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What’s In Store: 2012 - Canada

Gain insights into consumer shopping, buying, and media consumption behaviors and attitudes in Canada. Explore strategic visions for brand, category, and retail sales growth.

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What’s In Store: 2012 - Canada

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  1. What’s In Store: 2012 - Canada Carman Allison Director of Consumer Insights January 2012

  2. Understanding African American Consumer Power – February 21st Digital Shopping: Topline on Online – February 28th Hispanic Insights – TBD Upcoming Webinars

  3. Today’s presenter Carman Allison Director of Consumer Insights, Canada Carman Allison serves as Director of Consumer Insights for Nielsen in Canada. Carman is responsible for creating thought leadership reports and delivering client and industry presentations.  Carman shares his insights on consumer shopping, buying and media consumption behaviours and attitudes to provide CPG manufacturers and retailers with strategic visions to facilitate brand, category and retail sales growth. Carman is often quoted in the Canadian press on consumer trends including a monthly column in Canadian Grocer. Carman has more than 20 years of experience in the consumer research industry with The Nielsen Company, where he held various account management and analysis roles.

  4. 2011… A Year of Extremes! Out with the old and in with… the new or more of the same?

  5. The voice of the consumer is getting louder

  6. Consumer Confidence: Still a Global Concern

  7. Global consumer confidence is still struggling to recover to pre-recession levels Consumer Confidence Index Source: Nielsen Global Online Consumer Confidence Survey September 2011

  8. Asia and Latin America Lead Global Confidence AP 97 LA 97 MEA 86 88 NA 79 EU 74 Source: Nielsen Global Confidence Survey 3Q2011

  9. Economic power is shifting North America MEA West Europe East Europe LATAM Asia Pacific 4.3% 6.5% 3.8% 3.5% 2.4% 1.7% Average annual GDP growth rates in emerging markets from 2011 to 2016 is 50% higher than developed markets Source: IMF Sept 2011, World Economic Outlook Report

  10. Canadians more optimistic than Americans Canada 97 • 2007 112 • 2008 104 • 2009 84 • 2010 101 88 NA 79 U.S. 77 • 2007 106 • 2008 83 • 2009 80 • 2010 81 Source: Nielsen Global Confidence Survey 3Q2011

  11. Top concerns for North American consumers CANADA U.S. ECONOMY ECONOMY DEBT JOB SECURITY HEALTH DEBT FOOD PRICES JOB SECURITY FUEL PRICES FOOD PRICES Source: Nielsen Global Confidence Survey, 3Q2011

  12. Employment is up – yet so is pessimism about jobs Job Prospects? 54% Positive -4 points from 2Q2011 Source: Statistics Canada Nielsen Global Confidence Survey 3Q2011- Canada

  13. State of personal finances continue to plague Canadians Personal Finances? • Debt plagues all levels of government • Canadian consumer debt at an all time high ($100k+ / household) • Loans vulnerable to rising interests rates 40% Negative +4 points from 2Q2011 Source: Nielsen Global Confidence Survey 3Q2011 - Canada

  14. Despite the increase in earnings, the cost of goods are increasing at a faster rate Average Hourly Earnings vs. Consumer Price Index Source: Statistics Canada Source: Statistics Canada * % Change vs 2002

  15. Consumer spending remains flat Good time to buy? Spare cash… • 37% paying off debt • 30% put in savings • 23% have no spare cash 65% No! The impact… 64% are trying to reduce household expenses +9 points from 2Q2011 Source: Nielsen Global Confidence Survey 3Q2011 - Canada

  16. Slow growth in CPG retail sales, driven by modest inflationary gains CPG Inflation +3 +3 +5 0 +2 Source: Nielsen MarketTrack, Canada National All Channels – 52 weeks to December 17, 2011 Total Tracked Sales excluding Fresh Random Weight

  17. Unit consumption flat heading into 2012 Source: Nielsen MarketTrack, Canada National All Channels – 12 weeks to December 17, 2011 Total Tracked Sales excluding Fresh Random Weight

  18. Economic Outlook WHAT’S NEXT?

  19. As we turn the corner… 2012 will be unpredictable But one thing is for sure, the consumer will remain cautious

  20. Canada’s future GDP rate of growth is forecasted to slow – similar to U.S. Canada United States GDP % Growth Source: US: IMF World Economic Outlook, September 2011 Update; TCG Analysis Canada: Scotiabank Group – Global Forecast Update: January 2012

  21. Poll #1 Do you think the recession is over in Canada Yes No Not Sure

  22. Is the recession over in Canada? Consumer Economist Yes ?

  23. Almost half of Canadians think we are still in a recession % who think we are still in a recession 92% 62% 44% Canada U.S. Global

  24. Succeeding in 2012 is about PRECISION

  25. KEYS TO GROWTH IN 2012 • REACH: An increasingly polarized consumer • LEVERAGE: Redefinition of value • ALIGN: Innovation for long term growth • ENGAGE: The connected consumer in ways they trust • TARGET: Economically powerful consumer segments

  26. Higher income homes, now account for almost half of CPG sales $70K+ Household Importance $$$$ and they spend 20% more than average Source: Nielsen Homescan – Canada – 52 wks to October 1, 2011

  27. A greater portion of households with lower incomes are worse off financially than a year ago Compared to a year ago are Canadians financially… Worse Off About Same Better Off Source: Nielsen PanelViews Survey – Canada - May 2011

  28. Consumers are becoming more polarized $ $$$ $$$ Driving consumer behaviour and choice • Value focused • Value vs. Premium Brand • Expanded Premium Private Label • Discount vs. Conventional Retail Formats

  29. Discount retailers continue to gain consumers share of wallet – and expected to grow Discount Share Projections: Conventional 61.9% (-1) 2012: 39.2% 2013: 41.4% Discount 38.1% (+5) Source: Homescan Grocery Watch, Canada National All Channels 52 Weeks to October 1, 2011 – Grocery Composite

  30. You can no longer afford to be ‘middle of the road’ Conventional Retailers can no longer be …conventional They need to differentiate themselves more than ever – to get beyond price Source: Nielsen MarketTrack, Grcoery+Drug+Mass – 52 wks to September 24, 2011 Total Tracked Sales excluding Fresh Random Weight

  31. Premium retailers are alive and well in Canada…and expanding

  32. High income households are more likely to shop the store and take advantage of services such as: % of $70k+ Shoppers Who Shopped Pt Chg vs All Shoppers Bakery 78% +5 Butcher 44% +3 Ready to Eat Meals 39% +1 Liquor/Wine Stores 27% +4 Garden Centre 24% +5 Florist 23% +5 Source: Nielsen PanelViews – Shopper Opinions Survey – May 2011 – Canada

  33. How do I get high income households to spend more? • Offer larger sizes • Carry quality products • Offer free in store samples • Build an in-store relationship • Think meal solutions • Offer value not the lowest price

  34. KEYS TO GROWTH IN 2012 • REACH: An increasingly polarized consumer • LEVERAGE: Redefinition of value • ALIGN: Innovation for long term growth • ENGAGE: The connected consumer in ways they trust • TARGET: Economically powerful consumer segments

  35. Redefinition of Value: Balance how you connect with consumers on Value & Emotion

  36. Value is not about price, it’s about the balance between price & benefits Value Consumer = Price Value Consumer = Benefits/Price Mid-Tier Toothpaste Super Premium Toothpaste Avg Price +80% higher Dollar Sales 13% Unit Sales 11% Dollar Sales -8% Unit Sales -6% Source: Nielsen MarketTrack, Canada National GB+DR+MM, 52 weeks ending November 22, 2011

  37. Value is not about price, it’s about the balance between price & benefits Value Consumer = Price Value Consumer = Benefits/Price Mainstream Coffee Premium Coffee Pod Coffee Avg Price 131% higher Dollar Sales +4% Unit Sales 0% Avg Price 205% higher Dollar Sales +140% Unit Sales +99% Dollar Sales +13% Unit Sales -4% Source: Nielsen MarketTrack, Caanda National GB+DR+MM, 52 weeks ending November 22, 2011

  38. Value is not about price, it’s about the balance between price & benefits Value Consumer = Price Value Consumer = Benefits/Price Total Greek Yogurt Non Greek Yogurt Dollar Sales -1% Unit Sales 0% Avg Price +71% higher Dollar Sales 827% Unit Sales 1,336% Source: Nielsen MarketTrack, National GB+DR+MM, 52 weeks ending November 22, 2011

  39. Product Variety and Solution Motivators Source: Nielsen, Global Online Survey, Q1 2011 - Canada 

  40. Poll #2 What do you do when the product you want is not in stock? • Purchase another size or flavour • Purchase another brand • Postpone purchase • Leave the store and buy it elsewhere

  41. The risk of ‘out of stocks’ • 34% - Postpone purchase • 26% - Leave the store and buy it elsewhere • 23% - Purchase another brand • 12% - Purchase another size or flavour 60% of the time you lose the sale! Source: Nielsen PanelViews – Shopper Opinions Survey – May 2011 – Canada

  42. KEYS TO GROWTH IN 2012 • REACH: An increasingly polarized consumer • LEVERAGE: Redefinition of value • ALIGN: Innovation for long term growth • ENGAGE: The connected consumer in ways they trust • TARGET: Economically powerful consumer segments

  43. New items are a key driver of sales $62.1 Billions $ $62.6 +1 +6 0 New Items 5.6% ($3.5) 5.9% ($3.7) # of New Items 2009 56k 2010 55k 94.4% ($58.6) 94.1% ($58.9) Existing Items 2009 2010 Source: Nielsen MarketTrack, National All Channels – 52 wks calendar year

  44. The reality is, the majority of new items fail After a year… 30% Are No Longer Available After 1 year almost 80% of new items are gone or vulnerable to delist 2nd year… 70% Are Still Active in 47% < $50k 23% > $50k Nielsen MarketTrack tracked sales: Period ending November 25, 2006

  45. Innovation needs to be about Quality Quantity NOT

  46. Previous notion (“More is Better”) “More Stuff” = “More Shelf Visibility” The Retail reality today Years of sku proliferation Private Label increasing share of shelf Less shelf space available for new listings “More Stuff” = “More De-listings” of the manufacturer’s own sku’s ‘Quality, not Quantity‘ is also less at risk to the ‘One In - One Out’ challenge

  47. More Stuff just spreads volume across more sku’s – putting them at risk More Stuff Fewer Bigger Volume Per sku Delisting Risk Outstanding Ready Risky Failure

  48. KEYS TO GROWTH IN 2012 • REACH: An increasingly polarized consumer • LEVERAGE: Redefinition of value • ALIGN: Innovation for long term growth • ENGAGE: The connected consumer in ways they trust • TARGET: Economically powerful consumer segments

  49. How we connect with consumers is evolving

  50. New and traditional ways DEVELOPED 3.5 Hours 22% of Canadians own TV’s with internet connection + DEVELOPED 74% Internet penetration Source: Nielsen Global Survey Q3 2011

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