delivering on the promise of customer-centricity and personalization

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Delivering on the Promise of Customer-Centricity and

PersonalizationCHUCK SAMPLE, VP, Insight and Analytics, US Foods, Inc.

GRAEME MCVIE, VP and GM, PrecimaNIKKI BAIRD, Industry Analyst, RSR Research

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Delivering on the Promise of Customer-Centricity

and Personalization

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwiIluWpjYrNAhUDeD4KHSQ4AtAQjRwIBw&url=http://pittsburghpassion.com/home/us-foods-new-logo/&psig=AFQjCNHl3B7v_TfnQM3e9LAZUfahkME-mw&ust=1464983053329585


Delivering on the Promise of Customer-Centricity and PersonalizationNRF Exhibitor Insights – January 16th, 2017


Today’s presenters

Graeme McVieVP & GM [email protected]

4CONFIDENTIAL

Chuck SampleVP, Insights and AnalyticsUS [email protected]

Need a photo of Nikki

Nikki BairdManaging PartnerRSR [email protected]

Today’s discussion topics

Do retailers need to be customer-centric and personalized?

How did US Foods successfully deliver on the promise of customer-centricity and personalization?Where is retail heading with customer-centricity and personalization, how will retailers get there and how fast will they arrive?

Retail Research

Case Study

Panel Discussion

01

02

03

5CONFIDENTIAL

Do retailers even need to be customer-centric and

personalized?

01

6CONFIDENTIAL

www.rsrresearch.com © 2016 Retail Systems Research. All Rights Reserved.

Retailers Can’t Win On Price Forever:Is Personalization The Answer?

Nikki BairdManaging Partner, RSR Research

January 16, 2017

www.rsrresearch.com © 2016 Retail Systems Research. All Rights Reserved. 8

The Big Issues In Pricing Today

• Since 2012, RSR has expressed concerns over retailers’ over-promotion and race to the bottom on price

• Even as late as Holiday 2015, retailers expressed belief that these practices were effective

• But post-Holiday 2015, that perspective changed – drastically.• Bottom line: the finish line to the race to the bottom is not a finish line, it’s a cliff.

• So how did we get here? And how do we get out of it?


Pricing Strategies Are Not Effective

47%

32%40%

45%

29%23% 27%

40%

How Effective Are Your Pricing Strategies In The Following Situations ("Very Effective")?

2015 2016


Not Meeting Our Objectives

Price is not our primary driver

To create a strong price perception in the market

To stave off competitive pressures

To create excitement for our brand

To convey our value proposition

To drive demand

To build market share

To improve merchandise sell-through

To maximize gross margin

5%

36%

29%

28%

46%

39%

30%

38%

49%

23%

27%

28%

33%

33%

34%

34%

43%

46%

Top Three Objectives Of Your Company Pricing Strategy2016 2015


Business Challenges Overview

• While the business challenges of pricing remain relatively unchanged, there is a new smell of fear among retail respondents

• Retailers report having significantly increased the number of promotions they execute• They report starting earlier and earlier for the holiday promotion cycle• And they report taking bigger and bigger mass discounts• Winners in particular seem to sense the need for change

50%Increased price sensitivity

of consumers

48%Increased pricing aggressiveness of

competitors

45%Increased impact of price

transparency & comparative shopping


Breaking The Chain...How To Wean Consumers Off Promotions


Personalization’s Surge

Provide a more seamless cross-channel experience

Create a better value proposition for our customers

Gain margin advantage through dynamic pricing

Create a more price competitive image for our customers

Increase market share for key categories or products

Provide more localized/personalized offerings to customers

Create more profitable promotions

Better matching of demand and product supply

Improve margins

Improve top-line sales

23%

32%

24%

35%

28%

17%

36%

29%

44%

33%

18%

28%

28%

29%

30%

31%

31%

32%

35%

37%

Top Three Opportunities For Pricing To Contribute To Your Companies Business Strategy

2016 2015


Personalized Prices – How To Get There?

We are collecting data from new channels and using them to make better pricing decisions.

It will become important to deliver personalized prices to shoppers in the next three years.

My company currently targets our promotions at an appropriate level of granularity.

We have effective policies in place to manage different prices and promotions across channels and touch points.

We have processes in place to manage promotional planning across organizations within our company

We have the ability to quickly respond to competitors' price changes.

22%

50%

6%

11%

6%

22%

38%

41%

45%

45%

52%

52%

Percent of Respondents Who AgreeRetail Winners Laggards


Watch Out For...

Lack of coordination with marketing

Our channel organizational structure makes it difficult to coordinate pricing strategies

Not enough IT resources available

The possibility of negative customer reaction to changes in our pricing strategy

Resistance to change from merchandising

Lack of clean price, competitor, and purchase data

33%

39%

44%

22%

33%

22%

15%

19%

31%

38%

42%

46%

Top Three Organizational Inhibitors: Selected Performance Differences

Retail Winners Laggards


Operational Challenges Reflect Strategic Barriers

Keeping up with promotional deals made between buyers and manu-facturers

Minimizing markdown spend

Making sure that stores change prices accurately and timely

Coordinating with marketing on promotions and offers

Managing promotions across channels

Measuring the impact of executed pricing decisions

Maintaining visibility into promotional profitability

Forecasting the impact of potential pricing decisions

Keeping up with competitors' prices

14%

45%

27%

23%

45%

41%

45%

27%

32%

17%

23%

23%

30%

30%

33%

47%

47%

50%

Operational Challenges Around Setting PricesRetail Winners Laggards


What The Future Holds

Rules-based pricing engineIntegrated end-to-end price lifecycle management

Promotions optimizationProduct movement data warehouse

Inventory management – availability as a price driverDigital channel price management tools

Markdown optimizationPromotions planning, forecasting, managementMarkdown planning, forecasting, management

Digital channel promotions/offers management toolsRegular price planning, forecasting, management

Regular price optimizationCompetitive price intelligence

11%12%

14%

15%16%

16%16%

16%

17%18%

18%21%

24%

11%11%

15%

13%14%

10%10%

11%

14%11%

12%13%

7%

10%11%

11%

15%12%

11%10%

11%

12%11%

7%9%

12%

Planned Technology InvestmentsDeployed, looking for change Evaluating / Budgeted Planned, no budget


Some Hard Questions• Can you win a race to the bottom on price? (Answer: Unless you’re Walmart, no)

• Is it easy or hard for a competitor to track personalized prices? (Answer: hard)

• Do you have the ability to plan & optimize personalized prices?

• Do you have the ability to execute & track personalized prices?

• Can you take personalized prices to BOTH digital channels AND stores?

• Can you maintain a personalized price strategy if you over-buy? (Answer: no)

How did US Foods successfully deliver on the promise of customer-centricity and

personalization?

02

19CONFIDENTIAL

Powered by CookBook Vision

• 2nd largest foodservice distribution company in the U.S.

• 300K customers; 120K independent & regional operators

• $26+ billion in revenue

• ~60 distribution centers solely in the U.S.

• 23K+ employees, 3K+ sales people

• Post-recession IR growth estimated at 4%• Margin pressured industry

• Went public last year: USFD

21

Who is US Foods?

22

CookBook is the Engine Behind ourCustomer-Centric Vision

We put the customer at the center of everything we do

CookBook powers customer-centric, actionable insights through prescriptive analytics

These insights allow us to deepen customer relationships and provide the most relevant solutions to

help grow their business.

23

No two of our customers are quite the same: commitment to 100% personalization

Customer-item level insights are continually updated to account for recent changes in customer behavior

Three+ years of past behavior used to determine purchasing, promotion and pricing patterns

CookBook is the Engine Behind ourCustomer-Centric Vision

24

CookBook Realized

My Kitchen

CookBook for

CatMans

Sales Planning Powered

by CookBook

CookBook for

Vendors

• Customer-centric category roles• Predictive assortment through

demand transfer

•Unique price recos maximizing sales & profits

•1-to-1 tailored content driving Customer Lifetime Value

• Insight Syndication• True Joint Business Planning

• Prioritize customers and align resources

• Prioritize opportunities by customer

CookBook has evolved to further power capabilities across Merchandising & Sales

PricingPowered

by CookBook

25

USF Strategy Pyramid

WINFood Leadership

DIFFERENTIATEEasy Customer Experience

COMPETEFlawless Fundamentals

FOUNDATIONAL

GREAT FOOD

SELLERS

INSPIRING CONTENT/PROGEASIEST TRANSACT ACROSS CHANNELS

MOST VALUED BUSINESS

SOLUTIONSDELIVER PERFECT ORDERS

LEADING FOOD SAFETY

RIGHT PRODUCT, RIGHT PRICE

OPTIMIZED COST TO SERVE

PEOPLE

INFRASTRUCTURE

PROCESSES

ANALYTICS

Local and sustainable

Great brands

Innovative products

best everyday cop and produce

26

CookBook will be embedded in every business function

CookBook

Locally Managed

Sales Category Manage-

ment

Vendors

1-to-1 Personal-

ization

Retail Chef’s StoreValue

Added Services

Supply Chain &

Logistics

Pricing

National Sales

Promo

27

CookBook creates more value across all stages of the customer lifecycle

Current Customer

Lost CustomerProspectProspect

Prioritization

Prospect Pricing

AcquisitionCampaign

Prospect Product Recos

Pricing Onboarding

Price Stabilization

Loyalty Campaigns Category Pen Campaigns

Predict Churn

RetentionCampaign

Win Back Campaign

Win Back

Loss

Acquisition CU

STO

MER

VA

LUE

Steady State

Onboarding

28

Insights & Analytics Operating Model

Business Questions

I&A

PM

O

RequestsAssets

US Foods Customers & Sales

Organization

Food

Gen

ius

PMO

Answers/Solutions

* Partners with Marketing for Primary Research; Also supports Food Genius data transformation requirements

CookBook

Project Mgmt

Strategy Solution Alignment

Change Mgmt

Cen

tral

B

usin

ess

Serv

ices

PIM VIMCIM

Insights

Data Gov

Food Genius(App Development, Food

Taxonomy, Menu Stewarding, Market Data)

BI Gov

Data Strategy(Customer, Product, Vendor) Assets

IT partners across multiple I&A Teams to support I&A requirements

SC, Replen & Logistics Analytics

Corporate Forecasts

BI Integratio

n

Merch & Sales

Analytics

HR, Finance,

& Rev Mgt Analytics

IT

Predictive analytics, Segmentation

BI & Analytics Team

Functional Business Units

(Supported by

CookBook Steering

Committee & Operating Committees)

Business

Questions

Decision Sciences*

Primary Research - Marketing(Attitudes, Preference & Satisfaction)

Requests

29

Working Level

Program Leadership

ExecutiveLeadership

Business Leadership

• Program level escalation and decision-making team

• Enterprise level escalation for major business decisions

• Workstream/project/initiative-level activities and decisions

• Cross-program level escalation and decision-making team

Con

solid

atio

n / E

scal

atio

n

Stra

tegi

c D

irect

ion

/ Prio

ritiz

atio

n / D

ecis

ions

Workstream TeamsWorkstream

Teams

CookBookSteering

Committee

Workstream Teams

ICE

Enterprise Air Traffic Control

EI&A PMO

Workstream TeamsWorkstream

TeamsCookBook Operating

Committees

Data Governance

BI Governance

BI Center of Excellence

Insights & Analytics Governance Structure

The analytics IT roadmap can be a cluttered one: Continuously invest in the future

30

1. Cloud-based technology (AWS, Snowflake, Spark)

2. Open source languages (R, Python)

3. Machine learning for limited-structured data

4. Self-serve BI and data visualization

5. Business-led data governance

Big Data Landscape 2017

Lessons learned…

1 Have a business model to draw from

Have multiple executive stakeholder accountability2

Commit to a true partnership: Analytics & IT 3

Brand your work: make it approachable4

Involve the business actively5

Don’t let perfection become the enemy of good 6

Invest in change management7

Be efficient in your design 831

Where is retail heading with customer-centricity and personalization, how will

retailers get there and how fast will they arrive?

03

32CONFIDENTIAL

Takeaways

Leading retailers are investing heavily in itShoppers want it & demand for it is increasing

Personalization and customer-centricity matter

33CONFIDENTIAL

01Invest in capabilities and peopleCommit and deploy across the organization

It’s possible to deliver on the promise02

Starts with exec. support & org. commitmentRequires change managementNeeds scalable data and analytical platform

It has to be executed right03

Precima helps our clients to satisfy the needs of customers better than the competition to win in the marketplace

Understand customer needson a granular, timely & frequent basis

Consistently execute actions that best satisfy customer needs

1

2

34CONFIDENTIAL

Upcoming…

• See Chuck and Nikki at the Precima booth (#3777) after this presentation

• RSR Pricing Report: Life Becomes Unmanageable:• https://www.precima.com/research-insights/ whitepa

pers/pricing-2016-life-becomes-unmanageable-1

• Precima Primary Market Research on Shoppers:• Pricing: What do shoppers really want? • Promotions: How important is personalization?

• FMI Midwinter: January 28-31, 2017

• Precima Sponsored White Paper with POI• Personalized Offers: The Cure for Tired, Ineffective

Trade Promos 35CONFIDENTIAL

For more information, visit www.precima.com

Eataly (Wine Tasting Room)

Tonight 6-8pmplease join us

for Hors d'Oeuvres and drinks at

New York's famous Eataly, the largest

Italian marketplace in the world!

MONDAYJanuary 16

2017

NetworkingReception

6:00 pm - 8:00 pmEataly New York

Flatiron200 5th Avenue

New York, NY 10010

https://www.precima.com/research-insights/whitepapers/pricing-2016-life-becomes-unmanageable-1?whitepaper-submitted=true

https://www.precima.com/research-insights/whitepapers/pricing-2016-life-becomes-unmanageable-1?whitepaper-submitted=true

Delivering on the Promise of Customer-Centricity and PersonalizationNRF Exhibitor Insights – January 16th, 2017
