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Dave McConnell

Dave McConnell President & CEO GMDC There are those who make things happen … There are those who watch things happen … And sadly, there are those who say, “What happened?!” Four Major Trade Classes Value $15 +17% Drug $124 +8.4% 2002 ACV ($ billions) M/M $341* +7.7% $435

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Dave McConnell

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  1. Dave McConnell President & CEO GMDC

  2. There are those who make things happen …

  3. There are those who watch things happen …

  4. And sadly, there are those who say, “What happened?!”

  5. Four Major Trade Classes Value $15 +17% Drug $124 +8.4% 2002 ACV ($ billions) M/M $341* +7.7% $435 +3.0% Food $908 Total +5.6% * Includes supercenter sales.

  6. Traditional Formats Are Flat to Declining in Units, Growing Only in Dollars • Chain grocery • Chain drug store - front store • Department stores • Small box retailers (e.g., hardware stores)

  7. Grocery Retailer’s Dollar Growth in Non-Foods Slower than Food Figure 5 Grocery Percent Change in Food and Non-Foods Percent Change Year Source: IRI

  8. Chain Drug’s Growth is Food Figure 6 Chain Drug - Percent Change in Food and Non-Foods Percent Change Year Source: IRI

  9. Mass Is Also Growing Food Sales Figure 7 Mass Percent Change in Food and Non-Foods Percent Change Year Source: IRI

  10. The Value Channel’s Big Three 2002 Stores $ Sales Dollar General 6076 5.3 billion Family Dollar 4733 4.2 billion Dollar Tree 2263 2.3 billion

  11. Dreams Die Hard · The end of the 1990's economic boom came as a shock to many · The events of 9/11/01 finally convinced consumers that the boom had truly ended. · Our challenge today is to renew the tattered confidence of businesses and consumers

  12. How Can We Do That? How Can We Do That?

  13. Know Thy Customer · Interested in information · Value conscious · More sophisticated and focused on health issues The New Consumer

  14. · Last 5 years has seen growth in total number of shoppers but actual trips/shopper is flat to declining · By 2010 5-7% less trips/shopper projected · 60 - 70% of all purchase decisions made in-store Source: Management Ventures Inc. The New Consumer

  15. Borders Our challenge is to increase the average shopper spend/trip The New Consumer

  16. The New Consumer Wendy Liebmann

  17. The New Consumer Simplify My LifeOutlets shopped in a week Source: WSL Strategic Retail

  18. Dr. Robert Blattberg Northwestern University Dr. Robert Blattberg Northwestern University The New Consumer

  19. What Is the Most Important Consumer Force Changing Retailing Today? • Aging of the population • Time-starved consumers • Value-orientated consumers • Changing ethnic structure of population Source: Blattberg,Chaney & Assoc. The New Consumer

  20. The Answer • The value orientated consumer is affecting more retailers than any other force

  21. Why? • Median household income is $42,000 per year • A significant segment of consumers are up to their eyeballs in debt

  22. The New Consumer Outlets Shopped in the Last 3 Months 1998 2000 2002 Base: Women % % % Retail Mass Merchandiser 91 90 94 Supermarket/Food-drug 98 83 91 Drug Store 83 77 74 Department Store 79 72 72 Specialty Non-clothing 46 54 68 Home Improvement 61 48 68 Dollar Store na na 56 Supercenter 36 32 50 Warehouse Club 47 35 47 Specialty Clothing 37 32 38 Discount Clothing 39 29 32 Source: WSL Strategic Retail

  23. The New Consumer Outlets Shopped in the Last 3 Months Base: Women <$25K $25-45K $45-70K $70K+ Income Retail % % % % Mass Merchandiser 92 97 95 90 Supermarket/Combo 90 90 91 90 Drug Store 77 70 71 83 Department Store 58 64 75 85 Specialty Non-clothing 50 56 78 86 Home Improvement 38 61 72 80 Dollar Store 67 64 57 37 Supercenter 52 51 49 47 Warehouse Club 19 40 50 64 Specialty Clothing 27 34 34 54 Discount Clothing 29 32 32 32 Source: WSL Strategic Retail

  24. What Does This Mean to MPA Members? No Limits … Break the Rules!

  25. The New Consumer Break the Rules • Be Shockingly Convenient • EZ Pass, e-tickets, smart cards, on-line • Be Everywhere • Anywhere the shopper wants you: • Don’t ignore the niches • Leapfrog the format • Barnes & Noble, Starbucks, Home Depot Source: WSL Strategic Retail

  26. The New Consumer Generate Demand by Selling Items That Sell • Does the customer care that you sell? • Pickles and jeans? • Tires and Pepcid • Chain drug now sells Windex and Chips Ahoy • Clearly the answer is no. Source: Blattberg,Chaney & Assoc.

  27. The New Consumer

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