The economic outlook for retailers in the United States and Europe is getting better, a new report from Kantar Retail suggests, but that alone will provide very little momentum for strong sales growth.


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Inside This Issue - News

Growth will have to be earned by retailers

March 21st, 2011

NEW YORK – The economic outlook for retailers in the United States and Europe is getting better, a new report from Kantar Retail suggests, but that alone will provide very little momentum for strong sales growth.

Instead retailers will have to earn their growth by boosting their share in five key areas.
According to "The Five Shares: Kantar Retail’s Guide to Retailer/Supplier Strategy for the Next Five Years," those areas are:

• Share of Real Growth. Which markets, channels and customer groups are growing faster than the overall marketplace, and can a particular retailer develop a strategy to capitalize on that selective growth opportunity?

• Share of Wallet. How much do shoppers spend with a retailer compared with what they could spend?

• Share of Decision. Why do shoppers choose certain outlets and brands?

• Share of Solution. How can retailers provide more value to their shoppers?

• Share of Engagement. How can retailers cut through the clutter and connect with their customers inside and outside the store?

Each of these areas has its own implications, the Kantar report contends. With share of wallet, for example, retailers can focus on ways to expand their share of wallet-opening occasions.

"The retailer of the post-modern retail market that is primarily bricks and mortar will either have to be a relentlessly focused model targeting one occasion only, accepting the tradeoffs of that (Costco comes to mind) or be willing to meet shoppers wherever they want to go," the report states, adding that virtually all of the world’s top 10 retailers are diversifying their store format portfolios in order to serve more of their customers’ varied needs. Walmart has developed small-store formats throughout the world to target its shoppers’ fill-in trips as well as the stock-up trips that would send them to a Supercenter.

And Target Corp.’s P-fresh initiative is designed to let the discounter capture fill-in grocery trips from its most loyal shoppers, the report says.

"At the same time, multiple format strategies are a hallmark of retail markets that are in the Penetration phase of market development … this is more of a ‘share of national wallet’ approach," the report says. "Mexico, in particular, is the best representation of this phenomenon today. Walmex’s variations on its Bodega Aurrera format are all about reaching smaller communities that can’t support a larger-footprint Walmex store."

When it comes to "share of decision," meanwhile, Kantar contends that many retailers are using loyalty programs and other tools to "alter the nature of the core decisions a shopper makes."

The report maintains that while low prices may not be a core part of CVS Caremark Corp.’s business strategy, the promotions and savings available to loyal customers make it harder for competitors to make clear price comparisons.

"The really interesting issue today is around pricing and what is happening as price becomes an increasingly personal and private conversation between the shopper and the retailer," the report states. "Though in many cases it is easy to become fascinated with the bells and whistles of technology without understanding the business implications, the ability to personalize and privatize a pricing conversation has the chance to be the most transformative capability retailers can harness in the 2010s."

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