New work and capabilities in 2013 and beyond

1. New work and capabilities in 2013 and beyond Leon Nicholas Senior Vice President February 2013 Big Idea

2. Drivers of Marketplace Change Can Be Separated Into 3 Families Source: Kantar Retail analysis …And Each One Can Be Distilled to One Word

3. …& Five Core Trends Source: Kantar Retail analysis Smaller boxes Localization Urbanization Retail Outlet Online Personalization

4. Scale of the New Work and Capabilities Three realms Source: Kantar Retail analysis Info/analytics People/skills Product

5. 1. Product Are you nimble + fast enough? Source: Kantar Retail analysis • New formats suggest varied product configurations— Is marketing on board? • Speed to innovation becomes critical • Online “shelf appeal” must be considered • Production agility to enable bounded customization is lacking for scale-driven firms… Supplier Actions: Elevate packaging decisions; cut new product timelines in half; experiment with customization

6. 2. Information and Analytics It gets complicated… Source: Kantar Retail analysis • Inputs increase dramatically—structured and unstructured • Methods need to account for non-traditional sources • Partners need to be evaluated to assess capabilities • Layered, multi-stage scenarios • Data distributions vs. averages • Clustering on behaviors and outcomes • “Big data” less of a threat than useless insights Supplier Actions: Re-assess your company’s “filtering” and analytics gaps vs. market activities; scrutinize 3rd parties…

7. Algorithmic Tactics “In the age of the Internet, fixed prices are a thing of the past.” Oren Etzioni, University of WA, September 2012 Source: Kantar Retail analysis • Who you are, where you are, what you’ve done, in your “social genome”…mediated through an algorithmic layerpersonalized • Automating the most effective price/promotion to the shopper • Driving store/cluster assortment automation and triggers algorithm

8. Supply and Demand Indicators Number, speed, and complexity increase Source: Kantar Retail analysis • Points of influence fragment along new PTP • Promotional opportunities diversify…and punctuate • Old signals can now mislead! • Multiple formats and media enable transactions • Interconnected domains increase • Online promotion…but pickup in store • Large stores serve as DCs Supplier Actions: Audit your “receptivity” to demand signals…and assess your capacity to flex with retailer logistics.

9. Holistic Logistics Source: Kantar Retail analysis Manufacturer Warehouse Stores Home

10. 3. People and Skills The biggest issue Source: Kantar Retail analysis • Generation and ethnicity matter • Skills matter • Synthesis • Multiple disciplines • Emotional and cognitive intelligence • Innovation and execution • Does our industry appeal to Generation Y? Supplier Actions: Candidly assess 3 gaps: generational and ethnic representation, talent, and appeal.

11. Core Work for Suppliers Getting started today Source: Kantar Retail analysis; RSR Research, Internet Retailer, Sept 2012. • Invest in supply chain skills, analytics, and software • Shift new resources to small box, urban, & online retailing • Retool market research to focus on multi-channel shopper insights as a competitive advantage; pattern recognition • Balance talent mix: Technology/analytics and verbal/ narrative/synthesis skills • Re-deploy talent horizontally to enable greater cross-fertilization--marketing, analytics, and operations Info/analytics People/skills Product

12. Leon Nicholas Senior Vice President leon.nicholas@KantarRetail.com T: +617-588-4146 M: +603-770-9687