Understanding Todays Perishable Customer

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Understanding Todays Perishable Customer

• Presented by the Perishables Group

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Agenda

• Research Approach
• US/Region Consumer Profile Breads and Rolls
• Market/Chain Dynamics
• Store Level Performance
• Research Tools

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Research Approach

• Address the industry question
• What information is available to support
  perishable category management?
• Apply the approach common to CPG category
  development to the perishable categories
• Integrate the data resources available to support
  category management efforts for the perishable
  departments
• Demonstrate the ability to conduct perishable
  research based on understanding the perishable
  consumer behaviors and voids

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Research Approach

• Gain true insights into the perishables consumer
  across segments
• Demonstrate the value of consumer knowledge in
  the category management process
• Who is the consumer?
• How does the consumer behave?
• What category trends are the consumers driving?
• Develop a comprehensive consumer profile and
  define the consumer opportunity areas

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The Tools

• Consumer Research Components

Perishables Group Data and Tools
In-store Analysis (audits and intercepts)
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Project Approach

• The tools work together to gain a comprehensive
  understanding of the consumer
  opportunity

Consumer Purchase Intent and Triggers
Internet Surveys Topline View
Store Audits Market View
Consumer Intercepts Store Level View
POS (Topline, Market, Store Level results)
CONSUMER Opportunity
Consumer Purchase History
Spectra Clustering Store Level View
Spectra Segmentation Market View
Homescan Panel Data Topline View
Predictive Consumer Behavior
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Research Approach

• Develop perishable strategy and supporting
  tactics approach, valid for any category

Macro level Strategy National Regional
Strategy and Tactics Market Chain
Micro level Tactics Store
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National and Regional Consumer Profile
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The Bread and Roll Consumer

• Key Consumer Profile
• Age 45
• Affluent
• Own home
• 3 person and 5 person households
• Opportunity Consumer Profile
• Single Men/Women
• 35 - 45
• Getting by or poor

Source ACNielsen Homescan Panel Data

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The Bread and Roll Consumer

• 98.2 of US households purchase bread
• 84 of households report purchasing from the
  grocery in-store bakery

Average Spend Per Trip
Source ACNielsen Homescan Panel Data

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The ISB Bread and Roll Consumer

• Purchase Frequency
• 44 of consumers purchase the in-store bakery
  breads/rolls category weekly
• A greater percentage of ethnic minorities
  purchase ISB breads and rolls on a weekly basis
  compared to the US average.

Source Perishables Group Custom Internet Survey

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The ISB Bread and Roll Consumer

• Consumption varies by subcategory
• Crusty type breads are most often consumed within
  the same day of purchase.

Consumption within One Day of Purchase
Breakfast/ Sandwich Breads
Hot/Hearth Breads
Artisan, Specialty, Crusty Breads
Hamburger Hot Dog Buns
Sandwich Rolls
Crusty Rolls
Dinner Rolls
Source Perishables Group Custom Internet Survey

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The ISB Bread and Roll Consumer

• In-store Bakery Bread/Rolls Weekly Consumer
• Characteristics
• Eat and cook at home more often
• Bakery bread/roll are on their shopping list
  every week
• Have increased usage vs. previous year
• Buy several varieties within the bakery
  bread/roll category
• Willing to try new varieties

Source Perishables Group Custom Internet Survey

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The Bread and Roll Consumer

• 70 of total US bread and roll purchases are made
  in a traditional grocery store

• The West, highest grocery percentage at 73 the
  Midwest, lowest at 66

• The West reported the highest warehouse and
  natural food channel purchases
• The South reported stronger Supercenter channel
  purchases than other regions
• The Midwest led in the Specialty Bread channel

• The East region dominated in percent of local
  bakery channel purchases

Source ACNielsen Homescan Panel Data

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The ISB Bread and Roll Consumer

• Consumer Purchase Decision Tree

• Use/Occasion
• Freshness/Hot
• Texture
• Aroma
• Appearance
• Price
• Healthy
• Type
• Package size
• Packaging

Source Perishables Group Custom Internet Survey

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The ISB Bread and Roll Consumer

• Bakery Quality Perception

• Impulse purchases increased due to better
  quality/selection on
• Weekday mornings
• Weekends, throughout morning,
  afternoon, evening

• Weekday afternoon and evening shoppers often
  purchase less than they planned because of poor
  quality/selection
• Their negative experience affects future
  decisions to purchase from the fresh bakery.

Source Perishables Group Custom Internet Survey

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The ISB Bread and Roll Consumer

• Category/Subcategory Segmentation

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The ISB Bread and Roll Consumer

• Consumer Fresh Bread Flavor/Type Preferences

Source Perishables Group Custom Internet Survey

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The Bread and Roll Consumer

• Consumer Fresh Roll Type Preferences
• Dinner Rolls
• Hamburger/Kaiser Rolls
• Hot Dog/Hoagie Rolls
• Large Croissants
• French Rolls
• Small Croissants
• Wheat Rolls

Source Perishables Group Custom Internet Survey

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The ISB Bread and Roll Consumer
CENSUS PROFILE Older Demographic Lower
Hispanic Good mix of ethnicities

• Consumer Regional Preferences

CENSUS PROFILE Higher Caucasian
Sourdough, Whole Grain, French Rolls
White Bread
Italian/Vienna, Whole Grain, French Rolls
CENSUS PROFILE Younger Demographic Higher
Asian and Hispanic
Sourdough
CENSUS PROFILE Higher African American and
Hispanic
Source Perishables Group Custom Internet Survey

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The ISB Bread and Roll Consumer

• Consumer Meal Occasions for Breads and Rolls
• Dinner Rolls and Hot Hearth Breads are eaten most
  often at dinner

Meal Occasions
Subcategories
Source Perishables Group Custom Internet Survey

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The ISB Bread and Roll Consumer

• The impact of availability on consumer loyalty
  the in-store bakery

• 42 of bakery bread and roll consumers will
  purchase another fresh bakery item, if their
  preferred type is not available
• 25 of bakery bread and roll consumers will
  purchase a commercial bread item in the bread
  aisle
• 11 will delay purchase until the next shopping
  trip if their preferred type is not available
• 10 will go to another store for their preferred
  fresh bakery bread or roll item

Source Perishables Group Custom Internet Survey

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The ISB Bread and Roll Consumer

• Influence on Consumer Trial of New
  Products/Varieties
• In-store sampling
• 83 of Bakery Bread and Roll consumers would
  purchase a new variety based on a favorable
  sampling experience
• Word of Mouth
• 48 of Bakery Bread and Roll consumers would be
  influenced by a recommendation from a friend
• Price
• 48 of Bakery Bread and Roll consumers would be
  influenced to try a new in-store Bakery variety
  that is on sale

Source Perishables Group Custom Internet Survey

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The ISB Bread and Roll Consumer

• Bread and Roll Category Trends
• 25 of bakery bread and roll consumers report
  purchasing more bread and rolls than the previous
  year
• 56 of these consumers report cooking at home
  more than the previous year
• 48 believe the product quality has improved
• 44 are purchasing more due to an increase in
  variety offered
• 14 of bread and roll consumers reported
  purchasing less volume than last year
• 52 of these consumers have decreased consumption
  due to a specific diet
• 18 feel that the product prices are too expensive

Source Perishables Group Custom Internet Survey

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The Bread and Roll Consumer

• Ethnic Preferences

• African Americans purchase more whole grain and
  white breads less Italian
• Hispanics buy more whole grain and baguettes
  less sourdough

• Asians buy white bread and baguettes less
  Italian and sourdough
• Caucasians buy more Italian bread less wheat

Source Perishables Group Custom Internet Survey

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Market and Chain Dynamics
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Market/Chain

• Chain Seasonality Trends
• Q3 is the strongest sales quarter
• The East region is the only region which reports
  significant fluctuation of sales between seasons

Average Weekly Sales
Volume
Source Perishables Group FreshFacts
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Market/Chain

• Category Opportunity
• The variety segments in the bakery bread and roll
  categories are underdeveloped in the chain
  compared to the market.
• Hot/Hearth Breads, Sandwich Rolls,
  Artisan/Specialty/Crusty Breads and Crusty Rolls
  have large share differences compared to the
  market.

Chain Performance
Source Perishables Group FreshFacts
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Market/Chain

• Chain Promotional Contribution
• The bread and roll category was promoted 41 times
  over the year, with breakfast/sandwich breads
  promoted most frequently (15 times)

Breads Rolls Promotional Events by Subcategory
Source Perishables Group FreshFacts
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Market/Chain

• Chain Promotional Event Highlights
• October 9th Event - 2.79 promoted price
• Week of best category dollar performance vs.
  Market
• Bakery de France Tuscany bread
• August 28th Event - 1.99 promoted price
• Week of best non-holiday category dollar
  performance
• Country white bread

Source Perishables Group FreshFacts
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Market/Chain

• Bread and Roll Flavor/Type Preferences
• French bread has less emphasis than in the region
  and total US because of Italian and white bread
  dominance
• Dinner rolls do well as compared to the region
  and total US

Source Perishables Group, FreshFacts
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Market/Chain - Subcategory

• Total US Region Market
  Chain

51.3 Bread 48.7 Rolls
61.1 Bread 38.9 Rolls
61.1 Bread 38.9 Rolls
56.6 Bread 43.4 Rolls
Source Perishables Group, FreshFacts
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Market/Chain - Subcategory

• Total US Region Market
  Chain

51.3 Bread 48.7 Rolls
61.1 Bread 38.9 Rolls
61.1 Bread 38.9 Rolls
56.6 Bread 43.4 Rolls
Source Perishables Group, FreshFacts
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Market/Chain - Subcategory

• Total US Region Market
  Chain

51.3 Bread 48.7 Rolls
61.1 Bread 38.9 Rolls
61.1 Bread 38.9 Rolls
56.6 Bread 43.4 Rolls
Source Perishables Group, FreshFacts
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Market/Chain - Subcategory

• Total US Region Market
  Chain

51.3 Bread 48.7 Rolls
61.1 Bread 38.9 Rolls
61.1 Bread 38.9 Rolls
56.6 Bread 43.4 Rolls
Source Perishables Group, FreshFacts
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Market/Chain

• Category Contribution
• The chain category percent of sales to total
  department outperformed the market, region and
  total US

Bread/Rolls Category Percent of Total Department
Dollar Sales (per store)
Source Perishables Group, FreshFacts
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Spectra Chain Level Clusters

• Mid-America Empty Nesters

• Young Urban Singles

• Upscale Suburban Families

Source Spectra Marketing
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Spectra Chain Level Clusters

• Three Main Clusters
• Majority of the chain (63) skews in the 65,
  fixed income, smaller household demographics

Percent of stores in each cluster
Source Spectra Marketing
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Store Level Performance
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Store vs. Cluster

• Identifying Opportunities
  at the Store Level
• One store in the second largest cluster of the
  chain
• High demand index for breads and rolls (115)
• Underperforming in volume, dollars and
  contribution

Upscale Suburban Families
Source Spectra Marketing
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One Stores Consumer

• Events/Interests

• What events/interests does this shopper have
• Travel foreign, domestic and cruises
• Watch sports tennis, golf, hockey, basketball,
  skiing
• Attend museums and theater/dance performances
• Watch horse races
• Sailing

Source Spectra Marketing
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One Stores Consumer

• Media Preferences
• The newspapers, magazines, cable TV and radio
  programs that influence shoppers in this store

Source Spectra Marketing
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Store vs. Cluster

• The store is outperforming the cluster average by
  62 in dollar sales except in peak promotions
  where it outperformed the cluster by as much as
  126 in January.
• The store has the fifth highest category dollar
  sales in the cluster.

Source Perishables Group FreshFacts
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Store vs. Cluster

• Bread pricing is higher at the store by 5.6,
  with the largest difference in breakfast/sandwich
  breads which is 12.1 higher than the cluster
• Roll pricing at the store is lower than in the
  cluster by 11.2

Source FreshFacts
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Store vs. Cluster

• Store
• 27 weeks promoted
• Cluster
• 30 weeks promoted

Source Perishables Group FreshFacts
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Store vs. Cluster

• Store 156.0 sq ft

• Cluster 85.6 sq ft

Source Perishables Group Audits
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Store vs. Cluster

• Category Goals/Strategy
• Increase bakery bread and roll variety to match
  cluster
• Grow store category sales and profits to parity
  performance with the cluster

• The Tactical Plan
• Review product assortment
• Assess space allocation by segment
• Devise a promotional support strategy
• Build sales through cross merchandising
• Benchmark to cluster best-in-class

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Implementation Strategies

• Product Assortment
• Maintain category variety across segments on a
  daily basis
• Promotional Support
• Pre-plan display space to support promotions
• Order to maximize sales
• Maintain quality product on display
• Cross Merchandising Opportunities
• Consider out of department displays near market
  basket affinity items
• Pricing
• Increased variety assortment within the category
  will trade consumers to a higher ring and/or
  create an incremental purchase
• Quality product offerings will increase everyday
  purchases at full retail

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Implementation Strategies

• Space Allocation - Breads
• Assess space to sales ratio, defined by cluster
  and market

Artisan Breads
Rolls
Rolls
Round Loaves
Garlic Breads
Long Loaves
Sliced Loaves
Baguettes
Hot Breads
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Implementation Strategies

• Space Allocation - Rolls
• Assess space to sales ratio, defined by cluster
  and market

Artisan Rolls
Bagels
Pastries
Small Croissants
Large Croissants
Round Rolls
Sub Rolls
French Rolls
Hamburger Buns
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Implementation Strategies

• Category Development Approach
• Initial category review
• Consumer profile
• Consumer behavior
• Historical purchase trends
• Category plan
• Promotional timing and strategies
• Seasonal plan-o-gram changes
• Pricing strategy vs. competition
• Category role
• Monthly POS data updates
• Quarterly category performance comparison to
  category plan
• Annual category review to celebrate success

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The Tools Used

• This set of research tools has never been applied
  together to understand a category in the
  perishables segment
• Household panel data from ACNielsen
• Demographic/psychographic data from Spectra
• Integrated random weight and fixed weight
  point-of-sale perishable syndicated data from
  ACNielsen
• In-store activities
• Consumer intercepts
• Merchandising audits
• Proprietary Internet research

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More to Come

• Other categories
• Apples
• Tomatoes
• Cakes
• Other perishables categories to come
• Other places to see the results
• Progressive Grocer
• IDDBAs Annual Whats In Store Report
• IDDBA Show

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Thanks to Our Sponsors
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Presentation Materials

• If you wish to discuss the research more
  in-depth, please leave a business card or
  contact
• Doris Hanson, Rich Products Corporation
• dhanson_at_rich.com
• Bruce Axtman, Perishables Group
• bruce_at_perishablesgroup.com

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Questions?