The Future of Category Analytics – Win with Shoppers

ACOSTA SALESHeadquarter Selling

Sales Customer Relationship

Management Joint Business Planning

AMG Strategic Advisors Strategic Consulting Shopper Insights Market Research Advanced Analytics

Business Insights Category Management Space Management Business & Retail AnalysisLoyalty Analytics

The Agency at AMG Integrated Marketing Solutions Shopper Marketing

Retail Merchandising Continuity Sets Projects

AMG ActivationIn-store Media, promotion

and Communication

Business ProcessOutsourcing

Order to Invoice Invoice to Cash

MosaicAssisted SellingTrainingExperiential MarketingInteractive

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Who is Acosta

Discussion Topics

• A quick look at the evolution of category analytics

• The need to focus on the shopper• New skills and methods needed• Bret Thurston

• Sr. Manager Category Development – Hillshire Brands

Shopper Based Offers

Neighborhood/Precision Marketing

Assortment customization

Private Brands as a Point of Difference

Neighborhood Stores-Multi Formats

- Everything Old is New Again(with a twist)

PastPast FutureFuture1980’s 2012+

Local Store Control National Strategies

Local Market Advertising One Plan for the Entire Chain

Limited Assortment Assortment as a Differentiator

Private Brands as a Point of Difference

Private Brands as a Margin Play

Small Neighborhood Stores Larger Super Stores

The industry is evolving back to a local shopper focus

Customer focus Efficiency focus “Shopper "focus

Category ManagementProcess-Driven Multiple Templates

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New Metrics like GMROI, DOS, Opp Gap, Market Coverage, etc

Cut the store into Micro units versus looking at how Shoppers were buying across the store

Refrigerated Juice

Shelf Stable Juice

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Loyalty programs introduced

New metrics like top shopper, trips, frequency, basket affinity, conversion, etc

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Most do not align loyalty analytics to the category management process

Who are my Shoppers?SegmentLoyaltyOtherWhat are their purchase Behaviors?TripsFrequencyBasketProgramsLoyalty offers

Category Priority, Roles and Strategies and Tactics.

AssessmentAssortment, Pricing, Merchandising, Shelf Placement, and ScorecardsPromotionsPrice reductionsFeaturesDisplays

Loyalty Analytics Category Management

Need to move analytics from just a category focus to shopper focus

Our process is to continue the transition from traditional category management as retailers place more focus on their shoppers

Driven by shopper insights along the path to purchase, and is more holistic to include the aisle, department, and store.

TODAYYESTERDAY

CATEGORY TA

CATEGORY ROM

Consumer

StoreStore

CategoryCategory CategoryCategory

CategoryCategory CategoryCategory

StoreStore

CategoryCategory CategoryCategory

CategoryCategory CategoryCategory

StoreStore

CategoryCategory CategoryCategory

CategoryCategory CategoryCategory

Path to Purchase

Convenient, easy to shop, good variety.

Low prices, especially on HBC and Paper Products.

High quality products, fun to shop, low prices.

Convenient, easy to shop, good variety, low prices.

Home Delivery

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New shopper based analytical approach

Report Progress & Adjust As Needed

Strategic Tactical

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Discovery Phase

Objective: Better understand who the shopper is at the Product and Retailerlevel, how they purchase the Product and shop the Retailer, andidentify environmental issues that are affecting purchasing decisions.

Product Shopper DNA

Retailer Shopper DNA

Environmental Influence

• Who does my product appeal to?

• What need do I fulfill?• How am I purchased?• How/when am I

consumed?

• Who does my store appeal to?

• What is my position in the marketplace?

• How is my store shopped?

• What external factors are affecting households?

• What is important to the shopper?

• What does the path to purchase look like?

What Discoveries can be made:

04/20/23 Slide 13

Key Trends Impacting Our Industry

1. Shopper Landscape is Changing

2. Digital is Here and Growing Quickly

3. Retail Landscape is Changing

4. Marketing Spend is Shifting

5. Success is Driven by Innovative Growth Strategies

Tale of Two Shoppers

Generational

Multi-cultural

Economic

Source:AMGSA WBTB

Shoppers

Shoppers

04/20/23 Slide 16

Digital is Here and Growing Quickly• The typical consumer spent 4% of their grocery budget over the internet• 52% of shoppers are using digital tools on the path to obtaining grocery goods• 32% of shoppers said they reclaimed online coupons• 31% used mobile phones for making lists, searching for recipes, and similar activities• 23% checked prices at multiple stores on the web before buying• Shoppers are buying online mainly for convenience (both shopping and delivery) and lower prices

The Web Has “Quietly Encroached” on the Grocery

Sector

The Web Has “Quietly Encroached” on the Grocery

Sector

Many changes in how shoppers view the shopping landscape

Value Stores

Online Replenishment

Grab & Go at CVS

Grab & Go at CVS

Dollar General (*Prototype)Dollar General (*Prototype) Walgreens Expands Fresh

Walgreens Expands Fresh

Target pFreshTarget pFresh

Increased Food Offerings

Urban / multiple formats

Source: Kantar Retail , Nielsen

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Opportunity Phase

Objective: Establish consistent measures to benchmark Retailer store performanceAnd identify areas of opportunity. Define a strategic purpose andquantify the value potential for the retailer.

Buyer Conversion Share of Wallet Leakage

• Is the Retailer converting Shoppers into buyers?

• What is the value of increasing conversion rates?

• How much of the Shoppers’ spend is captured by the Retailer?

• If the sale is not captured at the Retailer, where is it going?

• How does the competition treat the category?

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Starting with a more holistic view shows shoppers are buying different categories more often at competitive retailers

These are important categories that drive trips and larger baskets

20Source: IRI Reviews Latest 52 WE 1/22/12

Comparison of top 25 categoriesRetailer

21Source: Nielsen Channel Facts L52 WE 7/2/2011, Nielsen Planners 52 Weeks Ending 12/24/2011

If Retailer could convert Pet Food buyers at the same rate as competitors, sales would increase by $4.5MM.

•Retailer buyer conversion = 33.7%•Avg conversion for other similar retailers= 40.2%

$693,025 x 6.5= $4.5MM

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Stores less than three miles

Stores more than three miles

Correlation between Pet sales to Supercenter proximitySales 24% higher

Opportunity to drive additional sales in stores within three miles of Supercenter

Source: ACNielsen: Spectra

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Diagnostic Phase

Objective: Evaluate category performance on the basis of Shopperand traditional sales metrics to identify the levers of sales results.

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Execution Phase

Objective: Articulate the key insights driving the business, theopportunity if addressed, and provide a clear and actionablerecommendation that can be followed to close the gaps.

DiscoveryDiscovery

Opportunity

Opportunity

DiagnosticDiagnostic

• WHAT do we know?

• WHY is it important?

• NOW WHAT do we do?

• What is the cost?

Bret ThurstonCategory Leadership

Hillshire Brands Customer Development Focus

Shopper Insights

o Shopper Integration into Category Leadership Platform

o Promotional Shopper Insights

Category Leadership

Shopper Marketing

o Shopper ROI’s via Shopper Marketing Development

o Link Insights to Solutions

Capability

o Change Management

o Improved Communication

o Specific KPI improvement

o Shopper Informed o Pricing and

Promotion Expertise

o KPI’s Against Shopper and Category

Advantaged Process for Shopper Development

o Market Structureo Custom Shopper & Trip

Segmentation o Proprietary Insight into

Shopper Barriers

o Enhanced Platformso Infused by Shopper Insighto Adv. Insight into Value &

Promotiono Level Up customer loyalty

o Shopper/Demand Based Assortmento Shelf Optimization and Theater Driven by Barriers

o Merge Shopper, Category, and Retailer Needs with Insight

o Supported by Well-developed Marketing and Advertising Support

The Shopper’s Journeyo The journey is where we learn about consumer & shopper’s emotional and

rational dynamics and identify the shopper’s triggers, barriers and opportunities

Influence of occasions and cultural assumptions about the category

•Occasion, category and brand implications•Importance of promotion which drives channel and store choice•Understanding of the trip mission

How the store frames the choice and directs behavior

• Store layout• Assortment modeling, Planograms• Fixture design• Shopper Marketing Programs

How consumption, storage, packaging delights or frustrates

• Promotional ROI• Product developments• Packaging development

Pre-Shop Shop Post Shop

Hillshire Brands’ Commitment to Shopper Focused Category Leadership

- Shopper Capabilities enable our strategies

- Customer Focused engagement strategies enable our partnerships

- Shopper Focused activation enables our success

Hillshire Brands Category LeadershipGuiding Principles

Strong Category Leadership platformsinformed with shopper/category/customerinsights

Clear understanding of and alignment to the customers’ category planning cycles, operational requirements, and category goals

Investment in customer-facing category teams charged with driving retail partnerships and customizing our category leadership platforms tocreate unique activation plans for customers

Disciplined approach to measuring resultsin order to ensure success

Hillshire Brands Building Capability to Ensure reaches all customers

POS ACNielsen

IRI Panel Shipments

Data Analysts Business Support, IT

Hillshire BrandsCategory Leadership

Acosta Partners Key Customers

Presentation Updates

Data Updates

Data U

pdates

Enable customization and ensure ROI

- Align with the customer to a level we are able to support well

- Fully engage in the areas where it makes sense to invest

- Ensure that we have a point of view on each of the customer’s strategies and tactics

- Become experts in areas that drive our business model forward with our customers

Closing thoughts

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Industry needs to focus on delivering new analytics to drive business insights

Multiple sources, store level upc to total store, syndicated, panel, third party observation, etc.

Common when possible, automated, national and local

Basic analysis, tell what the data says, Smart text when possible, getting to the who, what, when, and where

Rich Diagnostics driving hypothesis and begin understanding the why and prescribing what next

Need to develop new metrics and common language

Item ranking retailer vs market

Item ranking retailer productivity by point of distribution

* High ACV is>=50%, High Velocity is SPPD > Ctgry avg.

WATCH OUT

High ACV/Low Velocity

CONT TO GROW

High ACV/High Velocity

AT RISK

Low ACV/Low Velocity

GROW

Low ACV/High VelocityACV

Velocity

ACV

Old

New

A learning environment is critical for consistency and to deliver the insights to participate as an “advisor”

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