interaction. Bubble sized by value share. All_Gold Spar_Brand Rhodes Hugo_S KOO Hazeldene Weigh_pm_Less Thistlewood Product Mapping by Brand All_Gold Spar_Brand Rhodes Hugo_S KOO Hazeldene Goldcrest St_Dalfour Weigh_pm_Less Hillcrest Hilton Thistlewood Other_Brands Melissa_S Naturelite Dursots Premium brands in this retailer are highly interchangeable Mainstream brands are quite unique Brand 1 Brand 3 Brand 2 Brand 4 Brand 6 Brand 5 Brand 7 Brand 8 Brand 9 Brand 10 Brand 12 Brand 11
- 21. Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 21 All_Gold Hugo_S KOO Product Mapping by Brand Rite_Brand All_Gold Hugo_S Rhodes Sunshine Hazeldene Pot__O_Gold KOO Danish_Choice Naturelite Other_Brands Dursots Goldcrest Thistlewood Weigh_pm_Less Housebrand St_Dalfour Hillcrest BRANDS INTERACT DIFFERENTLY IN DIFFERENT RETAILERS Uniqueness: Brand map Product Mapping is a visual representation of attribute interaction, where proximity of attribute values implies strong interaction. Bubble sized by value share. Premium brands do not play a major role in this retailer Brand 1 Brand 4 Brand 2 Brand 3 Brand 5 Brand 6 Brand 7 Brand 8 Brand 9 Brand 10 Brand 11 Brand 12 Brand 13 Brand 14 Brand 15
- 22. Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 22 THE BURNING QUESTIONS How do we drive growth in a mature segment? What is the optimum assortment for each of our brands within the different retailers? Can we launch new products without one brand cannibalizing the other? Which product attributes (flavour, size, format etc.) do our products need and which do shoppers want?
- 23. Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 23 RESULTS Reducing the products by 37% will drive 1.1% ($270k) value growth for the retailers and 3.4% ($440k) value growth for Tiger Brands New launch has the potential to drive additional revenue of approx. $600K across markets Additional benefits: De-cluttered range Less complicated merchandising More efficient distribution & supply chain ROI x 12 NEW
- 24. HOW TO WIN
- 25. Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 25 FOCUS ON WHAT MATTERS Traditional view: Focus on the shelf Assortment optimisation 2.0: Starts with the shopper Sales rotation only Product isolation view Look at the at the category as a dynamic product mix Use the incrementality Use the incrementality from attributes’ attractiveness
- 26. Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 26 ASSORTMENT OPTIMIZATION 2.0 FOCUSES THE DRIVERS OF THE PURCHASE DECISION SHOPPER CHOICE Packaging Brand Category Ingredient Flavor Product Form Price Value Pack Type Marketing Mix
- 27. Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 27 ASSORTMENT OPTIMIZATION 2.0 IDENTIFIES ATTRIBUTE IMPORTANCE AND ATTRACTIVENESS Brand: Sub-category: Pack type: Pack size: Sugar: Red Classic Metal Can 330ml 12% Each product has a set of attributes (features):
- 28. Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 28 ASSORTMENT OPTIMIZATION 2.0 SIZE OF THE PRIZE Category revenue % change between optimized scenario and actual revenue across different regions/stores within each country Category revenue gain with the optimized scenario versus actual revenue 0 2 4 6 8 10 12 14 16 Netherlands - Hot Sauces France - Frozen Fish Spain - Margarines Non Optimized Store Group 1 - Optimized Store Group 2 - Optimized +1.2 +4.2 +4.6 +14.2 +9.5 +2.3
- 29. Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 29 Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. IN OUR INCREASINGLY COMPLEX WORLD, COMPANIES NEED SIMPLICITY AND SCALABILITY TO TURN OCEANS OF DATA INTO ACTION AND GROWTH The Market Is Changing Every Day No 2 Countries Are The Same Data Is Now Disparate Win Local, Track Global
- 30. Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 30 THE TRADITIONAL MARKET READING MODEL IS NOT ADAPTED TO THE BIG DATA ERA THE TRADITIONAL MODEL TRANSLATES PRODUCT CATEGORIES INTO RIGID HIERARCHIES Hair Shampoos Hair Conditioners Hair Colorants Hierarchy 1 Hierarchy 2 Hierarchy 3
- 31. Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 31 SO, MR. RETAILER MRS. MANUFACTURER IN THE FUTURE… WHAT WILL YOU NEED TO GROW?
- 32. Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 32 1. BREAK SKUS INTO ATTRIBUTES = THE END OF RIGID HIERACHIES Move from rigid hierarchies to multidimensional analysis of all consumer – product data
- 33. Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 33 1. BREAK SKUS INTO ATTRIBUTES = THE END OF RIGID HIERACHIES Move from rigid hierarchies to multidimensional analysis of all consumer – product data
- 34. Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 34 1. BREAK SKUS INTO ATTRIBUTES = THE END OF RIGID HIERACHIES Move from rigid hierarchies to multidimensional analysis of all consumer – product data
- 35. Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 35 2. HAVE A 360O VIEW OF CONSUMERS / SHOPPERS AND YOURSELF Liquid DataTM Technology Platform Data integrated and aligned across multiple dimensions of brand, customer, segment, geography, channel, store and time. You need to have a super powerful IT platform
- 36. Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 36 3. MAKE IT EASY SIMPLE VISUALISATION , MAKE IT FAST
- 37. Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 37 3. MAKE IT EASY SIMPLE VISUALISATION , MAKE IT FAST 15.000 USERS GLOBALLY 1MILLION QUERY A MONTH EXECUTED 95% OF WHICH ANSWERED IN LESS THAN 10 SECONDS “ON THE FLY“
- 38. Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 38 THE FUTURE IS NOW
- 39. Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 39 WHAT YOU WILL NEED TO GROW…AND WIN Observe & Understand Reality • Analytics on Oceans of Data • Analytics on Attributes 2 Make Sense of It Super Powerful Integration Platform 3 Be Able to Act Fast “On the Fly” 1
- 40. Thank you! Find out more at iriworldwide.com