1. Trends in Retail Space Allocation & Store Design
2012
&

2. Large-Scale Examination of Trends in Retail Space
…With Key Findings Across Multiple Channels, 16 Departments, and over 700 stores:
Supermarkets
Supercenters
Drug
Club
Mass
Value
Collected:
Base Linear Footage of Major Departments
Merchandising and Fixture Statistics
Checkouts
Aisle Signage
Use/Permission of Floor Displays

3. Four Areas You Should Know
Changing Channels
Retailer Review 1 4 2 3
Signage of the Times
Designing for Today’s Shopper

4. 1
Changing Channels 1

5. Retailer Store Portfolio Strategy Changing to Meet All Shopper Needs and Expectations
Re-investment vs. new store growth
“Gone back to the basics” on merchandising fundamentals
Segmentation of stores and data homogenizing retailer landscape
Channel blurring continues 1
Changing Channels

6. Primary Reason for Trip, by Channel Shopped on Trip
Trip Missions Vary by Channel
Primary Reason for Trip, by Channel Shopped on Trip
(last trip for groceries, other household essentials, or health and beauty care products)
All Store Types
Club
Discount/ Value1
Drug
Mass/
Supercenter
Conven.
Supermarket2
Stock-up trip
32.1%
51.1%
11.0%
4.3%
35.8%
31.6%
Fill-in trip
24.6%
19.1%
32.3%
15.4%
27.3%
23.2%
Immediate use
15.3%
7.2%
27.7%
22.3%
13.5%
16.0%
Specific sale items
12.8%
5.1%
11.6%
31.8%
7.4%
17.2%
Specific coupons
6.7%
4.2%
13.6%
5.8%
Special occasion
4.9%
5.2%
7.7%
5.0%
3.8%
Browsing/new items
3.7%
6.1%
4.5%
1.1%
1 Includes Dollar General, Dollar Tree, Family Dollar
2 Excludes health/natural food stores (e.g., Whole Foods), specialty food/neighborhood food stores (e.g., Trader Joe’s ), and limited-assortment grocery stores (e.g., Aldi)
Source: Kantar Retail ShopperScape®, May, August, & November 2010, and February & May 2011 1
Changing Channels 6

7. What Format Connects to Which Mission?
Walgreens Store Portfolio aligned to shopper missions
Promotionally Driven/ Immediate Use
CCR
H&D
Flagship
Fill In
Oasis
Drugstore.com
Special Occasion/ Stock Up
Look Boutique
Source: Kantar Retail ShopperScapeTM®, May 2011 and May 2012 1
Changing Channels

8. Consumables Expanding Presence
Space Allocation Changes
Indices
Increased effort on Health & Wellness also fuels perimeter, service and consumables for all retail channels 1
Changing Channels

9. Shoppers Willing to Spend on Products that Will Help Them Maintain Health
Top 5 Spending Priorities by Generation
Willing to Spend More on Products That …
Past ShopperScape data has shown that shoppers value, and are willing to spend on, products that will help them stay healthy. Among all generational cohorts, spending on health-related items have been part of their top 5 spending priorities.
Source: Kantar Retail analysis; ShopperScape® April 2011 1
Changing Channels

10. Supermarkets Emphasize Prepared Meals/Consumables to Tie to Lifestyle
Fill-in, immediate consumption trips have been growing. “Millennials” are trained to do prepared meals. 1
Changing Channels
Source: Kantar Retail analysis; store visits

11. Mass Appeal to Drive Traffic with Consumables
Trip frequency driver
Convenient for fill-ins
Incremental basket ring items 1
Changing Channels
Source: Goldman Sachs Global Retailing Conference, Company report and Kantar Retail store visits

12. CVS & Walgreens Urban Food Experience
FPO 1
Changing Channels
Source: Kantar Retail analysis

13. Discounters Dealing on Consumables Too1
Changing Channels
Source: Kantar Retail analysis

14. Value Discounters Gain, C-Stores Suffer
Shopping incidence pinpoints winners and losers
2011 vs Monthly Shoppers
(among all primary household shoppers)
76%
74%
74%
73%
72%
68%
55%
55%
42%
39%
29%
29%
Warehouse
clubs
Mass channel
retailers
Convenience
stores
Supermarkets
Drugstores
Value Discounters
Source: Kantar Retail ShopperScape®, October 2005, 2010, and 2011 1
Changing Channels

15. Promotional Space is 6% of Total Retail Space: Up +1
Promotional Space is 6% of Total Retail Space: Up +1.5% Across All Retail Formats
Increase led by Club and Supercenters
Decrease in Mass (Walmart Project Impact)
Treasure Hunt focus in Clubs
Drug increasing promotional space to drive margins in front end
Promotional space is DESTINATION for Value Discounters 1
Changing Channels

16. 2
Retailer Review 2

17. Think Small. Act Big. $2,122 $1,764 $1,604 < 20,000 20,000 – 50,000
USD Billions
$2,122
$1,764
$1,604
< 20,000
20,000 – 50,000
51,000 – 100,000
101,000 – 150,000
150,000 >
Note: Total sales by box size does not include non-store retail 2
Retailer Review
Source: KantarRetailIQ.com

18. Average Linear Footage Across Channels2
Retailer Review

19. Value Perception Fuels Growth
Retailers who respect shoppers budgets and time are winning
Redefined convenience
New values offer new growth opportunities
Health & Wellness
Local/Organic 2
Retailer Review

20. Shopper Definition of Value Goes Beyond Price
Fewer than 6 out of 10 shopper confident they are getting lowest price
But I still shop there because …
Confidence that Primary Grocery Store Offers Lowest Price on Total Basket
Convenient location
70%
One-stop shop
49%
Prices “low enough” on key items
42%
Easy to shop
36%
Pleasant to shop
28%
High quality produce/meat
27%
Good customer service
24%
Loyalty program
22%
Specific items
14%
Specific brands
10% 2
Retailer Review
Source: Kantar Retail ShopperScape®, February 2012

21. Kroger Investing in Its Newest Formats
Accelerating efforts in rolling out Marketplace stores
Approx. 50 to date (some new, some replacements)
Cheaper to build than a Fred Meyer ($18 MM vs. $30 MM)
Added GM gives margin flexibility and can fulfill more of shoppers’ needs
Stores getting larger: ~160k square feet 2
Retailer Review
Source: Kantar Retail analysis; store visits

22. SUPERVALU Continues Emphasis on “Hyper Local”
Increases Relevancy, but Also Complexity
Ethnic assortments and local trade shows as examples.
Store managers now have decision rights over 50% of promotional end cap space.
Commentary:
Could add extra complexity
Greater store level autonomy
Sales managers in the field could have more influence 2
Retailer Review
Source: Kantar Retail analysis; company reports

23. Rite Aid Keeping Pace with CVS, Walgreens2
Retailer Review
Source: Kantar Retail analysis

24. Costco Differentiates Itself with GM2
Retailer Review
Source: Kantar Retail research and analysis, Warehouse Club Focus (Fife, WA, Business Center only)

25. 3
Signage of the Times 3

26. Signage Preferences Align with Retailer Strategies
Consistency in Retailer brand identity in-store and in ad
Sightlines improved, number signs increased 3
Signage of the Times
Source: CROSSMARK, Kantar Retail analysis

27. Display Policies Align with Design Strategies
CVS 2006
Walmart
CVS 2011 3
Signage of the Times
Source: CROSSMARK, Kantar Retail analysis

28. Improved On-Shelf Education
On-shelf education includes health & wellness advice, interactive displays and bilingual signage 3
Signage of the Times
Source: Kantar Retail store visit

29. Signs Play Increasingly Important Role in the Store
Signage engages the shopper in-store
Types of materials and signs communicate value positioning of store and categories
Placement of signs help move the shopper around the store
Multi-Media signs help bridge brick & mortar with clicks
Use of QR codes and web links help connect multi-channel strategies for retailers 3
Signage of the Times

30. Designing for Today’s Shopper4
Designing for Today’s Shopper 4
Thinking beyond the store with a developed multi-channel strategy is essential to future success.

31. Connecting with Shoppers Defines the Store of Today and the Future
Engage shoppers in-store and out-of-store
Leverage technology
Store systems
Integration with mobile and online
In-store enhanced experiences
Out-of-store connection with social media
Appeal to shoppers needs for convenience and simplicity 4
Designing for Today’s Shopper

32. Experimenting with Social Media and Digital Marketing…
“Our Shaw's banner has done a great job of really connecting with consumers via the Shaw's Facebook page. Again, hyperlocal, talking directly to our most loyal customers. For those of you who like ice cream and might live in Chicago, sign up for Groupon this weekend and see if we might be playing around with Groupon at Jewel-Osco”
-Craig Herkert 7/26/11 4
Designing for Today’s Shopper
Source: Kantar Retail analysis; company reports; Groupon.com; Facebook.com

33. Stop & Shop Leads Supermarkets in Digital Path to Purchase4
Designing for Today’s Shopper
Source: Stopandshop.com

34. Designing for Today’s Shopper
Walgreens: Web Pickup
Redefines Convenience, Leverages the Store 4
Designing for Today’s Shopper
Source: Kantar Retail analysis

35. Target Brands In-Store and Online Experience with Seamless Success4
Designing for Today’s Shopper
Source: company webpage, circular, photos

36. Stores in the Future May be Assorted Very Differently
Categories are at risk of migrating online
Understanding the risk and rate of migration of categories will help retailers map out the economics of the box
Presence in all stores may be less relevant - knowing what categories and where they need to be is key to efficient use of future space 4
Designing for Today’s Shopper

37. Winning From a Kantar Retail Point-of-View
Retailers Should Focus On:
Convenience = Satisfaction Per Second
Loyalty = Managing “Convenience Leakage”
Experience = Delight Per Dollar
Value = Changing Language of Price
Execution & ROI = Processes to Enable Growth
Suppliers Should Focus On:
Identify = Know Your Focus
Influence = Probabalize the Store’s Role
Impact = “presence is more than just being there”
Innovate = Create a need to see AND want

38. Thank You! Rachel Donovan Director, Retail Insights
Customer Service
© Copyright 2012 Kantar Retail 38 38