1.Uncovering the Myths around Unplanned PurchasingDr David Bell Wharton School (Philadelphia)Dr Daniel Corsten IE Business School (Madrid) Dr George Knox Tilburg University (Tilburg)

2. It is widely believed that the majority of purchases are unplanned Oft-cited POPAI Consumer Buying Habit Study70% of In-Store Purchasing Decisions are Unplanned Paco Underhill (Why We Buy)Supermarkets are places of high impulse buying fully 60 to 70 percent of purchases there were unplanned, grocery industry studies have shown us. 3. Our Study 4. Key Messages from Our Research Only 20% of category purchases are unplanned Not proportional to basket size Enormous differences across households Recommended Actions Enhancing in-store marketing (state) Attracting leisurely shoppers (trait) 5. Study Features Definitionunplanned category purchases Locationthree European countries Storesmultiple chains Shopperstracked over time and stores 6. Approach Explain number of unplanned category purchasesin shopping basket Control for differences Across shoppers Across shoppers and stores Across shoppers, stores, and trips 7. Comprehensive Shopper Model Household Traits: Shopping Styles, Life Stage Store Perceptions: Self-reported store assessments Shopping TripContext: Travel mode, gender, etc. Shopping TripIn-Store Process: Offers seen instore, etc. 8. Key Findings 9. The majority of category purchases are NOT unplanned While most shoppers do it 75% of households And many trips see it 40% of shopping trips The overall rate is not that high only 20% of all category purchases are unplanned 10. Top 5 Enablers of Unplanned Purchasing 1. Shopper Sees Offers In-Store State (53%)2. Shopper Above Average Income Trait (45%)3. Shopper Travels by Car State (44%)4. Shopper is Informed at the Shelf Trait (35%)5. Shopper on Unplanned TripState (23%) 11. Top 5 Barriers to Unplanned Purchasing 1. Shopper is Fast and Efficient Type Trait(82%)2. Shopper from Larger HouseholdTrait(65%)3. Shopper in Fast and Efficient State State (53%)4. Shopper from Older HouseholdsTrait(47%)5. Shopper is Informed by Newspaper Trait(25%) 12. Trait Versus State: Changing the Mix of Shoppers May be the More Effective Strategy Imagine the store wishes to increase the rate ofunplanned category Thank You! ... purchasing, then 10% increase in Leisurely Shoppers =Questions &shoppers see In-Store Deals 40% increase of trips whereAnswersInvestmentAttract Leisurely1xShoppersIncrease In-StoreOffers4x 13. Customer-centric RetailingSteve Gray, CEO of emnos GmbHECR Europe Conference, 28 May 2008 14. 1 Introducing emnos and "customer-centric retailing" ECR Europe Conference - 28 May 2008 2 15. emnos helps leading retailers and suppliers achieve customer- centric growth Steve Gray CEO of emnos & Director ofOffices : London, Munich, Paris, MadridLoyalty Partner gmbhSkills: consulting, analysis, research,Formerly Managing Directortechnologyof dunnhumby UK & Ireland &Ownership : 100% Loyalty Partner GmbHdirector of dunnhumby USAECR Europe Conference - 28 May 2008 3 16. emnos follow a process called "customer centric retailing" that creates significant value for customers & shareholders 123 CustomerCustomer Customer PotentialStrategy Engagement user trainingOrganisation Alignment processes organisation change participation with retailerSupplier Alignment jointly agreed growthECR Europe Conference - 28 May 2008 4 17. 2 From loyalty data to customer insight ECR Europe Conference - 28 May 2008 5 18. Customer-centric retailing begins with loyalty data Consumer Panel Data ResearchLoyalty Card Shopper Purchase ResearchData ECR Europe Conference - 28 May 2008 6 19. Loyalty data enables unmatchable customer insight Customer Behaviour Lifestyle & Lifestage What did my customers do ?What type of person areWhere did they do it ?they?Who else are they like ?Attitudes Value & Potential Why did they do it ?What are my customersworth today ?How much could they beworth tomorrow ? ECR Europe Conference - 28 May 2008 7 20. "Insight should be a film not a photograph" youngyoung familyretiredLifestagesingle marriedwith kidscouple person couple Shoppingtrip trip triphabitsfrequency valuetime healthy tradi- pricegourmetLifestyle eatingtional sensitive foods organicShopping big top up eat nonmissionbasketsshopnow foodECR Europe Conference - 28 May 2008 8 21. Using insight to create value for 3 customers & shareholders ECR Europe Conference - 28 May 2008 9 22. Insight enables value growth via communication, store & category optimisationRelevant andengaging customercommunicationsRetailercustomerdatabaseStore clusters &customer, andlayouts optimised retailer and insightfor customers brand loyaltyplatformSupplierCategories optimisedfor customers customer feedback loop (behavioural what they did,attitudinal why they did it) ECR Europe Conference - 28 May 2008 10 23. Customer-centric communications: helping PAYBACK to become Europe's largest and most profitable coalition loyalty programme AccountPersonalisation 2008-? Statement2004-200710m+2000-2003 variations 2m+32 variations variations Themedio n Mailings ed e volut h t-bas t- In s igTimePartner MailingsMulti channel communication ECR Europe Conference - 28 May 2008 11 24. Customer-centric pricing: focus on price sensitive products bought by price senistive customersCustomers price sensitivity is identified by The importance of a product for price-sensitive analysis of buying behaviour and market researchcustomers influences its priceQuality-focusedPrice-focused Top products for very price-sensitive customers segments segmentsMost Price-sensitive Acheteurs rationnels Repas du travailleur Jeunes Achats rapides Acheteurs bas prixJeunes couples Jeunes famillesFamille Budget Produits fraisAlicaments Ligne et BeautBio Sant-1.00 -0.80 -0.60 -0.40 -0.20 0.00 0.20 0.40 0.60 0.80 1.00 Customer-centric pricingoptimisation achieved savings of 18m for a major retailer ECR Europe Conference - 28 May 2008 12 25. Customer-centric ranging: optimise range based on catchment area customer insightLocal catchment area flex Core range by customer segment Produits T1VMHProduits T2 Produits T3 Produits drfrencer Taux de rachatCustomer-centric ranginggrew sales in a major food category by 10%ECR Europe Conference - 28 May 2008 13 26. Customer-centric promotions: focus on promotions that are relevant to key customer segmentsPromotions are analysed for their impact andWe analyse promotional participation andeffectiveness against customer criteriaattitudes by customer segmentMost% spend promotions20% 25% 30% 35% 40% 50% 55% 60% 65%Performance dimensionsprice-sensitive CategorySalesProfitabilityInnovative High performanceProfitable I like to buy on promotion Switching High penetrationUnprofitable Rewarding High impact Low involvementPositive attitudeMost towards promotions Impact on category Impact on sales Impact on customer quality- profitabilityfocused 50% 55% 60% 65% 70% 75% 80% 85% 90%Customer-centric promotions optimisation generated savings of 10m and sales uplifts of 32mECR Europe Conference - 28 May 200814 27. Customer-centric store layout: optimise layout based on customer shopping patterns Identification of the most frequently-bought combined The store arrangement is adapted to reflect buyingproducts in relation to their distance in store behaviour and maximize purchasingMenswear The analysis of combined Mens underwear TVMen Home & LeisureChildrenswear WomensAccessories WomensFashion purchases shows whichHOME IT and Photo Radio / TelecommunicationDeSEASONAL sproducts are boughtImportant equipment corCD /Photoat Catering Womens underwear ioFoodWomennDVD Health andBeautytogether or bought by the same person SportBoys GirlsHousehold productsBooks and leisureTextilesVaris, produitsCooking PlantsLivres Stationery anniversaire EdibleseGames and Books Photo HouseHardwAnimalshold are MensAccessories and Car Clothi sng hygienePEM CampingUnderwear Outerwear aGarden Tools bgf Considering the currentHouseholdappliances store arrangement WomeClothi Videons ngITc Entrance Optimising store layout generated a LFL sales increase of 6% for a major food retailerECR Europe Conference - 28 May 200815 28. Using loyalty data to build collaboration & "Jointly 4 Agreed Growth" strategies with suppliers ECR Europe Conference - 28 May 2008 16 29. Optimising value for customers and shareholders requires the key principles of ECR to be followed"fulfilling consumer wishes better, faster and at less cost"RetailerSupplier"true sharing of knowledge" "set joint metrics" "joint business planning""analyse outcomes" ECR Europe Conference - 28 May 2008 17 30. Trusted 3rd parties help ensure a win / win / win Optimise processes & total system costs Act as the independent voice of the customer "Keep the retailer / supplier / customer song in tune"ECR Europe Conference - 28 May 2008 18 31. Thank yousteve.gray@emnos.com www.emnos.comECR Europe Conference - 28 May 2008 19 32. Integrated CollaborativePlanningTurning Shopper Insights into Growth Copyright Information Resources, Inc., 2007. Confidential and proprietary 33. Objectives and Agenda Agenda AgendaConcept OriginationConcept OriginationObjectivesObjectives Vision Vision Traditional BarriersTraditional BarriersChallenges Challenges Ingredients for Success Ingredients for SuccessSuccess Factors Success FactorsPilot Event and ResultsPilot Event and ResultsImplications and Lessons Implications and LessonsCopyright Information Resources, Inc., 2007. Confidential and proprietary2 34. Leveraging Ahold USA and Unilever Assets Existing AssetsExisting AssetsCustomer Centric RetailingDeep Customer Understanding Deep Customer Understanding 10,000,000+ HouseholdsSignificant Customer Base Significant Customer Base #1 in Key MarketsPowerful Retail Brand Equity Powerful Retail Brand Equity23% Aggregated Market ShareStrong CPG Brand Equities Strong CPG Brand Equities 27 Brands Bought in 6 Departments Scale CPG Brand Portfolio Scale CPG Brand Portfolio National and Local Vehicles Strong CPG Marketing Vehicles Strong CPG Marketing Vehicles In Store Execution in nearly Store Execution Store Execution 700 StoresCopyright Information Resources, Inc., 2007. Confidential and proprietary3 35. Traditional Collaboration BarriersSiloed Retail Organization Store DepartmentStore DepartmentManagersManagersStore ManagersStore ManagersStore OperationsStore OperationsSales PlanningSales PlanningMerchandisingMerchandisingBrand MarketingBrand MarketingCRMCRMPricingPricingConsumer InsightsConsumer Insights Copyright Information Resources, Inc., 2007. Confidential and proprietary 4 36. Traditional Collaboration BarriersSiloed CPG Organization Siloed Retail OrganizationGrocery Division Grocery DivisionSales Team Sales Team Store DepartmentRefrigerated DivisionRefrigerated Division Store Department Trade Marketing Trade Marketing ManagersSales TeamSales Team Managers Co-Marketing Frozen Co-MarketingFrozenDivisionDivision Store ManagersTrade MarketingTrade Marketing Store Managers Consumer Promotions Store OperationsCo-Marketing Promotions HBC Division HBC Division ConsumerCo-Marketing Store Operations CRM CRMSales Team Consumer Promotions Sales TeamConsumer Promotions Sales Planning Sales Planning Brand ManagementTrade Marketing Management CRM Brand Trade MarketingCRM Merchandising MerchandisingAdvertising AdvertisingCo-Marketing Management Brand Management Co-Marketing ResearchBrand Brand Marketing Brand MarketingMarketConsumer Market Research ConsumerPromotions AdvertisingPromotionsAdvertising CRM CRMCRM Market Research CRM Market Research Pricing PricingBrand Management Brand Management Consumer Insights Consumer InsightsAdvertising AdvertisingMarket Research Market Research Copyright Information Resources, Inc., 2007. Confidential and proprietary5 37. Traditional Collaboration BarriersSiloed CPG Organization Siloed Retail Organization Grocery DivisionGrocery DivisionSales Team Sales Team Store Department ManagersRefrigerated Division Refrigerated DivisionStore Department Managers Trade Marketing Trade Marketing Store Managers Sales Team Sales TeamStore ManagersFrozen DivisionCo-Marketing Frozen Division Store OperationsCo-MarketingTrade MarketingStore Operations Trade MarketingConsumer Promotions Sales Planning Co-MarketingPromotions ConsumerHBC Division Co-MarketingSales PlanningCRM HBC Division CRM MerchandisingMerchandising SalesConsumerPromotionsConsumer Promotions SalesTeam ManagementBrand Management Team Brand MarketingCRMBrandTradeCRMMarketingBrand Marketing Advertising Trade Advertising Marketing CRMBrand ManagementCo-MarketingResearch Brand ManagementCRM Market Co-MarketingResearch Market PricingAdvertisingConsumer Promotions AdvertisingPricingConsumer Promotions Consumer InsightsConsumer Insights CRM MarketResearch CRMMarket ResearchBrand Management Brand ManagementAdvertising AdvertisingMarket Research Market ResearchConflicting ObjectivesMy Brand EquityMy Brand Equityvs.vs.My Store Equity My Store EquityMy Brand ValueMy Brand Value vs.vs.My Category Value My Category ValueMy Brand ShareMy Brand Share vs.vs.My Market Share My Market ShareMy Brand MarginMy Brand Marginvs.vs.My Category Margin My Category MarginMy Brand ROIMy Brand ROI vs.vs.My Category ROI My Category ROI Copyright Information Resources, Inc., 2007. Confidential and proprietary 6 38. Traditional Collaboration BarriersSiloed CPG Organization Siloed Retail OrganizationGrocery Division Grocery Division Sales TeamSales Team Store Department Managers Refrigerated DivisionRefrigerated DivisionStore Department ManagersTrade MarketingTrade Marketing Store ManagersSales TeamSales TeamStore Managers Frozen Division Co-MarketingFrozen Division Store Operations Co-Marketing Trade MarketingStore OperationsTrade Marketing Consumer Promotions Sales PlanningCo-MarketingPromotionsConsumer HBC DivisionCo-MarketingSales Planning CRMHBC DivisionCRM MerchandisingMerchandisingSalesConsumerPromotions Consumer PromotionsSalesTeam Management Brand ManagementTeam Brand Marketing CRMBrand TradeCRM MarketingBrand MarketingAdvertisingTrade AdvertisingMarketing CRM Brand Management Co-MarketingResearchBrand ManagementCRMMarketCo-MarketingResearchMarket Pricing Advertising Consumer PromotionsAdvertisingPricing Consumer Promotions Consumer InsightsConsumer InsightsCRM MarketResearchCRM Market Research Brand ManagementBrand Management AdvertisingAdvertising Market ResearchMarket Research Conflicting Objectives My Brand Equity My Brand Equity vs.vs.My Store EquityMy Store EquityShared Customer FocusShared Customer FocusMy Brand Value My Brand Valuevs.vs.My Category ValueMy Category ValueMy Brand Share My Brand Sharevs.vs.My Market ShareMy Market Share Willingness to InnovateWillingness to InnovateMy Brand Margin My Brand Margin vs.vs.My Category MarginMy Category MarginMy Brand ROI vs. My Category ROI My Brand ROI vs. My Category ROIDrive to Overcome Barriers Drive to Overcome Barriers Copyright Information Resources, Inc., 2007. Confidential and proprietary7 39. How Do We Collaborate?Customer 2 3We bothWe collaborativelyinvest to Co-1 measure andDifferentiateimproveIdentify where our needs align with Customers AholdUnileverCopyright Information Resources, Inc., 2007. Confidential and proprietary8 40. Aholds ObjectiveGain more Stock-Up trips through CRM and Merchandising IntegrationCopyright Information Resources, Inc., 2007. Confidential and proprietary 9 41. Unilever ObjectiveConvert Customers to Center Store CategoriesCopyright Information Resources, Inc., 2007. Confidential and proprietary10 42. Customer Insights Unilevers brands are key big basket driversAverage Market Basket $ $78.35 $80$70$60$50$40$31.47$30$20$10 $0 Avg ShopperUnilever ShopperSource: IRI Copyright Information Resources, Inc., 2007. Confidential and proprietary 11 43. Customer Insights Particularly in the case of Aholds targetBehavior Segments Average Market Basket $ $108.08 $103.62$100$78.35 $80.26$80$60$40$31.47$20$0 Avg Shopper Unilever Discerning Good Lifers Quick Fixers ShopperDiners(total) Unilever Shoppers Copyright Information Resources, Inc., 2007. Confidential and proprietary12 44. Opportunity = Stock-Up TripsAholds Trip Mission Analysis shows Stock up Trips are a growth opportunity Disproportionately high $ ring/trip Increase conversion get them to buy more categories Unilever portfolio critical within Stock-up across key categories % of Trips% of Net Dollars Emergency Replenishment Fresh Fill-in Need a Meal Great Sale Stock-up InstitutionalCopyright Information Resources, Inc., 2007. Confidential and proprietary13 45. Shopper Insights > Opportunity: Stock-Up TripsUnilevers Shopper Trip AnalysisWe can help the shopper save time by anticipating her needs and converting hertrip to a stock-up tripGet her attention at pressure points along the perimeter, and convert her toadditional categoriesMeaty irProduce Beverage Da Bakery Deli &Center-of-store Aisles Cold s BeerEntranceCopyright Information Resources, Inc., 2007. Confidential and proprietary14 46. Shared Insights > Opportunity: Stock-Up TripsAholdsAholdsUnileversUnileversBuildObjectivesObjectives Objectives Objectives Mutualand Strengths and Strengths+ and and Business StrengthsStrengths Win with Key Customer through Collaboration! Copyright Information Resources, Inc., 2007. Confidential and proprietary15 47. The Plan of Attack The Strategy1. Build Team: Multi-discipline Ahold + Unilever2. Agree on: Rules of Engagement Joint Metrics Role of Assets3. Commitment:Integrate AssetsMutual InvestmentTest & Learn PhilosophyCopyright Information Resources, Inc., 2007. Confidential and proprietary16 48. The Plan of AttackThe Strategy 1. Build Team: Multi-discipline Ahold + Unilever 2. Agree on: Rules of Engagement The Mechanics Joint Metrics Role of Assets 1. Economics 3. Commitment: 2. Offer Strategy Integrate Assets Mutual Investment 3. CRM Targets Test & Learn Philosophy 4. Test Structure 5. Store Compliance 6. Measurement Copyright Information Resources, Inc., 2007. Confidential and proprietary17 49. The Plan of AttackThe Strategy 1. Build Team: Multi-discipline Ahold + Unilever 2. Agree on: The Rules of EngagementMechanics Joint Metrics 1.Economics Role of Assets 2.Offer Strategy 3. Commitment:3.TheCRM TargetsTheConcept ConceptIntegrate AssetsMutual Investment 4.1. Determine Desired Customer Experience Test Structure1. Determine Desired Customer Experience 5.Store Compliance 2. Develop the ThemeTest & Learn Philosophy 6. 2. Develop the Theme Measurement 3. Partner in the Creative Process3. Partner in the Creative Process 4. COLLABORATE ON FINAL INTERNAL4. COLLABORATE ON FINAL INTERNALSALES DECK SALES DECK 5. JOINTLY PRESENT INTERNALLY5. JOINTLY PRESENT INTERNALLY 6. Determine Store Engagement Approach6. Determine Store Engagement Approach 7. Communicate Regularly throughout Execution7. Communicate Regularly throughout ExecutionCopyright Information Resources, Inc., 2007. Confidential and proprietary18 50. How We Co-differentiated: Unilever Customized National Programs Copyright Information Resources, Inc., 2007. Confidential and proprietary 19 51. How We Co-Differentiated: Unilever Customized CRM Assets Copyright Information Resources, Inc., 2007. Confidential and proprietary20 52. How We Co-Differentiated: 360 Portfolio Selling: At Home Focus r M aile R tio ns etail C Soluon ne cti on s National FSICRMSolutionsGiant CircularCopyright Information Resources, Inc., 2007. Confidential and proprietary21 53. How We Shared the InvestmentAhold programmed the store and leveraged its marketing assets Copyright Information Resources, Inc., 2007. Confidential and proprietary22 54. How We Share the InvestmentAhold Programmed Store Incented Customer Circular Full Page In-store Shopping List 1. In Ad stock-up items across1. In Ad stock-up items across Unilever categories Unilever categories2. Complementary CPGs2. Complementary CPGs participated to truly enableparticipated to truly enable a stock up trip.a stock up trip.3. Achievable Stock-up3. Achievable Stock-up basket instant rewardbasket instant reward incentiveincentive4. Stock-up destination4. Stock-up destinationCircular Aisle stops throughout store Violatorstops throughout storeStanchion Sign Copyright Information Resources, Inc., 2007. Confidential and proprietary23 55. Ahold Bundled End Caps to Stock-up Rooms Laundry roomDetergentStain removerPaper products End-Cap Card Copyright Information Resources, Inc., 2007. Confidential and proprietary 24 56. The Kitchen Fridge, Freezer, PantrySection CaseCards Copyright Information Resources, Inc., 2007. Confidential and proprietary 25 57. Household - Bath, Wellness, MedicineSection Case Cards Copyright Information Resources, Inc., 2007. Confidential and proprietary 26 58. One of Most Successful Events Ever 7.6% Household penetration (3x avg.); Significant sales liftGOLD StandardTarget Segments showed highest level broad conversions for AholdTraditionalists, Segment F, due to overall size, drove sales volumeBehavior Segments 12%HH Penetration F 10% E 8% D 6%Series14%C2%B 0% AB C DE F A0% 5% 10% 15% 20% 25% 30% 35%Behavior SegmentsContribution to Sales Copyright Information Resources, Inc., 2007. Confidential and proprietary 27 59. Largest Unilever Sales Spike in 2 Years Copyright Information Resources, Inc., 2007. Confidential and proprietary 28 60. Customer Bought More CategoriesProving that category sales conversion works! 40%30.6%30%18.9%20%10% 0% 2+ Categories PurchasedPre-Event During Event Copyright Information Resources, Inc., 2007. Confidential and proprietary29 61. Event Increased Customer AppreciationDo you feel more positive toward Ahold? Yes 67% No 33%Q6b. The magazine is sent to you by Stop & Shop/Giant Carlisle. Doesknowing that make you feel more positive toward Stop & Shop/GiantCarlisle? Copyright Information Resources, Inc., 2007. Confidential and proprietary 30 62. Results Summary1. Shopping occasions1. Shopping occasions 1. Drove Stock-up trips 1. Drove Stock-up trips2. Total store shopping behavior2. Total store shopping behavior2. Increased Category conversions 2. Increased Category conversions3. Unilever event performance3. Unilever event performance 3. Biggest event and volume spike 3. Biggest event and volume spike4. Ahold USA incremental $$$4. Ahold USA incremental $$$4. Real sales, not just brand 4. Real sales, not just brandswitching switching 5. CRM relevance5. CRM relevance5. Excellent target Segment 5. Excellent target Segment 6. Customer-driven decision6. Customer-driven decision response response making making6. Consumers liked what they saw 6. Consumers liked what they saw 7. Greater Mutual Understanding7. Greater Mutual Understanding7. More Insights Driven Solutions 7. More Insights Driven Solutions Copyright Information Resources, Inc., 2007. Confidential and proprietary 31 63. What Was HardTrustSharing agendasAccepting trade-offsCorralling the categoriesClear ownership within each companyFitting programs into ingrained processesGetting Marketing and Merchandising to show up at the same meetings! Copyright Information Resources, Inc., 2007. Confidential and proprietary32 64. What Weve Realized 1. Were not that different we can collaborate 1. Were not that different we can collaborate2. This may not work for everyone 2. This may not work for everyone3. Need champions at each company 3. Need champions at each company4. Need long Planning lead times, simple shopper requirements 4. Need long Planning lead times, simple shopper requirements5. Need to communicate with our customer in-home and in-store 5. Need to communicate with our customer in-home and in-store6. Complementary manufacturers should partner to scale opportunity 6. Complementary manufacturers should partner to scale opportunity7. If it isnt repeatable, it isnt worth it think annual calendar, a series 7. If it isnt repeatable, it isnt worth it think annual calendar, a series8. Collaborate on success criteria and measurement 8. Collaborate on success criteria and measurement9. Keep it simple shoppers dont want to think 9. Keep it simple shoppers dont want to think Copyright Information Resources, Inc., 2007. Confidential and proprietary 33