STAKING A CLAIM ON
ALTERNATIVE CHANNELS
GMA Conference
November 2001
CORIOLISRESEARCH
Coriolis Research Ltd. is a strategic market research firm founded in 1997 and based in
Auckland, New Zealand. Coriolis primarily works with clients in the food and fast moving
consumer goods supply chain, from primary producers to retailers. In addition to working
with clients, Coriolis regularly produces reports on current industry topics. Recent reports
have included an analysis of the impact of the arrival of the German supermarket chain
Aldi in Australia, answering the question: “Will selling groceries over the internet ever
work?,” and this analysis of Alternative Channels in New Zealand.
!
The lead researcher on this report was Tim Morris, one of the founding partners of Coriolis
Research. Tim graduated from Cornell University in New York with a degree in
Agricultural Economics, with a specialisation in Food Industry Management. Tim has
worked for a number of international retailers and manufacturers, including Nestlé,
Dreyer’s Ice Cream, Kraft/General Foods, Safeway and Woolworths New Zealand. Before
helping to found Coriolis Research, Tim was a consultant for Swander Pace (now part of
Kurt Salmon) in San Francisco, where he worked on management consulting and
acquisition projects for clients including Danone, Heinz, Bestfoods and ConAgra.
!
The coriolis force, named for French physicist Gaspard Coriolis (1792-1843), may be seen on
a large scale in the movement of winds and ocean currents on the rotating earth. It
dominates weather patterns, producing the counterclockwise flow observed around lowpressure zones in the Northern Hemisphere and the clockwise flow around such zones in
the Southern Hemisphere. It is the result of a centripetal force on a mass moving with a
velocity radially outward in a rotating plane. In market research it means understanding the big
picture before you get into the details.
!
CORIOLISRESEARCH
PO BOX 10 202, Mt. Eden, Auckland, New Zealand
Tel: +64 9 623 1848; Fax: +64 9 353 1515; email: [email protected]
http://www.coriolisresearch.com
Alternative Channels
This presentation examines alternative channels in the New Zealand market
PRESENTATION OVERVIEW
Overview of
Alternative
Channels
CORIOLISRESEARCH
Profiles of
Four Key
Alternative
Channels
Targeting
Alternative
Channels
Alternatives
1
Alternative Channels
The first part of this presentation provides an overview of alternative channels
PRESENTATION OVERVIEW
Overview of
Alternative
Channels
CORIOLISRESEARCH
Alternatives
2
Alternative Channels
An alternative channel is here defined as “an outlet other than a supermarket that sells food and
fast moving consumer goods”
WHAT IS AN ALTERNATIVE CHANNEL?
Definition
Outlet other than a
supermarket that sells
food and fast moving
consumer goods
CORIOLISRESEARCH
Alternatives
3
Alternative Channels
Coca-Cola is an excellent example of a manufacturer serving a large number of alternative
channels
EXAMPLE OF ALTERNATIVE CHANNELS: COCA-COLA
Coca-Cola
Supermarket
• Pak’N Save
Dairy/
Convenience
• Star Mart
Vending
• Beaurepairs
Department
Stores
• The Warehouse
Fountain
• McDonalds
CORIOLISRESEARCH
Foodservice
Packaged
• Air New Zealand
Alternatives
4
Alternative Channels
Alternative channels to the supermarket are a spectrum, with no clear definition of where they
end
HOW BIG ARE ALTERNATIVE CHANNELS?
FOOD
Convenience
Store
Discount
Department
Store
Food
Specialist
Foodservice
Providers
Public
Markets
Chemists
Toy
Stores
Supermarket
NON-FOOD
Discount
Department
Store
Housewares
& Hardware
Store
Toiletries &
Cosmetics
Retailers
Supermarket
CORIOLISRESEARCH
Alternatives
5
Alternative Channels
Manufacturers choose to develop alternative channels for a number of reasons, both negative
and positive
WHY DEVELOP ALTERNATIVE CHANNELS?
Negative
− Supermarkets are consolidating,
dictating terms and driving down
profitability
− Gaining market share from entrenched
supermarket competitors is difficult
− Private label is growing in my category
in supermarkets
− Our main competitor is there already
CORIOLISRESEARCH
Positive
− There is a possibility to increase
consumption through wider
distribution
− Our product offers a real value-added
solution to a problem
− We want to extend our market
leadership by growing the category
Alternatives
6
Alternative Channels
The modern supermarket is only a convenient collection of separate stores or ‘departments’…
WHAT IS A SUPERMARKET?
In-Store
Bakery
Fruit,
Vegetables,
Flowers
General
Merchandise,
Detergents &
Cleaning
Products,
Garden
Supplies
Meat, Seafood
& Delicatessen
Beer &
Wine
Dry Grocery,
Bread,
Bulk Food,
Beverages &
Tobacco
Frozen
Dairy
Health &
Beauty Care
Total = 403 Supermarkets
CORIOLISRESEARCH
Alternatives
7
Alternative Channels
… that sell a wide range of products, both food and non-food
AVERAGE SUPERMARKET SALES BY DEPARTMENT
(Percent of total sales)
Non-Foods
30%
Health &
Beauty Care
6%
General
Merchandise
4%
Packaged
Shelf-stable
Food
21%
Cleaning
& Laundry
9%
Pet Care 2%
Tobacco 3%
Cold
Beverages
5%
Beer & Wine
6%
Bread
3%
Bulk Food
1%
Fruit, Vegetables,
Garden Supplies
& Flowers
9%
Dairy
11%
Bakery 2%
Delicatessen 3%
Seafood 1%
Perishables
25%
CORIOLISRESEARCH
Source: AC Nielsen; Coriolis
Shelf-stable Food
& Beverages
30%
Butcher
10%
Frozen
4%
Chilled food
15%
Alternatives
8
Alternative Channels
These departments collectively have a total of 12,490 external retail competitors
WHO COMPETES WITH SUPERMARKETS?
904 Bread & Cake Shops
737 Butchers, Delicatessens and
Fishmongers
369 Milk Vending
General
Merchandise,
Detergents &
Cleaning
Products,
Garden
Supplies
Meat, Seafood
& Delicatessen
In-Store
Bakery
403 Supermarkets
Fruit,
Vegetables,
Flowers
516 Greengrocers
507 Florists
CORIOLISRESEARCH
Beer &
Wine
668 Liquor
Retailers
Dry Grocery,
Bread,
Bulk Food,
Beverages &
Tobacco
Frozen
977 Domestic Housewares & Hardware
1,193 Newspaper, Book & Stationery
401 Garden Supplies
128 Photographic Equipment Retailing
Dairy
Health &
Beauty Care
2,357 Grocery & Dairies
1,658 Automotive Fuel Retailing
64 Public Markets
554 Specialty Food Retailing nec3
1. GM = General Merchandise or Non-foods (e.g. dog food, laundry detergent); 2. HBC = Health & Beauty Care (e.g. toothpaste);
3. Nec: not elsewhere classified; Source: Statistics New Zealand (Business Demography Survey, 2000)
277 Department Stores
1,180 Pharmaceutical, Cosmetic &
Toiletries
Alternatives
9
Alternative Channels
Supermarkets are currently challenged by a further 10,288 foodservice establishments
THE GROWTH OF FOODSERVICE
5,455 Cafés and Restaurants
3,195 Takeaway
1,237 Pubs, Taverns & Bars
401 Hospitality Clubs
FMCG
Retailers
CORIOLISRESEARCH
Source: Statistics New Zealand (Business Demography Survey, 2000)
Alternatives
10
Alternative Channels
While Supermarkets and Grocery chains are strong in food retailing…
AVERAGE HOUSEHOLD FOOD FMCG EXPENDITURE BY STORE TYPE
(Percent of average weekly expenditure; dollars; 1998)
Takeaway
Outlet
5.2%
Restaurant, Café
13.8%
Other 8.1%
Supermarket
63.4%
Greengrocer 2.6%
Butcher 2.8%
Dairy 4.1%
Total = $113.50
CORIOLISRESEARCH Source: Statistics New Zealand, (Household Expenditure Survey); Coriolis analysis
Alternatives
11
Alternative Channels
… they are weak in non-food retailing
AVERAGE HOUSEHOLD NON-FOOD FMCG EXPENDITURE BY STORE TYPE
(Percent of average weekly expenditure; dollars; 1998)
Supermarket
20.0%
Other
Dairy, Grocer
44.7%
5.1%
Hotel, Tavern
5.2%
Wholesale
Outlet
7.9%
Chemist,
Bookshop,
Stationer
4.9%
Department
Store
Cosmetics
6.9%
5.3%
Total = $57.70
CORIOLISRESEARCH Source: Statistics New Zealand, (Household Expenditure Survey); Coriolis analysis
Alternatives
12
Alternative Channels
Different store types have grown at different rates over the past four years
AVERAGE ANNUAL SALES GROWTH RATE BY STORE TYPE
(% CAGR of sales; 1996-2000)
Department Stores
8.3%
Restaurants, Cafes & Catering
8.1%
6.9%
Petrol Stations
Supermarkets
5.4%
Bakeries
5.3%
Fruit & Vegetable, Florists
4.6%
Pharmaceuticals
4.3%
Liquor Retailing
3.9%
Grocers & Dairies
2.8%
Fast Food & Takeaway
2.7%
Garden Supplies
1.1%
Pubs, Bars, Taverns & Clubs
Butchers
0.7%
0.2%
Domestic Housewares & Hardware -0.4%
CORIOLISRESEARCH
Source: Statistics New Zealand (Retail Trade Survey)
Alternatives
13
Alternative Channels
This presentation now profiles the four key alternative channels
PRESENTATION OVERVIEW
Overview of
Alternative
Channels
CORIOLISRESEARCH
Profiles of
Four Key
Alternative
Channels
Alternatives
14
Alternative Channels
Four different broad types of alternative channel exist in the New Zealand market
ALTERNATIVES TO THE SUPERMARKET
Foodservice
Perishables
Specialists
Supermarkets
Non-Foods
Retailers
Convenience
Outlets
CORIOLISRESEARCH
Alternatives
15
Alternative Channels
However, before we address alternative channels, remember that, according to the Department
of Statistics, fifty-four non-Key Account supermarkets exist in New Zealand
NON-KEY ACCOUNT SUPERMARKET
CORIOLISRESEARCH
Alternatives
16
Alternative Channels
Perishables Specialists focus on one specific type of perishable category
ALTERNATIVES TO THE SUPERMARKET
Perishables
Specialists
CORIOLISRESEARCH
Supermarkets
Alternatives
17
Alternative Channels
Perishables specialists come in a large variety of sizes and shapes
PERISHABLE SPECIALISTS
CORIOLISRESEARCH
Alternatives
18
Alternative Channels
About 12-14% of perishables specialists sales are outside their primary focus
SELECT FOOD SPECIALISTS SALES OUTSIDE PRIMARY FOCUS
(% of sales; 1998)
Greengrocer
Butcher
Baker
Other
Other
Other
14%
12%
14%
Fruit &
Meat
Baked
Vegetables
88%
Goods
86%
CORIOLISRESEARCH Source: Statistics New Zealand, (Household Expenditure Survey)
86%
Alternatives
19
Alternative Channels
Most categories of food specialist are showing sales growth
RETAIL SALES BY TYPE OF OUTLET1
(Dollars; millions; 1996v2000)
Bread
& Cake
Fresh Meat, Fish
& Poultry
CAGR
(96v00)
$257
$259
Fruit, Vegetable
& other food1
0.2%
$205
CORIOLISRESEARCH
2000
1996
$587
5.3%
4.6%
$490
$167
1996
CAGR
(96v00)
CAGR
(96v00)
2000
1. Due to confidentiality restrictions no finer breakdown available; includes milk home delivery and specialised food
Source: Statistics New Zealand (Retail Trade Survey)
1996
2000
Alternatives
20
Alternative Channels
While the number of supermarkets has remained relatively flat, the number of perishables
specialists is fluctuating, with both winners and losers
RELATIVE CHANGE IN OUTLET NUMBERS BY TYPE OF RETAILER
(Number of outlets in 1987=1; 87-00)
1.8
Bakery
1.6
1.4
1.2
Supermarkets
1.0
Specialty Food Retail
0.8
Greengrocer
0.6
Meat & Fish Retail
0.4
Milk Vending1
0.2
1987
1988
CORIOLISRESEARCH
1989
1990
1991
1992
1993
1994
1995
1. Home delivery
Source: Statistics New Zealand (Business Demography Survey); Coriolis analysis
1996
1997
1998
1999
2000
Alternatives
21
Alternative Channels
There are a number of medium size perishable specialist chains
EXAMPLES OF PERISHABLE SPECIALIST CHAINS
(# of outlets; 2001)
CORIOLISRESEARCH
Greengrocer
Pumpkin Planet
Vegie World
14
8
Butcher
Mad Butcher
Aussie Butcher
19
4
Baker
Baker’s Delight
Baker Boys
KB’s
Baker Street
27
15
13
5
Bulk Food
Bin Inn
52
Alternatives
22
Alternative Channels
The retail bakers sector is showing strong growth, both by chains and by independents
RETAIL BAKERIES/CAKE SHOPS
Brand
# of outlets
Supplier/Owner
Bakers Delight
27
Franchised
Baker Boys
15
Independents
KBs
13
Franchised
Baker Street
5
Private
Other Retailers
832
Total Retailers
904
CORIOLISRESEARCH
Source: Industry Interviews; Statistics New Zealand, (Business Demography Survey)
Alternatives
23
Alternative Channels
Independent greengrocers and florists are still a very strong force in New Zealand retailing
GREENGROCERS/FLORIST RETAILERS
Brand
# of outlets
Supplier/Owner
Pumpkin Planet
14
Private; franchised
Vegie World
8
Private
Total Greengrocers
516
Total Florists
507
CORIOLISRESEARCH
Source: Industry Interviews; Statistics New Zealand (Business Demography Survey)
Alternatives
24
Alternative Channels
While the number of independent butchers shops is down, total sales have remained stable implying an increasing turnover per outlet
BUTCHERS/FISHMONGERS/DELI’S
Brand
# of outlets
Supplier/Owner
Mad Butcher
19
Private
Lenards Chicken
5
Private; being sold
Aussie Butcher
4
Private
Other Retailers
Total Retailers
CORIOLISRESEARCH
737
Source: Industry Interviews; Statistics New Zealand (Business Demography Survey)
Alternatives
25
Alternative Channels
There is also a large group of other specialist retailers each with a different offer and different
market niche
SPECIALTY RETAILERS
Brand
# of outlets
Supplier/Owner
Bin Inn
52
Franchised
Bulk Barn
3
Independent
Total Public Markets
64
Total Specialty Food Retailing
554
CORIOLISRESEARCH
Source: Industry Interviews; Statistics New Zealand (Business Demography Survey)
Alternatives
26
Alternative Channels
Convenience outlets are defined by the importance of location and ease-of-access
ALTERNATIVES TO THE SUPERMARKET
Supermarkets
Convenience
Outlets
CORIOLISRESEARCH
Alternatives
27
Alternative Channels
Convenience-oriented retailers are professionalising rapidly
CONVENIENCE-ORIENTED STORES
CORIOLISRESEARCH
Alternatives
28
Alternative Channels
Convenience stores sell a mix of both food and non-food
CONVENIENCE STORE SALES BY CATEGORY1
(% of sales; 2000)
Other Food
12%
Milk
5%
Tobacco
38%
Confectionery
7%
43% Food
57% Non-Food
Convenience Foods
8%
Beverages
Phone Card
11%
Other Non-Food
6%
13%
CORIOLISRESEARCH 1. Excludes any fuel or alcohol sales
Source: AACS
Alternatives
29
Alternative Channels
Convenience-oriented stores are showing sales growth, albeit at different rates
RETAIL SALES BY TYPE OF OUTLET1
(Dollars; millions; 1996v2000)
Petrol
Stations1
CAGR
(96v00)
$4,313
Grocers
& Dairies
6.9%
$737
CORIOLISRESEARCH
1. Sales including fuel
Source: Statistics New Zealand (Retail Trade Survey)
1996
$976
2.8%
3.9%
$837
$3,299
2000
CAGR
(96v00)
CAGR
(96v00)
$824
1996
Liquor
Retailing
2000
1996
2000
Alternatives
30
Alternative Channels
While the number of supermarkets has remained relatively flat, the number of convenience
oriented stores is fluctuating, with both winners and losers
RELATIVE CHANGE IN OUTLET NUMBERS BY TYPE OF RETAILER
(Number of outlets in 1987=1; 87-00)
1.5
Liquor Retail1
1.4
1.3
1.2
1.1
Supermarkets
Petrol Stations
1.0
0.9
Groceries & Dairy
0.8
0.7
1987
1988
CORIOLISRESEARCH
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
1. This report defines Liquor Retailes are primarily convenience retailers, as in markets without legal restrictions, these store formats merge with convenience stores
Source: Statistics New Zealand (Business Demography Survey); Coriolis analysis
Alternatives
31
Alternative Channels
There are a number of large convenience-oriented chains
EXAMPLES OF CONVENIENCE-ORIENTED CHAINS
(# of outlets; 2001)
Petrol
Mobil
BP
Shell
Caltex
Gull Shop
Dairies
On The Spot
Four Square
Price Cutter
Super 7
CORIOLISRESEARCH
On The Run
Mobil Mart
Other
Connect
Express
Other
Select
Shell Shop
Challenge
Star Mart
Caltex Shop
Other
39
199
286
11
42
301
98
772
130
82
149
52
20+
Cash&
Carry
Gilmours
Toops
Moore Wilson
Rattrays
Trents
10
5
6
6
7
Liquor
Stores
Super Liquor
Liquorland
Liquor King
Glengary
99
84
34
22
244
353
56
69
Alternatives
32
Alternative Channels
The classic Kiwi dairy is evolving into professional chains of convenience stores with better
pricing and a more relevant product offer
GROCERY/CONVENIENCE/DAIRIES
Brand
# of outlets
Supplier/Owner
On the Spot
244
Independently owned;
supplied by Trents
Four Square
353
Independently owned;
supplied by Foodstuffs (Various)
Price Cutter
56
Independently owned;
Supplied by Rattrays (Infogate)
Super 7
69
Independently owned;
Supplied by Rattrays (Infogate)
Others
1,635
Total
2,357
CORIOLISRESEARCH
Source: Industry Interviews; Statistics New Zealand (Business Demography Survey)
Alternatives
33
Alternative Channels
New Zealand has a strong Cash & Carry sector servicing primarily small retailers and
foodservice
CASH & CARRY WAREHOUSES
Brand
# of outlets
Supplier/Owner
Gilmours
10
Foodstuffs (Auckland)
Toops
5
Foodstuffs (Wellington)
Moore Wilson
6
Private
Rattrays
6
Infogate
Trents
7
Foodstuffs (South Island)
Other Retailers
Total Retailers
CORIOLISRESEARCH
Source: Industry Interviews; Statistics New Zealand (Business Demography Survey)
Alternatives
34
Alternative Channels
Liquor retailing is highly competitive, with a number of strong chains battling with
independents
LIQUOR RETAILERS
Brand
# of outlets
Supplier/Owner
Super Liquor
99
Franchised
Liquorland
84
DB Breweries
Liquor King
34
Lion Breweries
Glengarry
22
Glengarry Hancocks Ltd
Other Retailers
429
Total Retailers
668
CORIOLISRESEARCH
Source: Industry Interviews; Statistics New Zealand (Business Demography Survey)
Alternatives
35
Alternative Channels
Non-foods retailers encompasses a broad range of store-types
ALTERNATIVES TO THE SUPERMARKET
Supermarkets
CORIOLISRESEARCH
Non-Foods
Retailers
Alternatives
36
Alternative Channels
Some non-food retailers are building very large boxes
NON-FOOD FMCG RETAILERS
CORIOLISRESEARCH
Alternatives
37
Alternative Channels
Department stores and pharmaceutical, cosmetics and toiletries retailers are showing strong
sales growth while other sectors are flat or down
RETAIL SALES BY TYPE OF OUTLET1
(Dollars; millions; 1996v2000)
Department
Stores
Pharmaceutical,
Cosmetic & Toiletries
Domestic Housewares
& Hardware
Garden
Supplies
CAGR
(96v00)
$2,556
CAGR
(96v00)
8.3%
$1,291
CORIOLISRESEARCH
$803
$789
1996
2000
(0.4%)
$271
$283
1996
2000
1.1%
$1,089
$1,859
1996
4.3%
CAGR
(96v00)
CAGR
(96v00)
2000
1996
2000
1. Due to confidentiality restrictions no finer breakdown available; includes milk home delivery and specialised food
Source: Statistics New Zealand (Retail Trade Survey)
Alternatives
38
Alternative Channels
The primarily non-food FMCG sector is undergoing massive changes as discounters replace
traditional department stores
RELATIVE CHANGE IN OUTLET NUMBERS BY TYPE OF RETAILER
(Number of outlets in 1987=1; 87-00)
Gardening
1.2
1.1
Department Stores
Supermarkets
1.0
Pharmacy, Health
& Beauty
0.9
Hardware Stores
0.8
Newspaper, Book &
Stationery Retail
0.7
1987
1988
CORIOLISRESEARCH
1989
1990
1991
1992
1993
1994
1995
Source: Statistics New Zealand (Business Demography Survey); Coriolis analysis
1996
1997
1998
1999
2000
Alternatives
39
Alternative Channels
There are a number of large primarily non-foods chains
EXAMPLES OF PRIMARILY NON-FOODS CHAINS
(# of outlets; 2001)
Department
Stores
Housewares
/Hardware
Farmers
The Warehouse
The $2 Shop
Briscoes
K-Mart
Rendells
Mitre 10
Hammer Hardware
ITM
Placemakers
Benchmark
CORIOLISRESEARCH
63
47
40
28
11
7
130
85
83
55
42
Pharmacy
/Cosmetics
Unichem
Amcal
Care
Chemist Shop
120
82
16
7
Paper Plus
Newsagents
Office Supplies Whitcoulls
Office Products Depot
Warehouse Stationery
Books & More
Bennetts
Stationery City
171
32
38
32
23
7
6
Alternatives
40
Alternative Channels
Competition in the department store sector is fierce, with new price-oriented discounters like
The Warehouse and The $2 Shop displacing old favourites
VARIETY/DEPARTMENT RETAILERS
Brand
# of outlets
Supplier/Owner
Farmers
63
FAL
DEKA
62
FAL (closing)
The Warehouse
47
Public
The $2 Shop
40
Franchised
Briscoes
28
Private
K-Mart
11
Coles Myer
Rendells
7
Private
Other Retailers
19
Total Retailers
277
CORIOLISRESEARCH
Source: Industry Interviews; Statistics New Zealand (Business Demography Survey)
Alternatives
41
Alternative Channels
There is a strong hardware sector with growing FMCG sales, especially in detergents and
cleaning products
HARDWARE RETAILERS
Brand
# of outlets
Supplier/Owner
Hammer Hardware
85
Franchised
Mitre 10
130
Franchised
ITM
83
Independently owned
Placemakers
55
Private & Fletcher Distribution
Benchmark Building Supplies
42
Corporate
Other Retailers
582
Total Retailers
977
CORIOLISRESEARCH
Source: Industry Interviews; Statistics New Zealand (Business Demography Survey)
Alternatives
42
Alternative Channels
There are a large number of chain and independent chemists and health and beauty specialists
selling a wide range of health and beauty related products
PHARMACEUTICAL, COSMETICS & TOILETRIES RETAILERS
Brand
# of outlets
Supplier/Owner
Unichem
120
Independents
(Zuellig Pharma banner group)
Amcal
82
Independents
(Zuellig Pharma banner group)
Care Chemists
16
Independents
(Zuellig Pharma banner group)
The Chemist Shop
7
Independents
(Zuellig Pharma banner group)
Other Retailers
955
Total Retailers
1,180
CORIOLISRESEARCH
Source: Industry Interviews; Statistics New Zealand (Business Demography Survey)
Alternatives
43
Alternative Channels
The line between most newsagents and stationers, and convenience stores is becoming blurred
NEWSPAPERS, BOOKS & STATIONERY RETAILERS
Brand
# of outlets
Supplier/Owner
PaperPlus
171
Franchised
Whitcoulls
32
Blue Star Retail Group
Office Products Depot
38
Franchised
Warehouse Stationery
32
Public
Books&More
23
Franchised
Bennetts Bookstores
7
Blue Star Retail Group
Stationery City
6
Private
Other Retailers
846
Total Retailers
1,193
CORIOLISRESEARCH
Source: Industry Interviews; Statistics New Zealand (Business Demography Survey)
Alternatives
44
Alternative Channels
The garden supplies sector is still highly fragmented
GARDEN SUPPLIERS
Brand
# of outlets
Supplier/Owner
Palmers Garden World
20
Mitre 10
Oderings
9
Private
Athol McCully
3
Private
Gardenways
3
Franchised
Turners Garden Centre
2
Private
Other Retailers
364
Total Retailers
401
CORIOLISRESEARCH
Source: Industry Interviews; Statistics New Zealand (Business Demography Survey)
Alternatives
45
Alternative Channels
Foodservice includes restaurants, catering clubs and bars
ALTERNATIVES TO THE SUPERMARKET
Foodservice
Supermarkets
CORIOLISRESEARCH
Alternatives
46
Alternative Channels
Foodservice outlets cover the full range from global chain to local eatery
FOODSERVICE
CORIOLISRESEARCH
Alternatives
47
Alternative Channels
Restaurants are showing much stronger turnover growth than other food away segments
RETAIL SALES BY TYPE OF OUTLET1
(Dollars; millions; 1997v2000)
Restaurants, Cafes
& Catering
Fast Food
& Takeaway
Pubs, Taverns,
Bars & Clubs
CAGR
(97v00)
$2,191
CAGR
(97v00)
8.1%
$814
$752
$1,734
1997
2000
1997
CORIOLISRESEARCH 1. Redefined as SNZ classifies fast food as unlicensed restaurants, not takeaway
Source: Statistics New Zealand; RANZ; Coriolis analysis
2000
2.7%
CAGR
(97v00)
$1,039
$1,062
1997
2000
0.7%
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48
Alternative Channels
The number of food away from home outlets is growing rapidly
RELATIVE OUTLET NUMBERS GROWTH FOOD AWAY VS. SUPERMARKET
(Normalised in 1987 to one; 87-00)
2.0
Cafes & Restaurants
1.8
1.6
Pubs & Bars
Takeaway Food
1.4
1.2
Supermarkets
1.0
Clubs (Hospitality)
0.8
1987
1988
1989
CORIOLISRESEARCH
1990
1991
1992
1993
1994
1995
Source: Statistics New Zealand (Business Demography Survey); Coriolis analysis
1996
1997
1998
1999
2000
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49
Alternative Channels
The experience of other markets suggests this trend will continue, causing food retailers to lose
‘share-of-stomach’
THE CONTINUING GROWTH OF FOODSERVICE
(% food spend on food away from home; 1989-2021p)
Cafes,
Restaurants
& Takeaways
16.2%
23.1%
33.0%
46.0%
Food
Retailing
83.8%
76.9%
67.0%
54.0%
1989
CORIOLISRESEARCH
Source: Statistics New Zealand; Coriolis analysis
1999
2011
2021
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50
Alternative Channels
Finally, this presentation looks at how manufacturers can begin to target alternative channels
PRESENTATION OVERVIEW
Overview of
Alternative
Channels
CORIOLISRESEARCH
Profiles of
Four Key
Alternative
Channels
Targeting
Alternative
Channels
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51
Alternative Channels
Manufacturers looking to develop an alternative channel strategy need to answer four key
questions
FOUR KEY QUESTIONS
CORIOLISRESEARCH
1.
What channels stock or are likely to stock your product?
2.
Where should you focus your effort?
3.
How do you effectively and profitably service these channels?
4.
How can you change your product/packaging to better serve
these channels?
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52
Alternative Channels
1. What channels stock or are likely to stock your product? Different products are, obviously,
suited for different channels
PRODUCT CATEGORY STRENGTH BY CHANNEL
Convenience
Bread & In-Store Bakery
Fruit, Vegetables & Flowers
Meat, Seafood & Deli
Dry Grocery, Bulk Food
Frozen Food
Dairy/Refrigerated
Beverages
Confectionery
Beer & Wine
Tobacco
General Merchandise
Health & Beauty Care
Garden Supplies
CORIOLISRESEARCH
Non-Foods
Perishables Specialists
Dairies
Petrol
Stations
Liquor
Stores
Green
Grocers
Butchers
Bakers
!
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Department Chemists Housewares
Stores
Cosmetics Hardware
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Alternative Channels
2. Where should you focus your effort? Focus your effort on likely winners, which the U.S.
market suggests are foodservice, warehouse clubs (Cash & Carry) and discounters
FOOD & NON-ALCOHOLIC BEVERAGE SALES BY STORE TYPE
(% of sales; 2000)
New Zealand
United States
Takeaway
Outlet
5%
Restaurant, Café
14%
Supermarket
32%
Other 8%
Supermarket
63%
Foodservice
48%
Greengrocer 3%
Butcher 3%
Mass Merchants1 3%
Warehouse Club 2%
Dairy 4%
Convenience
7%
Specialist/
Other
8%
CORIOLISRESEARCH 1. Does not include supercenters, counted in supermarkets
Source: Statistics New Zealand; ERS; FMI; Coriolis analysis
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54
Alternative Channels
3. How do you effectively and profitably service these channels? Distribution costs are the key
variable in any alternative channel strategy
EXAMPLE: THE CHALLENGE OF EFFICIENT DISTRIBUTION TO CONVENIENCE
Key Account
Supermarkets
403
CORIOLISRESEARCH
10 X
Grocers & Dairies
Automotive Fuel Retailers
2,357
1,658
Total
4,015
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55
Alternative Channels
4. How can you change your product/packaging to better serve these channels? The product and
packaging requirements of alternative channels differ from supermarkets
EXAMPLE: STAGES OF CUSTOMISATION FOR FOODSERVICE
STAGE I
STAGE II
STAGE III
Product
Standard
Supermarket
Item
New
Larger
Pack Size
Customised
Product
Formulation
Objective
Incremental
Sales
Incremental
Margin
Market
Leadership
Go-To-Market
Strategy
Sell Through
Cash & Carry
Sell Through
Foodservice
Distributor
Sell
Direct
CORIOLISRESEARCH
Alternatives
56
CORIOLISRESEARCH
PO BOX 10 202, Mt. Eden, Auckland, New Zealand
Tel: +64 9 623 1848; Fax: +64 9 353 1515; email: [email protected]
www.coriolisresearch.com