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Is Frozen Pizza Going the Way of the Typewriter? PowerPoint Presentation
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Is Frozen Pizza Going the Way of the Typewriter?

Is Frozen Pizza Going the Way of the Typewriter?

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Is Frozen Pizza Going the Way of the Typewriter?

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  1. March 2013 Is Frozen Pizza Going the Way of the Typewriter? Category Review and Recommendations for Frozen Pizza

  2. Is Frozen Pizza Going the Way of the Typewriter? • Health concerns work against pizza • Health: Pizza is #2 source of saturated fat due to cheese, no credit as protein source, sodium, fat, processed food • Healthy means fresh, smaller portions, large pizzas do not work for small households • Multicultural America – ethnic foods sales are up, new flavors desired, shoppers want customization • Consumer redefining value to mean more than price • It will take quality and value to compete with Takeout • More people snacking, but pizza is not portable nor easy to prepare as are microwavable or toaster snacks

  3. Purpose: To Activate Shopper Insights to Drive Frozen Pizza Category ResultsA standard approach to answer the following questions

  4. Frozen Pizza Product Hierarchy Segment size and hierarchy * $ % chg. vs. YAG ** $ Contribution to Frozen Pizza • Frozen Pizza is declining everywhere but it is more severe at Walmart • Walmart underperforms vs. the market in Multi-serve Value and Combo segments and all Single Serve segments Source: Nielsen Scan Data – 52 weeks ending 12/08/12 vs.YAG

  5. Sales Projections Retail pizza sales did well moving into the recession; they, are losing to foodservice pizza as the economy recovers Price competitively with brands or segments that compete most directly with take-out? Restaurant Pizza Dominos $4.99! • Retail Pizza including: • Frozen pizza • Refrigerated pizza Crust/dough, kits • Shelf-stable pizza crust mixes, kits, sauce • Take-and-bake-pizza

  6. Frozen Pizza Sales Have Declined in Walmart and the Remaining Market Over the Last Two Years Frozen Pizza Sales Trends Dollar/Unit Sales Week ending dates

  7. Total US by $ per Buyer Trips X Annual Spend • Pizza is purchased about as frequently as snacks and less often than Meals • This may imply that shoppers think of Pizza less as a meal alternative and more as a snack or it could be due to Pizzas and Snacks being on a separate aisle Purchase Frequency & Annual Spend of Frozen Categories Total Walmart by $ per Buyer

  8. Know the shopper Who buys the category? On what trip missions do my shoppers purchase the category? What consumer trends affect the category

  9. Mintel BASE: TOTAL SAMPLE 2,000; AGE 18-24 – 260; 25-34 – 358; 35-44 – 370; 45-54 – 386; 55-64 – 292; 65+ – 334 Pizza type by age Older People Eat Less Pizza than Younger Consumers, But Shoppers age 55 + Represents a Large Proportion of Sales • 53% of respondents 65+ and 62% of those age 55 to 64 indicate that their household Frozen Pizza compared to about 70% of younger households

  10. Walmart Frozen Pizza Declines are Driven by Market Contraction, Retained Buyers Buying Less, Shifting is Minimal Shopper Shifting • Publix, Kroger, Dollar Channel, Sam’s and Save A Lot are gaining sales from Walmart Walmart Banner – Total U.S. – Frozen Pizza Dollar Shifting Walmart Banner Dollar trends are due to: Dollar Gains & Losses (000 Source: Nielsen Homescan - Total US 52 weeks ending 11/24/2012

  11. Trip Type Distribution Walmart is Losing Pizza Stock Up Trips Which Account For 82.5% Of All Frozen Pizza Trips ; Kroger is gaining all trip types Change in Walmart’s Trip Share in the US 2012 Vs. 2011 – Frozen Pizza Top 2 Banners by Trip Share gain apart from Walmart • Kroger +1.2% • Stock Up Trips • Publix -0.4% +0.3% • Kroger +0.6% • Immediate Needs Trips • Publix +0.6% +0.4% -0.3% WM Total US • Kroger +1.8% • Department Destination Trips +1.1% • WMT • Supercenters +1.8% NOTE: Competitors have been ordered in terms of Trip share Trip share is computed for Walmart Supercenters Confidential: Internal to Walmart only Source: Walmart POS Data, IRI Trip Data : Period : Last Year (Nov 2010 - Nov 2011) This Year (Nov 2011 - Nov 2012)

  12. Walmart Is Losing Frozen Pizza Trips Across All Trip Types Trip Type Distribution • Walmart’s share of Pizza trips exceeds 19% but it is declining (.3%) • Walmart’s total box trips are increasing at 0.4% suggesting an issue with Pizza, not the box • 83.6% of Pizza is purchased on stock-up trips; both sales and visits declined 7.5% • Immediate Needs (What’s for Dinner Tonight) are10.8% of sales but they are declining. • Walmart’s share of Seasonal/Party trips is 28.7%; only 1.7% of Pizza is sold on these trips

  13. In Walmart Total, FZ Handheld Entrees and Fz/Rfg Processed Chicken are the top 2 of the top 10 affinity products in Fz Pizza baskets; representing over a 4 million dollar opportunity each if Fz Pizza increased by 1% in each of their baskets. Top 10 Affinity Products in Fz Pizza basket in Walmart Total ranked by Total Opportunity Dollars* Fz Pizza $/Trip % of Row Product Trips w/ Fz Pizza Trip Index % of All Trips w/ Fz Pizza *Dollar Opportunity if get Fz Pizza into an additional 1% of Row Product baskets SIG Syndicated Reviews ILD ConsumerNetwork Household data; Current 52 Weeks Ending 12-30-2012; 52wk static; Walmart Total

  14. Summary of Recommendations – Fz Pizza in Walmart Total Convenient Meal Solutions/Snacks & Stock up Items Finding Fz Pizza Walmart trips are more likely than average to include • Fz Handheld Entrees (Non-Breakfast) • Processed Fz/Rfg Chicken/Chicken Sub • Fz Appetizers/Snack Rolls • Dry Dinner Mixes With Meat • Fz Ravioli • Fz Onion Rings • Fz Pretzels • Fz Breaded Vegetables • Fz Tortellini/Tortelloni • Fz Cookie Dough Co-Promotion Ideation Recommendations Offerings in the above categories to this consumer group should address the need gap/need state around quick meal solutions and stock-up needs; offering options that deliver on convenience needs for a busy household. Focus on convenient, yet satisfying or flavorful attributes of the offerings and various ways the products can be used to satisfy meal and snack cravings. Appeal to the desire for quick, easy meals. Focus on convenience as ways to meet their needs. Convey the promotions as a quick, easy way to incorporate convenient products into their hectic schedule.

  15. Buyer & Dollar Distribution Pizza Buyers are Distributed Across Demo Groups: Walmart Wins with Lower Income Pizza Buyers as do Dollar and Save A Lot Stores Income: Frozen Pizza Buyer & Dollar Distribution by Retailer/Channel Breaks with fewer than 50 raw buyers in the Channel/Retailer are excluded Source: Nielsen Homescan - Total US 52 weeks ending 11/24/2012

  16. Buyer & Dollar Distribution 26% of US Pizza Consumers are Over Age 55, They Account for only 20% of Pizza Dollars Age: Frozen Pizza Buyer & Dollar Distribution by Retailer/Channel Breaks with fewer than 50 raw buyers in the Channel/Retailer are excluded Source: Nielsen Homescan - Total US 52 weeks ending 11/24/2012

  17. Know the competition Have shoppers shifted purchases to other retailers? How do I compare (benchmark) against others?

  18. Shopper Scorecard Most Retailers Convert More of their Pizza Shoppers than WalmartIncreasing shopper conversion by 10 points is a $165 MM opportunity 1 extra trip from our shoppers is a $159 MM opportunity Opportunity Calculations: • Conversion = (25MM Walmart buyers / 36.9% conversion) * 10% * $24.39 = $165 million • Trip = (1 trips / buyer) * $6.37 per trip * 25MM Walmart shoppers = $159 million All Category Buyers: Volume Driver by Key Competitors Source: Nielsen Homescan - Total US 52 weeks ending 11/24/2012

  19. Tactics - pricing Is my pricing competitive?

  20. Price Position, Cause and Effect Increased Promotion Contributed to Lower Market Price Implying Vendor Negotiation Opportunity WMT ROM WMT -77bps ROM -207bps 2898bps -1597bps Source: Nielsen syndicated POS and Walmart POS data for 104 weeks ending 11/16/2012

  21. But Deal Does Not Drive Incremental Sales – Implies Need for Competitive EDLP Pricing and Vendor Negotiations Base & Incremental Sales Brands whose Price Position Worsened • Totinos 56th percentile to 48th • Totinos Party Pizza 55th percentile to 51st • Red Barron 75th percentile to 48th • Tony’s 90th percentile to 83rd • California Pizza Kitchen 85th percentile to 77th 39% on deal 20.7% wasted Source: Nielsen Scan Data – 52 weeks ending 12/08/12

  22. Our Price Position Declined Overall and with Totino’s, Red Baron, Tony’s and California Kitchen; Some of our Highest Volume Brands Price Position by Brand Walmart Rest of Market Price Position Source: Nielsen syndicated POS and Walmart POS data for 52 weeks ending 11/16/2012