Retailing in the Week Ahead, Week 18

Wow! It’s that time of year again. Major retailers are reporting Q1 results; most of us have had to take a well-deserved break that never feels long enough, and nearly everyone is scrambling to find ways to hit first-half (H1) targets.

Amid all this activity we have learned two things:

  1. The global recession, some say consumer-led, has not materialised.
  2. Shoppers are changing faster than either retailers or brands.

Those two headlines are important, but still not relevant to our task at hand. We need to take these two learnings and apply them to the short-term objective of hitting H1 targets. So, how do we begin?

Our suggestion is to do two simple things this week.

First, review key retailer Q1 results, but ask one question when reading these numbers. Which shoppers did the retailer lose during the Q1 period? By lose, we mean fail to convert to higher levels of loyalty, such as more frequent shopping trips or a wider range of categories purchased.

Second, once you have done that, look at the longer-term picture on shopper changes and attempt to find out what can be done in key categories to solve the shopper problem.

Kantar’s Retail IQ team had the fortune to spend time with Kantar’s Poland team this month, alongside a group of about 90 retailers and suppliers. The theme at this workshop was “Poland’s Swinging Shoppers.” The goal was to review the big changes taking place in the ways that shoppers visit retail and make category decisions.

So, to take this specific example a step further, you could very easily make the two steps suggested above by looking at three or more retailers and the comments they made, and then putting these into context with longer term changes to shoppers as observed by Kantar Poland.

Let’s give it a try.

Retailer in Poland Q1 Results Headline What they said about shoppers Other important background
Biedronka (Jerónimo Martins)

-0.8% sales growth
-1.1% LFLs

7 fewer trading days due to Sunday shopping ban; In & Outs continue to drive shopper innovation 6 net new stores, 2 relocations, and 24 remodels
Carrefour

-0.6% sales growth (PLN)
+3.0% LFLs

Promotional investments limited impact of trading ban The group added approximately 50 convenience stores in past 18 months
Metro AG

+6.3% sales growth*
+6.4% LFL growth*

Move to new shopper segments and shopping methods particularly with HoReCa New distribution logistics

*Metro AG only reports for Eastern Europe excluding Russia (which includes Poland)
Other note: Other large companies in Poland such as Eurocash and Tesco will report results in the future but have not done so yet.

 Reviewing these results, we can see two things:

  • The one retailer that was aggressive on finding new shoppers and new shopping methods – Metro – outperformed the market
  • Without dramatic change, external pressures, such as fewer trading days, will drive negative results (as can be seen with Biedronka and Carrefour)

Now, let’s take a look at the bigger picture. Kantar data from Poland shows a big transformation in shopping habits over the past four years.

Fill-In Trip Stock-Up Trip Special Occasion/Special Purpose Trip On-the-Go Trip
2014 47% 32% 17% 5%
2018 36% 21% 39% 5%
Size of Shift -11% -11% +22% 0%

As we can see from this four-year shift, a focus on traditional shopper missions such as small basket, big basket or quick trip will not result in a notable win for retailers or brands. The real win is investigating the logic and rationale behind the rapid rise of special occasions and what this means for store design, category design, and secondary placements.

The great news is that the Kantar Poland team has done this and is ready to help retailers and brands on this deep dive. If you’re interested in taking a deeper dive, let us know and we can get you in touch with the right support team.

If you did not have a chance yet, please also have a look at some of our big featured items from Week 17:

Good luck in the week ahead. 

Regards,

Ray Gaul – Ray.Gaul@KantarConsulting.com and @KantarConsulting or @RayGaul on Twitter plus LinkedIn.

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