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Nielsen Economic AdvisorNielsen Economic AdvisorWhat You Need To KnowWhat You Need To Know
September 10, 2009 September 10, 2009
Scott L BrownScott L Brown
SVP, Strategy & Digital PlatformsSVP, Strategy & Digital Platforms
The Economy - Numbers & VisualsThe Economy - Numbers & Visuals
Real Story - People, Patterns, and ProclivityReal Story - People, Patterns, and Proclivity
Adversity Inspires Coping And Adjustment
Adjustment - Coming to Terms with Adjustment - Coming to Terms with the New Economythe New Economy
Tough but moderating conditions:Free fall is
over
Acceptance Acceptance
UncertaintyUncertainty
DenialDenial
$ Food$ Food
$ Fuel$ Fuel
FearFear
UnemploymentUnemployment
Restraint is the new mantra
Savings?
Discretionary Spending?
Savings?
Discretionary Spending?
22 00 0077
20092009
221100
00
2200
0088
Equity markets
Commodities
Consumer sentiment
Housing
Unemployment claims
Manufacturing
China
Massive Stimulus
2010 GDP Revisions
ISI: +3.5%
UBS: +2.2%
Merrill Lynch: +1.7%
Consumer Attitudes
Nielsen Insights
Near vs. long term
Online recession buzz drops -27% (Mar to Aug)
Planning return to discretionary spending
Consumer Actions
Trip dynamics slowing
Focused on essentials
Value is the winning proposition
Knowing When To Act..…
THE
Driver of Behavior
Source: Seasonally Adjusted U.S. Total Non Farm Employment, U.S. Government
-652K
-504K
-345K
-443K
-247K
-681K
41,000
-597K
-380K
-321K
-175K-128K
-161K-137K-160K
-122K-144K
-72K
-741K-681K
-775,000
-675,000
-575,000
-475,000
-375,000
-275,000
-175,000
-75,000
25,000
125,000
Dec-07
Jan-08
Feb-08
Mar-08
Apr-08
May-08
Jun-08
Jul-08
Aug-08
Sep-08
Oct-08
Nov-08
Dec-08
Jan-09
Feb-09
Mar-09
Apr-09
May-09
Jun-09
Jul-09
Job Losses – The Rate is SlowingStill A Long Way to go!
TheBottom
TheBottom
How Are Consumers Reacting?
Do you think your country is in economic recession at the moment?
75% to 100%50% to 75%25% to 50%0% to 25%
July 2009, Global Recession In Plateau
Consumer Response - Discretionary Change
Trip GeneratorsTrip Generators Trip AvoidersTrip Avoiders
Excludes gas only tripsSource: Homescan, a service of The Nielsen Company; 52 weeks ending 03/28/09 (versus prior year)
Percent Change vs. Year Ago
-14
-12
-10
-8
-6
-4
-2
0
2
4
6
8O
n-Li
ne
Sup
ercn
trs
Clu
b
Dol
lar
Liqu
or
Pet
Sto
res
Gro
cery
Ele
ctro
nic
Ttl
Out
lets
Dru
g
App
arel
Con
v/G
as
DIY
Off
ice
Sup
Mas
s
Dep
t
Toy
Annual Shopping TripsEssentials Needs Thrift
Essentials Needs Thrift
Avoidable
Avoidable
Same Store Sales Reflect Consumer ShiftSame Store Sales Reflect Consumer Shift
-15 -10 -5 0 5 10 15
Sams
BJ's
Kroger
Dollar General
Dollar Tree
Family Dollar
Walmart
Walgreens
CVS
Rite Aid
NordstromNordstrom
JCPenneyJCPenney
Home DepotHome Depot
KohlsKohls
Stock Up & SaveStock Up & Save
Discretionary SpendingDiscretionary Spending
Value & ConvenienceValue & Convenience
Source: Company press releases; June ‘09 results (excl fuel) for all but Sam’s Club, Kroger, Safeway, SuperValu, Dollar General, Family Dollar, Walmart, Dollar Tree, CVS, Whole Foods, Home Depot, Lowe’s – latest quarterly report
Same Store Sales GrowthSame Store Sales Growth
SuperValuSuperValu
MacysMacys
Whole FoodsWhole Foods
SafewaySafeway
CostcoCostco
Lowe’sLowe’s
TargetTarget
KmartKmart
Top 15 Categories: % Unit Growth (FDM w/WM)
1.9
2.1
2.3
2.5
2.5
2.9
3.4
3.7
4.2
4.3
5.2
5.9
6.1
7.9
14.6
Flour
Condiments, Gravies & Sauces
Cheese
Baking Supplies
Yogurt
Ref Juices & Drinks
Fzn Novelties
Baking Mixes
Vitamins
Pasta
Dry Mix Prepared Foods
Fresh Meat
Wine
Seasonal GM
Canning & Freezing Supp
““If You Can’t Eat It, You Don’t Need It”:If You Can’t Eat It, You Don’t Need It”:
Source: Scantrack, a service of The Nielsen Company; (FDM w/ Walmart) 52 weeks ending 06/13/09 (versus prior year) – minimum $100 million in sales
Back To The Basics
Back To The Basics
Store Brands
Avg Unit Sales Growth: 5.8%
Driver of growth: Consumables*
Departments: Fresh Produce, Fresh Meat, Packaged Meat, Dairy, Dry Grocery, Frozen, Deli
Store Brands
Avg Unit Sales Growth: 5.8%
Driver of growth: Consumables*
Departments: Fresh Produce, Fresh Meat, Packaged Meat, Dairy, Dry Grocery, Frozen, Deli
Consumers Turn to Consumers Turn to StoreStore Brands In A Down Brands In A Down EconomyEconomy
4.9
6.4
3.9
8.6
5.3 5.6
-4.7 -4.3
-7.2
2.2
-1 -1.1
Store BrandsStore
Brands
BrandedBranded
Source: Nielsen Scantrack, a service of The Nielsen Company; (FDM w/ Walmart) 52 weeks ending 06/13/09 (versus prior year)
Branded
Avg Unit Sales Growth: -2.7%
Driver of growth: Discretionary plus*
Departments: General Merchandise, Non-Foods, Health & Beauty, Dry Grocery
Branded
Avg Unit Sales Growth: -2.7%
Driver of growth: Discretionary plus*
Departments: General Merchandise, Non-Foods, Health & Beauty, Dry Grocery
% Unit Sales Growth for last 6 (4-week) periods
* Latest Quarter
* Latest Quarter
Coupons Back in Vogue
2.6 Billion
4.6 Billion
Q1 Q2 Q3 Q42008 -15% -8% -3% +10%2009 +17% ? ? ?
Source: Inmar CMS Promotions Services; excludes retailer coupons
An All-Time High for The Food Network Viewership More than 1 MM Viewers Tuning in During Primetime
Nielsen Measured PrimeTime Audience (000)
1003865
787771748682639584425
293
2000 2001 2002 2003 2004 2005 2006 2007 2008 YTD2009
Source: Nielsen National People Meter Panel – Average TV viewership in the U.S.
Economy Taking Toll on Health & Wellness
Source: Scantrack & LabelTrends, services of The Nielsen Company; (FDM ex-Walmart) % Change in 4-Week Dollar Sales vs. YAGO end 06/13/19
Monthly sales growth of organics below 4% in last six periods
+0%
+5%
+10%
+15%
+20%
+25%
+30%
+35%
4 W
/E 0
2/25/0
6
4 W
/E 0
4/22/0
6
4 W
/E 0
6/17/0
6
4 W
/E 0
8/12/0
6
4 W
/E 1
0/07/0
6
4 W
/E 1
2/02/0
6
4 W
/E 0
1/27/0
7
4 W
/E 0
3/24/0
7
4 W
/E 0
5/19/0
7
4 W
/E 0
7/14/0
7
4 W
/E 0
9/08/0
7
4 W
/E 1
1/03/0
7
4 W
/E 1
2/29/0
7
4 W
/E 0
2/23/0
8
4 W
/E 0
4/19/0
8
4 W
/E 0
6/14/0
8
4 W
/E 0
8/09/0
8
4 W
/E 1
0/04/0
8
4 W
/E 1
1/29/0
8
4 W
/E 0
1/24/0
9
4 W
/E 0
3/21/0
9
4 W
/E 0
5/16/0
9
UPC-Coded Organics
More At-Home Meal Preferences
20
24
24
32
23
29
37
20
24
24
32
23
28
37
16
20
22
26
20
24
31
Choose a Less Expensive RestaurantMuch More Often
Bring Prepared Meal or Home DeliveryMuch Less Often
Eat Fast Food Much Less Often
Eat Dinner at Restaurant Much Less Often
Bring Lunch to Work/Pack Lunch MuchMore Often
Eat Breakfast at Home Much More Often
Eat Dinner at Home Much More often
% U.S. Households Claiming
Apr '08
Oct '08
Apr '09
Source: Homescan®, a service of The Nielsen Company – PanelViews Economic Impact Survey
Media Shifting:Decline in Ad Spending Widening
-40%
-35%
-30%
-25%
-20%
-15%
-10%
-5%
0%
Q1 2009 versus Year Ago
Local Sunday Supplement
Local News-
paperB2B
Magazines
Nat’l News-
paper
Nat’l Maga-zine
InternetFSI
CouponOut- door
Spot Radio
Local Maga-zine
Network TV
Network Radio
Hisp TV
Nat’l Sunday
Supp.
Syndi- cated
TV
Spot TV top DMAs
Total Ad Spending
Cable TV
Hisp Cable
TV
Spot TV
bottom DMAs
Source: Nielsen Monitor-Plus - Internet advertising expenditures account for CPM-based, image-based advertising.Source: Nielsen Monitor-Plus - Internet advertising expenditures account for CPM-based, image-based advertising.
Another Shift: CPG Fighting BackAnother Shift: CPG Fighting Back
SOPHISTICATEDSOPHISTICATED
SOPHISTICATEDSOPHISTICATED
Value and DiscountsValue and Discounts Value and ReachingTo The Consumer
Value and ReachingTo The Consumer
Cause MarketingSpecial Offers
Cause MarketingSpecial Offers
Listening To NewConsumer NeedsListening To NewConsumer Needs
•What To Watch
% Thinking they will be out of a recession in 12 months?
Global Avg: 26%Global Avg: 26%0% to 15%15% to 30%30% to 45%45% to 60%
July 2009Optimism Becoming More Widespread
Personal Savings Rates Historically Rise During a Recession:
Rate of increase not seen since ’73-’75 Recession
As a percentage of disposable income
U.S. Personal Savings RateMay 6.90
-4
-2
0
2
4
6
8
10
12
14
16
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
Value Driven Excursions
Similarity inGlobal Behavior
Consumables
driving
growth
Prepping &
StoringHealth &Wellness
Slowing
Wine & Spirits
Stand Tall
Store
brands
resonating
Viewing & Reading
reflecting behavior
Food websites
generating
more traffic
Internet
time
increasing
Buzzing about
savings
Investing in at
home entertainment
Sales of
Blu-Ray
surging
Box office sales
up but slowingGamers going
strong
Areas of StrengthAreas of Strength
Putting The Pieces Together…
Consumer Trends Shaping The Future
• Fundamental shift in consumer spending as savings rates remain at elevated levels
• Value retailers attain preferred status for many
• Store brand success continues with risk for mid-tier brands
• A new “norm” is evolving and the days of over-leveraged households are gone
• Evidence supports movement back to discretionary consumption….at moderate levels
The Consumer: Value Measured By How The Brand Improves Life• “In a highly competitive landscape, only the strong
adaptive survive”
• Messaging and identifying the brand with value is key
• Positioning as green, a “friendly”, and an efficient provider
• Spelling out the benefit to the consumer/viewer –”how your product, and my engagement, helps me”
• Relevancy at all stages in the messaging, the brand, the benefit, the call to action
• The solutions are the same The solutions are the same
– Right product - right price - right placeRight product - right price - right place
– The difference now is we need to communicate with The difference now is we need to communicate with the right consumerthe right consumer
– It is increasingly about segmenting consumers to It is increasingly about segmenting consumers to understand and deliver on their unique needs understand and deliver on their unique needs
– Targeting applications and GPS enabled devices are Targeting applications and GPS enabled devices are enablers for new methods of reaching and delivering enablers for new methods of reaching and delivering
Keys to SuccessKeys to Success
Leading Indicators Support Bottom Has Been Hit, with Evidence of Emerging Recovery
•The•Outlook
A New Norm
Tough but moderating economic conditions
Restraint will be the new mantra
Economic ExpectationsStill Not Out Of The Woods
• Labor market pressures continue
• Housing woes to continue … commercial too
• More bank failures & bailouts
• Consumers under great financial stress
• Consumers pull back on spending continues
• Conservative recalibration of expectation and behavior toward value
• And what of television medium that reaches us all?
Reaching Across The Three Screens
TV
Internet
Mobile
Anytime/Anywhere Consumer Reach
Messaging and connectivity options multiplying
ConsumerConsumer ViewerViewer
NewlyEmpowered
NewlyEmpowered
TechnologyTechnology
WebsavvyWeb
savvy
Text MessagingText Messaging
18%18%
InternetInternet
34%34%
DownloadsDownloads
18%18%
VideoVideo
36%36%
Shift To Mobile Audiences Via Technology Shift To Mobile Audiences Via Technology Percent Increase in U.S. Mobile Subscribers
(Q1 2008– Q1 2009)Percent Increase in U.S. Mobile Subscribers
(Q1 2008– Q1 2009)
Multi Media MessagingMulti Media Messaging
32%32%
18%18%
Kraft
RecipesRecipes IngredientsIngredients
Store referrals & GPS Map
Store referrals & GPS Map
Brands must travel with the consumerBrands must travel with the consumer
Location Aware/Always OnLocation Aware/Always On
Page 36
New Paradigm: Anytime Anywhere Media Consumption & Measurement (A2/M2)
For the Media Industry…
• New ways to deliver content
Usage is independent of time
For Consumers…
Expanded access to content on “the best screen available”
For Marketers…
•Expanded opportunities to communicate with their customers
Usage is independent of location
+ +
New Research Questions
Page 37
Viewers use the “best screen available”
+ +153:27
hrs
3:37* hrs
3:00hrs
Usage is independent of time
Usage is independent of location
Monthly Time Spent Viewing Video in Hours: Minutes Per User 2+, Q1 2009
Source: The Nielsen Company Q1 2009; TV in the home includes live viewing plus playback within 7 days. Internet includes home and work who used internet to watch online video. *Mobile video audience consist of 13 or older mobile phone users who access video through any means.
Page 38
Media Growth ‘08 to ‘09 - All Time High
53.2%
Monthly Time Spent in Hours: Minutes Per User 2+, Q1 2009
1Q09 1Q08 % Diff Absolute Diff
Watching TV in the home * 153:27 150:38 1.9% 2:49
Watching Timeshifted TV* 8:13 5:52 40.1% 2:21
Using the Internet** 29:15 27:57 4.6% 1:17
Watching Video on Internet**
3:00 1:57 1:02
Mobile Subscribers Watching Video on a
Mobile Phone^
3:37* n/a n/a n/a
Source: The Nielsen Company Q1 2009; TV in the home includes live viewing plus playback within 7 days. Internet includes home and work who used internet to watch online video. *Mobile video audience consist of 13 or older mobile phone users who access video through any means.
Page 39
Apple iPhone U.S. Users (in millions)
Jan 2008 - Apr 2009
iPhone - small but growing a glimpse of mobile video consumption to come
6%
20%
13%15%
37%
AllSubscribers
AllSmartphone
Blackberry WindowsMobile
iPhone
Media Usage by Phone TypeVideo/Mobile TV
Q1 2009
Nielsen iPhone Executive Overview, Q1 2009
Page 40
Younger Demos Use A Diverse Set Of Platforms And Web Is Big
Source: CRE Study, 2009
New Economy – New TV ParadigmLeveraging Knowledge With New Norms
EconomyEconomy
Mobile TVMobile TV
TargetingTargeting Internet TVInternet TV
InteractivityInteractivity
TimeTime
ValueValue
Blue BloodsBlue Bloods
Blue CollarBlue Collar
MulticastMulticast
OpportunityOpportunity
Seg
men
tation
Seg
men
tation
GPSGPS
“We are all faced with a series of great opportunities brilliantly disguised as insolvable problems”