As documented by Supermarket News, Kantar Retail has recently released the 15th Annual PowerRanking Report. The report annually lists the best manufacturer and retailers. An important aspect of this report is that these rankings represent how trading partners see each other. In doing so, trends of the most successful brands in retailing are identified. Kantar Retail uses the QR Code as a theme for the report, but quickly points out that Quick Response is more than just a scanned link to more information. It is a metaphorical link to successful alignment and integration between the very best trading partners.
As a clever marketing tie-in, the cover of the PowerRanking Executive Summary features a QR Code that when scanned by a smart phone or mobile device brings you to a narrative welcome video. The report itself is on sale once you arrive, although the Executive Summary is complimentary.
The Supermarket News story does a good job of summarizing and top lining the report for those who want a quick glance at the information. P&G, Kraft, General Mills, PepsiCo and Unilever rank near the top of the list among CPG manufacturers. Wal-Mart, Target, Kroger, Costco, Publix, Wegmens, H-E-B, CVS, Walgreens and Safeway make up the top ten among retailers.
We now see QR Codes all over the retail environment as well as other aspects of our daily living, and are likely to see more in the near future. It is predictable that their use will become a necessity. But the concept of Quick Response is perhaps more important than the technology behind it. It is evident in the Kantar Retail PowerRanking Report that responsiveness and collaboration among trading partners is vital to success at retail and is the common denominator connecting those at the top of the list.
Add one more trading partner to the mix. The members of NARMS are important in delivering on the promise of Quick Response. Professional at-retail merchandising and marketing companies can be the conduit in which responsiveness between retailers and suppliers is delivered.
What if you could take a look into the new store and remodel plans and trends for five major grocery chains in one convenient place. A recent Supermarket News Webinar – Maximizing Cap-Ex Returns - did just that. Editor Mark Hamstra hosted the event that featured a section entitled Trends in Capital Spending for U.S. Supermarkets. The section was lead by Andrew Wolf, the Managing Director of BB&T Capital Markets. Capital Expenditures or Cap-Ex is the place in the annual budget where retailers plan for new store growth, remodel of existing space and technological investments.
Wolf made three major points during his address. First, Cap-Ex is driven by and follows sales. Second, Cap-Ex spending is down significantly among the five chains he examined. Third, Cap-Ex is below trend when looking at the past ten years. The chains he studied where Kroger, Safeway, Whole Foods, Publix and Supervalu.
According to the BB&T research, the average Cap-Ex expenditure among the five chains in 2010 was 2.4% of sales. That is down sharply from an average of 3.0% in 2009. Not coincidentally, the NARMS PIC study published in early 2010 - Continuing to Build Out the Future of Retail – put the 2009 number at 3.35% across all retail channels.
In general, during the last two years sales have been either negative or flat and the square footage of the studied retailers has followed. Penetration by consumers has been great for grocery throughout a ten year period, but the number of trips per year has shrunk from 72 to 57. Channel blurring is thought to be the culprit.
More of the Cap-Ex dollar is going toward technological investment with closer to 40% of Cap-Ex going there rather than new store and remodel. That is up significantly from the 0% that was seen during the last five years. These numbers also match closely with the PIC Study.
Wolf also showed a dramatic shift toward remodel and away from news stores in his research. This also corroborates findings in the PIC Study that showed remodel related spending at 21% of Cap-Ex in 2006 vs. 38% in 2010. As a reminder, the PIC study looked at a much broader set of data in terms of number of chains and channels.
While these numbers and trends may be seen as troubling to at-retail merchandising and marketing service companies, the fact that remodel and technological spending is up represents a great opportunity. Some of that technology spending is being directed at self-service vending machines which could present installation and service opportunities.
Reports of economic recovery have been consistently inconsistent as optimistic numbers are offset by news of closings, bankruptcies and forecasts of tougher times ahead. The retail sector, specifically food retailing, offered another sign of hope this week as Supermarket News released its Annual Top 75 Retailers for 2011. The largest food retailers in the country saw some impressive gains in 2010.
Although holding the industry up against the low point of 2009 makes for some easy comparisons in terms of sales gains, it is hard to argue with the direction being shown by the food industry giants. According to the SN report, sales among this group rose 7.7% during 2010. Revenues among food and non-food merchandise reached to $960 billion mark versus the $894 billion in 2009. These numbers appear to be top-heavy as the top ten on this list comprise 69% or $666 billion of the entire group volume, which is up slightly from the year earlier. The sales gains reported by the top ten rose 2.2%.
In terms of rank, there was little movement from the year before as Wal-Mart sits comfortably at the top of the list. Kroger is still number two, but number three Costco is closing the gap. Safeway has passed Supervalu for the number four spot with the rest of the top ten unchanged.
You can click here to read the Supermarket News story and see the list for yourself. For members of NARMS, professional at-retail merchandising and marketing service companies, it is important to keep an eye on all these metrics as a means of sniffing out new business opportunities, making strategic operational decisions and planning ahead for hiring with new job listings. Stay tuned to this column, the Top Shelf blog which appears on Tuesdays and www.narms.com as we keep you abreast of key industry findings and thought leadership. If you have not already done so, make sure to renew your membership so you do not lose access to these helpful streams of information.