1 mr. thomas e. milks chief operating officer mr. thomas e. milks chief operating officer

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Mr. Thomas E. MilksChief Operating Officer

Mr. Thomas E. MilksChief Operating Officer

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• Saving money on eating out: switching from fine

dining to fast foods and seeking supermarket meals

solutions in place of restaurant fare

• Saving in the store: buying more value brands, using

coupons, buying basic ingredients, and shopping with

a plan

• Switching store formats: buying at supercenters,

warehouse clubs, and limited assortment stores

Consumers are economizing on food purchases; three trends have emerged in 2009:

Source: FMI Grocery Shopper Trends 2009: Recession Changing Consumers Shopping Behavior at the Supermarket (14 May 2009)

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• Pressures from the turbulent economy are changing consumers behavior…

• Consumers are doing MORE of:– Going out of their way to find

bargains – Shopping multiple stores for the best

price– Clipping & redeeming coupons– Eating out less – Reading supermarket circulars

• Consumers are doing LESS of:– Dining out for lunch & dinner– Buying less organic produce & meats– Buying less Starbucks Coffee– Buying less Premium dark chocolate

Source: NGA, 2009 Consumer Panel Survey & Phil Lempert, Supermarket Guru & Mintel

4Source: Retail Forward ShopperScape, Feb/Mar/Apr 2009

Grocery Food Shopping

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30% 30% 22%36%

Using coupons more often Buying mulitiple items at atime to get better deal

stockpiling sale items Consolidating spending atstores where get best value

Source: Retail Forward ShopperScape, Feb/Mar/Apr 2009

Grocery Food Shopping

• Using coupons, buying multiple items at a time, and

stockpiling sale items most common

• Consumers are looking for that Multiple item buy

(i.e. 10/$10 or 5/$3) in order to get best value on

deal

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• Capitalize on Increased In-Home Eating Occasions– Consumers and Patrons eating out less: Restaurant quality & Healthy meals,

conveniently prepared at home

• Saving Money is a Priority – Increased use of coupons– Buying products on sale– Provide multiple pricing for value and stock up

• Consumers are Time Stressed– Provide convenient home meals solutions, in both Frozen and Shelf Stable

Grocery

– Key in on innovation and flavor profiles that meet the needs of the Patrons: Dining out “At Home,” Convenience, Healthy Fit

• Importance of Variety– Patrons expressed satisfaction with DeCA’s strong variety offering– DeCA point of difference versus Grocery & Club channels

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CHANNEL LOYALTYTotal US Market - 2008

41.1

7.85.0

2.2

39.338.6

8.45.4 4.8

40.040.2

8.15.3 6.2

39.2

COMMISSARY KROGER GROCERY-CORP

SAFEWAY- CORP SUPERVALU RETAILTOTAL- CORP

WAL- MART- SUPER

2006 2007 2008

DeCA 2008 Annual State of the Business

Source: Nielsen Homescan 2008 Cross Outlet Facts

DeCA 2008 Annual State of the Business

Source: Nielsen Homescan 2008 Cross Outlet Facts

Confidential & Proprietary

Copyright 2009 The Nielsen Company

Confidential & Proprietary

Copyright 2009 The Nielsen Company

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Location Type Date

Richards-Gebaur, MO New January 27, 2009

New Orleans, LA Interim store March 31, 2009

Saratoga Springs, NY New April 14, 2009

Dyess AFB, TX Re-opening April 21, 2009

Robins AFB, GA New May 28, 2009

Livorno/Camp Darby, Italy New June 5, 2009

Fort Drum, NY Re-opening June 30, 2009

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Location Type Opening

Chievres, Belgium New Jan 2010

Keesler AFB, MS New Apr 2010

New Orleans, LA New Oct 2010

Eglin AFB, FL Re-opening Dec 2010

Fort Riley, KS (MILCON) Re-opening May 2011

Fort Bliss, TX (BRAC) New Jun 2011

Fort Campbell, KY New Jun 2011

Moody, GA Re-opening Jul 2011

Quantico, VA New Nov 2011

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Project awarded:Project awarded: Sept 2007

Project cost:Project cost: $20.1 M

New facility:New facility:48,256 square feet (sales area 22,295 SF)

Project includes the Project includes the following:following: New administration offices, employee break rooms, cashier office, a bakery/deli area, self checkout, all new refrigeration display cases, walk-in coolers and freezer, new décor package, staging/receiving areas and patron parking.

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Project awarded:Project awarded: Apr 2007

Completion: Completion: Jan Jan 20102010

Project cost:Project cost: $30.3 M

New facility:New facility: 97,876 SF (sales area 51,600 SF)

Project includes the Project includes the following:following: A modern state-of-the-art shopping facility that will be environmentally friendly and energy efficient.

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Project includes the Project includes the following:following: a modern state-of-the-art shopping facility that will be environmentally friendly and energy efficient.

Project awarded:Project awarded: Sep 2008

Completion: Completion: Aug 2010

Project cost:Project cost: $19.5M

New facility:New facility: 48,041 SF (sales area 24,503 SF) part of shopping complex with exchange

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Project awarded:Project awarded: Oct 2008Completion:Completion: Oct 2010Total project cost: Total project cost: $22.3MRenovated facility:Renovated facility: 105,573 SF (sales area 56,988)

Project includes the following:Project includes the following:

This project will expand portions of the warehouse, the front end area for new entrance area, shopping carts and checkout area. It also includes new admin offices, and storage areas. The sales area will be renovated with a new décor package, refrigerated display cases and bakery/deli service area. The refrigeration system, HVAC and lighting system will be replaced.

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Project includes the Project includes the following:following: The project provides new refrigeration systems, display cases, including monitoring and controls, expanded sales/checkout area, and relocated backroom food processing areas. Also included is upgrade of all interior Décor and finishes, HVAC system replacement, repairs, and site improvements.

Project awarded:Project awarded: Aug 2009Completion:Completion: Spring 2011Total project cost: Total project cost: $24MRenovated facility:Renovated facility: Square footage increased from 62,067 to 108,178 SF. (Sales Area will increase by 74% to 58,980 SF )

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Project awarded:Project awarded: May 2009Completion:Completion: Mar 2011Total project cost: Total project cost: $26.1MNew facility:New facility: 113,827 SF (sales area, 60,765 SF)

Project includes the Project includes the following: following: A modern state-of-the-art shopping facility with a large deli and bakery, hot foods, sushi to go and self-checkouts conveniently located next to Grab ‘N Go products. The store will be environmentally friendly and energy efficient. The project is being funded under the Base Realignment and Closure program.

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Project awarded:Project awarded: Sep 2009Completion:Completion: Jun 2011Total project cost: Total project cost: $29.6 MNew facility:New facility: 121,871 SF, (sales area, 63,134 SF)

Project includes the Project includes the following:following: A modern state-of-the-art shopping facility that will be environmentally friendly and energy efficient.

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Project awarded:Project awarded: Aug 2009Completion:Completion: May 2011Total project cost: Total project cost: $15.6MRenovated facility:Renovated facility: 65,470 SF (sales area 34,127)

Project includes the Project includes the following:following: The project includes major additions and alterations to existing commissary for expanded sales area, bakery deli, updated decor, new refrigeration system and controls and display cases, force protection provisions, site improvements related to expansion.

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Project awarded:Project awarded: Sep 2009Completion:Completion: Nov 2011Total project cost: Total project cost: $26.1 MNew facility:New facility: 121,226 SF, (sales area, 64,135 SF)

Project includes the Project includes the following:following: An international delicatessen and bakery, self-checkouts, modern décor; the store will be environmentally friendly and energy efficient.

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• HQ Performance & Policy reorganizes under CoE

concept

• Aligns with Commissary Levels of Authorized

Standard Service (CLASS)

• More efficient, flexible to support culture of

innovation and creativity

• Personnel assigned to individual CoEs will be

linked to store departments for all policy

oversight, construction reviews, and other

operational issues

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– Operations Division – strategy and

oversight

– Management/Admin Division

– Grocery Division

– Customer Service Division

– Meat Division

– Produce Division

– Specialty Departments Division

– Facilities Division

– Environmental Management Division

– Security Division

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• Current label

operations are labor

intensive

• Automatically

installed with all

new CONUS

commissary

construction

• Beginning January

2010 replace CONUS

commissary labels

with ESL over 5

years

• Overseas stores:

ESLs only installed

at LARGE locations

such as Ramstein,

Vogelweh, Osan,

Kadena

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• Efforts to Improve– Re-commissioning at Mayport Commissary to

reduce energy use by optimizing refrigeration and air handling controls

– Preparing to conduct DeCA-wide equipment assessment to meet FY 2015 energy and water goals

• New Initiatives – Initiating Web-based refrigeration monitoring– Low ambient “layered” lighting and daylighting

at Little Creek NAB Commissary • Successes

– Energy reporting Web site– Annual worldwide Facility Energy Supervisor

energy efficiency training

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• In-house Gift Voucher Program

– Available in stores October 15, 2009

– $25 denomination

– Issued and redeemable at all 255

locations

– Purchased with cash, check, debit,

traveler’s check, or money order

– Large quantities should be preordered

at the store a week in advance

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May 2010• Family Fun and Fitness Festival

• 5K Run/Walk (DeCA Industry

partners onboard)

• Everyone Wins! Exchanges, DeCA &

MWR/Services

• “Big Top” in the parking lot: DeCA

Case Lot Sale; Exchange Sidewalk Sale;

Fitness Demos

• Theme - Health, Wellness, Fitness,

Super Sales/Savings!

• Food sampling; music; recreation

demos; health and wellness outreach;

kids programs

May 2010• Family Fun and Fitness Festival

• 5K Run/Walk (DeCA Industry

partners onboard)

• Everyone Wins! Exchanges, DeCA &

MWR/Services

• “Big Top” in the parking lot: DeCA

Case Lot Sale; Exchange Sidewalk Sale;

Fitness Demos

• Theme - Health, Wellness, Fitness,

Super Sales/Savings!

• Food sampling; music; recreation

demos; health and wellness outreach;

kids programs

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AreaDollar Sales

Percent Change

Customer Transactio

ns

Percent Change

East $2.8B + 3.5% 91.9M + 0.70%

Europe $503M + 3.4% 21.1M +4.18%

West $2.6B + 2.1% 94.8M -0.14%

Total $5.9B

+ 3.0%

207.8M +1 .00%

Sales/transactions through September 30Sales/transactions through September 30

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Estimated sales through Estimated sales through September 31September 31

Sales through September 30Sales through September 30

Estimated sales through Estimated sales through September 32September 32

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• Increased focus on “Winning Weekends”

–7 of Top 15 Record “Single Day Sales”

• Expanded Guard and Reserve sales

• Aggressively expanded and promoted club packs

–Focused on perishable

• Case Lot sales

– Twice-a-year worldwide sales

– Increased number of region and zone sales

• Focused on “Greener” Efforts

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Rank Day and Date Sales Event1 Saturday, January 31, 2009 $29,478,429.87 Super Bowl

2 Saturday, February 02, 2008 $28,554,263.79 Super Bowl

3 Saturday, November 17, 2007 $26,860,563.76 Thanksgiving


5 Saturday, January 31, 2004 $26,032,612.39 Super Bowl


7 Saturday, November 01, 2008 $25,708,710.38 Payday


9 Tuesday, December 23, 2008 $25,321,467.24 Christmas


11 Thursday, July 03, 2008 $25,045,894.17 July 4th

12 Saturday, May 02, 2009 $24,873,606.71 Payday


14 Saturday, August 30, 2008 $24,469,813.43 Labor Day

15 Saturday, February 28, 2009 $24,444,430.57 Payday

FY 2009: 7 of Top 15

FY 2009: 7 of Top 15

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FY 2009 Totals164 On-Site Sales!

Sales: $9.1M Savings: $4.1MServing 81,668

Patrons!

As of September 30

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FY 2009 vs. 2008 Sales: 111 % (4.8M)

Customer count:

103%

Serving 41,524 more Patrons!

As of September 30

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18 Surveys completed92.10% Met or exceeded customer expectations91.97% Met or exceeded savings expectations83.15% Consider these sales to be a valuable benefit

53.01% of patrons traveled from a distance greater than 16 miles from the event 59.25% of the patrons do not regularly shop at the commissary14.28% were Active Duty38.97% were Retired Military39.28% were Guard & Reserve

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Fall Winter SpringSummer

(July-Aug)

East $8,698,994

$9,531,161

$13,303,787

$8,242,088

Europe

$722,518 $859,764

$1,389,331

$532,007

West $9,441,503

$10,803,787

$14,190,858

$8,330,102

Total $18,863,015

$21,194,712

$28,833,976

$17,104,197

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DOLLARSDeCA EUROPE $504,700 DeCA EAST $8,913,526 DeCA WEST $8,541,620 GRAND TOTAL $17,959,846 1% increase over Worldwide Case Lot Sale in May 2008

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• Earth Friendly Days promotion featuring “Go Green” products

– April 16-29, 2009, promotion, coinciding with Earth Day (April 22) and Arbor Day (April 24)

• Leveraging explosive category growth for green

and organic products

• FY 2008 surpassed CFL Bulb Goal – over 1.25 million sold! – FY 2009 through September 21, we‘ve sold 578,773

– FY 2009 energy savings: $7.5M ($13 per bulb sold/over life of bulb)

• Reusable grocery bags– Over 2.1 million DeCA imprinted non-thermal bags

have

been sold since October 2007

– Over 627,000 non-imprinted thermal bags sold since 2005

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P We PURSUE EXCELLENCEOur pursuit of excellence is demonstrated through the valued benefit we deliver to the military members and their families.

A We are ACCOUNTABLE

We are accountable for commitments, results, and quality to customers, stakeholders, partners, and employees. We drop our personal agendas and band together as a team with shared results. We extend trust, respect each other, and value differing opinions.

S We have a SENSE OF URGENCY We are steadfast in our belief in the value of the benefit we provide. We have a sense of urgency and a common purpose.

S We SET HIGH STANDARDS We ensure standards are set HIGH to measure our progress and continuously improve our processes.

I We value INNOVATION

We recognize the value of innovation, ideas, collaboration and teamwork from across the enterprise. We seek open and honest exchange of information and ideas. We look for opportunities to make positive changes. We get better everyday.

O We take OWNERSHIP

We are leaders that take ownership and pride in what we do. We provide a clear and compelling vision. We empower and engage team members. We treat all with respect and dignity. We expect and model excellence in delivering the “benefit.”

N We are NECESSARY We are necessary to the Quality of Life of the military warfighter and their families.

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1 mr. thomas e. milks chief operating officer mr. thomas e. milks chief operating officer

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