national association of convenience stores€¢across nielsen-measured retail channels, departments...

Todd HaleConsultant, NielsenPrincipal, Todd Hale LLC

Shopper and Format TrendsIT'S OKAY TO LOOK IN THE REAR-VIEW MIRROR,

BUT WHAT'S MORE IMPORTANT LIES AHEAD

U.S. current state•Consumer confidence rising as unemployment falls along with low food inflation & gas

prices, but headwinds from aging population, low population growth, low working rate, health care costs & other spending challenges remain.

•Out-of-home dining continues to grow.

Economic indicators improving, but headwinds remain

•Across Nielsen-measured retail channels, departments & categories, total store gains have been less than spectacular. Over the past four (52-week) periods, dollar sales grew, on average, by 1.8%. Slow or no unit sales growth has been more problematic.

•Food deflation is having the greatest impact on supermarket growth, but most channels impacted. Produce & deli departments leading growth.

Total store sales flat as deflation impedes growth;

growth in perimeter continues

•Growth is coming from smaller more niche players, premium & value offerings.•Channels that offer value or convenience continue to lead store expansion, but retail

format is no guarantee of success. •Ecommerce becoming more mainstream.

Small manufacturers winning; retail format no guarantee of

success

•H&W trends continue to grow & evolve, but indulgence also winning consumer spend & retail investment.

Bifurcation of wants: health & wellness versus indulgence

Retail Landscape & Performance

Total store gains less than spectacular$774 $788 $803 $825 $831

252 254 254 255 255

52 weeks ending1/5/13





Billi

ons

Dollar SalesUnit Volume

Dollar Trend +1.8 +1.9 +2.7 +0.8

Unit Trend +0.5 +0.0 +0.4 +0.0

Avg U Price Trend +1.2 +2.0 +2.3 +0.9

% U sold on Promo 31.7 31.6 30.9 31.2

Source: Nielsen Answers, Total U.S. All Outlets Combined (plus Convenience), All Departments, All Brands, “trend” means % change 52 weeks vs. year ago

UPC-coded items

-0.1%

1.4%

1.8%

1.3%

$0

$50

$100

$150

$200

$250

$300

$350

$400

Billi

ons

Food deflation slows growth

SupermarketsC-Stores

Drug Stores

Value*

No Growth High Growth

UPC-coded itemsSize of bubble denotes dollar share of Total U.S. xAOC, including Convenience Stores

2.5%

4.1%

2.9%2.0%

Bold = same period year ago

Source: Nielsen Answers, Total U.S., 52 weeks ending 12/31/2016 (vs. year ago); *Club Stores, Dollar Stores, Mass-Merchandisers, Supercenters, & Military

U.S. store size falls as store count risesU.S. Store size falls as store count rises

Source: Nielsen TDLinx; includes supermarkets $2MM+, conventional mass-merchandisers, supercenters, drugstores, dollar stores, warehouse clubs, and convenience stores

*Store size adjusted for Supercenters to reflect total store

225,000

230,000

235,000

240,000

245,000

250,000

255,000

260,000

265,000

270,000

275,000

'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

Store Count

9,900

10,000

10,100

10,200

10,300

10,400

10,500

10,600

'06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16

Square Footage Per Store

11.6% increasesince 2006

-3.7% decrease since peak in 2009

U.S. Store Count & Store Size Trends*

35%

32%

17%

10%5%

1%Dollar Stores

C-Stores

Drug

Supermarkets $ 2MM+

Supercenters

Warehouse Club

Store size decline fueled by rapid growth in small formats

29,096 new

stores

Source: Nielsen TDLinx

% of U.S. Store Count Expansion by Retail Channel – 2016 vs. 2006

The race for scale: small formats dominate

1,8051,9491,9872,1092,2372,337

2,8043,348

3,6953,806

4,3244,5554,6164,767

5,3488,011

8,3699,688

13,31913,961

TargetCasey's

Ahold DelhaizeCST Brands/Valero

SunocoAlbertsons

Kroger Corp GroceryExxon Mobil

BPChevron Texaco

Marathon/SpeedwayRite Aid

Walmart BannerShell

Couche-TardWalgreens

7-ElevenCVS

Dollar GeneralDollar Tree

DollarC-StoresDrugGroceryMass Merchandisers


U.S. Store Counts for 2016

-6%

-4%

-2%

0%

2%

4%

6%

8%

Home Depot

Lowe's

Walgreens

CVS

Costco

Sam's Club

Sprouts

Publix

Kroger

Whole Foods

Dollar Tree

Dollar General

Walm

art

Target

Kmart

Retail format no guarantee of success

Source: Company press releases; monthly or quarterly news releases – excluding gas

% same-store sales growth – latest 12-months

Not all big players are expanding

U.S. Store Counts

1,137

1,987

2,337

2,804

745

1,805

4,616

Publix

Ahold Delhaize

Albertsons

Kroger Corp Grocery

Kmart - Tot

Target - Tot

Walmart Banner

2005 2016

Expansion from all but Kmart & Ahold Delhaize in 2016 vs. 2015

Source: Nielsen TDLinx – counts reflect corporate-owned grocery stores 2016 vs. 2005

bfresh urban fresh format

Source: bfresh

Investing in adult beverages & experience

The Watering Hole: Wine & Craft Beer Bar!Beer & wine bars

Threat or opportunity for C-stores? How will these formats impact center store?

Sources: Houston Chronicle (chron.com); Whole Foods Market

Mass-merchandisers taking diverse paths

2

741

247

1,558

416

696

3,504

Super Kmart

Kmart MM (Excl Sears)

Super Target

Target MM

Walmart MM

Walmart Grocery

Walmart Supercenter

2005 2016

• Walmart store expansion to slow as they look to bolster online business & improve foreign operations: expects to add 35 Supercenters & 20 small format stores in FY’18

• Target plans for about 29 new stores in 2017 – most smaller formats

• Sears Holdings to close 108 Kmart stores by end of March

“Retailers who are not managing store-closings with the same rigor as store openings are not maximizing sales”

– Todd Hale

U.S. Store Counts

2016 vs. 2005Source: Nielsen TDLinx

Still tweaking to get fresh rightAn affluent suburb of Hamilton, Ont. is ground zero for Lee

Tappenden’s discount store of the future… The CEO [of Wal-Mart Canada Corp.] makes a beeline for the refrigerated (8 degrees [Celsius]) walk-in fruits-and-vegetables room – another first for Wal-Mart Canada – and admires the rows of lettuce, strawberries and other wilt-prone produce.

In the all-important grocery section, which brings shoppers to stores more frequently than general merchandise, Wal-Mart has rearranged the aisles so that the fresh-food departments are more prominent and closer together … “We’ve been in fresh [food] for 10 years but we don’t have the credibility yet … A lot of people haven’t shopped us for fresh yet.”

The new walk-in refrigerated room with sliding doors is aimed at boosting its “credibility” in fresh produce by helping ensure the food lasts longer, he said. It borrows a leaf from Costco stores, which also have “cooler” rooms, he noted. “We were worried customers wouldn’t find their way in here and they’d think it is just part of the back room.”

Source: The Globe and Mail (2/20/2017)

Walmart continues to test traditional c-store waters

Source: dallasnews.com (2/16/2017)

Walmart c-store format w/online order & pick-up Walmart opens 2nd C-store format with online order & pick-up

“In addition to gas pumps and your typical convenience store

fare — hot coffee, cold soda and snacks galore — at Walmart

prices, Walmart Pickup with Fuel is home to a dedicated drive-

through for picking up grocery orders placed through Walmart

online grocery service.”

denverpost.com (12/1/2016)

Target planning to grow by going smallNBC’s Jo Ling Kent at Retail’s BIG Show: We see an increasing

number of millennials who desire to live in small or large metropolitan areas. Let’s talk about the new Target concept store down in Tribeca. How are those stores performing, and are the stores also supplying the e-commerce element?

Mike McNamara [Target’s EVP, chief information & digital officer]: Reorganization has been a trend all over the world, not just the United States. It’s occurring everywhere, and I think that for a number of years the majority of [successful] new stores have been smaller formats. Target is seeing exactly the same thing. As we move into neighborhoods —whether they’re big cities or on college campuses — that’s where we see trade move to, and they’ve been very, very successful for us. The store in Tribeca has only been open for a few months, but it’s had a phenomenal start. I can see us building out more and more of those smaller stores in urban areas because that’s where our consumers are moving.

They also are fantastic when it comes to buy online, pick-up in store — or even as shipment locations if they’re large enough, so I see them as being hugely important to the future of Target.

Source: geomarketing.com (1/23/2017)

Target’s First Small-Format Store (45,000-square-foot)in Manhattan's hip Tribeca neighborhood

Expansion from regional grocers

205

207

228

230

264

309

317

388

685

740

Weis Markets

Save Mart

Hy-Vee

Meijer/HQ

Grocer Outlet

Smart & Final

HEB

Houchens Industries

SUPERVALU

Southeastern Grocers

2005 2016

• Hy-Vee to open three stores in the Twin Cities market this year & five more planned after 2017;Hy-Vee to open first small-format urban store in downtown Des Moines on 2/28/2017 & plans for similar in both downtown Minneapolis & St. Paul

• Meijer continues expansion in the Midwest; plans for Ohio to be their second strongest market by 2020 behind Michigan

U.S. Store Counts


Smaller, more nimble, with a strong understanding of their shoppers, experimenting with new formats & expanding into new markets

2016 vs. 2005

Winn-Dixie Hispanic formats

Source: frescomas.com

Hy-Vee cosmetics & beauty department

“The Hy-Vee store that opened in Savage Tuesday features several firsts, including a cosmetics and beauty department called Basin and several new grab-and-go food offerings. A store it plans to open next year in White Bear Lake will have a fitness center in the mix with takeout foods, restaurants, clothing, and, oh yeah, groceries.”

Startribune.com (2/21/2017)

Source: pennlive.com

In-store pub & ice cream parlor with space to relax, eat & shop

2 story urban format with restaurant & bar2 story urban format w/restaurant & bar

“A unique feature of the store is a second-level, 155-seat restaurant and bar known as Table by Market District … offers full-service lunch

and dinner, and a menu inspired by fresh, seasonal ingredients”

Source: supermarketnews.com (8/19/2016)

Hunger for natural/gourmet & low prices

178

255

447

460

1,364

1,585

Fresh Market

Sprouts

Whole Foods

Trader Joe's

Save-A-Lot

Aldi

2005 2016

• Lidl, a $98 billion European limited assortment discount grocer is gearing up to open 100 stores along the East Coast by mid-2018 with the first 20 to open this summer

• Aldi will bring its total number of U.S. stores to nearly 2,000 by 2018

• Save-A-Lot pulling out of West Coast – closing 13 stores (CA & NV)

• Trader Joe’s accelerating its opening program• Whole Foods opening six new stores next quarter while

closing nine underperforming stores & slowing expansion plans

• Sprouts on track to open 36 new stores in 2017; expanding to FL and NC for a total of 15 states

• Kroger partnered with Lucky’s Market, a specialty grocery store chain focused on natural, organic & locally-grown products in April 2016

U.S. Store Counts

Source: Nielsen TDLinx 2016 vs. 2005

Expansion from all but The Fresh Market in 2016 vs. 2015

Investing $1.6 billion to re-fresh storesAldi investing $1.6 billion to re-fresh stores

“Aldi plans to remodel more than 1,300 U.S. stores by 2020, costing the retailer an estimated $1.6 billion, the

company said Wednesday. The grocery chain says the upgraded

stores will deliver “on its customers’ desire for a modern and convenient shopping experience with a focus on fresh items, including more robust

produce, dairy and bakery sections.” Aldi, based in Germany, operates

more than 1,600 stores in the U.S., across 35 states.”

theshelbyreport.com (2/8/2017)

Long-term expansion from leading chains

214

502

646

4,555

8,011

9,688

BJ's

Costco

Sam's

Rite Aid

Walgreens

CVS

2005 2016

U.S. Store Counts • CVS expansion aided by acquisition of 1,672 Target pharmacies & 79 Target clinics

• Walgreens-Rite Aid deal to be completed in 2017 & is selling 865 Rite Aid stores to Fred’s to close deal with FTC; new agreement with FedEx to be drop-off & pick-up spot

• Costco plans for 16 new stores in FY2017

• Sam’s Club U.S. expansion plans include 13 in FY’16, 11 in FY’17 & 4 in FY’18


Expansion from all but Walgreens & Rite Aid in 2016 vs. 2015

CVS Pharmacy y más in Florida & California“CVS Pharmacy has launched

CVS Pharmacy y más, a new shopping experience in the Los Angeles market

designed to provide enhanced, personalized service to the local Hispanic community.

Nine stores in the greater Los Angeles area will have the new format, which includes

completely bilingual signage and staff, the addition of more than 1,500 trusted Hispanic

products, more competitive pricing on hundreds of products, and new services

unique to a national retail pharmacy. The launch of CVS Pharmacy y más in Los

Angeles follows the opening of 12 locations in Miami in June of 2015.”

Source: cvshealth.com (4/14/2016)Nine stores open in California and 15 stores in Florida

(as of February 24, 2017)

Rapid expansion in the dollar channel

390

600

13,319

13,961

99 Cents Only Stores HQ

Fred's HQ

Dollar General

Dollar Tree

2005 2016

U.S. Store Counts

• Dollar General forecasting some 1,000 new stores & 900 remodels or relocations in 2017

• Fred’s acquiring 865 Rite Aid stores in 2017


Expansion from all but Fred’s in 2016 vs. 2015

Dollar General format with c-store components

“3,400 s.f. of sales floor space, provides urban shoppers with a focused selection of consumable items and instant consumption options in a compact format”

theshelbyreport.com (1/26/2017)

0%1%

1%1%

2%2%

2%2%

2%3%

4%5%

11%

Pizza HutDenny's

Burger KingSonic Drive-in

Dunkin DonutsWendy's N.A.

McDonald'sTaco Bell

PaneraKFC

Papa John'sStarbuck's Americas

Domino's

What matters most is good tasting & convenient food @ a good price% same-store sales growth – latest 12-months

Source: Company press releases; dominos.com; fool.com

At least 50% or more of sales from

the top 3 pizza chains are from

digital orders

Fast food makeovers

“Good design is no longer reserved for high-end experiences”

Susan Cantor, CEO of Red Peak Branding

“Arby's, KFC and Taco Bell appeal to millennials”

AdWeek

Source: AdWeek; Photos: KFC/Richard Cadan, Arby’s/Dena Dendy, Taco Bell

Portion & budget control

Source: mcdonalds.com (January 2017)

“the 5 biggest fast casual openings of 2016”

“Porano Pasta - St. LouisYou could say 2016 was the Year of the Chef in fast

casual. Given the landscape of the restaurant industry, where casual dining was the worst performing segment for 10 of the 12 months, according to TDn2K, even the most accomplished culinary professional began to see the limited-service light. St. Louis chef Gerard Craft, who has a James Beard Award to his name, joined the movement with his Porano Pasta early in the year. The concept, built around authentic Italian ingredients layered in bowls, allows guests to walk down the line and customize the experience, a la the tried and true Mexican-themed model. As far as what’s next, expect to see the menu keep evolving. The concept added pizza in the fall.”

qsrmagazine.com (1/19/2017)

“Chef-driven was the theme of the year”

Retail 2021 – What’s In Store?

-1.9%-1.1%-0.9%

0.7%1.7%

2.0%2.2%

2.6%3.0%3.1%

3.4%3.8%

4.1%4.6%

4.9%5.2%

5.6%5.8%6.0%6.1%

13.4%

DepartmentConsumer Electronics

OfficeApparel

BooksSporting Goods

ToyDrug

MassHome/Bed/Bath

SupermarketsSupercenters

AutoLiquor

Home ImprovementClub

Discount DepartmentPet

DollarConvenience/Gas

E-Commerce

E-commerce the big winnerE-commerce the big winner

Average Growth

CAGR 2016 to 2021

Sources: Nielsen TDLinx & Nielsen Analytics; CAGRs (compounded annual growth rates – dollar basis); company press releases

What’s Selling?

Price volatility & demand behind short-term trendsAll Outlets Combined (plus Convenience) – Dollar Trend

Source: Nielsen Answers, Total U.S. – All Outlets Combined (plus Convenience), 52 weeks ending 12/31/2016 (vs. year ago)

1%

-4%

-3%

-2%

0%

0%

1%

1%

1%

1%

2%

2%

3%

4%

4%

4%

Total All DepartmentsDairyMeat

General MerchandiseFrozen Foods

Beauty CareGrocery

Personal CareBakery

Household CarePet Care

Tobacco & AlternativesHealth Care

AlcoholDeli

Produce

UPC-coded items

Top selling categories are all ediblesTop Selling Supermarket Categories ($ in billions)

Source: Nielsen Answers, Total U.S. All Outlets Combined (plus Convenience), and Total U.S. Food Stores $2MM+, 52 weeks ending 12/31/2016 (vs. year ago)

But supermarkets don’t always hold dominate share in big categories

$0 $10 $20 $30 $40

Frozen Entrees

Fruit

Wine

Milk

Soft Drinks

Baked Bread

Beer & Malt Based Beverages

Salty Snacks

Cheese

Vegetables & Herbs

Billions

Supermarkets All Outlets Combined, including Conv/GasUPC-coded items

Fastest growing categories are mostly ediblesFastest Growing Supermarket Categories* (Dollar Trend)

Source: Nielsen Answers, Total U.S. All Outlets Combined (plus Convenience), 52 weeks ending 12/31/2016 (vs. year ago), categories w/ sales of $50 million+ in Food $2MM+ Channel

Supermarkets driving faster growth in four of these categories

7%

8%

6%

11%

8%

13%

11%

16%

19%

29%

7%

8%

8%

9%

9%

11%

12%

15%

19%

24%

Refrigerated Liquid Tea

Fruit

Diarrhea Remedy Product

Vinegar & Cooking Wine

Premixed Alcohol Cocktail

Lunch Combination

Liquid Coffee

Sushi

Liquid Tea

Refrigerated Appetizer

Supermarkets All Outlets Combined, including Conv/GasUPC-coded items

Non-edibles dominate top selling categoriesTop Selling Drug Store Categories ($ in billions)

Source: Nielsen Answers, Total U.S. All Outlets Combined (plus Convenience) and Total U.S. Drug Stores $1MM+, 52 weeks ending 12/31/2016 (vs. year ago)

$0 $10 $20 $30 $40 $50 $60 $70 $80

Beer & Malt Based Beverages

Stomach Upper G.I.

First Aid

Pain Relief

Oral Hygiene

Vitamins & Supplements

Candy

Cosmetics

Traditional Tobacco

Upper Respiratory Medicine

Billions

Drug Stores All Outlets Combined, including Conv/GasUPC-coded items

Three categories also top selling categories in C-stores

Mix of edibles & non-edibles on list of fast growing

Fastest Growing Drug Store Categories* (Dollar Trend)

Source: Nielsen Answers, Total U.S. All Outlets Combined (plus Convenience), 52 weeks ending 12/31/2016 (vs. year ago), categories w/ sales of $50 million+ in Drug $1MM+ Channel

Only one category on list of fastest growing c-store categories

0%

5%

6%

-1%

5%

-1%

5%

0%

9%

10%

6%

6%

7%

9%

9%

10%

12%

13%

17%

24%

Deodorizer & Freshener And Scent

Fabric Softener

Antiseptics & Disinfectants

Wholesome Snacks

Ice Cream

Cheese

Insect Repellent Product

Frozen Entrees

Tobacco Alternatives

Telephone & Accessory

Drug Stores All Outlets Combined, including Conv/GasUPC-coded items

Consumers flock to freshPrice volatility (positive & negative) and/or increased demand behind trends

Source: Nielsen Perishables Group FreshFacts, Total U.S., 52 weeks ending 12/31/2016 (vs. year ago)

Deli PreparedFoods

Fruits Vegetables Bakery Deli Cheese Deli Meat Seafood Meat

Dollar Trend Volume Trend Price Change

UPC-coded & non-UPC-coded items

Products closer to the point of consumption winning as demand for immediacy grows

Source: Nielsen Perishables Group FreshFacts, Total U.S., 52 weeks ending 12/31/2016 (vs. year ago)

14%8%

6%5%

5%4%4%

4%3%

2%2%

1%0%0%

0%

SushiSoups

DessertsSnacksSalads

Prepared ChickenSandwiches

EntreesDips/ Spreads/ Toppings

SidesPizza

PlattersBreakfast Foods

CondimentsAppetizers

Deli Prepared Food Volume Trend

UPC-coded & non-UPC-coded items

“designed to emphasize freshness, quality, value and

the “sense of something cooking in the kitchen,” referring to the

on-site food preparation”

Pilot store celebrates food

Value-added produce delivering convenient options @ a premium price

• Saves time when entertaining guests• Convenience for busy families,

individuals, and smaller households• Healthy for ‘on-the-go’ snacking

FRUIT

+9% CAGR $ sales from 2012 to 2016

+10% CAGR $ salesfrom 2012 to 2016

• Value Added Veg index highly with Asians, Boomers, Gen X, highly affluent consumers • Value Added Fruit index highly with Hispanics, Millennials, mid-to-high income brackets

FRUIT VEGETABLES

Source: Nielsen Perishables Group FreshFacts® Historical Projected Database 2012-2016

Fishing where the fish are w/new products!Campbell Fresh Division launching products to compete in a fresher market

Source: foodnusinessnews.net

Plant-Based Milk

Plant-Based Protein

Drinks & Organic

Smoothies

New Flavors of Hummus

& Salsa

“Ultra-Premium”

Organic Soup

Digital Shopping & Digital Retailing

E-commerce sales for Q4 2016 accounted for 8.3% of total Retail sales; up from 7.6% year ago

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

$0

$200

$400

$600

$800

$1,000

$1,200

Q1

2000

Q1

2001

Q1

2002

Q1

2003

Q1

2004

Q1

2005

Q1

2006

Q1

2007

Q1

2008

Q1

2009

Q1

2010

Q1

2011

Q1

2012

Q1

2013

Q1

2014

Q1

2015

Q1

2016

Q4

2016

U.S

. Dol

lars

(bill

ions

)

Retail E-Commerce Sales % of Total Retail Sales Retail E-Commerce Sales % Change vs. Year Ago

Source: U.S. Census Bureau, Quarterly U.S. Retail E-Commerce Sales

$115

$116

$136

$486

Kroger

Costco

Amazon

Walmart

2010 2011 2012 2013 2014 2015 2016

2016 $ Growth (Billions) versus:

2010 2015

Amazon + $ 101.8 + $ 28.9

Walmart + 64.5 + 3.7

Costco + 39.8 + 2.4

Kroger + 33.1 + 5.5

Reported Revenue/Sales/Net Sales (Billions)

Source: Company Reports, * Excludes Mexico

*

Amazon clear leader in sales growth

When will Amazon drive consistent profits?

2.0

2.4

2.4

13.6

$0 $2 $4 $6 $8 $10 $12 $14 $16 $18

Kroger

Costco

Amazon

Walmart

2010

2011

2012

2013

2014

2015

2016

*

Source: Company Reports, * Excludes Mexico

How will e-commerce efforts for these other retailers impact their growth & profits as

well as those of manufacturers?

Net Income/Earnings (Billions)

Amazon on pace to grow net salesto nearly $380 billion by 2021

$0

$50

$100

$150

$200

$250

$300

$350

$400

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Amazon Net Sales (billions)

Grabbing $242 billion

dollar in sales

from???

Actuals ForecastSource: Amazon.com; Todd Hale, LLC forecast

“the world’s most advancedshopping technology” “Our checkout-free shopping

experience is made possible by the same types of technologies used in self-driving cars: computer vision, sensor fusion, and deep learning.

Our Just Walk Out technologyautomatically detects when products are taken from or

returned to the shelves and keeps track of them in a virtual cart.

When you’re done shopping, you can just leave the store. Shortly after, we’ll charge your Amazon account and send you a receipt.”

Amazon delays public launch of this format due

to technical issues!

In catch-up mode: Walmart offers free 2-day shipping without membership fee

Source: Walmart.com

Walmart rapidly expanding click & collect to more than 100 markets & more to come!

“Walmart is about to put the sleepy supermarket industry on notice.”

Sources: The Street.com, walmart.com; Photo: https://www.instagram.com/jtreeproject/

The race for convenience: door-to-car versus door-to-door

ClickList in more than 550 stores*

Source: company websites; *Kroger Q3 2016 Earnings Conference Call (12/1/2016)

Kroger click-list leads to more store jobs& home delivery coming in the near future?

Source: THE TENNESSEAN, USA TODAY Network (2/17/2017)

Amazon testing click & collect model

“AmazonFresh Pickup, the service is only available to members of

Amazon’s $99-a-year-Prime program, who will place orders

ahead of time via the company’s website or app. There are no

minimums on order amounts and Amazon says orders can be ready

in as little as 15 minutes. The locations are opening to

employees only first.”

recode.net (3/28/2017)

Grocery delivery services catching on: how will they impact roll-out of Amazon Fresh?

Source: Company websites

“plans to offer services in 50 markets and over 30 million households by end of year”

• “Shipt is a membership-based service. By purchasing a membership, customers receive unlimited grocery deliveries for an annual fee of $99 or a monthly fee of $14.

• Members receive free delivery for orders over $35. Orders under $35 are subject to a $7 delivery fee.

• Shipt offers sale items including “buy one, get one free” (BOGO) items from grocery store’s weekly sales.

• At this time, Shipt cannot accept coupons. • Shipt prices vary from grocery store prices by an average of

approximately $5 on a $35 order.”

cnbc.com, shipt.com (3/23/2017)

Supermarket dark stores facilitate online delivery

People a big part of fulfillment today

Automation & robot technology will be increasingly important in the future

Source: theguardian.com; youtube.com

An abundance of meal delivery services

And the offerings keep coming!

Source: marleyspoon.com

From food manufacturers too!

Source: amazon.com

No Meal SubscriptionWe’ve made this easy as chicken pot pie, and just as delicious. No subscription needed, just order whatever you like, whenever you like. We refresh our menu seasonally to keep your palate on its toes.

Ready. Set. Cook!You’ve got your package. Pop the lid and check it out. Fresh veggies, prepped. Spices and sauces, measured. All-natural* meat, seasoned. Just give them some love and bring them to life.

*Minimally processed, no artificial ingredients.

Inspired Meals in an Hour or LessAll done! Each meal can be made in an hour or less. Our chefs have grabbed inspiration from around the world and around the corner to create something fresh. Something surprising. Something tasty.

Meal kit services are hugely popular – but are they profitable?

It’s a $1.5 billion industry in the U.S.

Source: Eater.com

Will be a multi-billion dollar market in 5 years

150 + brands bridging “gap between takeout and from-scratch home cooking”

Meal kits more of a trend than a fad

1 IN4US ADULTS HAVE

PURCHASED A MEAL KIT

IN THE PAST 12 MONTHS

70% ARE STILL ACTIVELY PURCHASING AFTER

TRIAL

Source: Harris Poll® conducted online, in English, within the United States between December 27 and December 29, 2016 among 2,015 adults aged 18+ (including 474 adults who have purchased a meal kit in the past 12 months

Meal kits attracting young males, families w/kids at home & more affluent

CHILDREN AT HOME31.7% of population

$6,025 annual grocery spend

INCOME >70K39.5% of population


MILLENNIAL MEN10.4% of population


Source: Nielsen

Top Over-Indexing U.S. Demographics

Meal kits an opportunity for retailers

Source: Nielsen Answers, Total U.S. xAOC; 52 weeks ending 3/4/17; bfresh photo

In-Store Meal Kits:

• $80.6 million

• +6.7% vs. year ago

Ahold goes omni-channel with kits

Ahold offering meal kits for in-store

purchase or delivery via Peapod

Collaboration between retailers & manufacturers

Source: Peapod

Peapod.com Expands Meal Kit Offerings: Partners with Trusted Brands from ConAgra Foods and Campbell Soup CompanyConvenient, family-friendly options deliver a delicious and easy mealtime

“Hate to put on real pants to go buy beer or wine?”

Source: consumerist.com

But wait, it is really a free 2-hour delivery “window”

“McDonald’s plans mobile ordering/paymentand delivery for all US stores this year”

Source: 9to5mac.com

“jaguar launches in-car paymentsat shell gas stations”“coming to the UK first, but will roll out around the world”

It’s a bird, it’s a plane: no it is a flying warehouse

“The patent says the warehouse could remain at a high altitude, and drones "with ordered items may be deployed from the AFC to deliver ordered items to user designated delivery locations."

The patent also says shuttles could deliver more inventory to the warehouse, as well as transport employees.

Images accompanying the patent feature a blimp as the chosen airship for the fulfillment center, although it's not clear the vehicle will be part of Amazon's final design.”

usatoday.com (12/29/2016)

So who needs any of this stuff, when we can just turn to the Jetson’s food machine!!

Winning in the future meansstaying on & ahead of trend with:

Demand for fresh, now & for me:

products need to have appearance of being less prepared, more convenient &

experiential

Health & wellness: transparency & free from movement key

now, but what’s next & how do you stand out from the pack? Don’t forget

indulgence!

Enhancing the in-store & out-of-store

experience

Managing the negative & positive

impacts of e-commerce

Shift from mass-marketing to niche-marketing among a diverse population

and an ever increasing & fast-paced digital age

THANK YOU!

[email protected]@nielsen.com

http://www.linkedin.com/pub/todd-hale/a/353/613

@ToddHaleLLC

Todd HaleConsultant, NielsenPrincipal, Todd Hale LLC

national association of convenience stores€¢across nielsen-measured retail channels, departments...

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