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Copyright © 2017 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute.

Pedro Manosalva

August 2017

WHAT’S NEXT FOR RETAILERSNielsen Retail Summit 2017

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KEY CHALLENGES FOR RETAILERS IN SINGAPORE

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SIMILARLY, THESE CHALLENGES ABOUND IN THE

GLOBAL RETAIL ENVIRONMENT

Globally Growth

• Cross-Channel & Digital are revolutionizing

the way we do business

• A new generation of shoppers – informed

and demanding – are taking control

• Volume of available data – structured and

not – is explosive. Connecting them together

and making them useful is increasingly

complex

• Electronic Evidence of Turnover and E-

Payment methods

• Sales declining, same store sales

• Stagnation when competition between

formats is getting harder

(convenience, discounters, wholesalers, dru

gstores)

• E-commerce transition, stronger outside

FMCG

• Macro economic recession

• Logistics, supply chain efficiencies and

productivity (technology)

• Highly demanding consumers, more

informed and empowered

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GROWTH BEING DRIVEN BY SMALL FORMATS

Note: Collection dates vary by country and category, but more were ending between September 2014 and January 2015 | Source: Nielsen Retail Measurement Data

Sales Growth – Developed vs. Developing Countries

% Annual Channel Growth in USD Adjusted for Inflation

12.6

10.6

10.1

6.5

5

4.8

4.3

3.1

1.8

-0.7

0.3

1.9

1.2

2.6

-0.5

0

Drug

Small Supermarket

Large Supermarket

Hard Discounter

Hypermarket

Convenience

Traditional

Specialty

Developing Developed

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ON THE GO LIFESTYLE…

NEED FOR SPEED

56%Consumers look for

proximity of stores

to make purchases

43% Want to spend less

time shopping

"it is a chore"

47% Prefer to get in and

get out quickly

of the store

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PROMOTIONS WITHOUT STRATEGY ARE NOT EFFECTIVE

Promotion Frequency and Trade ROI Trend – US, Canada and Top 5 EU Markets

4.3%

4.4%

4.5%

4.6%

4.7%

4.8%

4.9%

5.0%

5.1%

$0.89

$0.90

$0.91

$0.92

$0.93

$0.94

$0.95

$0.96

$0.97

Pro

mo

tio

n F

req

uen

cy

Man

ufa

ctu

rer

Tra

de E

ffic

ien

cy

Manufacturer Trade Efficiency Promotion Frequency Trade Efficiency Trend Promo Frequency Trend

Nielsen Global Promotions Benchmark Database

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CONSUMERS PAY MORE FOR THE RIGHT BENEFITS

Q1 2015 Global Survey of New Product Innovation; 2015 China Breakthrough Innovation Report; 2015 India Breakthrough Innovation Report

44%SAY THEY ARE WILLING TO

PAY A PREMIUM PRICE FOR

INNOVATIVE NEW PRODUCTS.

BREAKTHROUGH INNOVATION

WINNERS INDEX TO

AVG. CATEGORY PRICE

2.5x

1.5x

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DIVERSE WAYS TO DEAL WITH RISK & OPPORTUNITY

PRICING

Indulgency

HiLo

EDLP

ASSORTMENT

Wide and depth

Exclusive

Specialized

CONVENIENCE

Proximity

Small format

Home delivery

E-commerce

Virtual Reality

EXPERIENCE

Value added

Emotions & Hobbies

Sensorial

Ready to eat

Transactional

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Source: Second Measure, indexed relative to HelloFresh’s observed sales (=100) as of June 2014; Blue Apron Holdings SEC filings

Ind

exe

d S

ale

s

Blue Apron Hello Fresh Plated

2014 2015 2016

175

150

125

100Jun Aug Oct Dec Feb Apr Jun Aug Oct Dec Feb Apr

Blue Apron

$78MM

$795MM

Q1 2017

1MM customers

4.1 orders per customer

$57.23 per order

2014 sales

2016 sales

Example: Meal Kits

Meal Kit Startups – U.S. Indexed Sales

NEW MODELS – SMALL BUT HIGH GROWTH

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THE OPPORTUNITY: FOCUS ON CONSUMER PRIORITIES

MAKE INNOVATION A PRIORITY

• Find unmet needs to grow the category

• Know which benefits allow you to take a

premium price

MAKE SURE PROMOTIONS ARE FOCUSED

TO BE EFFECTIVE

• Right categories / brands that respond better

to promotion

• At the right depth of discount

• Supported with displays and features

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Secure the right products to

meet shopper demand, at best

price and supportEnsure the products are in the

right place at the right time at

the right amount Plan

SellProvide shoppers with right

experience and value to

transact

MoveBuy

Shoppers, Brands and Guidelines

HOW TO ADDRESS NEW TRENDSRetail Consulting Analytics – Buy/Move/Sell

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Retail Consulting Analytics – Buy/Move/Sell

HOW TO ADDRESS NEW TRENDS

Copyright © 2017 The Nielsen Company. Confidential and proprietary.

WHAT’S NEXT IN RETAIL FOR SINGAPORE?

Garick Kea

Executive Director, Consumer Insights

Nielsen Singapore

Retail Summit 2017

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CONTEXT TO THE

MARKET

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IT IS HIGHLY CONNECTED ONLINE

Source: Internet World Stats, Nielsen - Omnichannel Shopping study 2017

High internet penetration...

44%

82%

Asia Singapore

With heavy usage...

4:20 2:21

3:09 0:57

2:49 2:04

On multiple devices

Source – Global webindex 2016 https://wearesocial.com/sg/blog/2017/01/digital-in-2017-global-overview Source: Nielsen Connected Commerce Synd. study

Mobile TabletDesktop Laptop

Singaporeans own 3.1 internet

enabled devices per head

2.5 2.5

MobileDesktop/Laptop

And what does this mean for retailers?

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• Not just retail - All businesses going through structural changes

• Closure numbers largely attributed by small outfits

BRICK-AND-MORTAR IS CHALLENGING

Source: The Straits Times, 14 August 2017


…BUT REMAINS RELEVANT AND WILL NOT BOTTOM OUT

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• Excess supply - Population growth relatively flat but both retail

space and e-commerce are growing in tandem

• Decline in consumers’ confidence in general




1.08 sq.

metre retail space

per capita

Highest in

ASEAN


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• Accessibility and connectivity of commute network

• Growth still exists in some categories

• Data suggest inter-dependence between online and offline

environment




142 train stations

4684 bus stops

Medical Goods

& Toiletries

Petrol Service

Stations

+4.5%

+14.8%


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Source: Nielsen - Omnichannel Shopping study 2017

Low ONLINE

OF

FL

INE

High

High

Travel bookings

Fashion

Entertainment

Meal deliveries

Groceries Cosmetics

Health care products

Home &

Living

Books & Stationary

Sports Attire

Home appliances

Consumer electronics

Sports Gear

Flowers or gift sets

Baby products

Personal Care

PURCHASED IN PAST 6 MONTHS

WHERE ARE THE PURCHASES DONE?Online vis-à-vis offline purchases in relativity to other categories

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pro

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eta

ry. SO HOW DOES THIS SHAPE THE

SINGAPORE RETAIL CHANNEL?

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Purchase Journey YESTERDAY…

Demand

Pre-store

TV

Radio

In-store Purchase Loyalty

THE PURCHASE JOURNEY HAS EVOLVED

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Purchase Journey TODAY…

THE PURCHASE JOURNEY HAS EVOLVED

Demand

Pre-storeIn-store

eCommercemCommerce

Purchase Loyalty

TV Radio

Mobile Tablet

Computer

VR Web

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SO WHAT DOES RETAILERS NEED TO KNOW FOR THEIR

CHANNEL STRATEGY? PARTICULARLY IN THE ONLINE SPACE.

INFORMATION

GATHERING

CONSIDERATION

FACTORS

PURCHASE

LOYALTY

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89%

81%

81%

60%

59%

62%

80%

58%

49%

65%

58%

57%

BROWSE OFFLINEBROWSE ONLINE

Fashion

Personal Care

Packaged Food

CONSUMERS ARE OMNI CHANNEL INFORMATION GATHERERS

REGARDLESS OF PURCHASE CHANNEL


Online Shoppers Offline Shoppers

Making it IMPORTANT to have an

Omni Channel strategy to engage them

INFORMATION GATHERING

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THE CONSIDERATION EMPHASIS FOR E-RETAILER CHOICE IS

DIFFERENT ACROSS CATEGORIES

Source: Nielsen - Omnichannel Shopping study 2017 *Beauty includes Personal care & Cosmetics

PRODUCT

MIX

PRICE /

DISCOUNT

CUSTOMER

EXPERIENCE

PRODUCT

INFO

62% 58% 38% 21%

44% 53% 41% 32%

Fashion

Beauty

CONSIDERATION FACTORS

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ALTHOUGH THE ONLINE MARKET IS HEAVILY FRAGMENTED,

THE CHOICE OF E-RETAILERS VARIES BY CATEGORY


Website (57%)App (68%)Fashion Beauty

Online marketplaces 42% 31%

Online pharmacies - 28%

Brand.com 17% 11%

Second hand stores 13% 8%

Online beauty stores - 12%

Online deals 12% 8%

Social media 8% -

App

only

App +

Website

Website

only

Fashion 26% 29% 45%

Flowers or gift sets 26% 12% 62%

Baby products 42% 26% 32%

43% 32%25%

PURCHASE

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SHOPPERS TEND TO STICK TO A FEW E-RETAILERS

Only 3.6e-retailers purchased from

Information

Sources in the past 6

months before making a

purchase Online

10

PURCHASE

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60%

50%

44%

38%

THEY TEND TO GO BACK TO TRIED & TESTED

E-RETAILERS AS OPPOSED TO ADDING MORE


Purchased past

6 months

Ever Purchased

76%

33%

25%

86% 83%

LOYALTY

…making initial adoption extremely critical.

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SETTING THE STAGE…

WITH THE WHAT

FOR THE HOW

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KEY TAKEAWAYS

Focus effortsin the rightdirection

Activationover retention

The silverlining of

Brick-and-mortar

Offline is hereto stay

Understand consideration & purchase drivers

Thinkomnichannel

1

There is noone size fits all

approach

Know your category

2 3 4

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