DEFENSE COMMISSARY AGENCY Your Commissary … It’s Worth the Trip! Sales Growth & Opportunities ALA Commissary Roundtable, April 30, 2015 Mr. Rogers Campbell

DEFENSE COMMISSARY AGENCY

DeCA

Your Commissary … It’s Worth the Trip!

Sales Growth & OpportunitiesALA Commissary Roundtable, April 30, 2015

Mr. Rogers CampbellExecutive Director for Sales,

Marketing & Policy

2

DeCA



Defense Commissary Agency

Agenda

Sales Performance

Sales Growth & Opportunities

Swell

Sales Objectives

3

DeCA




• Video 1

4

DeCA




Agenda

Sales Performance


Swell

Sales Objectives

5

DeCA




Sales Trends - Sales Performance

FY 2013 FY 2014 FY 2015$2,500,000,000.00

$2,600,000,000.00

$2,700,000,000.00

$2,800,000,000.00

$2,900,000,000.00

$3,000,000,000.00

$3,100,000,000.00

$3,200,000,000.00

$3,300,000,000.00

+0.74%

Same Store Sales TrendsOctober 1 – March 31

6

DeCA




Sales Trends - Sales Performance

Source: Nielsen RDH Latest 26 Weeks Ending March 28, 2015

Market Dollar % Change vs YAGO

DeCA +0.2%

Remaining Market +1.9%

xAOC +2.1%

DeCA




Population Trends – Sales Performance

Source: Total Population Count by Category: DEERS Point In Time Extract – as of July 2014, DRS#9331Census.Gov (Note this is only U.S. Residents and does not include Military Serving Overseas, the reason this data set is used is to get an idea of growth in population for Nielsen RM and AOC store set which is CONUS only.

2011 2012 2013 20141.30

1.35

1.40

1.45

1.50 1.49

1.461.44

1.40

Active Duty Sponsor (in Millions)

-2.51%

2011 2012 2013 2014310

311

312

313

314

315

316

317

318

319

320

311.58

313.87

316.13

318.35

U.S. Residents (in Millions)

+0.70%

Military channel is experiencing steep declines

DeCA




Basket Size - Sales Performance

20 or Less

21 to 50

51+

44%

18%

12%

18%

5%

2%

2015 FYTD Transactions by Basket Size

CONUSOCONUS

Bask

et S

ize

(Net

Qty

)

20 or Less

21 to 50

51+

0% 10% 20% 30% 40% 50% 60% 70%

15%

24%

40%

6%

7%

7%

2015 FYTD Sales by Basket Size

Bask

et S

ize

(Net

Qty

)

DeCA




Basket Size Trends- Sales Performance

5 or Less 6-10 11-20 21-50 51-75 76-100 Greater than 1000

2,000,0004,000,0006,000,0008,000,000

10,000,00012,000,00014,000,000 Transaction Contribution 2014

2015

Tran

sacti

ons

(Mill

ions

)

+2.8%

+3.0%+2.5%

+1.2%

-2.8%-6.0% -10.7%

5 or Less 6-10 11-20 21-50 51-75 76-100 Greater than 100 $-

$200,000,000

$400,000,000

$600,000,000

$800,000,000

$1,000,000,000

Basket Size (Net Qty)

Net

Sal

es(M

illio

ns)

+5.2% +5.9%+5.6%

+4.1%

+0.2%-

3.2%-8.7%

Sales Contribution

DeCA




UPC-Coded Patron Savings

20.0% 22.0% 24.0% 26.0%

23.3%

22.8%

Patron Savings vs xAOC

Q2 2014

Q3 2014

Q4 2014

Q1 2015

10

20.0% 21.0% 22.0% 23.0% 24.0% 25.0% 26.0%

25.1%

24.5%

Patron Savings vs Remaining Market

Q2 2014

Q3 2014

Q4 2014

Q1 2015

Source: Nielsen RDH CONUS ex AK HI – Only UPC Coded Products, excludes random weight meat and produce

DeCA




Source: Nielsen Homescan Store Choice Drivers 2014

0.1 0.12 0.14 0.16 0.18 0.2 0.22 0.24 0.26 0.28 0.3

0

50

100

150

200

Chart Title

Strong

Strong

Sto

re

Ass

oci

atio

ns

Weak Derived ImportanceAmong Channel Shoppers

Chan

nel I

ndex

= 1

00Commissaries Choice Drivers - Sales Performance

Everyday Low Price

NearbyLocation

Store Brand

Friendly Employees

Fresh Produce

Trustworthy Company

Well Stocked

Specialty

ProductsHBC

Locally Sourced Products

Fresh Meat

12

DeCA




Agenda

Sales Performance


Swell

Sales Objectives

13

DeCA





Driving Sales

Staying connected and

sharing best practices

Engaging with the

empowered shopper

Winning the trip

Driving the Health & Wellness

growth wave

DeCA





Staying Connected• Keeping Current

– Delivering a 21st Century Commissary Benefit

• Voice of our Patrons– POS Demographics– Branding– Strategic Decisions

• Sharing Best Practices– What worked and didn’t work– Uniformity of practices

14

15

DeCA




Demographics - Voice of Our Patron

• Eligibility Validation• Commissary Usage• Non Usage

Patrons

• Rank, Age• Household Size• Branch, Status • Zip Code

Demographics• Category

Management• Marketing• Customization Ability• Local Promotions

Benefits

POS Demographics

16

DeCA




Shopper Breakout – Voice of Our Patron

Under 22 22-24 25-30 31-34 35-44 45-54 55-60 61-64 65-69 70-74 75+0%

5%

10%

15%

20%

Age Distribution

Net Sales Trans Count

17

DeCA




Commissary Shoppers – Voice of Our Patron

18

DeCA




Eligible Shoppers – Voice of Our Patron

19

DeCA




Industry Advertising

20

DeCA




DeCA Brand Strategy

Step 1Discovery

Step 2Research &

Insights

Step 3Brand Strategy

Brand Strategy Objective: Develop, define and deliver an updated

Brand Strategy for the Commissary

21

DeCA




DeCA Brand Strategy

Research Objective: Build a foundational

understanding from a patron perspective.

Step 1Discovery

Step 2Research & Insights


22

DeCA




DeCA Brand Strategy

Step 1Discovery



Data Collection:Information was used to inform the design and tactics of the additional branding plans

23

DeCA




DeCA Brand Strategy

Methodology:11,745 Online Surveys

144 In-Depth Interviews

623 Intercept Surveys

85 Shop Alongs

18 Focus Groups

DeCA




DeCA Brand Strategy

Insights Gained:• 81% feel the commissary supports

them unlike other grocery stores • 82% say that shopping at the

commissary is a privilege• The commissary can’t win on price

Key Findings:• The commissary has an advantage

like no other grocery store • The commissary is more than a

grocery store; pivotal QoL role• The privilege is ours alone

Step 1Discovery



24

25

DeCA




DeCA Brand Strategy

Step 1Discovery



• We’re Proud

• We’re Committed

• We’re More

26

DeCA




DeCA Brand Strategy

• We’re Proud

• We’re Committed

• We’re More

27

DeCA




DeCA Brand Strategy

What You Can Do• The smallest details

make the biggest difference

• If it’s not on the shelf, it can’t be sold

• Be a reflection of our patrons

Next Steps• Store Signage

• Communication

• Meet, Greet

DeCA





Engaging the Empowered Shopper• eCommerce

– CLICK2GO– Future with EBS

• Content Marketing – Digital Communications– Facebook– Sales flyer

28

DeCA




Shift in Shopper’s Preferences - eCommerce

29

Source: Ibis World and VentureBeat

eCommerce is evolving and is increasingly embracing the mobile presence

Mobile shopping apps usage has grown faster than any other category of mobile apps

DeCA




Where is DeCA? - eCommerce

30

CLICK2GO Piloted in 3 locations

Fort Lee, Offutt AFB, Travis AFB

Average Basket Size• CLICK2GO: $104.70• Brick and Mortar : $62.60

Source: Front End Sales/Transactions thru April 19

DeCA




DeCA’s Future - eCommerce

31

EBS capabilities will assist with DeCA’s transition into the digital space.

32

DeCA




Commissaries.com - Content Marketing

• Key Communication Tool

• Links to all our Social

Media Sites

33

DeCA




Sales Flyer – Content Marketing

Sales flyers posted for each Promotion on webpage &

facebook

DeCA





Winning the Trip• Value Brands• Promotions & Programs

–Club Packs–Basket Building

• Rewards Card• Customer Service• Store Audits

DeCA




Value Brand

• Quality brand names – store brand prices

• Response to continue demand for private label/store brand products

• Approximately 450 items; spanning more than 55 categories

• Save: 20-25% versus retail private label/store brands

• Save: 40% against similar national brand items

• Value Brands featured in each promotional flyers

DeCA




Locating Opportunity- Value Brand

DeCA Shoppers Purchase Private Label% HHs Purchasing….

DAIRY FROZEN HBC

WALMART TOTAL TOTAL GROCERY

DeCA




Private Label vs Value Brand Shopper

• Older Shoppers• Smaller Household Size• Retirees

Source: Spectra, POS Demographics

• Middle Age Shoppers• Larger Households• Families with Children

vs

38

DeCA




Basket Building - Promotions & Programs

• Solution Mandated

End Caps

• Encourage multiple

purchases

DeCA




Rewards Card

Over 382,000

current users

Coupon Redemptions

grew 65% for FY14

New Age Technology

Users spend more money!

Average Basket $157

DeCA





Health & Wellness Growth• Healthy Lifestyle Festivals• Natural, Organic and Gluten-Free

• Nutrition Guide Program – Educate Patrons on

Nutritional Attributes– Late Summer 2015

DeCA




Healthy Base Initiative

42

DeCA




Agenda

Sales Performance


Swell

Sales Objectives

DeCA




Swell Allowance Program

43

Swell Allowance Program

Mandatory Participation

• Except direct store delivered items, fresh meat, and produce.

Rate Negotiations

• Began February 2, 2015, to be completed by June 5th, 2015 (previously April 30th)

Swell Rates

• Negotiated Rates take effect October 2015

• Adjustments made after six months

44

DeCA




Agenda

Sales Performance


Swell

Sales Objectives

DeCA




Sales Objectives

• Gas prices stable but , Patron willing to travel• “Maintain” household counts and trips• Opportunity to improve in store experience• Fresh (produce, wellness) which will result in increased purchases

• DeCA demonstrated success in increasing basket size over past year

Increase of 0.7 Trips($65/trip)

Increase of $3/Trip

(14.5 trips/year)

OR+5% Sales

Increase

Source: Nielsen Homescan 52 Weeks Ending 12/27/14, Total Product Line

DeCA




59

11

9

9

13

HEAVY

Convert Shoppers – Sales Objectives

22

13

26

19

21

MEDIUM

GROCERY MILITARY CLUB SUPERCENTER

Medium Households already have vested interest in Military base

ALL OTHER

Source: Nielsen Homescan 52 Weeks Ending 12/27/14, Total Product Line

Converting one shopper increases their annual spend with us $1456

DeCA




Sales Objectives

• Although Economy is better, consumers are conservative with spending

• Sales lagging due to decline in shopping trips

Market Overall

• Share of Wallet Growth

• Basket Size Growth

• Store Importance

DeCA

• Improve in-store experience

• Minimize out of stocks⁻ Vendor Cuts⁻ Fill Rate⁻ Vendor Stocking

• Ethnic Foods

Opportunities

48

DeCA




Initiating Change

• Play Branding Video

Documents

DEFENSE COMMISSARY AGENCY Your Commissary … It’s Worth the Trip! Sales Growth & Opportunities ALA Commissary Roundtable, April 30, 2015 Mr. Rogers Campbell