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1 Product Support Product Support Mr. Mr. Chris Burns Chris Burns June 10, 2010 June 10, 2010 Trends Trends Mission Mission Opportunities Opportunities Focus Focus

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Page 1: 1 Product Support Mr. Chris Burns Product Support Mr. Chris Burns June 10, 2010 Trends Mission Opportunities Focus

1

Product Support Product Support

Mr. Chris BurnsMr. Chris Burns

June 10, 2010June 10, 2010

TrendsTrends

MissionMission

OpportunitiesOpportunities

FocusFocus

Page 2: 1 Product Support Mr. Chris Burns Product Support Mr. Chris Burns June 10, 2010 Trends Mission Opportunities Focus

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Mission

Page 3: 1 Product Support Mr. Chris Burns Product Support Mr. Chris Burns June 10, 2010 Trends Mission Opportunities Focus

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• Manages centralized product support program for commissaries worldwide

• Manages Agency’s worldwide sales & customer savings programs including:

− Merchandising – Promotion – Marketing - Shelving reset− Distribution - Transportation− Cataloging - Pricing− Guard/Reserve On-Site Sales program

• Functional store support & proponent for PS business systems for commissaries & CDC’s worldwide

• Acquisition support for all resale items

− Added mission for Europe due to diminishing support

Sales Directorate Sales Directorate MissionMission

Page 4: 1 Product Support Mr. Chris Burns Product Support Mr. Chris Burns June 10, 2010 Trends Mission Opportunities Focus

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Division Chief

5 Divisions Functions

Larry Hahn Contracting Resale Contracting

Michelle Frost Semi-Perishable General Grocery/Promotions/Grab-n-Go

Brad McMinn Perishable Produce/Meat/Deli/Bakery/Chill/Freeze

Gordon JonesInternet Sales, Transportation & Cataloging

Transportation bookings to Europe/Caribbean, Catalog File Maintenance, Internet Shopping & Guard/Reserve On-Site Sales, Store Support

Greg Kochuba Special ProjectsSales/Savings, Scholarships for Military Children, Resets, & OCONUS/CONUS Order Processing, Distribution

Sales Directorate Sales Directorate Division FunctionsDivision Functions

Page 5: 1 Product Support Mr. Chris Burns Product Support Mr. Chris Burns June 10, 2010 Trends Mission Opportunities Focus

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Trends

Page 6: 1 Product Support Mr. Chris Burns Product Support Mr. Chris Burns June 10, 2010 Trends Mission Opportunities Focus

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• Consumer Price Index – Food at Home

Inflation and Deflation information

• Consumer Trends

• DeCA & Industry Departmental Sales Comparisons

• Category Comparisons

Top 20 Categories by DeCA 2010 Sales

• Coupons

TrendsTrends

Page 7: 1 Product Support Mr. Chris Burns Product Support Mr. Chris Burns June 10, 2010 Trends Mission Opportunities Focus

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FY

-19

92

FY

-19

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FY

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FY

-19

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FY

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FY

-19

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FY

-19

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-20

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-20

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-20

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FY

-20

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FY

Avg

Ind

ex V

alue

Bureau of Labor Statistics Average Bureau of Labor Statistics Average Fiscal Year Food at Home Index Fiscal Year Food at Home Index

ValuesValues

Note: Values are Arithmetic Average of October – September Index Values (Source BLS Food At Home All Urban Seasonally Adjusted Monthly Table), FY 2010 thru April

A falling CPI Food At Home Index – DeCA hasn’t seen

this before!

Page 8: 1 Product Support Mr. Chris Burns Product Support Mr. Chris Burns June 10, 2010 Trends Mission Opportunities Focus

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210

211

212

213

214

215

216

217

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220

Oct

No

v

Dec

Jan

Feb

Mar

Ap

r

May

Jun

Jul

Au

g

Sep

2009

2010

-2.8% -2.9% -2.4% -2.0% -1.5% -0.7%

CPI Food at Home – Monthly CPI Food at Home – Monthly Compare FY 2010 vs. FY 2009Compare FY 2010 vs. FY 2009

-0.02%

The deflationary trend appears to

be ending!

Page 9: 1 Product Support Mr. Chris Burns Product Support Mr. Chris Burns June 10, 2010 Trends Mission Opportunities Focus

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1. Restraint remains the new normal – at home matters most

2. Value is top priority

3. Store Brand growth continues

4. Grocery consolidation intensifies

5. Assortment wars escalate, product assortment is point of differentiation

6. Winning brands are innovative & different

7. Spending on healthy items is a solid measure of consumer confidence

8. Manufacturers get stingy with trade promotion spending

9. Direct to consumer options thrive

Top Consumer Goods Top Consumer Goods Trends in 2010Trends in 2010

Page 10: 1 Product Support Mr. Chris Burns Product Support Mr. Chris Burns June 10, 2010 Trends Mission Opportunities Focus

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-12%

-9%

-6%

-3%

0%

3%

6%

DeCA -2.5% -10.6% -1.9% -0.2% -5.3% 5.1% 0.4%

RM 1.0% -5.0% 1.2% -0.4% 2.2% 1.7% 2.9%

GROCERY DAIRY FROZEN BEAUTY MEAT UPC PROD UPC HEALTH

Department Sales – DeCA vs. Industry Department Sales – DeCA vs. Industry (Nielsen Data – CONUS EX AK/HI 52 weeks ending 05/16/2010 (Nielsen Data – CONUS EX AK/HI 52 weeks ending 05/16/2010

vs. PY)vs. PY)

DeCA $M $2,006 $389 $384 $180 $161 $153 $129

Total sales for all DeCA CONUS UPC Departments - last 52 weeks was $3,816M -

this was down -2.51% vs. +0.19% for industry

Page 11: 1 Product Support Mr. Chris Burns Product Support Mr. Chris Burns June 10, 2010 Trends Mission Opportunities Focus

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-15%

-12%

-9%

-6%

-3%

0%

3%

6%

9%

12%

15%

DeCA 8.9% -5.4% -2.6% 13.2% -3.9% 0.0% -12.1% 9.5%

RM 4.2% 0.2% -0.8% 1.8% 0.2% 3.1% 4.6% 5.3%

TOBACCO BAKERY GM DELI UPCPET FOOD -

ACCESSALCOHOL

REFR SEAFOOD

PHARMACY

Department Sales – DeCA vs. IndustryDepartment Sales – DeCA vs. Industry (Continued) (Continued)

(Nielsen Data – CONUS EX AK/HI 52 weeks ending (Nielsen Data – CONUS EX AK/HI 52 weeks ending 05/16/2010 vs. PY)05/16/2010 vs. PY)

DeCA $M $123 $112 $92 $63 $11 $3 $2 $2

Page 12: 1 Product Support Mr. Chris Burns Product Support Mr. Chris Burns June 10, 2010 Trends Mission Opportunities Focus

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Top 20 CONUS Categories by SalesTop 20 CONUS Categories by Sales

Source: Nielsen RMS

Sales Rank

Category

DeCA Sales in Millions (52 Wks ending 05/16/2010)

Sales Change DeCA

Sales Change Industry

DeCA Savings

%

1 CIGARETTES $118 9.8% 4.4% 12.0%2 SALTED SNACKS $103 0.6% 3.4% 23.2%3 CHEESE $99 -16.4% -5.7% 41.5%4 SOFT DRINKS $92 -4.1% -0.3% 9.3%5 FRESH BAKERY $87 -6.3% -1.2% 28.7%6 RTE CEREAL $81 -3.3% 0.0% 17.0%7 MILK $81 -16.0% -9.8% 29.0%8 FROZEN ENTREES $79 -2.0% 3.0% 28.1%9 DOG FOOD $74 7.2% 3.8% 24.4%10 TOILET PAPER $68 -0.5% -0.6% 14.4%

Page 13: 1 Product Support Mr. Chris Burns Product Support Mr. Chris Burns June 10, 2010 Trends Mission Opportunities Focus

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Top 20 CONUS Categories by Sales Top 20 CONUS Categories by Sales (Continued)(Continued)

Source: Nielsen RMS

Sales Rank

Category

DeCA Sales ($M)

52 Wks ending

05/16/2010

Sales Change DeCA

Sales Change Industry

DeCA Savings

%

11 SHLF STAB JUICES & DRINKS $66 -4.5% -2.8% 21.2%12 LAUNDRY DETERGENT $62 -2.1% -0.8% 14.8%13 FRESH VEGETABLE & HERB $61 3.0% 0.2% 22.9%14 CANDY $60 -2.8% 7.1% 27.1%15 COFFEE $60 -1.7% 2.2% 24.6%16 LUNCHMEAT $53 -4.4% 1.6% 41.0%17 SHELF STABLE VEGETABLE $52 -1.6% 4.9% 28.0%18 CRACKERS $45 -1.4% 2.3% 26.2%19 FRESH FRUIT $44 7.8% 5.6% 14.0%20 COOKIES $42 -2.1% 1.5% 24.4%

Page 14: 1 Product Support Mr. Chris Burns Product Support Mr. Chris Burns June 10, 2010 Trends Mission Opportunities Focus

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FY 2010 YTD(thru Apr

2010)FY 2009 FY 2008

Coupon Dollars

$66.92M (up 16% versus PY)

$105.20M (up 12% versus PY)

$93.74M

Coupon Quantity

76.53M (Up 10% versus PY)

123.93M (Up 6% versus PY)

116.5M

Average Coupon Amount

87.4 cents (Up 3% versus PY)

84.9 cents (Up 6% versus PY)

80.5 cents

CouponsCoupons

Page 15: 1 Product Support Mr. Chris Burns Product Support Mr. Chris Burns June 10, 2010 Trends Mission Opportunities Focus

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2009 Coupon Rank

2008 Coupon Rank

Retailer

1 1 Wal-Mart

2 2 Kroger

3 5 Supervalu

4 3 Military Commissaries

5 6 Publix

6 4 Ahold

7 9 Walgreens

8 7 Target

9 8 Meijer

10 10 Safeway

2009 U.S. Coupon Redemption 2009 U.S. Coupon Redemption Rankings Rankings

Source: NCH Marketing Services, Inc.

Page 16: 1 Product Support Mr. Chris Burns Product Support Mr. Chris Burns June 10, 2010 Trends Mission Opportunities Focus

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Page 17: 1 Product Support Mr. Chris Burns Product Support Mr. Chris Burns June 10, 2010 Trends Mission Opportunities Focus

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Focus

Page 18: 1 Product Support Mr. Chris Burns Product Support Mr. Chris Burns June 10, 2010 Trends Mission Opportunities Focus

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•Savings•Sales•Basket Size•Guard & Reserve Sales•Customers•Category Management •Vendor Stocking

Focus AreasFocus Areas

Page 19: 1 Product Support Mr. Chris Burns Product Support Mr. Chris Burns June 10, 2010 Trends Mission Opportunities Focus

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Savings Savings (after Tax and Surcharge)(after Tax and Surcharge)

Department September 2009 Interim April 2010

CONUS Grocery (Scan Data)* 23.8% 25.3%

CONUS Meat 40.2% 33.1%

CONUS Produce 40.6% 38.9%

Worldwide (Includes CONUS, AK, HI and Overseas)

31.7% 31.6%

• Scan Data based on 26 weeks with Wal-Mart factor included• Interim Survey designed to give general information• Interim survey used only 6 stores for CONUS Meat and Produce vs. 30 stores in formal study.• Also, mini survey did not include OCONUS survey as done in formal annual survey

Department September 2009 Interim April 2010

CONUS Dairy 25.4% 28.3%

CONUS Grocery – Food 21.5% 23.5%

CONUS Frozen Foods 25.6% 26.8%

CONUS Health and Beauty 26.4% 26.1%

CONUS Non-Food Grocery 27.5% 28.1%

Page 20: 1 Product Support Mr. Chris Burns Product Support Mr. Chris Burns June 10, 2010 Trends Mission Opportunities Focus

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12.2% 8.7% 6.7%

18.1%

54.3%

0%

10%

20%

30%

40%

50%

60%

12.2% 8.7% 6.7%

18.1%

54.3%

0%

10%

20%

30%

40%

50%

60%39 (15.4%) of the largest stores generate 40% of total sales

138 smaller stores (54.3%) in mostly remote or overseas locations deliver 20% of sales

Sales Directorate serves all Stores Sales Directorate serves all Stores – Small & Large – Small & Large

% of Sales % of Stores

Page 21: 1 Product Support Mr. Chris Burns Product Support Mr. Chris Burns June 10, 2010 Trends Mission Opportunities Focus

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Sales and Customers Sales and Customers (Data is October – April) (Data is October – April)

Sales ($ Millions) FY 2010 FY 2009 Change % Change

DeCA East $ 1,602 $ 1,659 $ (57) -3.4%

DeCA Europe $ 302 $ 294 $ 7 2.5%

DeCA West $ 1,529 $ 1,561 $ (32) -2.1%

 DeCA Total $ 3,433 $ 3,515 $ (82) -2.3%

Sales ($ Millions) FY 2010 FY 2009 Change % Change

Grocery $ 2,924 $ 2,991 $ (67) -2.2%

Meat $ 241 $ 256 $ (15) -5.9%

Produce $ 268 $ 267 $ 0 0.1%

 DeCA Total $ 3,433 $ 3,515 $ (82) -2.3%

Customers (Millions) FY 2010 FY 2009 Change % Change

DeCA East 23.34 23.74 (0.40) -1.7%

DeCA Europe 6.57 6.43 0.14 2.2%

DeCA West 24.90 24.73 0.17 0.7%

 DeCA Total 54.81 54.90 (0.09) -0.2%

Page 22: 1 Product Support Mr. Chris Burns Product Support Mr. Chris Burns June 10, 2010 Trends Mission Opportunities Focus

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86.9% 86.3% 86.1% 85.6% 85.0% 84.7% 84.7% 84.5% 84.6% 84.8% 85.2%

7.1% 7.4% 7.6% 8.1% 7.9% 7.5% 7.4% 7.0%

6.0% 6.3% 6.8% 6.8% 7.1% 7.4% 7.7% 7.9% 7.8% 7.8%

8.2% 7.8%7.3%

6.6%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Grocery Meat Produce

DeCA Fiscal Yr. Dept Sales DeCA Fiscal Yr. Dept Sales %%

Page 23: 1 Product Support Mr. Chris Burns Product Support Mr. Chris Burns June 10, 2010 Trends Mission Opportunities Focus

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FY2008 FY2009 % Change FY2009 vs.

FY2008 FY 2010

% Change FY 2010 vs. FY

2009

Oct $ 460.56 $ 514.53 11.7%High growth from FY 2008

to FY 2009 means

challenging FY 2010 monthly

comparisons

$ 511.51 -0.6%

Nov $ 487.89 $ 526.62 7.9% $ 487.21 -7.5%

Dec* $ 508.80 $ 522.75 2.7% $ 527.88 1.0%

Jan $ 459.84 $ 512.94 11.5% $ 492.27 -4.0%

Feb** $ 460.27 $ 458.12 -0.5% $ 450.35 -1.7%

Mar $ 481.38 $ 493.88 2.6% $ 483.75 -2.1%

Apr $ 473.44 $ 485.66 2.6% $ 479.72 -1.2%

May $ 522.25 $ 524.47 0.4% Low growth from FY 2008

to FY 2009 may mean

easier FY 2010 monthly

comparisons

Jun $ 465.17 $ 467.65 0.5%

Jul $ 492.39 $ 490.97 -0.3%

Aug $ 521.36 $ 489.48 -6.1%

Sep $ 479.90 $ 493.86 2.9%

*December 2009 was up 1.0% over December 2008 only because December 26, 2008 was Federal Holiday lowering December 2008 sales

**February 2008 had 29 days, thus February 2009, even though down 0.5% was still a high growth month (if comparing 28 days)

Monthly Sales Monthly Sales Comparisons vs. Prior Comparisons vs. Prior

YearYear

Page 24: 1 Product Support Mr. Chris Burns Product Support Mr. Chris Burns June 10, 2010 Trends Mission Opportunities Focus

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$53.02$53.90 $53.62

$54.22 $54.39

$55.50

$56.86

$58.57

$60.54

$62.55$63.12

$62.63

$46

$48

$50

$52

$54

$56

$58

$60

$62

$64

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

DeCA Basket SizeDeCA Basket Size

Page 25: 1 Product Support Mr. Chris Burns Product Support Mr. Chris Burns June 10, 2010 Trends Mission Opportunities Focus

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Guard and Reserve Guard and Reserve Sales Growth Update Sales Growth Update

Fiscal Year # Events Sales # Customers

FY 2008 104 $4,438,930 41,347

FY 2009 164 $9,100,584 82,509

FY 2010 (thru May 28) 87 $5,384,226 43,357

$100

$110

$120

$130

FY 2008 FY 2009 FY 2010

$40,000

$50,000

$60,000

$70,000

FY 2008 FY 2009 FY 2010

$ Per Customer $ Per Event

Page 26: 1 Product Support Mr. Chris Burns Product Support Mr. Chris Burns June 10, 2010 Trends Mission Opportunities Focus

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5.80

5.475.34

5.28

5.10

4.90 4.955.04 5.04

4.965.04

5.245.37 5.42

5.54

5.81

5.98

4.5

5

5.5

6

6.5

FY93

FY94

FY95

FY96

FY97

FY98

FY99

FY00

FY01

FY02

FY03

FY04

FY05

FY06

FY07

FY08

FY09

$ B

illio

ns

-3.7%

-5.6%-2.3% -1.2%

-3.9% +0.9%

+1.9% -0.0% -1.5% +1.5%

+3.9%

363385 332Stores 313 308 299 296 292 290 281 276 275

+2.5%

273

-3.3%

+0.9%

+2.2%

+5.0%

+2.9%

268 264 254260

Commissary Sales Commissary Sales

FY 1993 thru FY 2009FY 1993 thru FY 2009

FYTD 2010 Sales through April are $3.43B which is down 2.33% from FY 2009

Page 27: 1 Product Support Mr. Chris Burns Product Support Mr. Chris Burns June 10, 2010 Trends Mission Opportunities Focus

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Our Goal…Our Goal…

$6 Billion Sales

in 2011

Page 28: 1 Product Support Mr. Chris Burns Product Support Mr. Chris Burns June 10, 2010 Trends Mission Opportunities Focus

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What will it take to achieve What will it take to achieve $6 Billion in Sales in FY $6 Billion in Sales in FY

2011?2011?• Increase of about 1.7% over FY 2010

About +$100M increase will be needed

• Any one of these factors would do it:

About ½ item more per basket (29.5 to 30)

19 more customers/day at average store

About 4 cent increase in average item price (from about $2.24 to $2.28)

About a $0.69 increase in basket size Based on 94.75M transactions/yr we would need

$63.32 basket size (up from $62.63 FYTD 2010)

"It is not necessary to do extraordinary things to get extraordinary results." – Warren Buffett

Page 29: 1 Product Support Mr. Chris Burns Product Support Mr. Chris Burns June 10, 2010 Trends Mission Opportunities Focus

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115.7

110.3

104.6 103.7

97.2

92.393.3 93.5 93.9

91.592.6

94.3 94.492.48

91.4792.94

94.75

90.0

95.0

100.0

105.0

110.0

115.0

120.0

FY93

FY94

FY95

FY96

FY97

FY98

FY99

FY00

FY01

FY02

FY03

FY04

FY05

FY06

FY07

FY08

FY09

Mill

ions

-4.6%

-5.2% -0.8%

-6.3%

-5.1% +1.1% +0.2% +0.5%

-2.5% +1.2%

+1.8%

363385 332Stores 313 308 299 296 292 290 281 276 275

+0.1%

273 268

-2.1% -1.1% +1.6% +1.9%

264 260 254

Commissary Customers Commissary Customers FY 1993 thru FY FY 1993 thru FY

20092009

FY 2010 Customers through April are 54.81M which is down 0.2% from FY 2009

Page 30: 1 Product Support Mr. Chris Burns Product Support Mr. Chris Burns June 10, 2010 Trends Mission Opportunities Focus

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Our Goal…Our Goal…

100M Customers

in 2012

Page 31: 1 Product Support Mr. Chris Burns Product Support Mr. Chris Burns June 10, 2010 Trends Mission Opportunities Focus

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What will it take to achieve What will it take to achieve 100M Customers?100M Customers?

• Growth in 2 years = 5M Customers

• FY 2011: 2.5 Million or +2.6%

• FY 2012: 2.5 Million or +2.6%

Average Monthly Sales

Average Monthly

Trans

2.6% Increase (Month)

Average Days Open

Average Daily Trans

2.6% Increase

(Day)

>$5M 81.0K 2.1K 7 2,671 69

$4-$5M 66.7K 1.7K 7 2,200 57

$3-$4M 52.7K 1.4K 6.6 1,737 45

$2-$3M 38.7K 1.0K 6.3 1,275 33

$1-$2M 26.5K 0.7K 6.2 874 23

$0-$1M 9.8K 0.3K 5.5 323 8

Page 32: 1 Product Support Mr. Chris Burns Product Support Mr. Chris Burns June 10, 2010 Trends Mission Opportunities Focus

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• Ensure Reviews are:− Standardized, fair, consistent across all categories

• Ensure we have:− Premium, mid, value lines in all categories that

make sense

• Do reviews at strategically right time− Know process timeline - preclude lost sales

− The “right” number of reviews each year

• Optimize SKUs− Right product - right time - right price

− Item savings meet category goals

Category ManagementCategory Management

Page 33: 1 Product Support Mr. Chris Burns Product Support Mr. Chris Burns June 10, 2010 Trends Mission Opportunities Focus

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• Where we were: Conducted a store web-base survey (at 183 commissaries)

Survey period – October 2008 – April 2009

Tracked top 33 manufacturer’s performance

Buyers/Category Managers shared results with business partners

• Where we are: Conducting a follow-up survey

Survey periods – March – May 2010

Compare survey results

• Where we are going: Continue team approach to improve the process

Bottom Line…It’s all about getting the products on the shelf

Vendor StockingVendor Stocking

Page 34: 1 Product Support Mr. Chris Burns Product Support Mr. Chris Burns June 10, 2010 Trends Mission Opportunities Focus

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Opportunities

Page 35: 1 Product Support Mr. Chris Burns Product Support Mr. Chris Burns June 10, 2010 Trends Mission Opportunities Focus

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• Capturing more of Patrons’ Shopping $

• Meat & Produce Focus

• Promotions

• Store Hours

• Target Thursday – Sunday

• Communication

OpportunitiesOpportunities

Page 36: 1 Product Support Mr. Chris Burns Product Support Mr. Chris Burns June 10, 2010 Trends Mission Opportunities Focus

36Page 36

Source: The Nielsen Company Homescan panel of 100,000+ in-home scanning households that demographically & geographically represents Total DeCA Trade Area

• 1,700 Commissary Shoppers• 2,500 Eligible Shoppers

Period: Annual 2009 (52 Weeks Ending 12/26/09)

Volume: Total Store Dollars (UPC Coded Products)

Geography: DeCA Total Trade Area

Research Design

Source: Nielsen Homescan 2009

DeCA Trade Area (Excl. AK & DeCA Trade Area (Excl. AK & HI)HI)

Page 37: 1 Product Support Mr. Chris Burns Product Support Mr. Chris Burns June 10, 2010 Trends Mission Opportunities Focus

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Commissary All-Outlet Dollar Loyalty % of Commissary All-Outlet $

Commissary, 22.5

Remaining, 77.5

Commissary All-Outlet $ Share in...

3.1

23.2

3.1

5.5

15.8

10.4

3.4

22.2

3.1

4.5

18.5

10.1

EXCHANGES

TOTALGROCERY

TOTAL DRUGSTORES

TOTAL MASSMERCH W/ O

SUPERS

TOTALSUPERCENTERS

TOTALWAREHOUSE

CLUBS20082009

- 1.4

Source: Nielsen Homescan 2009 Cross Outlet Facts

DeCA Shoppers Spend more in Commissaries than in any other Specific

Channel

Page 38: 1 Product Support Mr. Chris Burns Product Support Mr. Chris Burns June 10, 2010 Trends Mission Opportunities Focus

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Commissary shoppers (1,700) Frequency (Number of Trips) in...

COMMISSARY WAL- MARTDIV1+SUPER

TOTAL DRUGSTORES

TARGET-TOTAL

SAM'S EXCHANGE KROGERGROCERY-

CORP

COSTCO SAFEWAY

2008 2009

Commissary Shopper's (1,700) Basket Size in...

COMMISSARY WAL- MARTDIV1+SUPER

TOTAL DRUGSTORES

TARGET-TOTAL

SAM'S EXCHANGE KROGERGROCERY-

CORP

COSTCO SAFEWAY

Commissary frequency & basket size is down slightly

Source: Nielsen Homescan 2009 Cross Outlet Facts

Page 39: 1 Product Support Mr. Chris Burns Product Support Mr. Chris Burns June 10, 2010 Trends Mission Opportunities Focus

39

Commissary All-Outlet Dollar Loyalty % of Commissary All-Outlet $

Commissary, 49.5

Remaining, 50.5

Commissary All-Outlet $ Share in...

5.0

10.0

1.6

4.7

9.0

7.9

5.6

9.1

1.4

3.4

11.3

8.0

Exchanges

TOTALGROCERY

TOTAL DRUGSTORES

TOTAL MASSMERCH W/ O

SUPERS

TOTALSUPERCENTERS

TOTALWAREHOUSE

CLUBS 20082009

-0.7

When a Heavy Commissary Shopper is not shopping in the Commissary, they are

shopping…

Source: Nielsen Homescan 2009 Cross Outlet Facts

Page 40: 1 Product Support Mr. Chris Burns Product Support Mr. Chris Burns June 10, 2010 Trends Mission Opportunities Focus

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Commissary All-Outlet Dollar Loyalty % of Commissary All-Outlet $

Commissary, 8.5

Remaining, 91.5

Commissary All-Outlet $ Share in...

2.2

30.1

3.9

6.0

19.4

11.7

2.3

29.0

4.1

5.1

22.2

11.1

Exchanges

TOTALGROCERY

TOTAL DRUGSTORES

TOTAL MASSMERCH W/ O

SUPERS

TOTALSUPERCENTERS

TOTALWAREHOUSE

CLUBS20082009

-1.6

• Light Shoppers share is 2x in Wal-Mart compared to Heavy Shoppers

When a Light Commissary Shopper is not shopping in the Commissary, they are

shopping…

Source: Nielsen Homescan 2009 Cross Outlet Facts

Page 41: 1 Product Support Mr. Chris Burns Product Support Mr. Chris Burns June 10, 2010 Trends Mission Opportunities Focus

41

DeCA’s Heavy & Light Shopper Demographics

19% 21%

15% 9%

22% 22%

16% 15%

15% 14%

Heavy DeCA Shoppers Light DeCA Shoppers

Under 35 35 to 44 45 to 54 55 to 64 65 and Over

21% of the Light shoppers are under 35 years old21% of the Light shoppers are under 35 years old

Source: Nielsen Homescan 2009, Account Shopper Profiler

Page 42: 1 Product Support Mr. Chris Burns Product Support Mr. Chris Burns June 10, 2010 Trends Mission Opportunities Focus

42

12% 19%

37%34%

39% 40%

12% 7%

Heavy DeCA Shoppers Light DeCA Shoppers

1 Member 2 Members3 to 4 Members 5 or More Members

Source: Nielsen Homescan 2009, Account Shopper Profiler

DeCA’s Heavy & Light Shopper Demographics

Page 43: 1 Product Support Mr. Chris Burns Product Support Mr. Chris Burns June 10, 2010 Trends Mission Opportunities Focus

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67% 61%

15% 25%6% 4%

13% 11%

Heavy DeCA Shoppers Light DeCA Shoppers

White African American Asian Hispanic

Source: Nielsen Homescan 2009, Account Shopper Profiler

DeCA’s Heavy & Light Shopper Demographics

Overall Nielsen Homescan panel of all commissary shoppers (combined heavy and light shoppers) has White: 63%, African American 22%, Asian 5%, Hispanic 12%Overall Nielsen Homescan panel of all commissary shoppers (combined heavy and light shoppers) has White: 63%, African American 22%, Asian 5%, Hispanic 12%

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10% 12%14%

14%21% 17%

17% 22%

28% 22%

6%2% 7%7%

Heavy DeCA Shoppers Light DeCA Shoppers

Under $20 k $20 - $30 k $30 - $40 k $40 - $50 k $50 - $70 k $70 - $100 k $100 k +

67% 61%

Source: Nielsen Homescan 2009, Account Shopper Profiler

DeCA’s Heavy & Light Shopper Demographics

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Opportunities from Nielsen Opportunities from Nielsen Homescan DataHomescan Data

• DeCA’s Shoppers increased trips to Wal-Mart & Safeway Continue to offer club packs in prominent locations Focus on destination categories (milk, bread etc.)

• Greatest cross-spending threat in Mass, Supercenters & Club Identify top selling items within these channels Monitor pricing at competition

• Focus on converting light shoppers to heavy 25% of DeCA’s light shoppers are African American – why? Determine reasons and convert more to heavy shoppers

• Communicate value and benefits to convey the message “Commissary It’s Worth the Trip” Working with Nielsen to determine zip codes of 2,500 persons in

Homescan panel

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• Continued Focus on Meat & Produce

High savings & quality = a reason to shop commissaries!

Build a meal around Health & wellness

OpportunitiesOpportunities

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• Meal Solutions Promotion

• Develop Product Image USDA Choice & Targeted USDA Select “Choice Meats for select customers”

• HMR Test in Meat Department 24 week test period +8% in dollars & +4% in units

• 23 Fresh Meat Promotions Reflective of our top 10 processed items

• Core Merchandising Based on individual store top 20 processed items

Meat Department OpportunitiesMeat Department Opportunities

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• Consumers are focusing on health and value Health

Educate patrons on the health benefits of FF&V FF&V offer healthy/convenient options for ANY meal or snack

Value Focus on promotions, build big and up front Utilize “SALE” signage to draw their attention

• Consumers are preparing meals at home Offer & provide meal solutions

• Young consumers - fastest growing segment Target younger consumers with FF&V Market organic produce

Produce Department Produce Department OpportunitiesOpportunities

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• DeCA Plant/Flower sales average slightly less than $6M/yr• Incremental sales that won’t cannibalize other categories!

FY 2011 GOAL = $10 MILLION! See below…

Produce Department Produce Department OpportunitiesOpportunities

FY 2009 Plant/Flower Sales

# of Stores

Over $400K 1 1 Store sold > $1,168 in plants and flowers per day

$200K - $400K 2

$100K- $200K 11

$50K - $100K 23

$10K - $50K 74

$5K - $10K 27143 Stores sold <$30 a day

of plants and flowers$1K - $5K 40<$1K 76

Lots of untapped Sales!!!

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• Right promotions to attract patrons−In between pay week focus−In & out items, treasure hunt etc.

• Thanksgiving & Christmas−Win the Holidays−Keep authorized customers in commissary

• Case lot sales – relook/refine May Case Lot Sale and Family Fun Fitness

Festival – THANKS for your support!

• Cross merchandising opportunities Okay to test new things! Regional items

OpportunitiesOpportunities

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• Signage – looking to refresh• Look for Thurs-Sun sales opportunities

−4 days = 63.4% of business…be ready−Need good vendor stocking support

• After 4 P.M. Shopper Are some stores closing too early?

• Corporate Communication Partnership – driving Sales and Patron Awareness

• Listen to our customers Chiefs/Category Managers are:

Riding with Zone Managers - visiting stores Tap patron interface points for insights

Front End, Deli, Bakery, Produce, Managers etc.

OpportunitiesOpportunities

"Your most unhappy customers are your greatest source of learning." – Bill Gates

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THANK YOU FOR ALL YOU

DO TO SUPPORT OUR

VALUED PATRONS &

THIS BENEFIT!!“Individual commitment to a group effort – that is what makes a team work, a company work, a society work, a civilization work.” – Vince Lombardi