JOINT VALUE CREATION BEYOND PRICE Advisory Group, February
UPDATE Nominations Work Program Schedule Conference
Call for nomination responses Retailers Confirmed A.Heijn, dm, Interdis, Selex, Superquinn, Tesco, Tradeka, Veropoulos Manufacturers:Confirmed Barilla, Colgate Palmolive, Ferrero, Heinz, Heineken, Henkel, Kraft,Sara Lee, Pernod Ricard, P&G, Unilever Others: University Of St Gallen, IGD
BACKGROUND Market place increasingly challenged by deflation and declining or stagnant market size. Manufacturers and retailers rely more and more on “price” as the only value driver. BOARD The current trading environment, shaped among others by discounters, has emerged because ECR retailers and manufacturers have not yet been able to totally fulfil consumer wishes. Price is only one value driver. ECR Europe recognises the role played by other value drivers (e.g. health, convenience, proximity, changes in household profiles). Major roadblock to value creation, implementation of ECR demand creation processes: the buyer-seller relationship looking on quick return rather than looking to build sustainable value for o the consumers and shoppers o for the companies..
THE RECOMMENDATION ECR Europe shall set up a project to improve Joint Value Creation Beyond Price. The project aims at: Encouraging a wider usage of Joint Business Planning to increase shopper and consumer attraction and loyalty Review: explain/understand the environment Present innovative solutions in the shopping experience and product offer which lead to market growth by addressing other consumer/shopper value than price.
Joint Business Plan Supply chain efficiencies Data sharing Category management New product development Source:adapted IGD Research what do you want to achieve sharing company target/vision How to achieve business objectives Collaborative Projects Objectives -Profit & Loss -KPIs -POS - Loyalty Cards - Panels - Surveys - ….
Value creation beyond price Program Framing the issue: Deflation, commoditisation, reduce share of wallet for grocery –Definition of different values (consumer, manufacturer, retailer) –Roadblock: buyer-seller/cash/margin culture –Environment changes : –Socio economic changes: demographics, culture and aspiration, consumption patterns –Competition: other industry sectors, new channels, affecting consumption and share of wallet –Innovation : ability to answer to changing needs and aspirations (in grocery and in other sectors) –Industry structural change due to globalisation, IT development (ie use of internet) –The creation of long term value: economist and financial perspectives, benchmark with other sectors, benchmark across categories Process Strategic alignment (roadmap of joint value creation collaboration) Principles of Joint Business Planning Business Planning: how to integrate various business processes within your company and with your trade partners (Organisational design) Scorecard (measurement of value created and return ) Value Creation Case studies - Shifting money from price to other value drivers Benchmark categories: which are growing and how/what is driving their growth. A contrario : categories destruction by price strategy
Break out session - draft Presentation of the project group (why the issue, why the group, how session will The environnement –The key elements of value in retail Supply chain, Sales Growth, Margin –Danger of sole focus on discount and price –What the financial markets are seeing Speaker: Financial retail analyst (TBC: DavidMc Carthy) The Values Definition: What is your definition of value ? (electronic vote) Working together to grow sustainably : the roadmap of joint value creation beyond price Heineken and Carrefour (Italy)