Delivering on the Promise of Customer-Centricity and Personalization

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Delivering on the Promise of Customer-Centricity and

Personalization

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwiIluWpjYrNAhUDeD4KHSQ4AtAQjRwIBw&url=http://pittsburghpassion.com/home/us-foods-new-logo/&psig=AFQjCNHl3B7v_TfnQM3e9LAZUfahkME-mw&ust=1464983053329585


Delivering on the Promise of Customer-Centricity

and Personalization

NRF Exhibitor Insights – January 16th, 2017



Today’s presenters

Graeme McVieVP & GM

[email protected]

3

CONFIDENTIAL

Chuck SampleVP, Insights and Analytics

US [email protected]

Need a photo of Nikki

Nikki BairdManaging Partner

RSR [email protected]

Today’s discussion topics

Do retailers need to be customer-centric and

personalized?

How did US Foods successfully deliver on the

promise of customer-centricity and

personalization?

Where is retail heading with customer-centricity

and personalization, how will retailers get there

and how fast will they arrive?

4

CONFIDENTIAL

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CONFIDENTIAL

www.rsrresearch.com © 2016 Retail Systems Research. All Rights Reserved.

Retailers Can’t Win On Price Forever:Is Personalization The Answer?

Nikki Baird

Managing Partner, RSR Research

January 16, 2017


The Big Issues In Pricing Today

• Since 2012, RSR has expressed concerns over retailers’ over-promotion and race to the bottom on price

• Even as late as Holiday 2015, retailers expressed belief that these practices were effective

• But post-Holiday 2015, that perspective changed – drastically.

• Bottom line: the finish line to the race to the bottom is not a finish line, it’s a cliff.

• So how did we get here? And how do we get out of it?


Pricing Strategies Are Not Effective

47%

32%

40%

45%

29%

23%27%

40%

Driving top line results Driving bottom lineresults

Driving revenue fromour best customer

segments

Building loyalty withour customers

How Effective Are Your Pricing Strategies In The Following Situations ("Very Effective")?

2015 2016


Not Meeting Our Objectives

5%

36%

29%

28%

46%

39%

30%

38%

49%

23%

27%

28%

33%

33%

34%

34%

43%

46%

Price is not our primary driver

To create a strong price perception in the market

To stave off competitive pressures

To create excitement for our brand

To convey our value proposition

To drive demand

To build market share

To improve merchandise sell-through

To maximize gross margin

Top Three Objectives Of Your Company Pricing Strategy

2016 2015


Business Challenges Overview

• While the business challenges of pricing remain relatively unchanged, there is a new smell of fear among retail respondents

• Retailers report having significantly increased the number of promotions they execute

• They report starting earlier and earlier for the holiday promotion cycle

• And they report taking bigger and bigger mass discounts

• Winners in particular seem to sense the need for change

50%Increased price

sensitivity of consumers

48%Increased pricing aggressiveness of

competitors

45%Increased impact of price

transparency & comparative shopping


Breaking The Chain...How To Wean Consumers Off Promotions


Personalization’s Surge

23%

32%

24%

35%

28%

17%

36%

29%

44%

33%

18%

28%

28%

29%

30%

31%

31%

32%

35%

37%

Provide a more seamless cross-channel experience

Create a better value proposition for our customers

Gain margin advantage through dynamic pricing

Create a more price competitive image for our customers

Increase market share for key categories or products

Provide more localized/personalized offerings to customers

Create more profitable promotions

Better matching of demand and product supply

Improve margins

Improve top-line sales

Top Three Opportunities For Pricing To Contribute To Your Companies Business Strategy

2016 2015


Personalized Prices – How To Get There?

22%

50%

6%

11%

6%

22%

38%

41%

45%

45%

52%

52%

We are collecting data from new channels and using themto make better pricing decisions.

It will become important to deliver personalized prices toshoppers in the next three years.

My company currently targets our promotions at anappropriate level of granularity.

We have effective policies in place to manage differentprices and promotions across channels and touch points.

We have processes in place to manage promotionalplanning across organizations within our company

We have the ability to quickly respond to competitors'price changes.

Percent of Respondents Who Agree

Retail Winners Laggards


Watch Out For...

33%

39%

44%

22%

33%

22%

15%

19%

31%

38%

42%

46%

Lack of coordination with marketing

Our channel organizational structure makes itdifficult to coordinate pricing strategies

Not enough IT resources available

The possibility of negative customer reaction tochanges in our pricing strategy

Resistance to change from merchandising

Lack of clean price, competitor, and purchase data

Top Three Organizational Inhibitors: Selected Performance Differences



Operational Challenges Reflect Strategic Barriers

14%

45%

27%

23%

45%

41%

45%

27%

32%

17%

23%

23%

30%

30%

33%

47%

47%

50%

Keeping up with promotional deals made between buyers andmanufacturers

Minimizing markdown spend

Making sure that stores change prices accurately and timely

Coordinating with marketing on promotions and offers

Managing promotions across channels

Measuring the impact of executed pricing decisions

Maintaining visibility into promotional profitability

Forecasting the impact of potential pricing decisions

Keeping up with competitors' prices

Operational Challenges Around Setting Prices



What The Future Holds

11%

12%

14%

15%

16%

16%

16%

16%

17%

18%

18%

21%

24%

11%

11%

15%

13%

14%

10%

10%

11%

14%

11%

12%

13%

7%

10%

11%

11%

15%

12%

11%

10%

11%

12%

11%

7%

9%

12%

Rules-based pricing engine

Integrated end-to-end price lifecycle management

Promotions optimization

Product movement data warehouse

Inventory management – availability as a price driver

Digital channel price management tools

Markdown optimization

Promotions planning, forecasting, management

Markdown planning, forecasting, management

Digital channel promotions/offers management tools

Regular price planning, forecasting, management

Regular price optimization

Competitive price intelligence

Planned Technology Investments

Deployed, looking for change Evaluating / Budgeted Planned, no budget


Some Hard Questions

• Can you win a race to the bottom on price? (Answer: Unless you’re Walmart, no)

• Is it easy or hard for a competitor to track personalized prices? (Answer: hard)

• Do you have the ability to plan & optimize personalized prices?

• Do you have the ability to execute & track personalized prices?

• Can you take personalized prices to BOTH digital channels AND stores?

• Can you maintain a personalized price strategy if you over-buy? (Answer: no)

How did US Foods successfully

deliver on the promise of customer-

centricity and personalization?

02

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CONFIDENTIAL

Powered byCookBook Vision

• 2nd largest foodservice distribution company in the U.S.

• 300K customers; 120K independent & regional operators

• $26+ billion in revenue

• ~60 distribution centers solely in the U.S.

• 23K+ employees, 3K+ sales people

• Post-recession IR growth estimated at 4%

• Margin pressured industry

• Went public last year: USFD

20

Who is US Foods?

21

CookBook is the Engine Behind our

Customer-Centric Vision

We put the customer at the center of everything we do

CookBook powers customer-centric,

actionable insights through prescriptive analytics

These insights allow us to deepen customer

relationships and provide the most relevant solutions to

help grow their business.

22

No two of our customers are quite the same:

commitment to 100% personalization

Customer-item level insights are continually updated to

account for recent changes in customer behavior

Three+ years of past behavior used to determine

purchasing, promotion and pricing patterns

CookBook is the Engine Behind our

Customer-Centric Vision

23

CookBook Realized

My Kitchen

CookBook

for

CatMans

Sales

Planning

Powered

by

CookBook

CookBook

for

Vendors

• Customer-centric category roles

• Predictive assortment through

demand transfer

•Unique price recos maximizing sales & profits

•1-to-1 tailored content driving

Customer Lifetime Value

• Insight Syndication

• True Joint Business Planning

• Prioritize customers and align

resources

• Prioritize opportunities by

customer

CookBook has evolved to further power capabilities across Merchandising & Sales

Pricing

Powered

by

CookBook

24

USF Strategy Pyramid

WINFood Leadership

DIFFERENTIATEEasy Customer Experience

COMPETEFlawless Fundamentals

FOUNDATIONAL

GREAT

FOOD SELLERS

INSPIRING

CONTENT/PROG

EASIEST TRANSACT

ACROSS CHANNELS

MOST VALUED

BUSINESS SOLUTIONS

DELIVER PERFECT

ORDERS

LEADING FOOD

SAFETY

RIGHT PRODUCT, RIGHT

PRICE

OPTIMIZED COST TO

SERVE

PEOPLE

INFRASTRUCTURE

PROCESSES

ANALYTICS

Local and

sustainable

Great

brands

Innovative

products

best everyday cop

and produce

25

CookBook will

be embedded in

every business

function

CookBook

Locally Managed

Sales Category Manage-

ment

Vendors

1-to-1 Personal-

ization

Retail Chef’s StoreValue

Added Services

Supply Chain &

Logistics

Pricing

National Sales

Promo

26

CookBook creates more value across all stages of

the customer lifecycle

Current Customer

Lost CustomerProspectProspect

Prioritization

Prospect Pricing

Acquisition

Campaign

Prospect Product

Recos

Pricing Onboarding

Price Stabilization

Loyalty Campaigns Category Pen Campaigns

Predict Churn

Retention

Campaign

Win Back Campaign

Win Back

Loss

Acquisition CU

ST

OM

ER

V

AL

UE

Steady State

Onboarding

27

Insights & Analytics Operating Model

Business Questions

I&A

PM

O

RequestsAssets

US Foods

Customers & Sales

Organization

Fo

od

Gen

ius P

MO

Answers/Solutions

* Partners with Marketing for Primary Research; Also

supports Food Genius data transformation requirements

CookBook

Project

Mgmt

StrategySolution

Alignment

Change

Mgmt

Ce

ntr

al

Bu

sin

es

s

Se

rvic

es

PIM VIMCIM

Data

Gov

Food Genius(App Development, Food

Taxonomy, Menu Stewarding,

Market Data)

BI

Gov

Data Strategy(Customer, Product, Vendor)

IT partners across multiple I&A Teams to

support I&A requirements

SC,

Replen &

Logistics

Analytics

Corporate

Forecasts

BI

Integration

Merch &

Sales

Analytics

HR,

Finance,

& Rev Mgt

Analytics

IT

Predictive analytics, Segmentation

BI & Analytics Team

Functional Business

Units

(Supported

by

CookBook

Steering

Committee

& Operating

Committees)

Decision

Sciences*

28

Working

Level

Program

Leadership

Executive

Leadership

Business

Leadership

• Program level escalation

and decision-making

team

• Enterprise level

escalation for major

business decisions

• Workstream/project/initiat

ive-level activities and

decisions

• Cross-program level

escalation and decision-

making team

Co

ns

oli

da

tio

n / E

sc

ala

tio

n

Str

ate

gic

Dir

ec

tio

n / P

rio

riti

za

tio

n / D

ec

isio

ns

Workstream

TeamsWorkstream

Teams

CookBook

Steering

Committee

Workstream

Teams

ICE

Enterprise Air

Traffic Control

EI&A PMO

Workstream

TeamsWorkstream

TeamsCookBook

Operating

Committees

Data

Governance

BI

Governance

BI Center of

Excellence

Insights & Analytics Governance Structure

The analytics IT roadmap can be a cluttered one:

Continuously invest in the future

29

1. Cloud-based technology

(AWS, Snowflake, Spark)

2. Open source languages (R,

Python)

3. Machine learning for limited-

structured data

4. Self-serve BI and data

visualization

5. Business-led data governance

Big Data Landscape 2017

Lessons learned…

1 Have a business model to draw from

Have multiple executive stakeholder accountability2

Commit to a true partnership: Analytics & IT 3

Brand your work: make it approachable4

Involve the business actively5

Don’t let perfection become the enemy of good 6

Invest in change management7

Be efficient in your design 8

30

Where is retail heading with customer-

centricity and personalization, how

will retailers get there and how fast

will they arrive?

03

31

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Takeaways

Leading retailers are investing heavily in it

Shoppers want it & demand for it is increasing

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CONFIDENTIAL

01

Invest in capabilities and people

Commit and deploy across the organization02

Starts with exec. support & org. commitment

Requires change management

Needs scalable data and analytical platform03

Precima helps our clients to satisfy the needs of customers

better than the competition to win in the marketplace

Understand customer needson a granular, timely & frequent basis

Consistently execute actions that best satisfy customer needs

1

2

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CONFIDENTIAL

Upcoming…

• See Chuck and Nikki at the Precima booth (#3777)

after this presentation

• RSR Pricing Report: Life Becomes Unmanageable:• https://www.precima.com/research-insights/

whitepapers/pricing-2016-life-becomes-unmanageable-1

• Precima Primary Market Research on Shoppers:• Pricing: What do shoppers really want?

• Promotions: How important is personalization?

• FMI Midwinter: January 28-31, 2017

• Precima Sponsored White Paper with POI• Personalized Offers: The Cure for Tired, Ineffective Trade Promos

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CONFIDENTIAL

For more information, visit www.precima.com

Eataly (Wine Tasting Room)

Tonight 6-8pmplease join us

for Hors d'Oeuvres and drinks at New York's

famous Eataly, the largest Italian

marketplace in the world!

MONDAYJanuary 16

2017

NetworkingReception

6:00 pm - 8:00 pmEataly New York

Flatiron200 5th Avenue

New York, NY 10010

https://www.precima.com/research-insights/whitepapers/pricing-2016-life-becomes-unmanageable-1?whitepaper-submitted=true

Delivering on the Promise of Customer-Centricity

and Personalization

NRF Exhibitor Insights – January 16th, 2017



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