Big data analytics: is only option to grow with assortment optmisation

SHRINK TO GROWUSE ANALYTICS AND TECHNOLOGY TO OPTIMISE YOUR LINE-UPBrenda KoornneefBusiness Executive, Group Marketing & Corporate Strategy, Tiger Brands

José Carlos González-HurtadoPresident of IRI International

15th-17th June 2016, Consumer Goods Forum Global Summit 2016

AGENDACONTENTS

1 HOT TOPIC ON YOUR AGENDA

2 THE TIGER BRANDS SUCCESS STORY

3 HOW TO WIN

HOT TOPIC ON YOUR AGENDA

Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary.

4

CHOICE IS A KEY DRIVER TO WIN CLIENTS

"WHY HAVE YOU SELECTED THIS SHOP TODAY FOR YOUR GROCERYSHOPPING?"

Source: IRI Shopper Survey France 2015

Price Selection of products

Point of sales comfort and clarity of the

offer

Promotions Private labels New products

* Except proximity from your home or work

30%

25%

20%

15%

10%

5%

0%


5

BUT CURRENT OVERABUNDANCE OF PRODUCT OFFERING…

In suppliers price list

In a large hypermarket

In a supermarket

Bought in a year by household

In an average basket SM/HM

Number of FMCG items available – average per store (supermarkets) Europe and US

400.000 SKU’s (US = 970 000)

20.000 to 50.000 SKU’s

6.000 to 9.000 SKU’s

300 SKU’S(US 600)

10 to 50 SKU’s

MARKET SITUATION


6

AND THE MULTI-CHANNEL REVOLUTION…

M-commerce for a rebirth of loyaltyprograms and in-

store personalization

Demand for freshproducts and short

time delivery is increasing

Different trip missions with

different banners at different times

of the week

Online/Click & Collect (Drive)

growth

Convenience is growing

in importance

On-the-go shopping

with QR code -Shopping

walls is growing

Emergence of pure players in

FMCG


7

AND THE MULTI-CHANNEL REVOLUTION…

M-commerce for a rebirth of loyaltyprograms and in-

store personalization

Demand for freshproducts and short

time delivery is increasing

Different trip missions with

different banners at different times

of the week

Online/Click & Collect (Drive)

growth

Convenience is growing

in importance

On-the-go shopping

with QR code -Shopping

walls is growing

Emergence of pure players in

FMCG


8

FORCES RETAILERSTO RETHINKASSORTMENT

TESCO CUTS RANGE BY 30% TO SIMPLIFY SHOPPING

BY REDUCING NUMBER OF PRODUCTS FROM 90,000, SUPERMARKET WILL BE ABLE TO CUT PRICES AND IMPROVE AVAILABILITY ON ITS SHELVES

Friday 30 January 2015


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…AND MANUFACTURERS TO FACE NEW CHALLENGES LIMITED SHELF SPACE

RETAILERS REJECT "ME TOO" PRODUCTS

SHOPPER IS MORE DEMANDING

THE PRIVATE LABEL PRESSURE

MORE DIFFICULT TO STAND OUT OF THE SHELF

THE TIGER BRANDS SUCCESS STORY


11

A top 40 JSE (JHB Stock Exchange) listed company

Leading FMCG Manufacturer in SA:

• Baby Care• Beverages• Grains• Groceries• Perishables• Personal Care• Home Care• Snacks & Treats

Present in > 22 African countries

Founded in 1921

16,800 employees across Africa

KOO won favourite brand

in SA in 2015

“LEADING MANUFACTURER IN ALMOST EVERY CATEGORY IN WHICH WE PLAY”


12

GROWTH THROUGH FOCUSPortfolio complexity is often the root cause of symptoms faced by consumer goods companies in developed markets

BRANDSSKUs

SPECSCHANGES

High Overheads

Low Speed(decisions, launches)

LowMarketing

ROI

Poor in Store Execution

Low PurchasingScale

Low SupplyCosts

High Capex


13

GROWTH THROUGH FOCUS

High speedimplement-

ation

High marketing

ROI

High purchasingscale

Competitivesupply chain

costs

Capex forGrowth

Perfect in Store

executionOptimum

overheads

GROWTH THROUGH FOCUSED

PORTFOLIO


14

HALF THE JAMS SOLD IN THE MARKET* WILL BE A TIGER BRANDS JAM

*Defined Market i.e. formal trade & wholesalers

“Tastes real good, like good food

should”

Most valuable jam brand in SA

Within top 5 jam brands in SA

Discontinued in 2015


15

THE BURNINGQUESTIONS How do we drive growth in

a mature segment?

What is the optimum assortment for each of our brands within the different retailers?

Can we launch new products without one brand cannibalizing the other?

Which product attributes (flavour, size, format etc.) do our products need and which do shoppers want?


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17% 12%28%

51%

22% 29%

77% 79%64%

48%

75% 66%

6% 9% 8%

0%10%20%30%40%50%60%70%80%90%

100%

Spar PnP Checkers Shoprite Makro Total Mkt

Quality Grade Attribute Importance by Retailer: Latest Year

Economy Everyday Premium

THERE IS A CLEAR DISTINCTION IN THE TYPES OF JAMS THAT DIFFERENT RETAILERS SELL

Source: IRI

Retailer 1 Retailer 2 Retailer 3 Retailer 4 Retailer 5 Total Market

Brand + FlavourBalancedPrice + Size Dependant


17

METHODOLOGY: HOW DO WE DO IT?

Sales Figures+ Distribution Figures

Product Attributes + Store Level

+ Dynamic Product Mix

Importance per Attribute + Incremental Sales

Incremental Volume

Transferable volume

TRADITIONAL APPROACH COMPETITIVE EDGE

25%

75%

New Performing Approach


18

ASSORTMENT OPTIMIZATION 2.0 TO SPOT INCREMENTAL AND TRANSFERABLE SALES

25%

75%

Incremental SalesNon transferable

(Drives market size)

Transferable(Drives market share)

Gains from the added item

(uniqueness)

Sales substitutable with other products

Total new item’s sales


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ATTRIBUTE IMPORTANCE DIFFER BY RETAILER

22.0

16.9

15.5

14.4

14.1

9.7

7.4

Packtype

Flavour

Brand

PriceBin

Size

SKU‐Count

Consiste…

32.2

23.8

16.3

9.8

8.9

6.3

2.7

Lifestyle

Flavour

Brand

Size

PriceBin

Consist…

Packtype

25.5

21.8

19.3

15.2

12.2

3.2

2.9

Brand

Size

Flavour

PriceBin

Lifestyle

Consisten…

Packtype

28.6

19.9

18.2

15.7

9.6

4.9

3.1

Brand

Lifestyle

Flavour

PriceBin

Size

Packtype

Consist…

19.1

18.7

16.9

14.1

13.3

11.6

6.3

Size

Brand

Flavour

Lifestyle

Packty…

Consist…

PriceBin

Retailer 1 Retailer 2 Retailer 3 Retailer 4 Retailer 5


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PLANETARY SYSTEM INDICATES UNIQUENESS AND INTERCHANGEABILITY OF BRANDSUniqueness: Brand map

Product mapping is a visual representation of attribute interaction, where proximity of attribute values implies strong interaction. Bubble sized by value share.

All_Gold

Spar_Brand

Rhodes

Hugo_S

KOO

Hazeldene Weigh_pm_LessThistlewood

Product Mapping by Brand

All_Gold Spar_Brand Rhodes Hugo_S KOO Hazeldene

Goldcrest St_Dalfour Weigh_pm_Less Hillcrest Hilton Thistlewood

Other_Brands Melissa_S Naturelite Dursots

Premium brands in this retailer are highly

interchangeable

Mainstream brands are quite unique

Brand 1 Brand 3

Brand 2

Brand 4

Brand 6

Brand 5

Brand 7

Brand 8

Brand 9

Brand 10 Brand 12

Brand 11


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All_Gold

Hugo_S

KOO

Product Mapping by Brand

Rite_Brand All_Gold Hugo_S Rhodes Sunshine Hazeldene

Pot__O_Gold KOO Danish_Choice Naturelite Other_Brands Dursots

Goldcrest Thistlewood Weigh_pm_Less Housebrand St_Dalfour Hillcrest

BRANDS INTERACT DIFFERENTLY IN DIFFERENT RETAILERSUniqueness: Brand map

Product Mapping is a visual representation of attribute interaction, where proximity of attribute values implies strong interaction. Bubble sized by value share.

Premium brands do not play a major role in this retailer

Brand 1

Brand 4

Brand 2

Brand 3

Brand 5

Brand 6

Brand 7

Brand 8

Brand 9

Brand 10

Brand 11

Brand 12

Brand 13

Brand 14

Brand 15


22

THE BURNINGQUESTIONS How do we drive growth in

a mature segment?

What is the optimum assortment for each of our brands within the different retailers?

Can we launch new products without one brand cannibalizing the other?

Which product attributes (flavour, size, format etc.) do our products need and which do shoppers want?


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RESULTS

Reducing the products by 37% will drive 1.1% ($270k) value growth for the retailers and 3.4% ($440k) value growth for Tiger Brands

New launch has the potential to drive additional revenue of approx. $600K across markets

Additional benefits: De-cluttered range Less complicated merchandising More efficient distribution & supply chain

ROI x 12

NEW

HOW TO WIN


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FOCUS ON WHAT MATTERS

Traditional view: Focus on the shelf

Assortment optimisation 2.0:Starts with the shopper

Sales rotation only Product isolation view

Look at the at the category as a dynamic product mix

Use the incrementality

Use the incrementality from attributes’ attractiveness


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ASSORTMENT OPTIMIZATION 2.0 FOCUSES THE DRIVERS OF THE PURCHASE DECISION

SHOPPER CHOICE

Packaging

Brand

Category

IngredientFlavor

ProductForm

Price Value

Pack Type

MarketingMix


27

ASSORTMENT OPTIMIZATION 2.0 IDENTIFIES ATTRIBUTE IMPORTANCE AND ATTRACTIVENESS

Brand:

Sub-category:

Pack type:

Pack size:

Sugar:

Red

Classic

Metal Can

330ml

12%

Each product has a setof attributes (features):


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ASSORTMENT OPTIMIZATION 2.0 SIZE OF THE PRIZE

Category revenue % change between optimized scenario and actual revenue across different regions/stores within each country

Category revenue gain with the optimized scenario versus actual revenue

02468

10121416

Netherlands - Hot Sauces France - Frozen Fish Spain - Margarines

Non Optimized Store Group 1 - Optimized Store Group 2 - Optimized

+1.2

+4.2 +4.6

+14.2

+9.5

+2.3


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IN OUR INCREASINGLY COMPLEX WORLD, COMPANIES NEED SIMPLICITY AND SCALABILITY TO TURN OCEANS OF DATA INTO ACTION AND GROWTH

The MarketIs ChangingEvery Day

No 2 CountriesAre The Same

Data Is NowDisparate

Win Local,Track Global


30

THE TRADITIONAL MARKET READING MODEL IS NOT ADAPTED TO THE BIG DATA ERA

THE TRADITIONAL MODEL TRANSLATES PRODUCT CATEGORIES INTO RIGID HIERARCHIES

Hair Shampoos Hair Conditioners Hair Colorants

Hierarchy 1 Hierarchy 2 Hierarchy 3


31

SO, MR. RETAILER MRS. MANUFACTURER IN THE FUTURE… WHAT WILL YOU NEED

TO GROW?


32

1. BREAK SKUS INTO ATTRIBUTES = THE END OF RIGID HIERACHIES

Move from rigid hierarchies to multidimensional analysis of all consumer – product data


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2. HAVE A 360O VIEW OF CONSUMERS / SHOPPERS AND YOURSELF

Liquid DataTM

Technology PlatformData integrated and aligned across

multiple dimensions of brand, customer, segment, geography,

channel, store and time.

You need to have a super powerful IT platform


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3. MAKE IT EASY

SIMPLE VISUALISATION

, MAKE IT FAST


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3. MAKE IT EASY

SIMPLE VISUALISATION

, MAKE IT FAST

15.000 USERS GLOBALLY

1MILLION QUERY A MONTH EXECUTED

95% OF WHICH ANSWERED IN LESS THAN 10 SECONDS

“ON THE FLY“


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THE FUTURE IS NOW


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WHAT YOU WILL NEED TO GROW…AND WIN

Observe & Understand Reality

• Analytics on Oceans of Data• Analytics on Attributes

2 Make Sense of It Super Powerful Integration Platform

3 Be Able to Act Fast “On the Fly”

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Thank you!Find out more at iriworldwide.com

Data & Analytics

Big data analytics: is only option to grow with assortment optmisation