CHALLENGES OF THE

Copyright © 2018 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute.

NEW RETAIL LANDSCAPE

PHILIPPINES

LOU-ANN NAVALTA
Executive Director, Sales Effectiveness & Shopper
November 11, 2019
Copyright © 2018 The Nielsen Company. Confidential and proprietary. 1
 NEW LANDSCAPE

Young but Shifting

Demographics

Growing Spending Power

Urbanization
Copyright © 2017 The Nielsen Company. Confidential and proprietary.

Convenience Lifestyle

Connected Consumer

2
 1 THE PHILIPPINES IS A VERY YOUNG POPULATION

107 M
Copyright © 2017 The Nielsen Company. Confidential and proprietary.

PHILIPPINES
52%
are Gen Z or younger
Median Age: 24.3 years old

*Source: Philippine Statistics Authority 2019 projected population 3

 1 WITH CHANGING DEMOGRAPHICS = MORE VARIED
HOUSEHOLD COMPOSITIONS
• Late marriages lead to decline in birth rates
• Rise of Singleton or Empty Nester households with smaller household sizes
Copyright © 2017 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute.

LIFE EXPECTANCY

Source: Philippine Statistics Authority, other government websites 4

 2 BOOMING ECONOMY LEADS TO GROWING
SPENDING POWER
6-7%
2015-2018 GDP
Copyright © 2017 The Nielsen Company. Confidential and proprietary.

Class ABC show decline in grocery spend due to

higher incidence of eating out.

5
 URBANIZATION DUE TO IN-MIGRATION
3 Greater demand at work, longer commutes
and proprietary. Do not distribute.
and proprietary.

Cebu City, Davao City

LLC. Confidential
Confidential

Antipolo, Bacolod, Bacoor, Cagayan de Oro,

Zamboanga City, Dasmarinas
(US),
Company.
NielsenCompany

Iloilo City, Baguio, Santa Rosa, San Pedro,

San Fernando, Mandaue, Lipa, Lapu lapu,
TheNielsen

Imus, General Trias, Gen Santos

2017The
Copyright©©2017
Copyright

Source: Philippine Statistics Authority, other government websites 6

 A MOBILE FIRST MARKET - DIGITAL IS THE WAY TO
4
ENGAGE MORE FILIPINOS, ESPECIALLY THE YOUNG
Copyright © 2017 The Nielsen Company. Confidential and proprietary.

*Source: Nielsen Consumer & Media View (Urban Filipinos) 2018

Among 10-19 y.o. - 94% Filipinos spend the 4.58 HOURS

most time online* ONLINE ON
Among 20-29 y.o. - 92% MOBILE PHONE

*Source: 2019 Global Digital Report (Hootsuite)

7
 THESE MEGATRENDS BRING ABOUT SHIFTS IN RETAIL
GROWING NEED FOR CONVENIENCE-RELATED PRODUCTS & SERVICES
2018 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute.

Time Strapped Rise of Small

Apps for everything, Format Stores
Extended store hours Huge rise in store count of small format
supermarkets, mini markets, CVS -
Ave. 8 food channels moving closer to homes
patronized

Growth in
Eating Out
Eating out spend rose 9%,
popularity of food parks &
E-Commerce
aggregator apps 92% of online Filipinos have
bought online in the past 6
Copyright © 2017

months

*Sources: Asean Cities 2017, Foodies Report 2017, Nielsen Store Universe Estimates Q2 2018, Bricks to Clicks Report 2018 8
 AS A RESULT, NEW TRENDS EMERGE

1 SMALL IS THE NEW BIG

Copyright © 2017 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute.

2 NEW IS THE NEXT BIG THING

3 BRICKS TO CLICKS

4 PERSONALIZATION IN RETAIL

9
SMALL IS THE NEW BIG

This artwork was created using Nielsen data.

Copyright © 2017 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute.
 MODERN RETAILERS EXPAND TO MEET THE NEED FOR
ACCESSIBILITY
Source: 2019 Nielsen 1st UU (2017 Wave 1 to 2017 Wave 3 Retail Establishment Survey (RES)
Based on Nielsen store and channel definition
North Luzon Total Philippines Supermarket Grocery Store Convenience Store
-1%
227,654 1%
2018 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute.

Greater Manila 1,159,259 2,217 5,419 4,481

3% 2% 4%
-1%
148,939 Sari Sari Stores Market Stall
South Luzon

-1%
224,533 1,095,792 37,779
1% 2%
Visayas
Drugstores Department Stores
3%
282,193
Mindanao 12,901 670
Copyright © 2017

2% 3%
3%
275,940
2018/2019 CPG RETAIL OUTLET NUMERIC UNIVERSE: BASE UNIVERSE Note: Growth rates (%) are based on
11
2019 1st UU vs 2018 1st UU
 SHOPPERS GO TO SMALLER, COMMUNITY-BASED STORES
Stores expand closer to homes to answer convenience need.
Source: Company disclosures and news articles (SEP 2018)

Small Stores =
Community Stores
2018 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute.

(flexible, customized assortment &

offerings)

CVS GROWTH PROJECTION

2004-2014 (10 years)

2.4x
2014-2019 (5 years) Road to
2.2x 10,000
Copyright © 2017

SMALL FORMAT STORES NUMERIC STORE COUNT, March-June 2019 (Estimates only) 12
 SMALL FORMAT SUPERMARKET GROWS IN PENETRATION, SPEND/
TRIP AND OVERALL VALUE
PENETRATION SPEND/TRIP

MAT YA MAT Q1'19 MAT YA MAT Q1'19

MAT Q1'19
445
76.4 76.5 408 381
326 346 332
2018 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute.

44.1 42.0
28.5
24.0

24.6
Supermarket Big SMKT Small SMKT Supermarket Big SMKT Small SMKT
%Spend Contribution 68.4
Big SMKT

Small SMKT Retailer Value Growth MAT%

7.0 Supermarket +4.5
Other Supermarkets Big Format SMKT -4.3
(unclassified)
Small Format SMKT +18
Copyright © 2017

Big Supermarket: Puregold, SM hyper/super, Robinsons, Rustan’s, Shopwise, Gaisano

Small Supermarket: Puregold Jr, Save more, Wellcome/ Shopwise Express

Source: Home Panel | Nielsen Retailer Pulse Report 2019 13

 SMALL STORES PROSPER DUE TO ITS PROXIMITY
Closer to homes, more familiar

MODE OF TRANSPO TO BIG SMALL SHOPPING HABITS

SUPERMARKETS / HYPERMARKETS STORESTORE
“I generally know which parts of the store have
45 53 the items I want, and just visit them”
By walking

Bicycle

Motorcycle
PROXIMITY MATTERS
proprietary.

Car Near home/work/travel route

proprietary.

Public transportation (i.e. jeep, bus)

Confidentialandand

WALKABLE:
Company. Confidential

Private transportation (i.e. taxi / cab)

Walk rather than drive to store.

NielsenCompany.

Big Store Format (BSF)

Small Store Format (SSF) No more than 10 mins by foot
The
© 2017
© 2017
pyright Nielsen
The

Sig higher/ lower vs. BSF 15

Source: Nielsen Shopper Trends 2018
ght
 HELP SHOPPERS SAVE PRECIOUS TIME
For the time-strapped, it is essential to have a quick and seamless shopping trip

TOP 10 DRIVERS OF SUPERMARKET CHOICE - among SMALL

STORE FORMAT PATRONS MOST OFTEN

• Convenient to get to FIND THINGS EASILY

• Low prices for most items No to narrow aisles
Easy to shop layouts
• Long opening hours
• Good value for money
• Easy to quickly find what I need SHOPPING HOURS:
• Everything I need in one shop Opens early, closes late.
proprietary.

• Efficient checkout counters

proprietary.

• Ease of parking IN/OUT QUICKLY

Confidentialandand

Short wait time at cashier

Company. Confidential

• Provide really good deals and promos More COCs during peak hours
• Offers own brand which offers a good
NielsenCompany.

alternative to main brands

Nielsen
The

TIME
The
© 2017

CHOICE
© 2017

EXPERIENCE
pyright

PRICE Source: Nielsen Shopper Trends 2018 16

ght
 OFFER MORE CHOICES TO INCREASE SPEND
Meet demand for frequent shopping by offering the right range despite limited space

FREQUENCY OF SHOPPING

FREQUENCY OF Assortment is essential to shopper

TOP-UP SHOPPING
appeal.

BSF: 6.6 times per month

Increase range to increase
proprietary.

shopper spend.
proprietary.

SSF: 8.5 times per month

Confidential
Company. Confidential andand

Lack of choices forces a

NielsenCompany.

Big Store Format (BSF)

Small Store Format (SSF) shopper to travel further to
another store, costing them
Nielsen
The

precious time.
© 2017
pyright The
© 2017

Sig higher/ lower vs. BSF 17

Source: Nielsen Shopper Trends 2018
ght
 SMALL FORMAT SUPERMARKETS SLOWLY MIMICKING BIG
SUPERMARKET ASSORTMENT

Assortment in Small
Supermarkets
now include baked
goods, ready-to-cook
ingredients, and
ready-to-eat meals
proprietary.
proprietary.

Assortment
in CVS now
Confidentialandand

expands to
Company. Confidential

RTE viands,
NielsenCompany.

fresh fruits,
vegetables,
Nielsen

and meat
The
© 2017
© 2017
pyright The

18
ght
 SMALL STORES IN APAC DELIVER ON CONVENIENCE
AND NEW ITEMS BUT NOT NECESSARILY ON PRICE
The
© 2017
© 2017
pyright Nielsen
The Confidential
Company. Confidential
NielsenCompany. proprietary.
proprietary.
andand

20
*Source: www.ccrrc.org Small is the New Big global report
ght
 BUT IN THE PH, IT IS MISNOMER TO THINK PRICE IS NOT
IMPORTANT IN SMALL STORES
In fact it is more important to small store shoppers than big format stores
TOP 10 DRIVERS OF SUPERMARKET CHOICE – RANKED
AMONG MOST OFTEN PATRONS OF EACH STORE TYPE

BIG STORE SHOPPERS SMALL STORE SHOPPERS

Easy to quickly find what I need Convenient to get to
Provide enjoyable shopper experience Low prices for most items
Everything I need in one shop Long opening hours
Staff provides excellent customer Good value for money
proprietary.

service REASONABLE PRICING

proprietary.

Easy to quickly find what I need

Convenient to get to Not too far from bigger
andand

Everything I need in one shop

stores
Confidential

Efficient checkout counters

Company. Confidential

Efficient checkout counters

Always have what I want in stock Ease of parking
MORE PROMOS
NielsenCompany.

Good value for money

Provide really good deals and promos To increase perceived
Nielsen

Provide really good deals and promos

Offers own brand which offers a good value
TheThe

Are the first to have new products alternative to main brands

© 2017
© 2017
pyright

21
Source: Nielsen Shopper Trends 2018
ght
 BECAUSE SMALL FORMATS CATER MORE TO LOWER CLASS
Dualist & Big format shoppers are more ABC while small format shoppers are skewed to lower class

13
2018 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute.

27 23 26
Dualist
Solus Solus
SEC E %Spend Growth Total Panel Big/Small
Big SMKT Small SMKT
SMKT
52 SEC D

54 SEC C Total Panel 3.1 -24.8 21.9 16.9

54 61 SEC AB SEC AB 11.6 -9.6 131.9 41.5
SEC C -2.4 -15.1 6.9 -1.7
31 SEC D 7.0 -29.9 60.0 35.5
17 20 SEC E -1.1 -20.9 -18.6 0.1
13
2 3 5
Supermarket Big SMKT Exclusive Small SMKT Dualist Buyers
The market is really moving away from big stores to
Buyers Exclusive Buyers2
either small stores purely or at least dual stores
Copyright © 2017

Source: Home Panel | Nielsen Retailer Pulse Report 2019 22

NEW IS THE NEXT BIG THING

Copyright © 2017 The Nielsen Company. Confidential and proprietary.

 SHOPPERS ARE OPEN TO TRYING AND SWITCHING BRANDS
GLOBAL
GLOBAL AVG
AVG 55% 49%
42% 47% 46%
38%
GLOBAL
AVG
7% 7%
8%

ASIA- PHILIPPINES ASIA- PHILIPPINES ASIA- PHILIPPINES

PACIFIC PACIFIC PACIFIC

SOMETIMES BUY NEW BRANDS

LOVE TRYING NEW THINGS SELDOM TRY NEW THINGS
OR PRODUCTS
pyright © 2017 The Nielsen Company. Confidential and proprietary.

ARE YOU WILLING TO SWITCH OR TRY DIFFERENT GROCERY BRANDS?

Source: Nielsen Global Consumer Loyalty Survey (Q1, 2019)
Q39. Which of the following best describes how you feel about switching brands and buying different grocery and household products? Results by Region 24
 SHOPPERS ARE NOW CONSIDERING NEW BRANDS & PRODUCTS

MORE LIKELY TO TRY NEW BRANDS TEND TO HAVE FAVORITE BRANDS THINK I HAVE A LARGER SET OF BRANDS,
I’VE NEVER TRIED BEFORE I BUY EVERY TIME I SHOP BUT PREFER TO STICK TO BRANDS I’VE TRIED

ASIA-PACIFIC 46% ASIA-PACIFIC 27% ASIA-PACIFIC 24%

PHILIPPINES 50% PHILIPPINES 26% PHILIPPINES 23%
44% 29% 23%
42% 27% 24%
49% 20%
pyright © 2017 The Nielsen Company. Confidential and proprietary.

■ ASIA- ■ PHILIPINES
PACIFIC

Source: Nielsen Global Consumer Loyalty Survey (Q1, 2019)

Q40. Please select the one statement that you think best describes you | Results by Region 25
 ESPECIALLY IN CVS, NEW PRODUCT OFFERINGS ARE CRUCIAL
TOP 10 DRIVERS OF CVS CHOICE

1 Convenient to get to
2 Provides good deals and promos
BE KNOW FOR INNOVATION
3 Easy to quickly find what I need • Special displays for new
4 Always have what I want in stock items
5 First to have new products • Exclusive new launches
6 Products are of good value for money • Events to showcase new
proprietary.

7 Fast and efficient staff and crew offerings

proprietary.

• Constantly update new

8 Has other services inside the store
andand

house brand offerings

Confidential
Company. Confidential

9 Has high quality products

10 Low prices for most items
NielsenCompany.
Nielsen

TIME
CHOICE
TheThe

EXPERIENCE
© 2017
© 2017

PRICE
pyright

26
Source: Nielsen Shopper Trends 2018
ght
 BRAND IS IMPORTANT, BUT WILL SWITCH ACROSS MANY BRANDS DUE TO
EITHER PRICE, VALUE, SUPERIOR ATTRIBUTES OR WORD OF MOUTH
DISLOYAL LOYAL
pyright © 2017 The Nielsen Company. Confidential and proprietary.

Why switch?

Source: Nielsen Global Consumer Loyalty Survey (Q1, 2019)

Q42. How important would you say brand name is when you are deciding
what to buy? - Brand is important, but I will switch across a lot of brands
Q41. How much following influences you to try new brands or products, or
switch from your favourite brands or products? | Results by Region | Top 5
27
 HOW YOU CAN EMBRANCE DISLOYALTY

Shoppers are aware and Shoppers are looking for Shoppers are less likely
engaged with broader new & novel, as the risk of to be lured by brand halo
competitive sets of brands trial becomes less.

1 2 3
IDENTIFY HOW SHOPPERS RANK & STACK PROVIDE FREQUENT, RELEVANT REFRESHES & RETENTION, EXTENSION & INNOVATION
ATTRACTION ATTRIBUTES, TO GET ONTO THEIR NEW, UNIQUE CHOICES TO KEEP SHOPPERS PROPOSITIONS MUST BE COMPELLING TO
RADAR & INTO THEIR BASKET. ATTACHED TO YOUR BRAND/ STORE LOYALISTS & NEW, EXPERIMENTING CONSUMERS

Shoppers are enticed by price, but QUANTIFY HOW PHYSICAL PRODUCT PROPERTIES (QUALITY, FUNCTION,
4
pyright © 2017 The Nielsen Company. Confidential and proprietary.

more likely to commit for the tangible attributes CONVENIENCE, HEALTH) OUTWEIGH PURELY PRICE – AT A CATEGORY LEVEL.

28
BRICKS TO CLICKS

Copyright © 2017 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute.
 E-COMMERCE BOOM AS IT FITS INTO CONVENIENCE
LIFESTYLE
Lines between online and offline continue to blur
Copyright © 2017 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute.

&
Traditional brick-and-mortar Bricks versus clicks is
retailers are expanding their outdated; bricks and clicks is a
digital presence, while pure- more apt description
online retailers are opening
physical stores.

30
 92% OF ONLINE FILIPINOS HAVE BOUGHT ONLINE

33%
Gadgets/ Electronic
NOW
Copyright © 2017 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute.

2019
16% 28%
Baby Products Shoes & Apparel 94%
online

17% 92% 25%

purchase
P6M
Airline Tickets (18.5M) Beauty Products
are Past 6 Months Ave: 4
online cats
19% shoppers 25% bought
Jewelry, Food online
Ave: 3 categories in
accessories & bag P6M Delivery Online

21% 24%
Packaged Food Personal Care
& Beverages Products

31
Source: Nielsen Bricks to Clicks 2018 (Online Filipinos - Urban Nationwide)
 MORE MOTIVATORS THAN BARRIERS. TODAY, ONLY TRUST ISSUES
REMAIN AS BARRIER TO ONLINE PURCHASE
MOTIVATORS BARRIERS
DEAL
CONVENIENCE SEEKING
2018 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute.

Reducing time and Finding best

effort spent shopping price possible Infrastructure and Trust
Logistics
Delivery promise

INFORMED
PRODUCT
DECISION
ASSORTMENT
MAKING
More choices than
Low Credit Card Lack of different
Getting information available locally and Cashless Payment assortment,
and reviews Penetration price and promo
Copyright © 2017

incentives
32
 LAZADA, SHOPEE AND FB ARE TOP PLATFORMS
Facebook is the #3 platform reinforcing the growing prevalence of independent merchants

Purchase Channels in the P6M (%)

Copyright © 2017 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute.

FMCG Beauty Products Fashion Apparel &

Accessories

61% 45% 59%

47% 39% 44%

29% 29% 22%

Base: Among P6M online shoppers of category

Source: Q19/ Q20/ Q21. Purchase Channels in the P6M Sig higher/ lower vs Total 33
 PROMOS PLAY HUGE ROLE IN TRIGGERING PURCHASE
TOP 3 REASONS WHY BUY ONLINE
74% Bought on
DEAL SEEKING IMPULSE
2018 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute.

Finding the best price

possible 6%
Promo
16%

CONVENIENCE More
Reducing time and convenient
78%
effort shopping More choices
(worsening traffic) online

CHOICES
More choices than
Copyright © 2017

available locally

Source: Nielsen Bricks to Clicks 2018 (Online Filipinos - Urban Nationwide) 34

Copyright © 2017 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute.

Source: Nielsen Global Analysis

35
 THE FUTURE IS
PERSONAL

Copyright © 2017 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute. 37
 WHAT IS PERSONALIZATION IN RETAIL?

The ability to deliver customized offers, content

and marketing based on the individual’s habits,
2018 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute.

preferences, needs and environment.

Copyright © 2017

38
 CUSTOMIZATION = PERSONALIZATION
COCA-COLA & PEPSI

FMCG companies play the

customization game!
2018 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute.

#SayitwithPepsi

My Pepsi, my Emoji
Copyright © 2017

39
 TECHNOLOGY DELIVERING ADDRESSING SHOPPER NEED
SEPHORA & LEGO
(US), LLC.
Company (US),
Nielsen Company Confidential and
LLC. Confidential Do not
proprietary. Do
and proprietary. distribute.
not distribute.

Shopper Insight – shoppers could not visualize Shopper Insight – low sales due to inability to try makeup
The Nielsen

finished product online

2018 The
© 2018

The Lego Digital Box allowed any Lego box to be The Sephora App built-in Augmented Reality to allow you to try
different makeup products on your face, using your mobile’s
Copyright ©

held up to a virtual screen in store and the finished

Copyright

product displayed on top of it. front camera. 40

 CREATING UNIQUE DISPLAYS THAT THEY CAN INTERACT WITH
HEINEKEN

Shopper Insight – shoppers don’t

know how to pour draft beer
2018 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute.

The Heineken Draught Challenge uses

multi-sensory motion technology -- by
holding an interactive glass equipped with
sensors under the Draught Keg and moving
the tap handle, participants can check on the
screen whether they can pour a perfect
draught beer.

Result: Sales of Heineken Draught

Keg Beer increased by 90%.
Copyright © 2017

41
 2018 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute.
Copyright © 2017

SNICKERS
GENERATING BUZZ VIA OMNI-CHANNEL PROMOTIONS

42
 PREDICTING WHAT SHOPPERS WANT
Loyalty analytics can individually match offers to customers based on relevance

25%
OFF
2018 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute.

PRODUCTS YOU PRODUCTS YOU

LIKE & BUY 1+1 LIKE & BUY
10%
OFF
30% 10%
OFF OFF

CUSTOMERS LIKE CUSTOMERS LIKE

YOU ALSO BUY 20% YOU ALSO BUY
OFF 25% 10%
OFF OFF

5%
OFF
IT’S TIME TO REFILL –
10% BUY NOW!
1+1
25% OFF
OFF
Copyright © 2017

SHOPPERS WANT YOU TO TELL THEM WHAT THEY WANT 43

Copyright © 2018 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute.

C
C
ONNECTED
ONVENIENCE
FORGET ABOUT THE 4Ps…

C
C HOICE
The future is about the 4Cs…

USTOMIZATION

44