Confidential & Proprietary Copyright © 2009 The Nielsen Company U.S. Retailing & Consumer Trends...

Confidential & Proprietary • Copyright © 2009 The Nielsen Company

U.S. Retailing & Consumer Trends

July, 2009

Todd Hale

SVP Consumer & Shopper Insights

Version 6 (1 of 3)

Confidential & ProprietaryCopyright © 2009 The Nielsen Company

April 19, 2023 U.S. Retailing & Consumer Trends

•Retailing Trends

•Retail Channel Demographics

• Buying Trends

•Consumer Trends

Topics


April 19, 2023 U.S. Retailing & Consumer Trends Page 3

•Retailing Trends



144,875

37,700

32,304

6,594

19,974

3,253

1,187

124,516

39,660

30,682

6,421

13,151

1,583

907

Convenience

Drug

Supermarkets

Mass Merch

Dollar Stores

Supercenters

Warehouse Clubs

20012008

Value & Convenience Winning as Evidenced by Increased Store Count

U.S. Store counts

Supermarkets have not grown at the rate of other retail channels – no wonder the channel has lost

shopping trips!

Source: Trade Dimensions® & TDLinx®, services of The Nielsen Company

1,419 fewer stores since end of 2007



43,080

17,806

8,157

3,699

2,522

2,565

999

41,169

14,309

8,598

2,816

1,613

1,328

2,458

Liquor

Hardware Home Improvement*

Electronics*

Office Supply*

Bookstores

Pet Stores*

Toy Stores

20012008

Variety Winning as Evidenced by Increased Stores from Category Killers

U.S. Store counts

Competitive pressure has had negative impact on Toy Stores & Electronics; look for significant store closings in many of these

channels in 2009

Source: Trade Dimensions® & TDLinx®, services of The Nielsen Company * Counts reflect chains – not independents

Toys R Us adding expanded consumables section in 260 of

600 stores

Source: USA TODAY



Walmart & Target Leading Store Expansion versus Major Grocers

992

1,510

1,606

1,602

2,484

1,348

1,689

4,244

682

1,561

1,460

549

2,433

2,088

1,056

3,219

Publix Grocery

Safeway Corp Grocery

Delhaize Grocery

SuperValu Corp Grocery

Kroger Corp Grocery

Kmart - Tot

Target - Tot

Wal-Mart - Corp*

2001

2008

*Includes Division 1, Supercenters, Neighborhood Markets & Sam’s Club

U.S. Store counts

Closing 50 poor

performers in early

2009

Due to economic slowdown, Target & Walmart to cut back expansion in 2009 & 2010


Target to aggressively expand food offering

Kroger opens 83rd Fresh Fare

format, 3rd under Kroger banner



Walmart Sales Almost as Large as Next Four Competitors

Top 10 Grocery Chains

$0 $20 $40 $60 $80 $100 $120 $140 $160

Walmart

Kroger

Safeway

Supervalu

Ahold USA

Publix

Delhaize America

H.E. Butt

A&P

Meijer

Est. Annual ACV (billions)

Source: Progressive Grocer – May 2009

$152.8

$146.3



2nd Tier of Top Grocery Chains @ $58 Billion – $2 Billion Less Than Kroger

2nd Tier Top Grocery Chains

$0 $2 $4 $6 $8 $10

Winn-Dixie

Whole Foods

Target

Trader Joe's

Giant Eagle

Save Mart

Albertson's LLC

Military

Hy-Vee

Wegmans

Est. Annual ACV (billions)

Source: Progressive Grocer – May 2009



Some Big Players Going w/Smaller Formats

Source: Company websites, Reuters, Orange County Register



Neighborhood Market by Walmart - Still in Expansion Plans

Store Count 148

Avg. $ per Store $30 Million

Avg. Store Size 42,000

Planned Growth Approx. 10 per year

Page 10



Focus on Freshness & Prepared Meals


April 19, 2023 U.S. Retailing & Consumer TrendsTopic of Presentation Page 12



Walmart Plans Growth in 15 Opportunity Markets

Eduardo Castro-Wright, president and chief executive officer of the U.S. division Wal-Mart Stores:

“We call them opportunity markets because they are markets where we have a 3.9% share as opposed to our average of 8.9%,” he explained. “Those 15 markets represent 34% of total U.S. retail sales …nearly the size of the entire retail market in China and larger than Russia and India [markets] combined.”

Some of the chain's ability to grow in those markets will come from the smaller “high efficiency” retail formats Wal-Mart is developing, he pointed out, “that would deliver much high sales per square foot and return on invested capital.”

Source: Supermarket News



Aggressively Promoting “Unbeatable Prices” Billboard Located 2 Blocks From Target HQ???



Aggressively Promoting “Unbeatable Prices” Billboard Located 2 Blocks From Target HQ???

While we question the authenticity of this photo, Walmart continues to be very focused on value & low prices. In a 7/1/09 full page ad in the Cincinnati Enquirer, Walmart made

the following claims:

“No one beats our Unbeatable prices.”

“We will match any local competitor’s ads.”



Source: Cincinnati Enquirer

Investing in New Formats



Great Example of a Retailer Marketing Value w/Frequent Shopper Cards

Source: Winn-Dixie website



“It’s So Easy! With the 1-2-3 REWARDS® MasterCard®, you’ll earn: 1 point per $1 spent anywhere MasterCard is accepted 2 points per $1 spent in our stores (excluding fuel centers) 3 points per $1 spent on the Kroger family of quality brands

Every 1,000 points = $5 in free groceries!

Plus, save up to 15¢ per gallon* with a bonus fuel discount at participating stores**!

Rewarding — Free groceries for every 1,000 points! Easy — Automatic reward certificates sent every three months for earned rewards Smart — No annual fee Safe — Zero fraud liability Accepted — Worldwide MasterCard acceptance for extra purchasing power when you need it”

Kroger Providing Shopper Incentives to Earn Free Groceries & Gas Discounts

Source: Kroger website



Coupons Back in Vogue

2.6 Billion

4.6 Billion

Q1 Q2 Q3 Q4

2008 -7% -1% -3% +10%

2009 +17% +33% ? ?

Source: Inmar CMS Promotions Services; excludes retailer coupons



Increased Coupon Activity

% Change in RedemptionOverall Food Non-Food

Q4 08 +10% +21% -3%

Q1 09 +17% +22% +9%

Q2 09 +33% +27% +46%

% Change in DistributionOverall Food Non-Food

Q4 08 +8% +16% +3%

Q1 09 +16% +25% +9%

Q2 09 +20% +31% +12%

Source: Inmar CMS Promotions Services; excludes retailer coupons



E-mailed Coupon Offers

Source: Company websites

“access and save exclusive coupons from your phone or PC directly to your savings card!”



Digital Coupon Offers From Safeway

Source: Company website



Cooking Videos Linked to Shopping Lists & Feature Activity

Tips & Recipes to Save MoneySource: Company websites



Niche Grocery Store Count Growth From Natural/Gourmet & Deep Discounters

1,187

957

309

269

943

578

164

130

Save-A-Lot

Aldi

Trader Joe's

Whole Foods

2001

2008

U.S. Store counts


Aldi looking to add 75 stores in 2009; 2008 sales grew 21%

Source: The Wall Street Journal



Aldi Delivers Extreme Value For The Home

Interesting tag line in

these economic

times

Rolling out new Fit & Active Private Label brand featuring “Fit Facts” on product labels


Rolling out new Fit & Active Private Label brand featuring “Fit Facts” on product labels




Save-A-Lot providing meal solutions for less than the price of a gallon of gas!

20 meal plans under $4.00 for a family of four

Source: Save-A-Lot website



Save-A-Lot providing meal solutions for less than the price of a gallon of gas!

20 30 meal plans under $4.00 $5.00 for a family of four

Source: Save-A-Lot website

In These Tough Times, Flexibility is Key



Meal Deals are Everywhere – Next Generation of Recipe Marketing




Fresh From Our Kitchen to Your Oven –Oven-Ready Entrees, Side Dishes & Desserts

Source: Company website and Progressive Grocer magazine



Jewel-Osco Driving Value in Their Perimeter & Throughout the Store

Source: Jewel-Osco flyer



Manufacturers: Pitching “Value” & Increasing Ad Spending

Search-engine optimization when consumers type “cereal” plus “deals” or “value”, Kellogg's Web site will pop up

The original dollar menu campaign. 10 cans soup for $10

Jointly promoting with Kraft: soup & grilled-cheese sandwiches

Local word-of-mouth campaign “So good for so little”

First time in more than a decade, advertising Banquet frozen dinners

15-second TV commercial for Kool-Aid showing how four pitchers of Kool-Aid cost same as a two-liter bottle of soda

Planning increase in ad spending & expanding number of brands it advertises, including Dinty Moore stews

Announced plans to increase consumer marketing 8% to 12% in its new fiscal year as part of a two-year growth plan

“Nestlé Helps Makes Family Night Easy.” Free ice cream & DVD rental w/$15 purchase of select Nestlé brands

Multimillion dollar campaign

Using online & targeting individuals to a narrower focus of consumers

Source: Company Websites & Ads



Manufacturers: Positioning, Cause Marketing & Special Offers

“Best night cream, best eye treatment, hydrates better than even the $350 cream! Now save $5”

Source: Company Websites & Ads

“The Beauty Secret is Out

70% of salon-brand users agree—their brand didn’t beat Pantene”

“working to make this world a cleaner, healthier, better place…today, for the next generation and beyond.”

Web site with consumer tips & on-line coupon & other promotional offers

Oral & dental care information along with access to special offers w/capture of contact information for CRM initiatives

“support program offers advice and counseling for smokers trying to quit using GSK's nicotine replacement therapy products”

“ARM & HAMMER® works with adoption shelters to provide valuable information and discounts at the point of adoption”

“In a world of unachievable, airbrushed images, Dove is redefining beauty with the worldwide Campaign for Real Beauty”



6,456

4,918

598

399

179

4,298

3,575

3,602

493

278

128

CVS

Walgreens

Rite Aid

Sam's

Costco

BJ's20012008

Rapid Store Growth From Leading Drug Chains; Warehouse Stores Growing too

Decreasing openings from 495, 425 & 365 over the

next three fiscal years

U.S. Store counts


Opening 6 to 8 stores in 2009Opening 6 to 8 stores in 2009

6,527



The Warehouse Club Treasure Hunt

Page 37



Significant Online Business From Club Retailers

“Savings of up to 30%* off supermarket prices”




Sam’s Club Focus on Small Business & Trial Programs to Build Membership

Source: Company websiteSource: Company website



Coupon Savings, Trial Programs, Sampling & Club Cards All Part of the Experience



Kraft & Sam’s Club Collaborate on “two week dinner plan”

Source: www.SamsClub.com



Merchandising Wide Variety of Categories




Walgreens Helping Shoppers in Many Ways

Source: Company website & newsletter



Walgreens Café W – Back to The Future



Walgreens Café W – Back to The Future

“Walgreens … will sell a limited selection of beer and wine at 70 percent of its 6,857 drugstores ...

Stores nationwide are being redesigned by department … in an effort to make them easier to shop …

…will introduce more private-label merchandise, ranging from paper towels to over-the-counter medications.”

Source: Associated Press



Convenience/Gas - Current Industry Landscape

•Still huge and fragmented, but consolidation starting

•Single-store owners contracting

•Foodservice rising to replace lost cigarette revenue

• Industry counting on Foodservice to drive 2009 sales



Top Ten Convenience Store Chains Dominated by Petroleum Companies & Franchise Operators

Store Count

0 1000 2000 3000 4000 5000 6000 7000

7-Eleven

BP

Shell

Exxon Mobil

ChevronTexaco

Couche-Tard

Speedway SuperAmerica

CITGO

Sunoco

The Pantry

Company

Franchise

Source: Convenience Store News Hot top 100 – August 2008

62% of top 100 stores from top 10 – off 61 units as oil

companies divest or franchise retail operations



2nd Tier of Convenience Store Chains Dominated by Company-Owned Operators

Store Count

0 500 1000 1500 2000

Valero

ConocoPhillips

Casey's

Kroger

Amereda Hess

Wawa

Cumberland Farms

Racetrac

Susser Holdings

Delec Holdings

QuikTrip - Tulsa

Company

Franchise




3rd Tier of Convenience Store Chains Dominated by Company-Owned Operators Too

Store Count

0 100 200 300 400 500

Kum & Go

Holiday

Military

CHS Inc/Cenex

Sheetz

WilcoHess LLC

Kwik Trip - La Crosse

Pilot

Getty

Stewart's

Company

Franchise




2006

2007

2008

Chain Single StoreSource: Convenience Store News/Nielsen TDLinx®

144,875144,87561.8%61.8%

146,294146,294

62.0%62.0%

145,119145,11938.0%38.0%

62.0%62.0%

38.2%38.2%

38.0%38.0%

Chain Single Store

2008

2007

2006

Single-Store C-Store Operators Drive 1% Decline in Store Count, but Still the Majority



Giant To Go – a Convenience Store or Small Grocery Store?

Source: Supermarket News and Convenience Store News



Source: Public Domain (store interior), company website (small images), Gary M. Baranec/Associated Press (touch screen)

A Fun Place to Go for Food – Shoppers Use Touch Screens to Place Orders




WaWa Drives Strong Food Service Business with Touch Screen Order Process too




One of Five Convenient Store Divisions from Kroger



7-Eleven Offering Meal Deals Too




BP Franchises – Food Service Focus in Channel Has Never Been Stronger




6,610

3,507

652

280

4,244

5,162

3,942

1,654

307

129

3,219

Dollar General

Family Dollar

Dollar Tree

Fred's

Ninety-NineCents Only

Wal-MartCorporate*

20012008


Rapid Store Expansion Within Dollar Channel

1,025 new Walmart Corp stores since 2001, but 8,291

new Dollar Stores from these 5 chains

U.S. Store counts


8,436




6,610

3,507

652

280

4,244

5,162

3,942

1,654

307

129

3,219

Dollar General

Family Dollar

Dollar Tree

Fred's

Ninety-NineCents Only

Wal-MartCorporate*

20012008


Rapid Store Expansion Within Dollar Channel

1,025 new Walmart Corp stores since 2001, but 8,291

new Dollar Stores from these 5 chains

U.S. Store counts


8,436

Planning to open 450 new stores; up from 207 this

past FY; remodeling or relocating 400 other stores




Dollar Stores Increasing Branded Focus; Expanding Price Points & Promotions




Strong Focus on Pets




Strong Focus on Pets, “Me-Too” Store Brands




Strong Focus on Pets, “Me-Too” Store Brands & Easy Meals




Shakeup of The Retail LandscapeAnnounced Store Closings• Rite-Aid – 117 (on top of 200 in prior

fiscal)• SuperValu – 50 • Sear’s Holding – 24• Bruno’s – 10• Penn Traffic – 8• Sweetbay – 7• Sam’s Club (Canada) – 6 • Bashas’ – 15• Balducci’s – 5• A&P SuperFresh – 5• Lane Bryant/Catherine's – 150• Sprint – 133 stores • FYE – 130• Office Depot – 112 stores• Zales – 105• Macy’s – 10

• Starbucks closing nearly 1,000 underperforming stores worldwide in less than 2 years

• Circuit City closing all 567 stores

• Linens ’n Things – closing all 571 stores & shifting to online model



Shakeup of The Retail LandscapeAnnounced Store Closings• Rite-Aid – 117 (on top of 200 in prior

fiscal)• SuperValu – 50 • Sear’s Holding – 24• Bruno’s – 10• Penn Traffic – 8• Sweetbay – 7• Sam’s Club (Canada) – 6 • Bashas’ – 15• Balducci’s – 5• A&P SuperFresh – 5• Lane Bryant/Catherine's – 150• Sprint – 133 stores • FYE – 130• Office Depot – 112 stores• Zales – 105• Macy’s – 10

• Starbucks closing nearly 1,000 underperforming stores worldwide in less than 2 years

• Circuit City closing all 567 stores

• Linens ’n Things – closing all 571 stores & shifting to online model

NEW YORK (Reuters) – General Growth Properties Inc, the second largest U.S. mall owner, filed for bankruptcy protection on Thursday in one of the biggest real estate failures in U.S. history.

Ending months of speculation, the Chicago-based mall owner, which listed total assets of $29.56 billion and total debts of $27.29 billion, sought Chapter 11 bankruptcy protection from creditors along with 158 of its more than 200 U.S. malls, while it seeks to restructure some of its debt.

04/16/2009



Rate of Restaurant Openings Decreasing & Eclipsed by Closings

Dining Location Openings & Closings - Total U.S.

05,000

10,00015,00020,00025,00030,00035,00040,000

2004 2005 2006 2007 2008 YTD 2009

New Closed

Source: Trade Dimensions® & TDLinx®, services of The Nielsen Company; thru April 2009



Dining: That was then...Same store sales trends (Year Ago % Change)

FlemingsOn the Border

Mac GrillBonefish

Ruby TuesdayOutback

O'CharleysPF ChangsMimis Café

Ruth ChrisApplebees

Bahama BreezeRed Lobster

MaggianosChilisCarrabas

Cheesecake FacLandrys

Cap GrilleJ Alexanders

Grand LuxTexas Roadhouse

Olive GardenBenihanaCPKRed Robin

Kona GrillBJ's

Buff Wild WingsMortons Grill Concepts

McCorm. & Schmicks

-10 -8 -6 -4 -2 0 2 4 6 8 10Source: Company Reports -NRN (Dec 22, 2008)

20072007

20 of 32 operators reported same

store gains; Overall avg: +1%

20 of 32 operators reported same

store gains; Overall avg: +1%



Dining: This is now!Same store sales trends (Latest quarter % change)

MortonsFlemings

Ruth ChrisCap Grille

BonefishMcCorm. & Schmicks

BenihanaMac Grill

MaggianosOutback

Kona GrillLandrys

Bahama BreezeRed Robin

CarrabasMimis CaféPF Changs

Ruby TuesdayJ Alexanders

CPKChillis

On the BorderGrand LuxRed Lobster

O'CharleysCheesecake Fac

ApplebeesTexas Roadhouse

Olive Garden

Buff Wild Wings

BJ's

Grill Concepts

-25 -23 -21 -19 -17 -15 -13 -11 -9 -7 -5 -3 -1 1 3 5 7Source: Company Reports - NRN (May 11, 2009)

20082008

30 of 32 operators reported same store losses Overall avg: -8.2%

30 of 32 operators reported same store losses Overall avg: -8.2%

Guest Check

Customer Traffic

Guest Check

Customer Traffic



Store Closings – How Will They Impact Your Business?

Opportunity for retailers to grab cheap property, expand store count and enhance market share

Threat to retailers relying on traffic draw from closed site(s) – be prepared to relocate quickly

Threat to manufacturer sales – be prepared to shift sales efforts to winning retailers



Shopping Behavior Trends

• Retailers can grow their sales by:– Increasing their shopper base– Driving shopping frequency– Building baskets

• Leveraging categories & brands that impact one or more of these components

• Driving “need state” trip opportunities– Health & wellness– Meal occasions– Large versus small trips– Time-starved consumers



99

79

81

64

68

50

40

100

95

86

59

51

50

45

Grocery

Mass Merch

Drug

Dollar

Supercenters*

Warehouse

Conv/Gas20012008

Value Winning As Evidenced by Consumer Acceptance

Benefits from new store openings

% Household Penetration

**

Source: Homescan®, a service of The Nielsen Company; excludes gas only trips** Note: Conv/Gas channel behaviors understated because of the high level of gasoline only buys & purchases of immediate consumables *Includes Kmart, Target & Walmart



59

26

14

14

14

13

11

72

20

24

15

15

11

10

Grocery

Supercenters*

Mass Merch

Drug

Conv/Gas

Dollar

Warehouse20012008

Grocery & Mass trips continue to drop

Value Channels Grabbing Trips

Trips Per household

**




Value Retailing Driving Price Compression

$100

$65

$49

$41

$24

$19

$14

$82

$51

$39

$32

$19

$10

$11

Warehouse

Supercenters*

Mass Merch

Grocery

Drug

Conv/Gas

Dollar

20012008

Average $ Basket Ring

**




Variety Winning as Evidenced by the Size of Alternative Channel Shopper Bases

74

70

47

45

36

32

26

22

20

77

78

48

48

38

30

31

23

31

Hardware & Home Improvement

Department

Electronics

Office Supply

Bookstores

Pet

Auto

Liquor

Toy Stores

2001Mid-2008

Significant drop in shopper bases for Department & Toy Stores; declines in all category killers

except Pet

% Household Penetration

Source: Homescan®, a service of The Nielsen Company



Low Shopping Frequency in Other Retail Channels & Some Reductions

7

6

7

5

5

3

3

2

2

7

7

7

5

5

3

3

3

3


Department

Liquor

Bookstores

Pet

Electronics

Office Supply

Auto

Toy Stores

20012008

Trips per Household




Shopping Baskets Vary, but Large Baskets in Many Alternative Retailers

$112

$86

$59

$51

$51

$37

$34

$33

$25

$93

$73

$46

$42

$42

$27

$25

$25

$17

Electronics

Department

Toy Stores

Office Supply


Pet

Auto

Liquor

Bookstores

2001

2008

Average Basket Ring




% Change in Retail Channel Shopping Trips

-12

-10

-8

-6

-4

-2

0

2

4

6

8

10

07/1

2/08

08/0

9/08

09/0

6/08

10/0

4/08

11/0

1/08

11/2

9/08

12/2

7/08

01/2

4/09

02/2

1/09

03/2

1/09

04/1

8/09

05/1

6/09

06/1

3/09

4-week period ending

Dollar

Club

Supercenter

Grocery

Drug

Mass Merch

Conv/Gas

Source: Homescan, a service of The Nielsen Company; excludes gas only trips

Value Retailers Outperforming Grocery, Drug, Mass & C-Store Trips – Grocery Trips Flat During Recession




-15

-10

-5

0

5

10

15

20

07/1

2/08

08/0

9/08

09/0

6/08

10/0

4/08

11/0

1/08

11/2

9/08

12/2

7/08

01/2

4/09

02/2

1/09

03/2

1/09

04/1

8/09

05/1

6/09

06/1

3/09


Online

Dollar

Club

Supercenter

Grocery

Drug

Mass Merch

Online Retailing Driving Strongest Trip Growth





-40

-30

-20

-10

0

10

20

07/1

2/08

08/0

9/08

09/0

6/08

10/0

4/08

11/0

1/08

11/2

9/08

12/2

7/08

01/2

4/09

02/2

1/09

03/2

1/09

04/1

8/09

05/1

6/09

06/1

3/09


Toy

HHI

Apparel

Office Supply

Department

Electronics

Liquor Stores

Discretionary Retail Channel Trips Still Soft




% Change in All Channel Shopping Trips

-8

-6

-4

-2

0

2

4

6


$70K +

$30 to $69.9K

< $29K

Continued Trip Compression From Lower Income, While More Affluent Showing Trip Growth in 2009




% Change in Grocery Channel Shopping Trips

-6

-4

-2

0

2

4

6

8

07/1

2/08

08/0

9/08

09/0

6/08

10/0

4/08

11/0

1/08

11/2

9/08

12/2

7/08

01/2

4/09

02/2

1/09

03/2

1/09

04/1

8/09

05/1

6/09

06/1

3/09


$70K +

$30 to $69.9K

< $29K

More Affluent Shopping Grocery More Often & Account For Largest Share of Channel Sales

Share of Basket Ring Dollars*

41%

36%

23%

* Latest Period




% Change in Grocery Channel Shopping Trips

-6

-4

-2

0

2

4

6

8

07/1

2/08

08/0

9/08

09/0

6/08

10/0

4/08

11/0

1/08

11/2

9/08

12/2

7/08

01/2

4/09

02/2

1/09

03/2

1/09

04/1

8/09

05/1

6/09

06/1

3/09


$70K +

$30 to $69.9K

< $29K

More Affluent Shopping Grocery More Often & Account For Largest Share of Channel Sales


41%

36%

23%

* Latest Period


50% of adults w/ incomes of $70k plus eating out less to

save expenses – versus 46% for total adults

Source: 4/09 Nielsen Homescan Survey

The heck with meal deals, how about recipe ideas, in-store demos

and cooking classes in your stores serving

affluent?



% Change in Grocery Channel % Items on Deal

-6

-4

-2

0

2

4

6

8

10

07/1

2/08

08/0

9/08

09/0

6/08

10/0

4/08

11/0

1/08

11/2

9/08

12/2

7/08

01/2

4/09

02/2

1/09

03/2

1/09

04/1

8/09

05/1

6/09

06/1

3/09


$70K +

$30 to $69.9K

< $29K

All Incomes Increasingly Looking for Grocery Deals

% Items on Deal*

32%31%29%

* Latest Period




% Change in Supercenter Channel Shopping Trips

-4

-2

0

2

4

6

8

10

12

07/1

2/08

08/0

9/08

09/0

6/08

10/0

4/08

11/0

1/08

11/2

9/08

12/2

7/08

01/2

4/09

02/2

1/09

03/2

1/09

04/1

8/09

05/1

6/09

06/1

3/09


$70K +

$30 to $69.9K

< $29K

More Affluent Driving Stronger Supercenter Trip Growth, but Only Drive 1/3rd of Sales


32%

40%

28%

* Latest Period




Affluent Drive > Sales & > Trip Growth; Middle & Low Income Shopping Club More Frequently in ‘09

% Change in Warehouse Club Channel Shopping Trips

-10

-8

-6

-4

-2

0

2

4

6

8

10

12

07/1

2/08

08/0

9/08

09/0

6/08

10/0

4/08

11/0

1/08

11/2

9/08

12/2

7/08

01/2

4/09

02/2

1/09

03/2

1/09

04/1

8/09

05/1

9/09

06/1

3/09


$70K +

$30 to $69.9K

< $29K


57%

31%

12%

* Latest Period




Middle Income & More Affluent Finding Value in Dollar Stores, but Low Income Drive 46% of Sales

% Change in Dollar Store Channel Shopping Trips

-4

-2

0

2

4

6

8

10

12

14

07/1

2/08

08/0

9/08

09/0

6/08

10/0

4/08

11/0

1/08

11/2

9/08

12/2

7/08

01/2

4/09

02/2

1/09

03/2

1/09

04/1

8/09

05/1

6/09

06/1

3/09


$70K +

$30 to $69.9K

< $29K

19%

35%

46%


* Latest Period




% Change in Drug Store Channel Shopping Trips

-12

-10

-8

-6

-4

-2

0

2

4

6

8

10

07/1

2/08

08/0

9/08

09/0

6/08

10/0

4/08

11/0

1/08

11/2

9/08

12/2

7/08

01/2

4/09

02/2

1/09

03/2

1/09

04/1

8/09

05/1

6/09

06/1

3/09


$70K +

$30 to $69.9K

< $29K

Middle & Low Income Making Fewer Trips to Drugstores; More Positive Trip Growth by Affluent

36%

37%

27%


* Latest Period




% Change in Mass Merchandisers* Channel Shopping Trips

-16

-14

-12

-10

-8

-6

-4

-2

0

2

4

07/1

2/08

08/0

9/08

09/0

6/08

10/0

4/08

11/0

1/08

11/2

9/08

12/2

7/08

01/2

4/09

02/2

1/09

03/2

1/09

04/1

8/09

05/1

6/09

06/1

3/09


$70K +

$30 to $69.9K

< $29K

Tough Year for Regular Mass Formats

30%

37%

23%


* Latest Period; excludes Supercenter formats




% Change in Convenience/Gas Channel Shopping Trips

-20

-15

-10

-5

0

5

10

07/1

2/08

08/0

9/08

09/0

6/08

10/0

4/08

11/0

1/08

11/2

9/08

12/2

7/08

01/2

4/09

02/2

1/09

03/2

1/09

04/1

8/09

05/1

6/09

06/1

3/09


$70K +

$30 to $69.9K

< $29K

Middle & Low Income Making Fewer Trips to Convenience/Gas

26%

36%

38%


* Latest Period




•Retail Channel

Demographics



Club Sales Skew to Affluent, C-Store & Dollar Sales Overdeveloped Among Lower Income

Distribution of Dollars

125

11 12 16 1524 27

10

6

10 1113 13

1618

10

7

11 1011 12

1313

10

8

10 9

10 11

1110

17

16

17 17

16 18

1413

18

22

18 1816

1613

102336

23 23 18 15 10 8

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Total Outlets Club Mass Grocery Drug Supers C-Store Dollar

<$20,000 $20,000-29,999 $30,000-39,999 $40,000-49,999

$50,000-69,999 $70,000-99,999 $100,000+

Source: Homescan®, a service of The Nielsen Company; UPC-coded purchases; 52-week period ending 12/27/2008



Supers Skew Toward Caucasian; C-Store & Dollar African American; Club & Mass Hispanics


7882 80 76 75 75 73 70

2218

2024

25 25 27 30

1110

9 139 11

16 20

9 7 8 812 11

10 812 9 11 11 16 15 11 11

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Total Outlets Supers Grocery Drug Club Mass C-Store Dollar

CAUCASIAN NON-CAUCASIAN AFRICAN AMER. ASIAN OTHER RACE HISPANIC




Smaller Formats Attract Smaller Households


17 15 11 14 17 20 23 24

3429 35 32

33 3237 38

3539 37 38

36 3329 29

14 17 17 16 14 15 11 9

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Total Outlets Mass Club Supers Grocery Dollar C-Store Drug

1 MEM 2 MEM 3-4 MEM 5+ MEM




Dollar & Drug Skew to Older; C-Stores Attract Male-Only Households


17 21 2216 17 13 11 12

1720 19

18 1717

15 13

2323 22

23 2323

2421

1514 15

17 14 1916

17

1211 11

12 13 15

10 20

15 11 11 15 16 1323

17

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Total Outlets Mass Supers Club Grocery Dollar C-Store Drug

UNDER 35 35-44 45-5455-64 65+ NO FEMALE HEADColumn 8 Column 9 Column 10Column 11 Column 13 Column 14Column 15 Column 16Source: Homescan®, a service of The Nielsen Company; UPC-coded purchases; 52-week period ending 12/27/2008



Big Box Retailers Attract Sales From Households With Kids


6071 67

59 59 58 53 52

15

1010

15 13 1718 20

2215

1822 23 22

27 27

19 14 17 19 21 20 22 21

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Total Outlets Drug C-Store Grocery Dollar Club Supers Mass

NONE < 18 ANY < 6 ANY 6-12 ANY 13-17




54

46

37

63

37

63

34

66

30

70

26

74

25

75

Mal

es

Femal

es Dollar

Mass

Supers

Drug

Grocery

WHC

Conv/Gas

55

45

39

61

39

61

35

65

31

69

28

72

27

73

Mal

es

Femal

es Dollar

Mass

Supers

Drug

Grocery

WHC

Conv/Gas

Share of Retail Channel Shopping Trips

Source: Homescan, a service of The Nielsen Company; 52-weeks ending 12/25/04 versus 52-weeks ending 05/30/09

2004 2009

Except for Convenience/Gas, Females Dominate Channel Trips – Males Increase Share in All Channels



$84.96

$60.16

$44.37

$37.44

$21.79

$13.86

$12.19

$80.48

$45.36

$34.55

$27.49

$18.15

$10.35

$8.93

Club

Super

cent

erM

assG

roce

ry

DrugCon

v/Gas

Dollar

Males

Females

$99.49

$69.12

$49.17

$43.50

$24.96

$20.34

$13.99

$93.26

$52.25

$41.08

$41.67

$21.04

$16.00

$10.61

Club

Super

cent

erM

assG

roce

ry

DrugCon

v/Gas

Dollar

Males

Females

Average Dollar Basket Size

Source: Homescan, a service of The Nielsen Company; 52-weeks ending 12/25/04 versus 52-weeks ending 05/30/09

2004 2009

Higher Basket Values for Female Shoppers – Likely Those Making the Larger Planned Trips



•Retailing Trends

Summary



“Great Recession” Driving Fundamental Shifts in Consumer Shopping

Value retailers winning and will likely maintain preferred status for many as economy improves

Recovery for discretionary retailers will lag those in CPG-space

Accelerated industry innovation & collaboration

New formats

Store expansion

Meal deals

Value messaging and promotions

On-line engagements

New and expanded offerings

Diverse retail shopper bases enables opportunities to differentiate via assortment, pricing, promotion, & communication



Contributing Authors

• Doug Anderson

• Patrick Barnard

• Cindy Bonini

• Wendy Bordewisch

• Danny Brager

• Tom Donato

• Mark Elola

• Michelle Engholm

• Pam Leibfried

• Steve Knight

• Bill Petschow

• Tom Pirovano

• Mitchell Ross

• James Russo

• Mary Ellen Ryan

• Scott Smith

• Kimberly Vanderberry

Confidential & Proprietary Copyright © 2009 The Nielsen Company U.S. Retailing & Consumer Trends...

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