Convenience Trends 2016 September 27, 2016 Chelsea Gross | - - PowerPoint PPT Presentation
CDA Convenience Trends 2016 September 27, 2016 Chelsea Gross | chelsea.gross@retailnetgroup.com Todays Session Convenience Learning from Intro Forecasts Summary Store Initiatives the Disruptors Real-time Retail Channel View
September 27, 2016
Chelsea Gross | chelsea.gross@retailnetgroup.com
CDA
Intro Forecasts Convenience Store Initiatives Learning from the Disruptors Summary
the Industry
Traditional planning process
RNG process
Track the Drivers Shaping the 2020 Retail Landscape to Guide Planning
Trends Drivers of Change
3
Introduction
STEIP Model
4
Introduction
STEIP Model
Attention Spans Shrinking & Processing Speeds Accelerating, Generational Differences Important
Introduction
Consumer Impact
Competitive Set Changing Drastically for Proximity Retailing
Express Grocery Convenience Superstores
Competing with & Rolling Up
Discount Food Progressive Drug Independents QSR / Food Service
Introduction
Channel Blurring
Trip Types Meal Solutions / Prepared Foods Future of the Front End Retail Health Desire to Experience Pricing & Promotion
Introduction
Drivers of Change
Apparel Specialists Cash & Carry/Club Consumer Electronics Convenience Department Stores Discounters Food Service / QSR Grocery Health & Beauty Home Specialists Hyper/Super & Mass Leisure Other Category Specialists 0% 3% 6% 9% 0% 5% 10% 15% 20%
Channel Sales Share Matrix
US Retail Average Sales CAGR 17E-20E: 5.3%
Share of 2020E Sales Sales CAGR 17E-20E
Convenience Channel to Grow 5.5% 17E-20E, 28 Basis Points Ahead of Total US Retail
Forecast
Channel Analysis
Source: RNG Database, excluding 3P marketplaces
Convenience Superstores Outpace Traditional Convenience Segment in Sales and Store Growth Through 2020E
2016E 2020E 2016E 2020E 13-16E 17E-20E 13-16E 17E-20E 13-16E 17E-20E Convenience Superstore $27 $33 1% 1% 8.0% 6.3% $6 $5 2% 1% Traditional Convenience $55 $64 2% 2% 5.8% 5.1% $9 $9 2% 2% US Convenience Total $82 $97 3% 3% 6.5% 5.5% $14 $14 4% 3% RNG Total US Chain Retail $2,605 $3,038 100% 100% 5.2% 5.3% $366 $434 100% 100% Share of Sales Added Segment Sales (USD bil) Sales CAGR Share of Sales Sales Added (USD bil) 2016E 2020E 2016E 2020E 13-16E 17E-20E 13-16E 17E-20E 13-16E 17E-20E Convenience Superstore 11,995 12,707 2% 2% 2.4% 1.9% 816 712 3% 3% Traditional Convenience 44,165 45,736 9% 9% 0.8% 1.2% 1,001 1,571 4% 7% US Convenience Total 56,160 58,443 11% 11% 1.1% 1.3% 1,817 2,283 7% 11% RNG Total US Chain Retail 509,186 530,766 100% 100% 1.9% 1.4% 27,414 21,580 100% 100% Segment Stores Share of Stores Stores CAGR Stores Added Share of Stores Added
Forecast
Channel Analysis
Source: RNG Database
Convenience Superstores Represent 6 of the Top 10 Convenience Banners by Sales Added, 5 of 10 for Stores Added
7-Eleven Mobil Mart Speedway Casey’s General Store Kwik Trip Wawa Circle K Sheetz QuikTrip RaceTrac +820 +210 +193 +150 +120 +119 +100 +80 +60 +59 Stores Added 1 2 4 3 6 5 7 9 8 10 7-Eleven QuikTrip Wawa Speedway Circle K Sheetz Casey’s General Store Mobil Mart RaceTrac Kwik Trip +$4.3 +$1.3 +$1.2 +$1.1 +$0.8 +$0.6 +$0.5 +$0.4 +$0.4 +$0.3 Sales Added (USD bil) 1 2 4 3 6 5 7 9 8 10
Source: RNG Database
Forecast
Channel Analysis
Convenience Stores Shift to Multi-Destination Superstores 5 Core Zones = New Trips
Fuel Coffee Refreshments QSR Foods
Traditional Convenience Store Assortment
Convenience Store Initiatives
Source: RNG Store Tours
Disciplined Category Expansion to Broaden Trip Relevance
Convenience Store Initiatives
Oxxo – Mexico City
Source: RNG Store Tours
Meal Solutions and Prepared Foods Driving Traffic Across Day Parts – Also Supports Localization Efforts
Convenience Store Initiatives
Oxxo – Guadalajara
Source: RNG Store Tours
Convenience Store Initiatives
RaceTrac – Orlando, FL
Source: RNG Store Tours
Source: RNG Store Tours
Convenience Store Initiatives
7 Eleven – Miami, FL
AM PM in Brazil Launches Flagship Store, Expanding Fresh Assortment to Compete Against Full Grocery Trip
Source: RNG Research, AM PM Portal
Convenience Store Initiatives
AM PM – Sao Paulo
Convenience Store Initiatives
Sheetz – Penn State Campus
Source: RNG Store Tours
7 Eleven- Next Generation Concept Store Aligning to Store & Network Renewal Trends
Source: RNG Store Tours
Day Parts reinforced with digital menus Healthy foods marketed as treats Employee recommendations bring craft beers to local tastes Third party salad vending machine maintaining supply of fresh, adds authenticity to local supply chain Convenience Store Initiatives
7 Eleven – Chicago, IL
Sainsbury’s Small Store Format, Sainsbury’s Local, Now Adding Pharmacy Into Convenience Store
Front end exclusively self-checkout Queuing both self-checkout and pharmacy Health & wellness informational material spread throughout Attached to hospital, serving patients, employees, and regular pharmacy customers Prepared foods adjacent to pharmacy, driving impulse and efficiency
Source: RNG Store Tours
Convenience Store Initiatives
Sainsbury – London
Mobile App Extends the Power of the Retailer Beyond Small Box
Source: RNG Store Tours
Convenience Store Initiatives
Channel Blurring Driven by Format Diversification, Targeting Ethnic, Small Format, and Discounter Trips
Evolution of Food Relevant Retailers – US Timeline
July 2014 - Target launches small format Target Express Feb 2016 – Kroger launches Main & Vine fresh format Sept 2015 – Ahold launches fresh format, bfresh May 2016 – Whole Foods
format April 2005 – Publix launches first targeted Hispanic banner, Publix Sabor Sept 2007 – Publix launches first organic format, Greenwise Oct 2006 – H-E-B launches first targeted Hispanic banner, Mi Tienda May 2010 – H-E-B launches first discount banner, Joe V’s Smart Shop July 2012 – Target launches first urban format, CityTarget Feb 2016 – H-E-B opens first small format store H1 2017 – Publix expected to open first small/ campus format May 2015 – CVS launches CVS y mas format Nov 2015 – Amazon
Amazon Books Nov 2015 – Costco opens first hybrid business center/ warehouse Oct 2009 – Kroger opens first larger format, Kroger Marketplace July 2004 – H-E-B launches first large format H-E-B Plus!
Source: RNG research & analysis
March 2014 – Walmart launches convenience format, Walmart To Go
Learning from the Disruptors
H-E-B’s First Urban Store Maintains Look & Feel of Traditional Big Box Banner
Source: RNG Store Tours
Learning from the Disruptors
H-E-B – San Antonio, TX
Express Premiumization Approach, Combining Grocery & Restaurant
Source: RNG Store Tours
Learning from the Disruptors
Lunds & Byerly’s Kitchen – Wayzata, MN
Experience is Elevating - McDonald’s “Create Your Taste” Campaign – Combines Digital Integration, New Healthy / Quality Ingredients
Quality / Fresh Ingredients Digital Integration Table Service Marketing/ Social Media Learning from the Disruptors
card for new weekly sample of shelf-ready goods – food & non-food
for further marketing & engagement
Clubs in the US
samples for $1 each
alongside machine
Learning from the Disruptors
Walmart Supercenter – Dallas, TX Sam’s Club – Dallas, TX
Mass Merchandise Express Formats Solving for Big Box Weaknesses, Accelerating Development of Click & Collect
Source: RNG Store Tours
Learning from the Disruptors
Target (Express) – St. Paul, MN
Economics Driving Emphasis on Click & Collect – Retailers Look to Ameliorate Ecommerce Economics By Removing Last Mile
Pick Pack Ship In-Store Click & Collect Home Delivery
Shopper Shopper Shopper Retailer Retailer Shopper Retailer Retailer Retailer
Profitability
Learning from the Disruptors
Variation Across the Globe Fueling Click & Collect Diversification – Innovation Seen Across Emerging and Developed Markets
Source: RNG research & analysis
Learning from the Disruptors
Amazon Lockers – Reducing Friction and Increasing Flexibility in the Click & Collect Process
Source: RNG research & analysis, Amazon
Flexibility
a 3-day period with no penalty
No Checkout
enter payment information, or navigate traditional checkout
Automation
human intervention
remove labor costs and potential points of friction
Learning from the Disruptors
Source: MIT Senseable City Lab
Summary
Real-Time
Inspiration Outside of the Retail Industry, Ex-Retail Experiences Impact Shopper Expectations of Seamless Digital
Source: Mobile Commerce Daily, Tech Crunch
Front End - Wearables Rewards - Transparency Meal Planning - Delivery Queuing - Reservations Sponsorships - Content Gamification Summary
Tracking Change
as consumers continue to increase share of quick trips
challenges for convenience retailers… increased competition alongside new opportunities for differentiation
– Two forms of differentiation: investment in quality experience
winners will reimagine the store and add an experience layer to products
brick & mortar’s key advantages… learn from entertainment, sports, food industries
– Pricing & promotion will be reimagined with the expansion digital couponing & payment – Players from across the ecosystem will look to own digital wallets & gain control of promotions and transactional data
average consumer and target distinct trips with different value equations and rotational assortment. Cannot market to the middle
– More impulse (esp. through cross-merchandising techniques) and seasonal SKUs
– Extend brand relevancy beyond need for product.
Summary
Key Takeaways
Summary Implications