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AN EXCLUSIVE RETAILWIRE WEBINAR, SPONSORED BY:
Al McClainCEO, Co-founder, RetailWire
Al McClain has spent 30+ years in the retail, tech, and CPG spaces. Al's career highlights include sales and management stints with Luzianne-Blue Plate Foods, Bestfoods, Red Rose Tea, and Progressive Grocer (Trade Dimensions and Retail Insights divisions).
Al has also spoken extensively at industry events for the National Grocers Association, the Institute for International Research, the Magazine Publishers Association, and the Category Management Association. He has written for publications such as Nielsen Wire, Loyalty Management, and Forbes.com.
Moderating
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PRESENTATIONPrivate Label Online: Evaluating the threat and the opportunity (30 min)
• Ken Cassar, VP, Principal Analyst, Slice Intelligence
INTERVIEW• Al McClain and Ken Cassar (15 min)
AUDIENCE Q&A (10 min)
Today’s agenda
Ken CassarVP, Principal Analyst, Slice Intelligence
Ken oversees Slice's research agenda; identifying and contextualizing e-commerce industry trends from Slice's panel of 4.7 million U.S. online consumers.
Ken brings a rich online retail background to Slice Intelligence. Most recently, Ken was the senior vice president, media analytic solutions at Nielsen, where he developed several innovative digital commerce measurement and advertising effectiveness solutions. Prior to Nielsen, Ken was an analyst at Jupiter Research. His prescient outlook on fledgling e-commerce industry was a key contributor to Jupiter’s dominance as a digital media zeitgeist at the dawn of the Internet.
Our presenter
private label onlineevaluating the threat and the opportunity
Ken CassarPrincipal Analyst, Slice Intelligence
1. private label context
2. online private label challenges and opportunities
3. a review of private label across four online categories
4. key findings and recommendations
agenda
7
where does Slice get its data?
8
• who made the purchase
• what was bought
• where it was bought
• when it was bought
• how much was paid
• how quickly it was shipped
largest consumer e-commerce purchase panel in the world
passive tracking of e-commerce sales from
consumer inboxes across
all platforms
longitudinal tracking of the consumer, with two
years of history
we know:
9
Slice is the standard in e-commerce measurement
Do you believe that online is a more or less hospitable environment for private label brands than brick and mortar?
survey question 1
10
11
12
13
the benefits of private label to retailers are clear
14
in brick and mortar, private label has flat-lined of late, causing consternation for some, hope for others
15
85.4% 85.3% 85.2% 85.2% 85.5%
14.6% 14.7% 14.8% 14.8% 14.5%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2012 2013 2014 2015 2016
private label as share of CPG sales
national brands private label
source: IRI Market Advantage 52 weeks ended 9/11/2016
1616
the challenges
will online turn the tide in one direction or the other?
will online turn the tide in one direction or the other?
17
the opportunities
17
brick and mortar retailers make good use of potent levers to drive private label…
…but online levers will prove to be more potent
the product aperture is narrowing, not broadening, for those not deeply engaged in finding the right product
20
1990 – many SKUs available in
increasingly large stores
2000 – efforts to rationalize SKUs in
stores
2005 – promise of ‘endless aisle’ meets reality: consumers search and do not
scroll deeply
2010 – smaller screens
2016 – voice user interface limited to two find-able
items
ok, enough talking, let’s see some data!
21
survey question #2
22
Are private label buyers more likely to be male or female than brand buyers (in baby wipes, laundry detergent and batteries)?
private label items have a slight male skew online
23
65%
35%
62%
38%
0% 20% 40% 60% 80%
Female
Male
buyer composition – baby wipesgender
private label branded
0% 20% 40% 60% 80%
Female
Male
buyer composition – batteriesgender
private label branded
0% 20% 40% 60% 80%
Female
Male
buyer composition – laundry det.gender
private label branded
Source: Slice Intelligence. n=148,734 US online shoppers
…and a slight skew toward Millennials
24
0% 20% 40% 60%
millennial
gen x
boomers
70+
buyer composition –baby wipes
age
private label branded
0% 20% 40%
millennial
gen x
boomers
70+
buyer composition –batteries
age
private label branded
0% 10% 20% 30% 40%
millennial
gen x
boomers
70+
buyer composition –laundry det.
age
private label branded
0% 10% 20% 30% 40%
millennial
gen x
boomers
70+
buyer composition –men’s apparel
age
private label branded
Source: Slice Intelligence. n=179,293 US online shoppers
private label buyers do not significantly skew either way on income across categories
25
0% 10% 20% 30%
<$25k
$25k-$50k
$50k-$75k
$75k-$100k
$100k-$150k
$>150k
buyer composition –baby wipes
income
private label branded
0% 10% 20% 30%
<$25k
$25k-$50k
$50k-$75k
$75k-$100k
$100k-$150k
$>150k
buyer composition –batteries
income
private label branded
0% 10% 20% 30%
<$25k
$25k-$50k
$50k-$75k
$75k-$100k
$100k-$150k
$>150k
buyer composition –laundry det.
income
private label branded
0% 10% 20% 30%
<$25k
$25k-$50k
$50k-$75k
$75k-$100k
$100k-$150k
$>150k
buyer composition –men’s apparel
income
private label branded
Source: Slice Intelligence. n=179,293 US online shoppers
before we dive into the online penetration data, let’s benchmark with some offline data
26source: IRI Market Advantage 52 weeks ended 9/11/2016
0% 5% 10% 15% 20% 25% 30% 35%
beverage
home care
beauty
general food
frozen
health care
general merchandise
refrigerated
offline private label share by category - CPG
survey question 3
27
What percent of baby wipes sold online are private label?
national brands dominate baby wipes
28
9%
share of baby wipes salesall online - 2016
private label brands
6%
share of baby wipes salesAmazon only - 2016
private label brands
brand rank share
top brand Pampers1 36% ✘
top private label Amazon Elements6 4% ✘
Amazon designation
Source: Slice Intelligence. n=56,987 US online shoppers
…as well as in laundry
29
1%
share of laundry detergent $all online - 2016
private label brands
0%
share of laundry detergent $Amazon only - 2016
private label brands
brand rank share
top brand Tide 1 46% ✘
top private label Kirkland Signature 9 1%
Amazon brand Presto 10 0% ✘
Amazon designation
Source: Slice Intelligence. n=83,629 US online shoppers
survey question 4
30
What percent of disposable batteries sold online are private label?
batteries, though, should be a cautionary warning to brands
31
26%
share of battery salesall online - 2016
private label brands
31%
share of battery salesAmazon only - 2016
private label brands
brand rank share
top brand Duracell 2 18%
top private label Amazon Basics 1 25% ✘
Amazon designation
Source: Slice Intelligence. n=83,560 US online shoppers
national brands generally have the edge in loyalty
32
disposable batteries
Amazon Basics• avg. orders/person – 1.3• wallet share – 64%
Duracell• avg. orders/person – 1.2• wallet share – 64%
baby wipes
Pampers• avg. orders/person – 1.9• wallet share – 82%
Amazon Elements• avg. orders/person – 1.8• wallet share – 42%
laundry detergent
Tide• avg. orders/person – 1.7• wallet share – 78%
Kirkland Signature• avg. orders/person – 1.5• wallet share – 53%
Source: Slice Intelligence. n=75,402 US online shoppers
private label was a size-able share of men’s apparel sales in 2016 – not so with Amazon
33
16%
share of men’s apparel $all online - 2016
private label brands
0%
share of men’s apparel $Amazon only - 2016
private label brands
brand rank share
top brand Ralph Lauren 1 29%
top private label Nordstrom 5 6%
Amazon designation
* includes Ralph Lauren, Calvin Klein, Tommy Hilfiger, Haggar, Nordstrom, Izod, Nautica, Alfani, Van Heusen, Vineyard VInes, Bar III, Geoffrey Beene
Source: Slice Intelligence. n=81,041 US online shoppers
but watch out – Amazon is not sitting idle
34
8%
share of men’s apparel $Amazon Feb. 2017
private label brands
brandAmazon
shareAmazon
rank
top brand Ralph Lauren 13% 1
Amazon brand Goodthreads 6% 12
Amazon brandAmazon
Essentials2% 14
Source: Slice Intelligence. n=7,060 US online shoppers
private label is on the ascent in some categories, flat in others online
35
0%
5%
10%
15%
20%
25%
30%
35%
private label share of category sales (dollars)
Wipes Detergent Batteries Men's Apparel
Source: Slice Intelligence. n=335,104 US online shoppers
36
• private label is less developed online than offline• fewer categories with private label present
• [mostly] lower penetration in existing categories
• it is possible, but not inevitable, for a private label brand to lead the category
• Amazon is the chief threat to brands
• assume that retailers have more levers to drive private label sales online than offline
• assume that the private label buyer looks like the national brand buyer – slightly younger, slightly more male
• the trajectory of digital shopping experiences is likely to be more amenable to private label brands over time as simplicity is increasingly paramount
key takeaways
37
• assume that Amazon will make a private label play in your category
• create world class product content to maintain parity
• laser focus on consumer reviews
• relentless innovation – particularly around e-commerce friendly innovation
• balance bets across e-commerce channel partners
• direct-to-consumer becomes critical balance to retailer power
• understand how to work all of Amazon’s levers• search• display• subscribe & save• Amazon’s Choice
• listen to Amazon’s recommendations
brands – countering the private label threat
38
thank you
39
www.sliceintelligence.com
Slice information
follow Slice Intelligence on Twitter
@SliceIntel
follow Ken on Twitter
@Kcassar
Interview
Ken CassarVP, Principal Analyst Slice Intelligence
Al McClainCEORetailWire
Audience Poll Question
How likely is Walmart.com to become a viable rival to Amazon.comin online private label?
Interview
Ken Cassar Al McClain
private label onlineevaluating the threat and the opportunity
Audience Poll Question
Which retail segment has the most to fear from Amazon’s private label challenge?
Interview
Ken Cassar Al McClain
Audience Poll Question
In five years, will national brands have gained strength online vs. private label or lost strength?
Interview
Ken Cassar Al McClain
Audience Poll Question
To combat online private label, should national brands invest more heavily in their own direct-to-consumer e-commerce?
Interview
Ken Cassar Al McClain
Audience Q&A
Ken CassarVP, Principal Analyst Slice Intelligence
Your questions for Ken...
thank you
50
www.sliceintelligence.com
Slice information
follow Slice Intelligence on Twitter
@SliceIntel
follow Ken on Twitter
@Kcassar
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