Consumer Demand: Unlocking Hidden Growth
- 1. Reason meets Imagination Consumer Demand: Unlocking Hidden Growth 2010 RWTA Conference 30 August 2010 Growth Solutions Group Market Strategy Research Level 11. 99 Queen Street T. +61 3 9670 4700 Brand & Communication Melbourne. Victoria 3000. Australia W. www.gsg.com.au This document is not to be copied without permission
- 2. Food retailing more fragmented, more competitive, more demanding Forces at play Retailer Responses • Supermarkets stretching into Changes in Retail new categories to protect structure revenue/growth • Reduction in supply chain costs • Consolidation of suppliers Consumer Trends • Improved logistics • Passing SC management responsibility back to suppliers Export & Global • Growth in private label – tiers Market Pressures of value • Localisation – ‘my’ grocer, baker, in-store greeters, etc • Information & resource offer Investor Demands around healthy eating 2 Source: Foodmap: A comparative analysis of Australian food distribution channels Department of Agriculture, Fisheries and Forestry
- 3. …with more pressures on the Supply Chain Forces at play Retailer Responses Supply Chain pressure • Supermarkets stretching into Manufacturers Changes in Retail new categories to protect • Growth pressure structure revenue/growth • Relationship pressure • Reduction in supply chain • Margin pressure costs • Increased costs • Consolidation of suppliers Consumer Trends • Increased competition • Improved logistics • Increased difficulty to recoup • Passing SC management costs on investments responsibility back to suppliers Fresh Product Suppliers Investor Demands • Growth in private label – tiers • More demand for products to of value meet retailer specs • Localisation – ‘my’ grocer, • Demand for better product baker, in-store greeters, etc performance Export & Global • Information & resource offer • Greater competition Market Pressures • Information pressures around healthy eating 3 Source: Foodmap: A comparative analysis of Australian food distribution channels Department of Agriculture, Fisheries and Forestry
- 4. Success has been about getting it right for your customers You Your customer Business Business Value = On time Quality Flexibility Service Responsiveness Cost 4
- 5. Success has been about getting it right for your customers You Your customer Their customer Business Business Consumer Value Value = = On time Convenience Quality Quality Flexibility Usefulness Service Experience Responsiveness Service Cost Price 5
- 6. Today’s Presentation 1. Real ‘demand’ starts before the shelf 2. A visit to Consumer Land – Macro trends 3. Consumer Driven Improvements – Case Studies 4. Implications for the future 6
- 7. The voice of the consumer is getter louder “I’ll tell you what I want, what I really, really want” Spice Girls, 1996 7
- 8. The voice of the consumer is getter louder “I’ll tell you what I want, what I really, really want” Spice Girls, 1996 NOT Just about asking them what they want any more, or demand monitoring at the shelf. BY UNDERSTANDING What Consumers want through their behaviours, attitudes and opinions, even before they get to the store. 8
- 9. Getting behind the data Demand Planning is a powerful management process…but can we look beyond demand to macro level influences? Monitoring Demand at the shelf What are they buying Why are they How are they buying buying? • How are they feeling? • What else are they doing that is related to this? When are they • What and who are influencing their choice? buying • What needs do they have? Or will they have? Supply chain response 9
- 10. Top 20 Food Trends 1. Locally grown produce 11. Super-fruits (acai, goji, mangosteen, purslane et al) 2. Locally sourced meats and seafood 12. Organic produce 3. Sustainability 13. Culinary cocktails (e.g. savoury, fresh 4. Bites size/mini desserts ingredients) 5. Locally produced wine and beer 14. Micro-distilled/artisan liquor 6. Nutritionally balanced children’s 15. Nutrition/health dishes 16. Simplicity/back to basis 7. Half portions. Smaller portion for a smaller price 17. Regional ethnic cuisines 8. Farm/estate-branded ingredients 18. Non-traditional fish (Arctic Char, barramundi etc) 9. Gluten-free/food allergy conscious foods 19. New cuts of meat 10. Sustainable seafood 20. Fruit/vegetable children’s side items 10 Source: US. Restaurant News (www.nrn.com) US Chefs
- 11. Immediately relevant 1. Locally grown produce 11. Super-fruits (acai, goji, mangosteen, purslane et al) 2. Locally sourced meats and seafood 12. Organic produce 3. Sustainability 13. Culinary cocktails (e.g. savory, fresh 4. Bites size/mini desserts ingredients) 5. Locally produced wine and beer 14. Micro-distilled/artisan liquor 6. Nutritionally balanced children’s dishes 15. Nutrition/health 7. Half portions. Smaller portion for a 16. Simplicity/back to basis smaller price 17. Regional ethnic cuisines 8. Farm/estate-branded ingredients 18. Non-traditional fish (Arctic Char, 9. Gluten-free/food allergy conscious barramundi etc) foods 19. New cuts of meat 10. Sustainable seafood 20. Fruit/vegetable children’s side items 11 Source: US. Restaurant News (www.nrn.com) US Chefs
- 12. Macro Trend 1: Health / Well-being are part of life An ageing population, who are still young at heart…plus a national focus Mellentin’s 10 Key Trends for 2010 are : on obesity / diabetes / heart disease 1. Digestive health – a mega-trend moves will influence consumer choice (and beyond the tipping point brand messages) 2. An intrinsic health benefit that’s also convenient 3. Feel the benefit – the most powerful • Ingredients matter – choose natural marketing message • Supplements are ok if it’s about 4. Energy – a world of untapped opportunities enrichment / advantage 5. Fruit and superfruit – the future of food • Smaller portions and health • More fresh options in pre-made 6. Antioxidants – big in America, dead in Europe? • Endorsements or ‘ticks’ 7. Weight management 8. Healthy snacking 9. Packaging and premiumisation 10.Bones and movement Julian Mellentin: Industry Expert, Nutritional Foods 12
- 13. Preshafruit 13
- 14. Macro Trend 2: Where it comes from matters more Consumers are placing increasing importance on… • Knowing who’s behind the product (maker) • Fresh is best, even better it’s local • Authenticity – farmer’s markets • ‘My’ grocer, butcher, baker etc – dealing with people who care about food • Frozen food with locked-in freshness 14
- 15. Macro Trend 3: Good food that’s easy to get Trading off quality & convenience is no longer necessary, or acceptable. Retailers and the media are constantly illustrating how we can achieve simple, good food for under x dollars, in under x minutes. 15
- 16. Yarra Valley Farms – Branding in Food Service 16
- 17. Aussie Farmers Direct - Back to the future 17
- 18. Macro Trend 4: Green is good Consumers want brands/retailers to take more responsibility • Carbon footprint • Green / environmental standards • Fairtrade / ethical supply – Cadbury & Nestle response to consumer backlash on palm oil (But most will still trade-off for price) 18
- 19. Macro Trend 5: Polarization of behaviour 19 Source: IBM – The Consumer Driven Supply Chain
- 20. Angus Burger – Premium Pricing Big Mac Angus Burgers $4.45 $6.45 - $6.75 20
- 21. Macro Trend 6: NOW technology “WHAT, WHERE AND WHEN I WANT” 21
- 22. Less Is Best: Haagen-Dazs – Especially for you 22
- 23. Less Is Best: Haagen-Dazs – Especially for you 23
- 24. The Retailers under pressure to deliver change new… Focus on consumers Understanding the shopper better Information resources on food & nutrition Store formats Smaller footprint x increase locations Retailers Aldi, Costco – changing shopping behaviour AFD, The Greenline – direct to consumer Multi - Channel Online entrenched, mobile web emerging Experiences Self-serve checkouts, drive through supermarkets (UK), in-store market spaces Branded ingredients Private label with value-added ingredients Branding location of origin 24
- 25. Costco is changing the way consumers shop & eat • Collective shopping – multiple families involved • Takes whole categories out of supermarket shop e.g toiletries • Bulk food purchase also changing consumption habits – more homogenous meals • Appeal of unique product formats that can’t be purchased in supermarkets Toiletries Fresh Food Bakery Laundry & Cleaning Frozen Food Savoury Snacks Non-alcoholic beverages Canned Food 0 13 25 38 50 25
- 26. Retailers are responding quickly to consumer trends Consumer trend/demand Woolworths ingredient branding Fresh Local Natural “Tassie Grown” Woolworths 26
- 27. Coles - “It’s all about the customer” Half way through a 5 year transformation process ''The most important factor for us is that we are aligned to what the consumer needs are, and which consumer needs are changing” Ian McLeod, Coles Managing Director 27
- 28. New channels & experiences are changing the way we shop Customer has greater control over their shopping experience. Expectations are changing – customers are demanding more information about pricing and inventory – so they can make better decisions. 28
- 29. Cold Chain Challenges in responding to the end-consumer • Lack of visible consumer information • Different drivers of consumer value by channel • Increase fragmentation of food service sector, new channels to market • Competing demands creating increased complexity in solutions • Closer to source • natural & fresh • convenience • price 29
- 30. Implications & Opportunities Responding to consumer needs, through the supply chain • Innovation in product and format to meet consumers convenience needs • Solutions to respond to growth in out-of-home consumption/dining • Branding/capturing value in the origin or location • Responding to demands for localised sourcing • Bringing niche/gourmet to the mass market • Leveraging technology to get closer to the consumer and add value • Partnerships and alliances to create one-stop solutions for small/ independent food retailers • Strategic account management to enable value capture • Greater capacity to support merchandising & shelf management 30
- 31. How do you respond to Consumer Trends? Macro Consumer Trend:_______________________________ 31
- 32. How do you respond to Consumer Trends? Macro Consumer Trend:_______________________________ Impact on your Customers What will their customers demand/need? How will their industry be affected? How with their company be affected? What challenges does it create for them? What advantages does it create for them? How will their competitors respond? 31
- 33. How do you respond to Consumer Trends? Macro Consumer Trend:_______________________________ Impact on your Customers Impact on your Business What will their customers demand/need? What will your customers demand/need? How will their industry be affected? How will your business be affected? How with their company be affected? Which products/services will be impacted? What challenges does it create for them? What challenges does it create for you? What advantages does it create for them? What opportunities does it create for you? How will their competitors respond? How will our competitors respond? 31
- 34. How do you respond to Consumer Trends? Macro Consumer Trend:_______________________________ Impact on your Customers Impact on your Business What will their customers demand/need? What will your customers demand/need? How will their industry be affected? How will your business be affected? How with their company be affected? Which products/services will be impacted? What challenges does it create for them? What challenges does it create for you? What advantages does it create for them? What opportunities does it create for you? How will their competitors respond? How will our competitors respond? Your Response What problems can your help them solve? What current solutions can you offer? What solutions do you need to develop? Which partners in the supply chain can assist? Will this help to satisfy the consumer need? 31
- 35. What does this mean for Cold Chain businesses? Not just responding to demand, but Anticipate anticipating what future demand may be Being agile enough respond to changing Move consumer trends Help to shape consumer demand through Influence supply chain transformation & innovation 32
- 36. Reason meets Imagination Thank you. Growth Solutions Group Market Strategy Research Level 11. 99 Queen Street T. +61 3 9670 4700 Brand & Communication Melbourne. Victoria 3000. Australia W. www.gsg.com.au This document is not to be copied without permission