stephen schueler. p&g
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“Listening to the Boss”
Stephen Schueler Procter and Gamble
June’2’ 2010
Key for business is to Key for business is to keep the BOSS happy!keep the BOSS happy!
Meet Our Bosses,The Ivanovs: Olga and Igor…
Olga is 35 y.o
Igor is 37 y.o.
They have one child
P&G is focused to build full understanding of consumer, shopper and environment
Talk to people
Visit people attheir homes
Observe peopleIn-store
Register andanalyze
purchases
Conduct Quantitative
studies
Model and predictconsumer and
market behavior
Life in Moscow •Moscow drives the trends for Russia!•Incomes are the highest here•They can afford to buy premium products
•They like to try novelties in the market
•In the regions lower income per capita
•So they use mid-tier products•They lag behind some aspects (lower ownership of durables, PC etc.)
Russians are highly educated, doing skilled work vs. other countries
% Russia Poland USAHigh education - urban women - urban male
3238
119
2526
Employment - urban women - urban male
5875
3652
5770
Source: TGI, 2005, age 15+USA NCS 05/06, age 18+
Key Russian consumer trends Getting more and more demanding,
rational and smart
Increasing importance of traditional human values “love-home-family”
Investing in future and experiences
Highly involved in Health & Beauty
Getting more demanding, rational and smart
• Rely only on personal budget
• Quality, reliability and customization
• Shopping is planning and value
010203040506070
Shopping there ischeaper
Prod I want areconsistently available
Shopping there is easyand fast
Is a store which I trust
2002 2007 2009
growing expectations
growing expectations
Increasing role of traditional values
• Love-home-family, safety and well-being
• Help others & charity
TOP 5 VALUES
Russians, % 2007 2009
HOME 80% 86%
FAMILY 75% 81%
LOVE 60% 78%
WELL-BEING 70% 75%
SAFETY 63% 73%
Invest in future and experiences • Appearance, health maintenance and preventive measures
• Personal and children education
• Thirst for experiences
# 2009 vs. 2007
FITNESS CLUBS 140
BEAUTY SALONS 125
TOP 5 CONCERNS OF RUSSIANS
ECONOMY
JOB SECURITY
WORK/LIFE BALANCE
HEALTH
CHILDREN EDUCATION AND WELLFARE
She is highly involved in Health and Beauty
2009 – She purchases more cosmetics and skin care products. Shopping for beauty is considered as “time for myself” and is expected to be a pleasurable experience.
Usage of cosmetics (%), 2000-2009
0
10
20
30
40
50
60
70
80
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Anti wrinkle cream Cream for eye-lids Day cream
Women 45+ Moscow
Source: TGI Russia, 2009
FOM fact-book 2009, MCA 2003
Russians are heavily beauty focused
5789Being well dressed is important, %
4190Be attractive for men is important, %
WERussia
What did we learn regarding Crisis Impact on Russian
Consumer?
2008 Crisis Hit
84
101106
8488
112 110 111115
110 112 113 111
97.7102.9
$103
$145 $162 $166
$67 $81$106
$126
$168
$223
$287
$375$395
$491
$514
0
20
40
60
80
100
120
140
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Real
inco
me
chan
ge, I
YA
$0
$100
$200
$300
$400
$500
$600
Aver
age
mon
thly
inco
me
per c
apita
, USD
2008-09 economic changes have affected Ivanovs’ welfare
Novosibirsk
KrasnoyarskVladivostok
EkaterinburgVolgograd
Saratov
Moscow
St.Petersburg
Kazan
Samara
Izhevsk
Omsk
Chelyabinsk
Perm
Ufa
Purchasing Power in Moscow, St Petersburg and the top cities won’t decline significantly:
– Absolute income level is high.– Unemployment risk is lower.– Consumers have alternative sources of income. – Share of FMCG in consumption basket is lower to save on.
While small cities are more strongly affected by the crisis:
– Township enterprises are suffering financial difficulties. leading to consumption crisis in regions.
– Retailers are revising their plans in regions.
Families living in big cities are not as affected by crisis as their friends in smaller cities of Russia
The Ivanovs reflected financial constraints in their spending behavior
• Cut down on out of home entertainment
• Postpone some home improvements
• Cut travelling
• Started saving on non-essential food and clothes
• Shopping behavior became more rational
Source: Crisis Tracker consumer research
The Ivanovs are stressed,The Ivanovs are stressed, more than ever before more than ever before
Russian consumers saved on:
Eating out 38%Leisure, travels 24%Hobby, sport 23%
05
1015202530354045
Time is worth more thanmoney
20002008
1) 1) Life is very busy
2) Now they have less possibilities to pay for free time and retreat
Source: TGI and Crisis Tracker (COMCON)
The Ivanovs changed their shopping The Ivanovs changed their shopping behavior:behavior:
% consumersChanges In Product UsageRussia Ukraine
2009 2009
Switched to cheaper stores 18 24
Switched to cheaper brands 16 16
Up-sized 9 10
Down-sized 3 4P&G crisis tracker JFM’2009
How could we together improve the lives of Russian Consumers post-
crisis?
Forced to change store
Looks for information on news and promotions
Expects to find the right product for her
Expects to be treated like a valued customer
Meet the shopper needs in-store
• Consumers are lost in front of the shelves:
Opportunity for joint collaboration between Opportunity for joint collaboration between Retailers and Retailers and Suppliers to improve in-store Suppliers to improve in-store experience:experience:
1. Help to organize departments & categories 1. Help to organize departments & categories according to SHOPPER NEEDSaccording to SHOPPER NEEDS
2. Drive PRODUCT AVAILABILITY on-shelf2. Drive PRODUCT AVAILABILITY on-shelf
Shopper behavior differs by trade channelShe does BIG time-consuming
shopping for WHOLE FAMILY in Hypermarkets
She EXPECTS PROFESSIONAL
HELP in baby Stores
She BROWSES AND LOOKS FOR INFO/EXPERIENCES in
Perfumery
She COMES TO SOCIALIZE to Open Market
She makes ROUTINE purchasesat BEST PRICE in Discounter
She is ready to PAY MORE for BEST QUALITY
in Pharmacy
Design right Shopping Experience for each channel
• • Relevant Assortment
• Right Shelf based on Shopper Decision Tree
• Right Category Adjacency within the Department
• Right Navigation
• Right Promotional Strategy
EXAMPLE: Grooming Category Re-design in KARUSEL
Male Grooming Category Shoppers• 70% of shoppers buy Blades & Razors from the main shelf• Highly planned purchase - above 70% • High level of loyalty on Blades&Razors (retailer loses 66% if OOS)
Key Actions• Blades & Razors in Open Access • Shelving according to Shopper Decision Tree• Loss prevention procedures implemented
Results1. Growth index:• Blades & Razors +89%• Shave Category Total +50%2. Shrinkage decreased 2 times
Improving Product Availability In-Store
• • Shelf OOS reduction – Joint Root Cause Analysis– Category-specific approach
• Leverage technology to optimize Supply– Advanced EDI;– GDSN
• Reduce Shrinkage– Focus on high pilferage items/ implement “Roadmap”
Improving Shelf Availability: Win/Win opportunity between Suppliers and Retailers
Target < 5%
Focus on Baby Diapers. Key Actions:
• Improving service ex-P&G via by-customer volume forecasting
• Assortment alignment/ non-active EAN codes in Retailer/P&G database clean-up
• Joint work with retailers to improve category planograms based on SKU turnover
• Test Category Space Extension
Enabling Technologies in Joint Integration Areas
P&G and METRO: Integration of advanced EDI into daily business procedures
3 full-time employees work-reduction (Joint value for P&G and METRO);
Assured data accuracy in invoicing documents
Service level increase by 14 points
Implementation of advanced electronic data flow
Switch to Direct Deliveries via MGL
Information flow optimization and automation of core logistics processes
Reducing Shrinkage
ECR approach
Traditional approach
Mistakes in processes
Mistakes during goods acceptance
Internal theftExternal
Theft (30%)
Losses/shrinkage
In Summary:
• It starts with deep understanding of the Russian consumer and environment
• Suppliers and Retailers should partner to turn this knowledge into winning in-store solutions;
•Those who collaborate most effectively will best meet the needs of their consumers
THANK YOU