Todd Hale SVP, Consumer & Shopper Insights March 7, 2014 U.S. RETAIL TRENDS

Todd HaleSVP, Consumer & Shopper InsightsMarch 7, 2014

U.S. RETAIL TRENDS

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TABLE OF CONTENTS

• Economic Update (3)

• Economic Divide (13)

• Gas Price Update (35)

• Consumer Confidence (43)

• Retailing Trends (50)• Monthly gov’t sales (51)• Same-store-sales (52)• Retail Channel Trends (63)

• Retail Channel Shopping Behaviors (141)

• Retail Channel Demographics (152)

• Channel Blurring (165)

• Retail Trends Summary (173)

ECONOMIC UPDATE

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CONFIDENCE DRIVEN BY MANY FACTORSWhich remain volatile, uncertain, but improving

EQUITY MARKETSHOUSING FUEL COSTS

LABOR MARKETS GOVERNMENTINFLATION

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’13 GROWTH MUCH BETTER THAN ’12; MODEST GROWTH FORECASTED FOR 2014-2015U.S. Real GDP Percent Change from Preceding Period (seasonally adjusted at annual rates)

Sources: U.S. Department of Commerce, Bureau of Economic Analysis; *Survey of Professional Forecasters, Research Department, Federal Reserve Bank of Philadelphia

Q1 2008

Q2 2008

Q3 2008

Q4 2008

Q1 2009

Q2 2009

Q3 2009

Q4 2009

Q1 2010

Q2 2010

Q3 2010

Q4 2010

Q1 2011

Q2 2011

Q3 2011

Q4 2011

Q1 2012

Q2 2012

Q3 2012

Q4 2012

Q1 2013

Q2 2013

Q3 2013

Q4 2013

Q1 2014

Q2 2014

Q3 2014

Q4 2014

Q1 2015

-2.7%

2%

-2%

-8.3%

-5.4%

-0.4%

1.3%

3.9%

1.6%

3.9%

2.8% 2.8%

-1.3%

3.2%

1.4%

4.9%

3.7%

1.2%

2.8%

0.1%

1.1%

2.5%

4.1%

2.4%2%

3% 2.8% 2.7%3.2%

GDP percent change based on chained 2005 dollars Estimated*

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U.S. Monthly Job Losses/Gains:

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014-900

-800

-700

-600

-500

-400

-300

-200

-100

0

100

200

300

400

500

600

175K NEW JOBS & RATE AT 6.7%February 2014 – Unemployed for longer than 27 weeks: 37.0%

Source: Seasonally Adjusted U.S. Total Non Farm Employment, Bureau of Labor Statistics - U.S. Department of Labor

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EMPLOYED POPULATION GROWING

*December 2007 – June 2009Source: United States Bureau of Labor Statistics, Employed & Unemployed, ages 16 years old & over (seasonally adjusted)

0

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

120,000,000

140,000,000

160,000,000

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

18,000,000

Employed, Age 16 Yrs+ Unemployed, Age 16 Yrs+

Empl

oyed

(Mill

ions

)Unem

ployed (Millions)

But more jobs needed to make-up for those lost in Great Recession*

Dec ‘82

Oct ‘09

Jun ‘92Jun ‘03May ‘75

Nov ‘07

January 1948 February 2014

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UNDERUTILIZED PAINTS TOUGHER PICTURE


Feb-07

Aug-07

Feb-08

Aug-08

Feb-09

Aug-09

Feb-10

Aug-10

Feb-11

Aug-11

Feb-12

Aug-12

Feb-13

Aug-13

Feb-14

0%

5%

10%

15%

20%

25%

30%

Unemployed Underutilized

The number of underutilized workers yields a rate of 6.7% and when you add it to the 12.6% unemployment rate, the 19.3% paints a tougher picture.

Great Recession (Dec 2007 – Jun 2009)

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INEQUITIES WILL IMPACT PRODUCTS DIFFERENTLYFebruary 2014 Unemployment Rates – Seasonally Adjusted


Race/EthnicityAsian 6.0% (not seasonally adjusted)

White 5.8%Hispanic (any race) 8.1%Black or African Amer. 12.0%

Age Group20-24 11.9%25-34 7.0%35-44 5.1%45-54 5.1%55+ 4.6%

EducationLess than high school diploma 9.8%High school grad; no college 6.4%Some college, or assoc degree 6.2%Bachelor degree and higher 3.4%

Gender (adults 20 +)Men 6.4%Women 5.9%

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Jan 2013

Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan 2014

0

1

2

3

4

5

6

7

8

9

10

7.9 7.7 7.5 7.5 7.5 7.5 7.3 7.2 7.2 7.2 7.0 6.7 6.6

1.6 2.01.5

1.1 1.41.8 2.0

1.5 1.2 1.0 1.2 1.5 1.6

MISERY INDEX IMPROVING

Source: U.S. Bureau of Labor Statistics; CPI non-seasonally adjusted, unempl. rate seasonally adjusted

Misery Index = Unemployment Rate + Inflation

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GREATER MISERY FOR YOUNG & LESS EDUCATED

Source: U.S. Bureau of Labor Statistics; CPI non-seasonally adjusted, unempl. rate seasonally adjusted

Jan 2013


0

4

8

12

16

14.3 13.1 13.3 13.1 13.2 13.3 12.5 12.8 12.8 12.2 11.6 11.1 11.9

1.62.0 1.5 1.1 1.4 1.8 2.0 1.5 1.2 1.0 1.2 1.5

1.6

Ages 20 to 24 years

Jan 2013


0

4

8

12

16

5.9 5.8 5.5 5.5 5.3 5.3 5.0 5.1 5.3 5.4 4.9 5.1 4.5

1.6 2.0 1.5 1.1 1.4 1.8 2.0 1.5 1.2 1.0 1.2 1.5 1.6

Age 55 and over

Jan 2013


0

4

8

12

16

8.1 7.9 7.6 7.5 7.4 7.6 7.6 7.5 7.5 7.3 7.3 7.1 6.5

1.6 2.0 1.5 1.1 1.4 1.8 2.0 1.5 1.2 1.0 1.2 1.5 1.6

High School graduates, no college

Jan 2013


0

4

8

12

16

3.8 3.9 3.8 3.9 3.8 3.9 3.8 3.5 3.7 3.8 3.4 3.3 3.2

1.6 2.0 1.5 1.1 1.4 1.8 2.0 1.5 1.2 1.0 1.2 1.5 1.6

Bachelor's degree and higher

Misery Index = Unemployment Rate + Inflation

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ARE MILLENNIALS BECOMING “CAREER RENTERS”?

Source: USA TODAY

For many Americans hard hit by the recession or dealing with large student loan debt, the idea of renting indefinitely has become appealing. No mortgage to pay off, a living space that comes with built-in amenities, and a landlord who takes care of upkeep and maintenance.

USA TODAYSep. 16, 2013

Among households headed by 25- to 34-year-olds, renters increased by more than a million from 2006 to 2011, while the number who own fell nearly 1.4 million

The Wall Street JournalSep. 30, 2013

Landlords passed along hefty rent increases to tenants this summer, an indication that rising home-buying costs are helping heat up demand for apartments.

Pay the

rent

ECONOMIC DIVIDE

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GOOD NEWS & BAD NEWS

Source: U.S. Government

Falling gas prices

$5 billion reduction in SNAP benefits

Natural gas prices rising

Home heating oil prices falling

Social security recipients receive 1.5% cost of living increase

Minimum wage increases in 13 states on 01/01/14

1.3 million lost extended unemployment benefits on 12/28/13

U.S. population 2013 growth rate less than 1%

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DÉJÀ VU ALL OVER AGAIN

Source: The World Top Incomes Database via Associated Press; University of California-Berkeley, the Paris School of Economics and Oxford University via USA TODAY

“In 2012, the incomes of the top 1% rose nearly 20% compared with a 1% increase for the remaining 99%.”

48%

52%

Top 10% of Americans Remaining Americans

19%

81%

Percentage of U.S. Household Income

Top 1% of Americans Remaining Americans

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ALL GROUPS HAVE LOST SINCE 2000But Blacks & Hispanics have suffered the most

Source: USA TODAY (story by Tim Mullaney; graphics by Frank Pampa & Anne R. Carey – 9/18/2013))

% Change vs. 2000:Non-Hispanic White: -6.3%Asian: -7.7%Hispanic: -11.8%Black: -15.8%

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SHIFTS IN JOB TYPES DRAGS DOWN INCOME

Source: United States Bureau of Labor Statistics, All Employees by Industry (seasonally adjusted)

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

18,000,000

20,000,000

Manufacturing Retail Trade Construction Health Care

January 1990


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Median household income in 2012 inflation adjusted dollars

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

$51,017

$51,100

$51,892

$53,285

$53,644

$55,627

$54,892

$54,486

$53,891

$54,079

$54,127

$54,766

$55,987

VALUE STAYS AS INCOME GOESDecline in median household income in 9 of last 13 years

Source: U.S. Census Bureau

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HARD TIMES FOR MANY“the share of Americans living in poverty showed little change from 2011”

Source: USA TODAY (story by Tim Mullaney; graphics by Frank Pampa & Anne R. Carey – 9/18/2013))

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“1 IN 5 KIDS IN U.S. LIVING IN POVERTY”

• About 2.7 million more children lived with an unemployed parent during a typical month [during 2012] compared with 2007, a 71 percent increase.

• Some 2.8 million children lived with a parent who was out of work for six months or longer.

• About 9 percent of all children live with unemployed parents, compared with 5 percent before the recession.

• More than 21.6 million children receive subsidies, an increase of 8.8 million from 2007.

Source: National Journal & AP Photo (Mel Evans)

National JournalDec. 5, 2012

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SNAP PARTICIPATION SLOWS

Source: United States Department of Agriculture Food and Nutrition Service; U.S. Bureau of Labor Statistics, Current Population Survey

30,000,000

32,000,000

34,000,000

36,000,000

38,000,000

40,000,000

42,000,000

44,000,000

46,000,000

48,000,000

50,000,000

10,000,000

11,000,000

12,000,000

13,000,000

14,000,000

15,000,000

16,000,000

17,000,000

SNAP: Average Monthly Participation (Persons) Unemployed Persons (seasonally adjusted)

SNAP

(Mill

ions

)U

nemployed Persons (M

illions)

Has participation peaked?

Unemployed Persons (age 16 years & over, seasonally adjusted)• Jan 2009: 12,058,000• Feb 2014: 10.459,000 -13.3%

SNAP: Monthly Participation (Persons)• Jan 2009: 31,983,716• Nov 2013: 47,033,135 +47.1%

SNAP = Supplemental Nutrition Assistance Program


Nov 2013

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SNAP PARTICIPATION SLOWS

Source: United States Department of Agriculture Food and Nutrition Service; U.S. Bureau of Labor Statistics, Current Population Survey

30,000,000

32,000,000

34,000,000

36,000,000

38,000,000

40,000,000

42,000,000

44,000,000

46,000,000

48,000,000

50,000,000

126,000,000

128,000,000

130,000,000

132,000,000

134,000,000

136,000,000

138,000,000

SNAP: Average Monthly Participation (Persons) Employed Persons (non-farm, seas. adjusted)

SNAP

(Mill

ions

)

Employed Persons (M

illions)

Has participation peaked?

Employed Persons (non-farm, all employees, seas. adjusted)• Jan 2009 133,631,000• Feb 2014: 137.699,000 +2.8%

SNAP = Supplemental Nutrition Assistance Program

SNAP: Monthly Participation (Persons)• Jan 2009: 31,983,716• Nov 2013: 47,033,135 +47.1%

Nov 2013


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SNAP CUTS AFFECT 47 MILLION AMERICANS: A BIG OPPORTUNITY FOR PRIVATE BRANDS

Note: American Recovery and Reinvestment Act of 2009 (ARRA); Supplemental Nutrition Assistance Program (SNAP)Sources: Center on Budget and Policy Priorities; U.S. Department of Agriculture, ‘SNAP – Fiscal Year 2014 Cost-of-Living Adjustments and AARA Sunset Impact on Allotments,” August 1, 2013

Household Size

ARRA maximum benefits through Oct. 2013

Maximum benefits

beginning Nov. 2013

Monthly Cut

Total Cut

FY 2014

1 member $200 $189 -$11 -$121

2 members $367 $347 -$20 -$220

3 members $526 $497 -$29 -$319

4 members $668 $632 -$36 -$396

“For a family of three, that cut will mean a reduction of $29 a month — $319 for the remaining 11 months of the fiscal year — a serious loss for families whose benefits

will, after this cut, average less than $1.40 per person, per meal.”

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GREATER SPENDING POWER AS INCOME RISES

Source: Nielsen Homescan, 52 w/e 12/28/2013 - excludes gas-only or Rx-only trips

< $25K $25K - $34K

$35K - $49K

$50K - $69K

$70K - $99K

$100K - $124K

$125K - $149K

$150K - $199K

$200K +$0

$2,000

$4,000

$6,000

$8,000

$10,000

Annual Basket Ring Dollars

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BECAUSE OF GREATER SPEND MORE PER TRIP


< $25K

$25K - $34K

$35K - $49K

$50K - $69K

$70K - $99K

$100K - $124K

$125K - $149K

$150K - $199K

$200K +

140

142

141

138

139

140

146

144

142

$37

$41

$46

$49

$54

$58

$61

$61

$66

Basket Ring Per Trip Trips Per Shopper

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RETAILING AT THE EXTREMES

*HHI = Hardware/Home Improvement Source: Nielsen Homescan, 52 w/e 12/28/2013 - excludes gas-only or Rx-only trips

Channel Preference: % Household Penetration

Groce

ryDolla

rDru

gM

ass HHI*

Department

Convenience

/Gas

ClubOffice Pet

Electronics

Automotive

Liquor

News/Book

Toy0%

25%

50%

75%

100%Income < $25KIncome $200K +

Reflects instances where % household penetration for a retail channel are skewed to the low or high income ªP

ª P PPPP PP PPª ª

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DIVERSE BANNER ATTRACTION


Banner Preference: % Household Penetration

0%

25%

50%

75%

100%Income < $25KIncome $200K +

Reflects instances where % household penetration for a retailer are skewed to the low or high income ªP

ª PPP P PPªª

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The Telegraph (UK)Aug. 27, 2012

INNOVATING FOR LOWER PRICE POINT

Source: Heinz Q2-FY2012 Earnings Webcast (11/18/2011); P&G; The Telegraph (UK)

Poverty is returning to Europe… Unilever has already started to change the way it sells some of its products. In Spain, the company sells Surf detergent in packages for as few as five washes, while in Greece, it now offers mashed potatoes and mayonnaise in small packages, and has created a low-cost brand for basic goods such as tea and olive oil.

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EXPANDING NO-FRILLS FORMATS

Source: Bottom Dollar, Joe V’s Smart Shop, Valu Land, Good Cents; Ruler Foods

• Valu Land operates eight stores in MI

• Bottom Dollar Foods operates 63 stores in PA, NJ, OH

• Ruler Foods operates 23 stores in IN, KY, OH, IL

• Joe V’s Smart Shop operates six stores in TX

• Good Cents Grocery + More operates eight stores in OH & PA

http://valuland.spartanstores.com/

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PRICE WARS

Source: Food Lion

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TAKING PRICE WARS VERY PUBLIX

Sources: TampaBay.com; andnowuknow.com; digitalanddirt.com

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HOW LOW IS “LOW”?

Source: Company websites

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RESTAURANTS FIGHT BACK WITH DISCOUNTS +

Source: Olive Garden, Red Lobster, Red Robin, Starbucks

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CONSUMERS WILL PAY MORE IF THE BENEFITS OUTWEIGH THE PRICE

Sources: MultiAd Kwikee, Target (k-cups) & company websites

http://www.amys.com/products/product-detail/light-lean/000062

GAS PRICE IMPACT

While many U.S. consumers are feeling pain at the pump, we see less

severe actions versus prior years

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GAS PRICES STABLIZED, BUT PAINFULLY HIGH

Source: U.S. Energy Information Administration – prices include all taxes; YTD through week ending 03/03/2014

19921994

19961998

20002002

20042006

20082010

2012

YTD 2014$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

Annual U.S. Regular All Formulations Retail Gasoline Prices (Dollars per Gallon)

$3.51

$3.35

An average household spent about $1,120 more in 2013 than they did in 2006

$2.57

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37Source: U.S. Energy Information Administration - Monthly U.S. Regular All Formulations Retail Gas Prices (2012, 2013 & 2014) - prices include all taxes

F M A M J J A S O N D J F M A M J J A S O N D J F

$3.

58

$3.

85

$3.

90

$3.

73

$3.

54

$3.

44

$3.

72

$3.

85

$3.

75

$3.

45

$3.

31

$3.

32

$3.

67

$3.

71

$3.

57

$3.

62

$3.

63

$3.

59

$3.

57

$3.

53

$3.

34

$3.

24

$3.

28

$3.

31

$3.

36

MAKING IT TOUGH TO MANAGE BUDGET

Prices down 22-cents from 2012, and down 31-cent vs. year ago

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LULL BEFORE THE SPRINGTIME INCREASES?

Source: Nielsen Gas Impact Homescan Survey; U.S. Energy Information Administration - Weekly U.S. Regular All Formulations Retail Gas Prices (2013 & 2014) - prices include all taxes

9-Sep16-Sep23-Sep30-Sep

7-Oct14-Oct21-Oct28-Oct4-Nov

11-Nov18-Nov25-Nov

2-Dec9-Dec

16-Dec23-Dec30-Dec

6-Jan13-Jan20-Jan27-Jan3-Feb

10-Feb17-Feb24-Feb3-Mar

$3.59 $3.55

$3.50 $3.43

$3.37 $3.35 $3.36

$3.29 $3.27

$3.19 $3.22

$3.29 $3.27 $3.27

$3.24 $3.27

$3.33 $3.33 $3.33

$3.30 $3.30 $3.29 $3.31

$3.38 $3.44

$3.48

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Price differences since last year

(week ending 3/4/2013 versusweek ending 3/3/2014)

• Total US: -28¢• Rocky Mountain: -9¢• Central Atlantic: -20¢ • Midwest: -21¢ • New England: -23¢ • Gulf Coast: -35¢• West Coast: -36¢ • Lower Atlantic: -37¢

REGIONAL PRICES DIFFERENCES, BUT ALL ARE DOWN

Source: U.S. Energy Information Administration - Weekly U.S. Regular All Formulations Retail Gas Prices (2013 & 2014) - prices include all taxes

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GAS REWARDS KEY PART OF LOYALTY PROGRAMS

Source: Company websites & LogoBase

https://logo-base-logos.com/CategoryResults.cfm?div=21&cat=541&cat_parent=532&pack=5257





http://www.meijer.com/home.jsp

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WINNING WITH GAS REWARDS

Note: Stop & Shop gas rewards points are valid for 30 daysSource: Nielsen Homescan Surveys; Stop & Shop

% RESPONSE 2007 2008 2009 2010 2011 2012 2013

Yes 19 21 25 24 28 32 32

One-third of households shopping grocery to save on gas

Are you …buying more gas at locations because of incentives tied to spending levels at GROCERY store where you shop?

…up to $2.20/gallon!

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OTHER CHANNELS NOT GAINING GROUND Other than GROCERY, are you …buying more gas at locations because of incentives tied to spending levels at that store where you shop?

Source: Nielsen Homescan Survey; Rutter’s, Turkey Hill, Speedway

% RESPONSE 2010 2011 2012 2013

Convenience/Gas 19 18 18 17

Warehouse/Club 14 15 15 15

Mass Merchandiser 7 6 7 8

Drugstore 2 2 3 3

http://www.ruttersrewards.com/

CONSUMER CONFIDENCE

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WINTER BLUES: CONFIDENCE SLIPS SLIGHTLY IN FEBRUARYConsumer Confidence Index – January 2002 through February 2014

Source: The Conference Board; Nielsen supplied data as of February 2011

20

30

40

50

60

70

80

90

100

110

120

89

25

78

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

58

2014

82

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2013 AVERAGE AT HIGHEST LEVEL SINCE START OF RECESSION, BUT STILL ROOM FOR IMPROVEMENTNielsen U.S. Consumer Confidence Index

Source: Nielsen Global Consumer Confidence & Opinion Survey, Total U.S. responses

1Q05

3Q05

1Q06

3Q06

1Q07

3Q07

1Q08

3Q08

1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

3Q12

4Q12

1Q13

2Q13

3Q13

4Q13

96103106108106

100

83 82 80 8084 82 85 87

81 81 8378 77

8392

87 90 8992.8695.569894.33

+6 points

avg.

90

avg.

95

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Savings Paying Debts

Vacations Apparel No spare cash

Home Improv

Out of Home Ent.

Tech Products

Retirement Funds

Investing 0%

5%

10%

15%

20%

25%

30%

35%

40%

45%4Q12

1Q13

2Q13

3Q13

4Q13

SAVING & PAYING OFF DEBT STILL PRIORITIES

Source: Nielsen Global Consumer Confidence & Opinion Survey, Total U.S. responses, 4Q’12 through 4Q’13

Once you have covered your essential living expenses, what do you do with your spare cash? I spend it on…

23% reporting no spare cash

Current quarter vs. previous:

Increase in those reporting no spare cash; decreased interest in discretionary spending

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The Economy 26% +5

Job Security 11% -2

Debt 10% -2

Health 9% +1

Food Prices 4% -3

Fuel Prices 4% n/c

ECONOMY STILL THE #1 CONCERNWhat are your biggest concerns over the next six months…

Source: Nielsen Global Consumer Confidence & Opinion Survey Total U.S. responses, 4Q’13 (versus previous quarter)

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CONSUMER OUTLOOK REMAINS STUBBORNLY WEAK

Source: Nielsen Global Consumer Confidence & Opinion Survey, Total U.S. responses, 1Q’09 through 4Q’13

1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

3Q12

4Q12

1Q13

2Q13

3Q13

4Q13

0%

5%

10%

15%

20%

25%

30%

Percent who think the U.S. will be out of a recession in the next 12 months

25%

10%

Most Optimistic

Most Pessimistic

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PRAGMATIC BEHAVIOR CONTINUES, BUT LESS INTENSE

Source: Nielsen Global Consumer Confidence & Opinion Survey, Total U.S. responses, 4Q’13

Did This Past Year:

59% save on gas & electricity

56% spend less on clothes

54% reduce take-out meals

52% reduce o-o-h entertain

49% switch to cheaper brands

36% use car less

Will Continue To Do:

46% save on gas & electricity

34% reduce take-out meals

30% spend less on clothes

28% switch to cheaper brands

25% reduce o-o-h entertain

22% use car less

Competition heats up!

RETAILING TRENDS

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51

Dec-2007

Feb-2008

Apr-2008

Jun-2008

Aug-2008

Oct-2008

Dec-2008

Feb-2009

Apr-2009

Jun-2009

Aug-2009

Oct-2009

Dec-2009

Feb-2010

Apr-2010

Jun-2010

Aug-2010

Oct-2010

Dec-2010

Feb-2011

Apr-2011

Jun-2011

Aug-2011

Oct-2011

Dec-2011

Feb-2012

Apr-2012

Jun-2012

Aug-2012

Oct-2012

Dec-2012

Feb-2013

Apr-2013

Jun-2013

Aug-2013

Oct-2013

Dec-2013

-4

-3

-2

-1

0

1

2

JANUARY RETAIL SALES FLAT – WEATHER IMPACT?

Source: U.S. Census Bureau (44Y72: Retail Trade & Food Service, ex Auto)

Monthly % change in Retail Trade & Food Services, ex Auto – seasonally adjusted

Recession Recovery

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52

Hom

e Depot

Whole Foods

Costco

Dollar G

eneral

Petsmart

Walgreens

Lowe's

Kroger

Dollar Tree

Nordstrom

Macy's

CVS

Safeway

Family D

ollar

Sam's Club

Rite Aid

Target

Walm

art

Kohl's

Kmart

jcpenney

-25

-20

-15

-10

-5

0

5

10

ECONOMIC DIVIDE & EXECUTION DRIVES SUCCESSSame-Store-Sales – average growth – latest 52 weeks

Source: Company press releases; monthly or quarterly news releases – excluding gas

Strong affluent shopper attraction

Strong lower income attraction

No strong attraction

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53

Hom

e Depot

Whole Foods

Costco

Dollar G

eneral

Petsmart

Walgreens

Lowe's

Kroger

Dollar Tree

Nordstrom

Macy's

CVS

Safeway

Family D

ollar

Sam's Club

Rite Aid

Target

Walm

art

Kohl's

Kmart

jcpenney

-10

-5

0

5

10

15

2009 Latest Year

ECONOMIC DIVIDE & EXECUTION DRIVES SUCCESSSame-Store-Sales – average growth

Source: Company press releases; monthly or quarterly news releases – excluding gas

Note: Red arrows indicate worse than 2009; green arrows indicate largest positive swing in

performance since 2009

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WHOLE FOODS & KROGER DELIVERING

Source: Company press releases (excluding gas)

1st 2nd 3rd 4th 5th 6th (current)0

1

2

3

4

5

6

7

8

9

KrogerSafewayWhole Foods

% Change in Same-Store-Sales for last six reported quarters

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ONLY PUBLIX POSTING CONSISTENT GAINS


1st 2nd 3rd 4th 5th 6th (current)-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

AholdDelhaizePublix


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MASS RETAILERS – GROWTH CHALLENGED


1st 2nd 3rd 4th 5th 6th (current)-6

-5

-4

-3

-2

-1

0

1

2

Walmart*Target**Kmart*

% Change in Same-Store-Sales for last six reported months* or quarters**

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WALGREENS GROWTH BACK W/EXPRESS SCRIPTS



-1

0

1

2

3

4

5

6

7

8

CVS*WalgreensRite Aid

% Change in Same-Store-Sales for last six reported months or quarters*

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FAMILY DOLLAR & DOLLAR TREE GROWTH SLOWS



-2

0

2

4

6

8

Dollar TreeFamily DollarDollar General


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COSTCO CONTINUES TO BEAT SAM'S CLUB



0

1

2

3

4

5

6

CostcoSam's Club*


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GROWTH IN HIGH-END SLOWS; JCP POSTS A GAIN



-30

-25

-20

-15

-10

-5

0

5

10

15

Nordstrom**Macy's**Kohl's**JCPenney*


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HOME IMPROVEMENT WINNING



0

2

4

6

8

10

12

14

Lowe'sHome Depot


Strong demand to buy things that last or are we getting around to fixing things

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TOYS FOR PEOPLE NOT WINNING LIKE TOYS FOR PETS



-8

-6

-4

-2

0

2

4

6

8

PetsmartBest BuyToys R US


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63

VALUE & CONVENIENCE WINNING

Source: Nielsen Scantrack, Total U.S., 52 weeks ending 12/21/2013 (vs. year ago), UPC-coded; *Club Stores, Dollar Stores, Mass-Merchandisers, Supercenters, & Military

$0

$50,000,000,000

$100,000,000,000

$150,000,000,000

$200,000,000,000

$250,000,000,000

$300,000,000,000

$350,000,000,000

Series3

Total measured channels: $771 Billion & up 1.5%

All Departments – Dollar Sales & Trend

Supermarkets

C-Stores

Drug Stores

Value*

Low Growth High Growth

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TOP 100 RETAILERS LIST

Source: STORES magazine (July 2013) – annual ranking of U.S. retailers by domestic sales

Rank Company Rank Company

1 Wal-Mart 21 Kohl's2 Kroger 22 Delhaize America3 Target 23 H-E-B4 Costco 24 YUM! Brands5 The Home Depot 25 True Value6 Walgreen 26 Dollar General7 CVS Caremark 27 Meijer8 Lowe's 28 Wakefern / ShopRite9 Safeway 29 J.C. Penney

10 McDonald's 30 BJ's Wholesale Club11 Amazon.com 31 Staples12 Best Buy 32 Subway13 Sears Holdings 33 Gap14 Macy's 34 Nordstrom15 Publix 35 Whole Foods Market16 SUPERVALU 36 Bed Bath & Beyond17 Ahold USA / Royal Ahold 37 7-Eleven18 Rite Aid 38 Aldi19 Apple Stores / iTunes 39 Ace Hardware20 TJX 40 Ross Stores

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TOP 100 RETAILERS LIST (CONTINUED)

Source: STORES magazine (July 2013) – annual ranking of U.S. retailers by domestic sales

Rank Company Rank Company Rank Company

41 L Brands (formerly Limited Brands) 61 Dunkin' Brands 81 Harris Teeter Supermarkets42 Family Dollar Stores 62 Barnes & Noble 82 Foot Locker43 Army Air Force Exchange 63 DineEquity 83 Dell44 Wendy's 64 Dillard's 84 Neiman Marcus45 Bi-Lo (formerly Winn-Dixie Stores) 65 A&P 85 Hy-Vee46 Starbucks 66 O'Reilly Automotive 86 Brinker International47 Burger King Worldwide 67 Advance Auto Parts 87 Burlington Coat Factory48 Menard 68 GameStop 88 Michaels Stores49 Good Neighbor Pharmacy 69 Dick's Sporting Goods 89 Belk50 Darden Restaurants 70 PetSmart 90 Bloomin' Brands51 Verizon Wireless 71 QVC 91 Williams-Sonoma52 Toys "R" Us 72 Defense Commissary Agency 92 IKEA North America53 Trader Joe's 73 Big Lots 93 Roundy's Supermarkets54 AT&T Wireless 74 Save Mart 94 Stater Bros. Holdings55 Health Mart Systems 75 Sherwin-Williams 95 Sonic56 Dollar Tree 76 WinCo Foods 96 Albertsons57 Office Depot 77 OfficeMax 97 Price Chopper Supermarkets58 AutoZone 78 Alimentation Couche-Tard 98 RadioShack59 Giant Eagle 79 Tractor Supply Co. 99 Ingles Markets60 Wegmans Food Markets 80 Chick-fil-A 100 The Sports Authority

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VALUE & CONVENIENCE DRIVE STORE EXPANSION

Source: Nielsen TDLinx

Convenience

Drug

Supermarkets $2MM+

Dollar Stores

Mass Merch

Supercenters

Warehouse Clubs

151,282

41,378

33,445

25,486

4,071

4,014

1,2862013

Expansion from all formats but Mass Merchandisers in 2013 vs. previous year

U.S. Store Counts

69% + of growth from niche formats

Value & Convenience

vs. 2005

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MIXED GROWTH FROM SPECIALTY FORMATS


Liquor

Hardware Home Improvement

Electronics

Office Supply

Pet Stores

Bookstores

Toy Stores

46,266

17,627

6,757

3,445

3,267

1,649

7042013

2013 expansion from prior year in Liquor, Pet & Toy Stores

U.S. Store Counts

vs. 2005

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WALMART & TARGET LEADING EXPANSION

Source: Nielsen TDLinx - Counts reflect corporate-owned grocery stores

Walmart Banner

Target - Tot

Kmart - Tot

Kroger Corp Grocery

Delhaize Grocery

Safeway Corp Grocery

Publix Grocery

Albertsons LLC

Ahold Grocery

4,122

1,797

1,147

2,644

1,520

1,410

1,083

1,052

7642013

Expansion from Walmart, Target, Kroger, Publix, Albertsons in 2013 vs. previous year

U.S. Store Counts• Kroger acquires Harris

Teeter January 2014• Albertsons LLC to acquire

The United Family chain of 51 supermarkets under three banners in January 2014

• Walmart U.S. will build approximately 120 to 150 small format stores & plans to open approximately 115 supercenters, including relocations & expansions, in 2014

• Safeway and Albertsons to merge in Q4 2014vs. 2005

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WALMART WIDENS STORE COUNT GAP


Walmart Supercenter

Walmart MM

Walmart Grocery

Target MM

Super Target

Kmart MM (Excl Sears)

Super Kmart

3,265

502

355

1,546

251

1,122

252013

Versus ‘12, Walmart added 131 supercenters & 111 Neighborhood Markets; Target added just 15 stores in ’13, while Kmart closed 76

U.S. Store Counts

vs. 2005

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EXPANSION FROM MOST REGIONAL GROCERS


Bi-Lo/Winn-Dixie

SUPERVALU

HEB

A&P

Save Mart

Hy-Vee

Tesco

Meijer

Giant Eagle

WinCo Foods

Wegmans

700

595

302

284

224

215

199

204

192

91

832013

Smaller, more nimble, with a better understanding of their shoppers, experimenting with new formats & expanding into new markets

U.S. Store Counts

vs. 2005

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71

EDIBLES DOMINATE TOP SELLING CATEGORIES

Source: Nielsen Scantrack, Total U.S. All Outlets Combined (plus Convenience), 52 weeks ending 01/18/2014 (vs. year ago), UPC-coded

Paper Products

Prepared Foods-Frozen

Beer

Cheese

Milk

Carbonated Beverages

Packaged Meat

Snacks

Bread & Baked Goods

Fresh Produce

Supermarkets

All Outlets Combined, including Conv/Gas

But Supermarkets don’t always hold dominate share in big categories

Top Selling Supermarket Categories ($ in billions)

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72*PAB’s (Progressive Adult Beverages)Source: Nielsen Scantrack, Total U.S. All Outlets Combined (plus Convenience), 52 weeks ending 01/18/2014 (vs. year ago), UPC-coded, categories w/ sales of $50 million+ in Food $2MM+ Channel

FASTEST GROWING CATEGORIES MOSTLY EDIBLES

Pet Care

Vitamins

Liquor

Fresh Produce

Yogurt

Snacks/Spreads/Dip-Dairy

Gloves

Coolers/PAB’s*

Fresh Meat

Seasonal Gen Merchandise

3

4

7

8

8

9

23

19

12

64

5

6

6

7

7

9

11

14

23

73

SupermarketsAll Outlets Combined, including Conv/Gas

Supermarkets driving faster or comparable growth in many categories

Fastest Growing Supermarket Categories* (Dollar Trend)

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WINNING WITH BIG FORMAT & GREAT VALUE

Sources: MorningNewsBeat.com; Las Vegas Sun/Steve Marcus (photos – March 4, 2012)

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• Daily dinner deals• “Grab & Go” foods• New garden cooler,

which keeps fruits and vegetables fresher, longer

• Expanded gluten-free section• $1 Deals• New Food Lion-brand beef in

sealed-fresh packaging

FOOD LION DEBUTS NEW STORE FORMAT

Sources: Food Lion, Supermarket News & Salisbury Post (photos)

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UPSCALE BANNERS FOR SOME GROCERS

Sources: Tops, OrchardFresh; Roundy’s, Mariano’s Fresh; Harris Teeter, 201central

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“SCALED-DOWN-YET-UPSCALE” STORES PLANNEDMarket District Express stores will be located in Pittsburgh, Cleveland & Columbus

Sources: Giant Eagle & Grocery Headquarters

Giant Eagle Express, debuted in the Pittsburgh area in 2007…to offer shoppers fresh prepared foods, convenience-oriented services and fill-in grocery items…

…we announced our most recent evolution of the concept with plans to open our first Market District Express south of Pittsburgh toward the end of 2013, bringing our unique foodie experience to a more intimate setting.”

Grocery HeadquartersSep. 30, 2013

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TAKING FOOD TO ANOTHER LEVELFood prepared with “the incomparably fresh ingredients sold on-site in the store”

Source: Wegmans

http://www.wegmans.com/webapp/wcs/stores/servlet/HomepageView?storeId=10052&catalogId=10002&langId=-1

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HY-VEE SERVING UP MORE IN-STORE MEALS

Sources: Supermarket News; quote by Randy Edeker, Hy-Vee chairman, president & CEO

We are a company focused on fresh and embarking on a new initiative with restaurants to continue building on this.

Supermarket NewsJul. 29, 2013

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“2013 RETAILER OF THE YEAR: KROGER CO.”“This grocery superstar surpassed $1 billion in annual wine sales in 2012 and expects to post double-digit growth this year.”

Sources: Wine Enthusiast Magazine & Kroger

Kroger identifies wine as an important category, with plans to grow aggressively over the next five years.

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80

GROWTH AT GROCERY

*Technomic estimateSource: QSR Magazine (October 2013)

The retailer meal solutions segment grew to $37 billion in sales in 2012, and its growth is expected to outpace that of restaurants and bars at least through 2014.*

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BYERLY’S OPENS PET STORE

Source: Byerly’s

Supermarket News Sep. 20, 2012

Bone Marché has a separate entrance and welcomes pets on leashes. The store features a ‘bone bar,’ a variety of specialty pet-food brands and refrigerated and frozen pet foods.

http://www.lundsandbyerlys.com/

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82

HUNGER FOR NATURAL/GOURMET & LOW PRICES


Save-A-Lot

Aldi

Trader Joe's

Whole Foods

Sprouts

Fresh Market

1351

1283

402

353

169

152

2013

Expansion from all in 2013

U.S. Store Counts

• Aldi plans to open 650 stores by 2018

• Whole Foods plans 1,200 new stores

• Lidl sounding out market entry

vs. 2005

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83Sources: Associated Press & The Wall Street Journal

Whole Foods is coming to downtown Newark, N.J… by 2016. The… company says it wants to spur economic development in urban areas. It opened a store in Detroit in June and also plans a store in an impoverished area of Chicago… prices at the Newark store will be cheaper than others in the area.

Associated PressOct. 10, 2013

Whole Foods has been working to shed its reputation as an overpriced grocer, so that it can open stores in new markets and appeal to lower-income consumers. Whole Foods has started offering more discounts, adding value-oriented brands, and matching lower prices of its competitors.

The Wall Street JournalNov. 6, 2013

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CONSUMERS PICK ALDI AS “LOW-PRICE LEADER”

Source: https://www.facebook.com/ALDI.USA

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SAVE-A-LOT EXPANDING TO ENGAGE SHOPPERS

Source: Save-A-Lot

we got about 10 stores or so that we’re going to be opening this year and next year we have more in the plan

Sam Duncan, President & CEOSUPERVALU’s F4Q2013 Results Call

Apr. 24, 2013

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86

SMALL FORMATS DRIVING STORE EXPANSION


36%

32%

21%

7%5%

Dollar StoresC-StoresDrug StoresGroceryMass Merchandisers

But fastest expansion from small formats

% of U.S. Store Count Expansion in the Top 20 Expansion Chains – 2013 versus 2007

16,570 new

stores

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87

SMALL FORMAT NOT THE ONLY BOX IN TOWN


Dollar General

Family Dollar

CVS

Dollar Tree

BP

Chevron Texaco

Exxon Mobil

Kroger Grocery

CST Brands

Target

11,1208,245

8,0458,038

7,6354,978

4,6994,614

4,4284,122

3,9993,772

3,4592,805

2,4192,0131,923

1,7971,797

1,562

But 17 of top 20 chains with the most stores are small box

U.S. Store Counts for 2013

Dollar

C-Stores

Drug

Mass Merchandisers

Grocery

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SMALL FORMATS DOMINATE LIST OF RETAILERS ADDING THE MOST STORESIncreases in actual U.S. Store Counts – 2013 versus 2007


Dollar General

Walgreens

Dollar Tree

Couche Tard

Walmart Banner

CST Brands

Casey's

Shell

Western Refining

Sunoco

2888

15821412

732

2134

419370

334269258

220208

206190

2074

1329

722

436580

207

17 of top 20 chains adding the most stores are small box

Dollar

C-Stores

Drug

Grocery

Mass Merchandisers

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“WALMART U.S.’S NEXT GROWTH PLAN INVOLVES THINKING SMALL”

Source: Walmart, MarketWatch, Arkansas Online

Long term, part of the growth will come from accelerating the openings of its better-performing and smaller Neighborhood Market and Walmart Express, for the first time at a faster pace than their larger supercenter sister. They provide “fill-in” trips for consumers as the “stock-up” trips made to its larger format stores declined.The 20-unit Express chain will allow Walmart to compete effectively with dollar stores.

MarketWatchOct. 15, 2013

There are three Walmart on Campus: University of Arkansas-Fayetteville, Arizona State University-Tempe, and Georgia Tech-Atlanta

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TARGET SMALL URBAN FORMAT FOCUS

Source: Target; Photos: Sofia Jaramillo / SEATTLEPI.COM, Los Angeles Times, Antonio Perez / Chicago Tribune

a new era for downtown residents

Seattlepi.comJul. 23, 2012

CityTarget:1. Chicago (July 2012)

2. L.A. (July 2012)

3. Seattle (July 2012)

4. L.A. (Oct. 2012)

5. San Francisco (Oct. 2012)

6. L.A. (March 2013)

7. Portland, OR (July 2013)

8. San Francisco (Oct. 2013)

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“TARGET TESTS SMALLEST FORMAT YET”Approximately 15% of the size of a typical general merchandise Target store

Source: A Bullseye View, behind the scenes at Target

Grand opening in July 2014 near the University of Minnesota campus.

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SPECIALTY INVESTS IN SMALL TOOOfficeMax, Petco, Sports Authority, Cabela’s are among those with small-store strategy

Source: Milwaukee Business Journal, Petco, Cabela’s & Sports Authority

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FRESH IS IN!


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SEE HOW YOUR TARGET'S BEEN REFRESHED1,206 Target stores w/expanded food

Source: Target

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TARGET MAKES GROCERIES FASHIONABLE & ADDS TO ITS PORTFOLIO

Source: Target & Associated Press

http://www.cooking.com/

http://www.google.com/url?sa=i&source=images&cd=&cad=rja&docid=18MK1eZ6ZTFfXM&tbnid=F44NsjTr6S_G-M:&ved=0CAgQjRwwAA&url=https://play.google.com/store/apps/details?id=com.res.tgt&ei=SFGeUu2UM4ursQS3gIHQDQ&psig=AFQjCNHptvlzWv25yN6BqSFN3m-uDmHunQ&ust=1386193608899342

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PERFORMANCE INDEX EDGES UP IN JANUARY

Source: http://www.restaurant.org//Downloads/PDFs/News-Research/index/RPIJan2014

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TOP CHAINS DOMINATE, BUT ….

Source: QSR Magazine’s The Top 50 (Aug. 2013)*Includes figures estimated by Technomic Inc. 1Franchise Unit Counts Represent data for Licensed Units 2AUV data for Company-operated units only

QSR 50 Rank Company/Chain Name 2012 U.S. Systemwide

Sales (millions)2012 U.S. Average

Sales per Unit (thousands)

Number of Total Units in 2012

Total Change in Units from 2011

1 McDonald's $35,600 $2,600 14,157 592 Subway* $12,100 $481 25,549 9563 Starbucks*1 $10,600 $1,223 11,128 3414 Wendy's2 $8,600 $1,484 5,817 -345 Burger King* $8,587 $1,195 7,183 -216 Taco Bell $7,478 $1,363 5,262 257 Dunkin' Donuts $6,264 $857 7,306 2918 Pizza Hut $5,666 $883 6,209 1569 Chick-fil-A $4,621 $3,158 1,683 77

10 KFC $4,459 $957 4,556 -16211 Panera Bread $3,861 $2,427 1,652 11112 Sonic Drive-In $3,791 $1,074 3,556 -513 Domino's Pizza $3,500 $710 4,928 2114 Jack in the Box $3,085 $1,379 2,250 2915 Arby's $2,992 $993 3,354 -83

Subtotal (Top 1-15) $121,204 $1,159 104,590 1,761Grand Total (Top 1-50) $156,875 $1,084 144,744 3,171

Increase in units from 2011Decrease in units from 2011

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16 Chipotle Mexican Grill $2,731 $2,113 1,410 18017 Papa John's $2,402 $829 3,131 13018 Dairy Queen* $2,300 $545 4,462 -2319 Popeyes Louisiana Kitchen $2,253 $1,242 1,679 6920 Hardee's $1,900 $1,145 1,703 821 Panda Express $1,797 $1,237 1,533 11922 Little Caesars* $1,684 $465 3,725 20723 Whataburger $1,477 $1,996 740 1224 Carl's Jr. $1,400 $1,470 1,124 825 Jimmy John's $1,263 $879 1,560 22926 Five Guys Burgers & Fries $1,083 $1,049 1,105 20427 Zaxby's $979 $1,766 565 2528 Church's Chicken $870 $707 1,202 1029 Bojangles' $865 $1,718 536 3030 Steak 'n Shake* $858 $1,700 501 10

Subtotal (Top 16-30) $23,862 $955 24,976 1,218Grand Total (Top 1-50) $156,875 $1,084 144,744 3,171

EXPANSION FROM MOST 2ND TIER CHAINS

Source: QSR Magazine’s The Top 50 (Aug. 2013)*Includes figures estimated by Technomic Inc.


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31 Culver's $839 $1,838 472 2832 Quiznos* $838 $345 2,353 -15033 Papa Murphy's $738 $575 1,329 7934 Long John Silver's $723 $794 911 -2135 Checkers/Rally's $697 $903 776 -336 White Castle $619 $1,284 406 937 Del Taco $608 $1,100 551 1938 Qdoba Mexican Grill $583 $966 627 4439 Jason's Deli $579 $2,556 245 1040 Krispy Kreme* $569 $2,428 239 941 El Pollo Loco* $563 $1,475 397 342 Boston Market $559 $1,184 469 -1243 Tim Hortons $532 $1,095 804 9044 In-N-Out Burger* $528 $1,935 280 1445 Baskin-Robbins $510 $207 2,463 -30

Subtotal (Top 31-45) $9,485 $770 12,322 89Grand Total (Top 1-50) $156,875 $1,084 144,744 3,171

A FEW NEW STORES FROM 3RD TIER



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46 CiCi's Pizza* $505 $915 550 -2347 Captain D's $467 $903 517 -248 Moe's Southwest Grill $452 $1,103 482 4349 Wingstop $451 $902 533 4550 Jamba Juice $450 $715 774 40

Subtotal (Top 46-50) $2,325 $814 2,856 103Grand Total (Top 1-50) $156,875 $1,084 144,744 3,171

A FEW NEW STORES FROM 4TH TIER



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STRONG GROWTH OUTSIDE OF THE U.S.

Source: QSR Magazine’s The Top 30 (March 2013)

QSR 30 Rank Company/Chain Name

2011 Non-U.S. Systemwide Sales

(millions)

2011 Non-U.S. Average Sales per Unit (thousands)

Total Non-U.S. Units in 2011

Total Change in Non-U.S. Units

from 2010

1 McDonald's $51,800 $2,668 19,419 7092 KFC $17,600 $1,339 13,142 13443 Burger King $6,050 $1,172 5,164 1664 Pizza Hut $5,500 $870 6,323 4335 Subway $5,200 $464 11,198 10896 Domino's Pizza $3,500 $753 4,650 2287 Starbucks $2,626 $423 6,216 4898 Baskin-Robbins $1,292 $304 4,254 3689 Wendy's $820 $1,142 718 25

10 Dairy Queen $640 $413 1,548 16411 Dunkin' Donuts $637 $208 3,068 4312 Krispy Kreme $384 $834 460 4313 Church's Chicken $328 $723 443 -1714 Taco Bell $300 $1,071 280 1815 Coffee Bean & Tea Leaf $273 $476 568 23

Subtotal $96,949 $12,859 77,451 5,125Grand Total (Top 30) $98,008 $19,101 81,246 5,463


http://www.qsrmagazine.com/



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GROWTH OUTSIDE OF THE U.S. – 2ND TIER

Source: QSR Magazine’s The Top 30 (March 2013)

QSR 30 Rank Company/Chain Name

2011 Non-U.S. Systemwide Sales

(millions)

2011 Non-U.S. Average Sales per Unit (thousands)

Total Non-U.S. Units in 2011

Total Change in Non-U.S. Units

from 2010

16 Quiznos $230 $358 660 1017 Sbarro $200 $700 402 3818 Cinnabon $114 $261 437 7819 Cold Stone Creamery $107 $550 374 4120 Arby's $82 $697 127 121 Auntie Anne's $58 $194 311 2622 Smoothie King $44 $529 96 2023 Papa John's* $42 $60 709 7424 Seattle's Best Coffee $32 $232 140 025 Charley's Grilled Subs $32 $643 53 126 Fatburger $29 $757 38 1227 Pinkberry $28 $757 37 2828 Marble Slab Creamery $26 $207 124 229 Mrs. Fields $20 $215 99 230 TCBY $16 $82 188 5 Subtotal $1,059 $6,242 3,795 338 Grand Total (Top 30) $98,008 $19,101 81,246 5,463





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IT’S JUST NOT ABOUT THE FOOD

Source: Kroger’s Fred Meyer & Facebook.com/BombayCompany

• Baby World• Bed & Bath• Deli & Bakery• Fresh Flowers• Fred Meyer Jewelers• Gourmet Cheese• Health & Beauty• Home Fashion• Kitchen Place• Toys• Clothes (pilot at one store)

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LOTS OF U.S. TRAFFIC FOR GIFT CARDS

Source: Blackhawk Network (quote); TribLocal & Facebook.com/GiftCardMall (photos)

Gift Card Mall, with access to 160 million customer visits each week, is available through a network of leading grocery stores, big box, convenience, pharmacy, specialty stores, Internet retailers and mobile channels, including GiftCardMall.com.

Blackhawk Network, Feb. 7, 2013

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FASHION & ACCESSORIES STORE WITHIN A STORE

Source: H-E-B

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EXPANSION FROM LEADING DRUG & CLUB CHAINS

*Drug chains include other owned banners (i.e., Walgreens includes Duane Reade and Happy Harry; CVS includes Careplus and Longs; Rite Aid includes Save-A-Lot RA) Source: Nielsen TDLinx

Walgreens*

CVS*

Rite Aid*

Sam's

Costco

BJ's

8,038

7,635

4,614

620

457

2012013

Expansion from all but Rite Aid in 2013 vs. previous year

U.S. Store Counts

vs. 2005

• Costco plans to open 10 new stores in U.S. during Q1’14

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THE WAREHOUSE CLUB TREASURE HUNT


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108

CLUB MEMBERSHIP FEES


Store Brand promotion at its best… In February, LivingSocial.com offered Costco Gold Star membership at the regular rate, but threw in extras… “All new members will receive

a pack of bonus coupons (a $29.47 value), good for a free Kirkland Signature™ 48-pack of AA batteries, a free rotisserie chicken, a free Kirkland Signature™ case of water, $4 off Kirkland Signature™ coffee, and $4 off Kirkland Signature albacore tuna.”

• Executive, $110• Business, $55• Gold Star, $55

• Plus, $100• Business, $45• Savings, $45

• Business Rewards, $100• Inner Circle

Rewards, $100• Business, $50• Inner Circle, $50

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BIG ONLINE BUSINESS FROM CLUB RETAILERSSam’s Club includes option for in-store pick up


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CLUB COUPONS, TRIAL PROGRAMS & REWARDS

Source: Costco, Sam’s Club, BJ’s

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SAM’S CLUB FOCUS ON SMALL BUSINESS

Source: Sam’s Club

Shop by Business:• Restaurant Supplies• Vending &Concession• Convenience Stores• Hotel & Hospitality• Salons & Barber Shops• Construction & Repair• Child Care & Schools

The hands-on training seminars

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WALGREENS ACQUIRED KERR DRUG DURING Q4’13

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MERCHANDISING WIDE VARIETY OF CATEGORIES


Have you noticed Walgreens online ad includes more pages

than their print edition?

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FEMALES & BEAUTY A BIG DRAW FOR DRUG

Source: Company websites, Drug Store News & Chicago Tribune

Walgreen Co. has begun leveraging Duane Reade’s successful Look Boutique concept in select Walgreens drugstores. They average 1,200 to 2,000 square feet

& each has a minimum of five beauty advisers

CVS closed Beauty 360 locations & e-commerce site in May 2012 to

“focus on the growth and development of beauty at

CVS/pharmacy”

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SHAKING UP THE BOXWalgreens expanding “flagship” store concept in the U.S. & Puerto Rico

Source: Walgreens, Business Wire, Los Angeles Times

Walgreens “flagship” store concept includes:• sushi chef• barista, juice bar, soda

fountain• 700 fine wines• manicures and, more!

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116

WALGREENS & BOOTS COMBINING BEST PRACTICES

Source: New Store magazine 2013 #1, Chris Denner & Mike Cook Imaging (Boots); Walgreens

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NON-EDIBLES DOMINATE TOP SELLING CATEGORIES

Source: Nielsen Scantrack, Total U.S. All Outlets Combined (plus Convenience) , 52 weeks ending 01/18/2014 (vs. year ago), UPC-coded


Oral Hygiene

Skin Care Preparations

Hair Care

Cosmetics

Candy

Vitamins

Cough & Cold Remedies

Tobacco & Accessories

Medications/Remedies

Drug Stores

Top Selling Drug Store Categories ($ in billions)

• CVS announced it will stop selling tobacco products by October 1; estimated at $2 billion in annual sales

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118

FASTEST GROWING CATEGORIES MOSTLY EDIBLES

Source: Nielsen Scantrack, Total U.S. All Outlets Combined (plus Convenience), 52 weeks ending 01/18/2014 (vs. year ago), UPC-coded, categories w/ sales of $50 million+ in Drug $1MM+ Channel

Pet Food

Snacks

Dressng/Salad/Pr Fd-Deli

Baby Food

Pizza/Snacks-Frozen

Juices & Drinks-Refrig

Light Bulbs/Telephone

Coffee

Packaged Meat

Tobacco Alt & Accessory

2

4

3

1

2

3

-4

6

2

108

5

6

6

7

10

10

11

12

16

56

Drug StoresAll Outlets Combined, including Conv/Gas

Is your category a trip driver or a basket builder?

Fastest Growing Drug Store Categories* (Dollar Trend)

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119

EXPANSION FROM MOST TOP C-STORE CHAINS


7-Eleven

Shell

BP

Chevron Texaco

Couche Tard

Exxon Mobil

Marathon

Sunoco

CST Brands

Casey's

8,245

4,978

4,428

3,999

3,772

3,459

2,805

2,013

1,923

1,7972013

Slower or declining growth for most oil company outlets in 2013 vs. previous year

U.S. Store Counts

vs. 2007

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120

EXPANSION FROM MOST 2ND TIER C-STORE CHAINS


Pantry

Cumberland Farms

Kroger

Hess

RaceTrac

QuikTrip

WaWa

SSP/Stripes

Pilot Flying J

Military

1,562

950

799

743

694

678

648

581

555

5192013

Expansion from all but Pantry, Kroger, Hess in 2013 vs. previous year

U.S. Store Counts

vs. 2007

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121

EXPANSION FROM MOST 3RD TIER C-STORE CHAINS


Holiday

Sheetz

GPM Investments

Kum & Go

Kwik Trip

WilcoHess

Tesoro

Delek

Stewart's Shops

Allsup's

479

466

462

428

407

388

388

379

332

3182013

Expansion from all but Kum & Go, Delek, Allsup’s in 2013 vs. previous year

U.S. Store Counts

vs. 2007

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122

DOMINATE TOBACCO & BIG IN BEVERAGES

Source: Nielsen Scantrack, Total U.S. All Outlets Combined (plus Convenience), 52 weeks ending 01/18/2014 (vs. year ago), UPC-coded

Tea

Milk

Bread & Baked Goods

Bottled Water

Juices Drinks-Shelf Stbl

Candy

Snacks


Beer

Tobacco & Accessories

Conv/GasAll Outlets Combined, including Conv/Gas

Top Selling C-Store Categories ($ in billions)

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STRONGER GROWTH & MOST ARE EDIBLE

*PAB’s (Progressive Adult Beverages)Source: Nielsen Scantrack, Total U.S. All Outlets Combined (plus Convenience), 52 weeks ending 01/18/2014 (vs. year ago), UPC-coded, categories w/ sales of $50 million+ in C-Store Channel

Fresh Produce

Yogurt

Wine

Fruit-Dried

Charcoal/Logs/Accessries

Liquor

Coolers/PAB's*

Gloves

Tobacco Alt & Accessory

Pkg'd Milks & Modifiers

8

8

6

0

2

7

19

23

108

9

14

14

14

15

15

15

19

25

123

232

Conv/Gas

All Outlets Combined, plus Conv/Gas

Consumers are voting – convenience matters

Fastest Growing C-Store Categories* (Dollar Trend)

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124

WALMART ENTERS C-STORE CHANNEL

Source: Northwest Arkansas Business Journal

Wal-Mart Stores… is building a convenience store in Bentonville… the store… will be open by the spring.

The store will offer customers a quick and easy solution for gas, snacks and beverages, and other staples like milk, bread and eggs.

…there are no plans to build additional stores like this.

Northwest Arkansas Business Journal Nov. 6, 2013

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“ON THE BRINK OF MAJOR EXPANSION AND A FUNDAMENTAL SHIFT IN ITS IDENTITY”

Source: Convenience Store News

7-Eleven added almost 1,000 convenience stores in the United States and Canada in the past year and plans to present a new face to the public.[7-Eleven] may eventually have as many as 30,000 North American outlets, up from its current total of roughly 8,000. Over the short term, the company plans to increase its North American total to 10,000 as early as 2014.

Convenience Store NewsJan. 7, 2014

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7-ELEVEN REBRANDS & AIMS HIGHER

Source: 7-Eleven & FastCoDesign.com

Seeks to attract health-conscious millennials, females, wine drinkers & more

7-Eleven will roll out a series of better-for-you snacks in a bid to attract Millennials.

USA TODAYSep. 12, 2013

7-Eleven “added four high-demand A-listers to its lineup at its top wine-selling stores”

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“A GREAT FIRST IMPRESSION”

Source: Convenience Store News

Wawa's expansion into Florida included its first major new store concept since the late 1990s. The new concept uses "fresh" decorating cues such as natural materials, warm colors, and a redesigned and highly visible kitchen/sandwich-making area... while touchscreen monitors make ordering easy.

Convenience Store NewsOct. 2013

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BLURRING THE LINE BETWEEN SUPERMARKET & CONVENIENCE STORE

Source: Giant Eagle Express; Design Retail Online (photos)

With its focus on fresh meal solutions and full assortment of grocery, frozen, dairy and health and beauty items, Giant Eagle Express® is unlike any store you've ever shopped before.

Giant Eagle Express

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FOCUSING ON FOOD & BUILDING BIGGER STORES

Source: Tom Gilbert/Tulsa World (photo)

The competition now is not between convenience stores…It's big box, it's fast feeders, it's coffee.We're getting into the fresh food market the things you �take home and cook

Mike Thornbrugh, QuikTrip spokesman

via Tulsa WorldNov. 22, 2013

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KELLOGG’S SUPPORTING C-STORE OWNERS

Source: https://www.kelloggsconvenience.com/

Print Shop allows users to design a range of promotional pieces, such as shelf talkers, posters, counter cards and digital media advertising.

Convenience Store NewsNov. 20, 2013

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NEW CONCEPT STORE FOCUSES ON FOOD

Source: Boston Business Journal

The increased emphasis on food sales has allowed the stores to be more viable in urban locations, and the company is currently looking for other sites in Boston and other urban areas.

Convenience Store NewsNov. 17, 2013

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KROGER “SUPERSIZES” C-STORE FORMAT

Sources: Columbus Dispatch; NACS Online

Kroger is testing its Turkey Hill Minit Market convenience store concept in Central Ohio, hoping to bridge the gap between grocery and one-stop shopping for merchandise typically found in larger grocery stores, such as fresh produce and packaged and prepared foods.

NACS OnlineDec. 2, 2013

“At 7,500 square feet, the recently opened Turkey Hill is smaller than the average Kroger store (67,000 square

feet), but it’s about 70% larger than the retailer’s typical c-store size (4,000 square feet).”

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OPPORTUNITIES FOR NEW LOCATIONS

Source: Shop 24 Global LLC on Facebook & PropertyManagementInsider.com (Tim Blackwell/photo)

Shop24 currently has locations at 10 campuses nationwide, with another 30 slated for installation within the next 12 months. There are eight locations outside higher education in the US and 200 throughout Europe. Another company in the space is Newton, a UK-based start-up, with just two locations so far, both in Europe.

University BusinessOctober 2013

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134

RAPID EXPANSION WITHIN DOLLAR CHANNEL


Dollar General

Family Dollar

Dollar Tree

Fred's HQ

Ninety-Nine Cents Only

11,120

8,045

4,699

658

3112013

Expansion from all but Fred’s in 2013 vs. previous year

U.S. Store Counts

vs. 2005

• Fred’s testing smaller box Fred’s with pharmacy

• Dollar General plans to open approximately 700 stores in fiscal 2014 & remodel or relocate approximately 525 locations

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INCREASED BRAND FOCUS; BROADER PRICE POINTS

Source: Family Dollar & Dollar General

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DOLLAR TREE CONTINUES TO GROW

Source: SeekingAlpha.com

Dollar Tree is the smallest of its peers, in terms of store count with 4,842 stores. Family Dollar has more than 7,600 stores, while Dollar General's has over 10,000. This suggests that Dollar Tree still has as a lot of room to expand its business, and management believes that there is potential for 7,000 stores in the U.S. and 1,000 stores in Canada, much more than the current 160 Canadian stores.

Neal RauStrategy Consultant at Stock Traders Daily

Sep. 20, 2013

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3,800+ ITEMS ONLINE; SPANISH WEBSITE TOO!

Source: Dollar Tree

Online items sold with minimum quantities; case prices available; limited free in-store pick-up

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SEIZING THE MOMENT & ADDING STORES

Source: Dollar General

At the end of the third quarter, we had 11,061 stores…in 40 states…we upgraded our site selection technology in order to fine-tune the way we look at opportunities for growth…Our new model now estimates more than 14,000 additional opportunities for the industry, 40% higher than our previous estimate of 10,000…we believe that reinvesting in our business through store growth remains the best use of our capital.In 2014, we plan to open approximately 700 new stores and to relocate or remodel approximately 525 stores...

Dollar General Q3 2013 Earnings Call

Dec. 5, 2013

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STORE EXPANSION & CLOSINGS TO DRIVE GROWTH

Source: Family Dollar

To improve the shopping experience in our stores and strengthen our competitive positioning, we continue to invest in our store renovation program. This multiyear investment is critical to improving our competitiveness… We remain on track to complete the chain by around 2016.Lastly, we are committed to our new store program. With strong returns on investment and ample market opportunity, opening new stores continues to be an investment priority. This year, we plan to open 525 new stores… We believe we can double the size of our chain and we remain committed to 5% to 7% annual square footage growth as long as these metrics continue to meet our targets.

Family Dollar StoresQ1 2014 Earnings

Jan. 9, 2014

http://www.familydollar.com/

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DOLLAR GENERAL PILOTS FIRST FUEL STATION

Source: Dollar General; Tiffeny Owens/The Cullman Times (photo)

Rick DreilingChairman & CEO

Dollar GeneralOct. 23, 2013

Dollar General continues to innovate to provide convenience and value for our customers… This project to test a fuel offering is consistent with our strategy of continually looking for new and better ways to meet our customers’ needs for value and convenience and enhancing our position as America’s general store.

http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=-u1srfGYN5xRRM&tbnid=Fvk0T8eQiMZs4M:&ved=0CAUQjRw&url=http://www.bizjournals.com/memphis/news/2013/10/21/dollar-general-getting-into-gas-stations.html&ei=BZyBUtX6NOTc4AP48IDwAw&bvm=bv.56146854,d.dmg&psig=AFQjCNE9t8mXyeJn088tOthtIb2V9EmePw&ust=1384312145406000

RETAIL CHANNEL SHOPPING BEHAVIORS

The data behind these trends come from syndicated Homescan® reports which are available for licensing. Please contact Todd Karmel ([email protected]) for details.

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CONSUMER ACCEPTANCE OF VALUE

*Includes Kmart, Target & Walmart **Note: Conv/Gas channel behaviors understated because of the high level of gasoline-only buys & purchases of immediate consumablesSource: Nielsen Homescan, excludes gas-only or Rx-only trips

Conv/Gas**

Warehouse

Dollar

Mass Merch

Drug

Supercenters*

Grocery

35

51

66

69

75

75

99

45

50

59

95

86

51

100

20012013

% Household Penetration

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143

VALUE CHANNELS GRABBING TRIPS

*Includes Kmart, Target & Walmart**Note: Conv/Gas channel behaviors understated because of the high level of gasoline-only buys & purchases of immediate consumablesSource: Nielsen Homescan, excludes gas-only or Rx-only trips

Mass Merch

Warehouse

Conv/Gas**

Drug

Dollar

Supercenters*

Grocery

11

12

13

13

14

23

54

24

10

15

15

11

20

72

20012013

Trips Per Household

Long-term decline in Grocery & Mass trips,

but holding fairly steady over the past couple of

years

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144

BIG BOX STORES DRIVE BIG BASKETS

*Includes Kmart, Target & Walmart**Note: Conv/Gas channel behaviors understated because of the high level of gasoline-only buys & purchases of immediate consumablesSource: Nielsen Homescan, excludes gas-only or Rx-only trips

Dollar

Conv/Gas**

Drug

Grocery

Mass Merch

Supercenters*

Warehouse

$16

$22

$27

$44

$50

$63

$100

2013

Average $ Basket Ring

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145

ONLY PET IS NOT EXPERIENCING BIG DECLINES IN PENETRATION % Household Penetration

Source: Nielsen Homescan, excludes gas-only or Rx-only trips

Toy Stores

Bookstores

Liquor

Auto

Electronics

Pet

Office Supply

Department

Hardware & Home Improvement

12

18

20

20

28

30

35

57

67

31

38

23

31

48

30

48

78

77

20012013

Store closings; online & big box retailers driving shopper compression

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146

LOW FREQUENCY & MOST ARE OFF


Toy Stores

Electronics

Auto

Office Supply

Bookstores

Pet

Department

Liquor


2

2

2

3

4

5

6

6

6

2013

Trips Per Household

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SHOPPING BASKETS VARY IN SPECIALTY


Bookstores

Liquor

Pet

Auto

Office Supply


Toy Stores

Department

Electronics

$26

$38

$41

$42

$50

$51

$61

$86

$121

2013

Average $ Basket Ring

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148

01/21/2012

02/18/2012

03/17/2012

04/14/2012

05/12/2012

06/09/2012

07/07/2012

08/04/2012

09/01/2012

09/29/2012

10/27/2012

11/24/2012

12/22/2012

01/19/2013

02/16/2013

03/16/2013

04/13/2013

05/11/2013

06/08/2013

07/06/2013

08/03/2013

08/31/2013

09/28/2013

10/26/2013

11/23/2013

12/21/2013

01/18/2014

-5-4-3-2-1012345

Shopping Trips Shopping Basket $ Ring

TRIPS SOFT & BASKET SIZE GROWTH

Source: Nielsen Homescan, excludes gas-only or Rx-only trips (percent change vs. year ago)

All Channel Shopping – Trends

4-weeks ending

Period included Christmas

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149

TRIPS SOFT OR FLAT ACROSS ALL CHANNELS


01/21/2012

02/18/2012

03/17/2012

04/14/2012

05/12/2012

06/09/2012

07/07/2012

08/04/2012

09/01/2012

09/29/2012

10/27/2012

11/24/2012

12/22/2012

01/19/2013

02/16/2013

03/16/2013

04/13/2013

05/11/2013

06/08/2013

07/06/2013

08/03/2013

08/31/2013

09/28/2013

10/26/2013

11/23/2013

12/21/2013

01/18/2014

-15

-10

-5

0

5

10

15

Grocery Drug Mass Merch SupercenterClub Conv/Gas Dollar

Channel Shopping Trip Trends

4-weeks ending

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150

01/21/2012

02/18/2012

03/17/2012

04/14/2012

05/12/2012

06/09/2012

07/07/2012

08/04/2012

09/01/2012

09/29/2012

10/27/2012

11/24/2012

12/22/2012

01/19/2013

02/16/2013

03/16/2013

04/13/2013

05/11/2013

06/08/2013

07/06/2013

08/03/2013

08/31/2013

09/28/2013

10/26/2013

11/23/2013

12/21/2013

01/18/2014

-6

-4

-2

0

2

4

6

8

10

Grocery Drug Mass Merch SupercenterClub Conv/Gas Dollar

INFLATIONARY PRESSURES IN HOLDING PATTERN


$ Basket Ring Per Trip Trends

4-weeks ending

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151

01/21/2012

02/18/2012

03/17/2012

04/14/2012

05/12/2012

06/09/2012

07/07/2012

08/04/2012

09/01/2012

09/29/2012

10/27/2012

11/24/2012

12/22/2012

01/19/2013

02/16/2013

03/16/2013

04/13/2013

05/11/2013

06/08/2013

07/06/2013

08/03/2013

08/31/2013

09/28/2013

10/26/2013

11/23/2013

12/21/2013

01/18/2014

-25

-20

-15

-10

-5

0

5

10

15

Office Supply HHI Pet Stores Toy Electronics Apparel AutoLiquor Stores Department

TRIP DECLINE IN MOST DISCRETIONARY CHANNELS


Retail Channel Shopping Trip Trends

4-weeks ending

RETAIL CHANNEL DEMOGRAPHICS

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OPPORTUNITIES ACROSS ECONOMIC DIVIDE

Source: Nielsen Homescan, Total U.S., 52-week period ending 12/28/2013 – UPC-coded purchases

Total Out-lets

Club Mass Grocery Drug Supers C-Store Dollar

13 7 11 13 15 1625 27

127

11 12 14 15

17 2010

7

10 1011 12

1212

9

8

99

10 10

910

15

15

17 1514

1612

1217

21

18 17 1515

111024

3725 23 21 15 13 10

<$20k $20k-29.9k $30k-39.9k $40k-49.9k $50k-69.9k $70k-99.9k $100k+

Distribution of Dollars – Household Income

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SMALL FORMATS ATTRACT SMALLER HOUSEHOLDS


Total Out-lets

Mass Club Grocery Supers Dollar Drug C-Store

19 17 13 18 17 23 23 28

3531 35

34 3532 35

36

3337 35 34 33 31 30 25

14 16 17 14 15 13 12 11

1 Member 2 Members 3-4 Members 5+ Members

Distribution of Dollars – Household Size

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OPPORTUNITIES TO REACH YOUNG, OLD & MALES


Total Out-lets

Mass Supers Grocery Club Dollar Drug C-Store

14 19 15 15 11 11 13 7

1417

14 14 14 13 138

2323

24 23 25 24 2023

1817

19 17 19 20 1921

1312 13 13 13 16 18

12

18 13 15 18 17 16 1830

Under 35 35-44 45-5455-64 65+ No Female Head

Distribution of Dollars – Age of Female HH

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BIG BOX ATTRACTION TO KID HOUSEHOLDS


Total Out-lets

Mass Supers Club Grocery Dollar Drug C-Store

64 58 61 62 63 66 6976

1115 12 12 12 8 9

520 24 22 21 20 19 17 13

18 20 20 20 19 19 16 14

None < 18 Any < 6 Any 6-12 Any 13-17

Distribution of Dollars – Kids in Household

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CONNECT WITH MULTICULTURAL VIA CHANNELS


Total Out-lets

Supers Grocery C-Store Mass Club Drug Dollar

77 81 80 76 76 74 73 70

12 11 10 16 11 10 14 20

3 2 3 24 6 3 2

8 7 7 7 10 10 10 8

Caucasian African American Asian Other Race

Distribution of Dollars – Race

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HISPANIC ATTRACTION TO CLUB, MASS & DRUG


Total Out-lets

Club Mass Drug Dollar Grocery Supers C-Store

1316 15 15

13 12 119

Distribution of Dollars – Ethnicity – Hispanic (any race)

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FEMALES DRIVE TRIPS, BUT MALES GAININGShare of Retail Channel Shopping Trips

Mal

esFe

mal

es

57

43

40

60

38

62

33

67

32

68

28

72

28

72

Mal

esFe

mal

es

54

46

37

63

37

63

34

66

30

70

25

75

26

74

MassDollarSupersDrugGroceryClubC-Store

2004 2013

Source: Nielsen Homescan, Total U.S., excludes gas-only or Rx-only trips

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FEMALES MAKE LARGER “PLANNED” TRIPSAverage $ Basket Ring

Dollar

C-Store

Drug

Grocery

Mass

Supers

Club

$12

$14

$22

$37

$44

$60

$85

$9

$10

$18

$27

$35

$45

$80

MalesFemales

Dollar

C-Store

Drug

Grocery

Mass

Supers

Club

$16

$25

$28

$48

$52

$67

$102

$13

$19

$25

$37

$43

$53

$96

Source: Nielsen Homescan, Total U.S., excludes gas-only or Rx-only trips

2004 2013

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161

WEEKEND SHOPPING FRENZY

Source: Nielsen Homescan, Total U.S., 52-week period ending 12/28/2013; excludes gas-only or Rx-only trips

Sun Mon Tues Wed Thur Fri Sat0

5

10

15

20

25

Club Mass Drug Grocery Conv/Gas Supercenters Dollar

All-Outlet Share of trips by day of week by Females

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SIMILAR DAY-OF-WEEK SHOPPING PATTERNS



5

10

15

20

25

Females Males

All-Outlet Share of trips by day of week

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163

YOUNGER FEMALES SHOP WEEKENDS



5

10

15

20

25

< 36 36 - 44 45 - 54 55 +

All-Outlet Share of trips by day of week by Females

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164

CATCH MALES ON THE WEEKENDS



5

10

15

20

25

< 36 36 - 44 45 - 54 55 +

All-Outlet Share of trips by day of week by Males

CHANNEL BLURRING – THE IMPORTANCE OF

MULTI-CHANNEL BUYERS

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166

MULTI-CHANNEL BUYING VARIES BY CATEGORY

Source: Nielsen Homescan, 52-weeks ending 12/28/2013; Total U.S. grocery, drug, club, dollar stores, mass-supercenters and mass-merch only; UPC-coded purchases

Snacks

Paper Products

Carbonated Bevs

Cookies

Cereal

Pet Food

Detergents

Oral Hygiene

Juice/Drinks - SS

Frozen Prepared Foods

Hair Care

Coffee

Vitamins

Cough & Cold

Disposable Diapers

Houseware/Appliances

1819

303537373738

4040

444647

5060

71

3231

3336

3934

373636

4133

3533

3226

24

2928

2220

1920

191818

1617

14151410

5

222114

9697773645431

Exclusive 2 Channels 3 Channels 4+ Channels

% of Buyers

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167

MULTI-CHANNEL BUYERS DRIVE CATEGORY SALES


Snacks

Paper Products

Carbonated Bevs

Pet Food

Cookies

Oral Hygiene

Juice/Drinks - SS

Cereal

Hair Care

Vitamins

Detergents

Cough & Cold


Coffee

Disposable Diapers

Housewares/Appliances

10 12

16 18

22 23 23

25 25 25 26 26 28 28

32 51

27 27

29 33

35 37 37

39 35 36 36 36

44 40 37

36

32 31

29 29

27 27 26

25 27 26 25 25

23 24

22 10

31 31 26 20 16 14 14 11 13 13 13 12

5 8 9 2

Exclusive 2 Channels 3 Channels 4+ Channels

% of Dollars

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MULTI-CHANNEL BUYERS ARE TOP SPENDERS


Pet Food

Disposable Diapers

Vitamins



Housewares/Appliances

Snacks

Paper Products

Coffee

Cereal

Juice/Drinks - SS

Cough & Cold

Detergents

Hair Care

Cookies

Oral Hygiene

72

46

49

57

78

43

70

68

41

47

32

22

33

20

25

19

332

240

234

202

199

190

169

161

150

119

116

114

87

83

74

66

4+ ChannelsExclusive

Annual Buying Rate

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BUILDING LOYALTY ONE SHOPPER AT A TIME

Source: Safeway

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“KROGER SEES CUSTOMERS' FAVORITE CHARITIES AS THE KEY TO LOYALTY”

Source: The Cincinnati Enquirer

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CONTINUITY MARKETING VIA CREDIT CARDS19.9% of Target’s total sales in the third quarter were REDcard transactions

Sources: Target & Meijer

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BRANDS PROMOTING BLURRING

Source: P&G Everyday email newsletter (01/11/2013) & The Home Depot

RETAILING TRENDS SUMMARY

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SHIFTS IN SHOPPING & INDUSTRY INNOVATION• Club & dollar winning

• High-end retailers winning

• Excellence in execution within channels

• Accelerated industry innovation & collaboration• New formats• Store expansion• Strong food focus in many channels• Value messaging & promotions• Online engagements• New & expanded offerings

• What are you doing to drive shopping trips & build baskets?

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

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STAY CONNECTED

[email protected] http://www.linkedin.com/pub/todd-hale/a/353/613

@ToddHaleNielsen

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U.S. TRENDS CONTRIBUTING AUTHORS

Bonnie Dykstra-Losoff

Diane Johannes

Erik Quick

Gail Ehrenberg

Haley Hastings

Kathy Mancini

Katie Sheehan

Kelly Pirrera

Mary Ellen Ryan

Sandy Smith

Sue Mommaerts

Todd [email protected]

@ToddHaleNielsen

Victoria Stevens

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Source: https://ishare.nielsen.com/teams/consumer/NA/events/default.aspx

COME VISIT US ON ISHAREFor internal use only

https://ishare.nielsen.com/teams/consumer/NA/thoughtleadership/default.aspx

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179Source: Nielsen NA Buy Weekly

TODD HALE’S U.S. TRENDS & RETAIL HOT BUTTONS DECKS UPDATED & ANNOUNCED EVERY FOUR WEEKS

Update schedule:• 3/7/2014• 4/4/2014• 5/2/2014• 5/30/2014• 6/27/2014• 7/25/2014• 8/22/2014• 9/26/2014• 10/17/2014• 11/14/2014• 12/12/2014• 1/9/2015

Documents

Todd Hale SVP, Consumer & Shopper Insights March 7, 2014 U.S. RETAIL TRENDS