Alli 60 mg Refill Pack 120 Capsules 10% Patron Savings vs. Outside the Gate? Higher or Lower? Alli 60 mg Refill Pack 120 Capsules Actual Price at DeCA: $50.64 Avg. Price Outside: $64.91 ($ Savings: $14.27) % Patron Savings: 22% William “Bill” T. Wood Category Manager – Non Edibles HBC Categories Represent 10 % of the Business! $-Share on Total Store Top 6 HBC Categories $166.2 Million = 43% 52 WE March 20, 2010, $$ in mm $16.80 PAIN RELIEF $19.70 HBC Categories $383 Million 10% Grocery Food $1,806 Million 47% Dairy $391 Million 10% Nonfood $214 Million 6% Center Store Other $157 Million 4% Frozen $396 Million 10% Chilled Other $503 Million 13% SHAMP/COND. $24.30 $25.20 BAR/ LIQUID SOAP SHAVING NEEDS $38.50 VITAMINS & SUPPL. $41.60 ORAL HYGIENE Source: Nielsen RMS, HBC Category = DeCA definition Higher Share for Oral Hygiene, Vitamins and Shaving Needs than RM $-Share on HBC Categories 52 WE March 20, 2010 Commissaries 10.8% Share Index 130 Remaining Market 8.3% Oral Hygiene Bar/Liq. Soap Source: Nielsen RMS 10.0% 160 6.2% 6.6% 184 3.6% 4.7% Vitamins Shampoo/Cond. 136 4.6% 6.4% 112 5.2% Shaving Needs Pain Relief 5.2% 84 4.4% Higher Focus on HBC than Remaining Market !! $-Share on Total Store 52 WE March 20, 2010 Commissaries Perishables 33% Index 78 Remaining Market Source: Nielsen RMS Perishables 43% Center Store Other 57% Index 112 Center Store Other 50% Calculation Example: 56.5%/50.3% = 112 HBC 10% Index 149 HBC 7% Growth Opportunities with Bar/Liquid Soap and Vitamins. Need for Action with Pain Relief! %-chg. Vs YAGO Patron Savings 52 WE March 20, 2010 22.8% Pain Relief (3.6%) (0.4%) Shampoo/Cond. 23.4% (2.7%) (3.0%) 27.1% 3.9% Bar/Liq Soap 7.8% 3.4% Shaving Needs 23.1% (3.7%) 28.3% 6.1% Vitamins 10.3% Oral Hygiene (0.2%) (0.7%) Remaining Market Source: Nielsen RMS 23.7% Commissaries Health & Beauty Execution Excellence Create More Impactful HBC Endcap Displays!! More emphasis on display execution! Review Display Compliance Reports Military Patrons – Shopper Segments Single soldiers – always on the go Young families – getting in and getting the job done to provide for family Retirees – taking the time, enjoying the company and finding the deals Single Soldiers Military Outlets Young Families Retirees Skin Care, Men’s and Fragrance Will be a Significant Driver of Growth Skin Care Men’s Beauty/ Grooming Fragrances Potentially, a $1 Trillion Business! The market is predicted to grow to $1 T by 2020. Beauty & Health Annual Spending Unlike most key categories throughout the store, she spends more annually on Personal Needs as her product needs change at different lifestages. Beauty & Health Annual Spending Annual Dollar Spending $445 $425 $405 $385 $365 $345 $325 New Families (kids <6) Maturing Families (kids 6-12) Established Families (Teens 13-17) Empty Nester Couples Lifestage Nielsen HH Panel CY 08 Beauty & Health Annual Spending HH’s with children spend +22% more annually than households without children. Avg Annual Beauty & Health Spending - CY 04 $400 $381 $380 $360 $340 $320 $300 $311 $280 HH's without Children* HH's with Children** Avg Annual Beauty & Health Spending - CY 04 * HH's without children include singles and couples 18-54 yrs old without children. ** HH's with children include new, maturing, and established families with children <18. Nielsen HH Panel CY 04 Beauty & Health Annual Spending Remarkably, beauty & health annual spending for empty nester couples is +12% greater than HH’s with children! Avg Annual Beauty & Health Spending - CY 04 $430 $420 $410 $400 $390 $380 $370 $360 $350 $425 $381 HH's with Children* Empty Nester HH's Avg Annual Beauty & Health Spending - CY 04 * HH's with children include New, M aturing, and Established Families. Nielsen HH Panel CY 04 Demographic Trend - Graying of America The number of people 55+ has grown +27% from 2000–2010 This group is projected to grow another +28% from 2010–2020 Everyday beauty & health needs change at various lifestages Opportunity for retailers to grow sales across beauty & health Population (Millions) Graying of America Projections* 95.8MM 75.1MM 52.4MM 1990 59.3MM 2000 2010 Years # of Persons 55+ * US Census Data 2020 4 Traits of HBC Shoppers “We want to feel confident in the choices we make for our families.” “We want to choose the right solutions for each family member’s needs.” “We want to do our best in helping our families achieve wellbeing every day.” “We want to find products that fit the changing priorities of our family members and ourselves as we age.” 4 Traits of HBC Shoppers RETAILER IMPLICATIONS Help shoppers find the right products to satisfy the needs of each individual family member, and the more shoppers will buy. Can leverage consumers’ changing lifestages and priorities to maintain loyalty and build sales. Ability to orchestrate shoppers’ choices and self-selections by validating their decisions and providing reassurance as they shop. Opportunity to become the primary destination for all Personal Needs purchases for every member of the family – “one-stop shopping.” Olay Pro-X Age Repair Lotion SPF 30 2.5 oz 20% Patron Savings vs. Outside the Gate? Higher or Lower? Olay Pro-X Age Repair Lotion SPF 30 2.5 oz Actual Price at DeCA: $28.79 Avg. Price Outside: $40.66 ($ Savings: $11.87) % Patron Savings: 29% Military Patrons – In their own words… Difficulty Finding New Items “9 times out of 10 I can’t find it” “You can go to Walmart and you can go to somewhere else…get the new thing that my kids saw on the TV that they want. But you can’t go to the commissary…” “They’re behind the curve.” “It takes them forever to get [new products].” Assortment Problems “One time they have it, then they don’t have it anymore… That’s kind of annoying to me.” “It doesn’t seem to flow… Where’s the freaking mousse?” “They don’t have a large selection at all.” Neil Stern Senior Partner, McMillan Doolittle Why Get Excited About HBC? HBC has been one of the most consistently growing categories in retailing over the past decade. Projected to continue that way as consumer concerns for their health, well-being and appearance remains unabated. The category is attractive to retailers due to new products driving incremental overall sales, higher overall margins and higher rings. It is little wonder that most major retailers are devoting additional space, merchandise attention, enhanced displays and information to the category in an effort to win customers. 27 The Keys to Winning 1. Clear delineation of Health, Personal Care and Beauty 2. Create an environment that causes consumers to “Stop” 3. Use key organization principles within the category 4. Choices organized by brand, price point, promotion Drive regimen sales, trade-up, and trial Highlight “new” within the categories 5. Provide clear and compelling information on how to choose 6. Wow them—unique environment, great savings, etc. 28 Keys to Winning in Action: Best Practices Mass Retailers: Supermarkets: Drug Stores: Specialists: Target, Walmart and Costco Kroger and Stop & Shop CVS and Shoppers Drug Mart (Canada) Ulta, Sephora and others 29 Facts on Walmart HBC Walmart sales have moved from 45% to 51% grocery/HBC over the past 5 years Walmart HBC sales were $18 billion in 2009 They have a 30% share of the US market Note: The following pictures are intended to be thought-starters only. Moving HBC Over to Food Side— More Prominence, More Traffic Stopping Power—Wood Floors, Lower Profile, Slanted Aisles But, Still Communicating Value With Information/Promotion Now at Product Level… 1. Adjacencies: Health Interplays with Pharmacy… 2. Visual “Stopping” Power…Curves Promote Intimacy and Browsing 3. Organize—Brand, Price Points for Trade-Up 4. Promote Regimen Selling… 5. Focus on News…and New 6. Information… 7. Wow! Stopping Power, Trial, Uniqueness… Costco: Wow! Can be a Price, or an Unexpected Item… Great Pack and Price Point Supermarkets Creating a Distinctive Look… Color-Coding Health… And Beauty… With Way-finding, Information and Adjacencies… And Help in Making Choices… Walgreens Lowered Profile for Better Navigation Focusing on New And Better Information… But the Bar Keeps on Rising… With Enormous Product Choice… DeCA Can Create Its Own Path to Winning 1. 2. 3. 4. 5. 6. Clear delineation of Health, Personal Care and Beauty Create an environment that causes consumers to “Stop” Use key organization principles within the category Choices organized by brand, price point, promotion Drive regimen sales, trade-up, and trial Highlight “new” within the categories Provide clear and compelling information on how to choose Wow them—unique environment, great savings, etc. 57 Creating the Path To Meaningful Differentiation Delight the Shopper Wow! Best Prices Unique Environment Category Organization Principles Brand, Trade-Up, Regimen Selling Compelling Information … New Make It Simple Clear delineation of categories Adjacencies, Layout, Assortment Basics Upward Progression Provide In-Store Guidance 58 What We Know Now… We know the Health & Beauty categories are growing as consumer concern for their health, well-being continues. We know how she shops… We know why she does not shop the Commissary. We know the Commissary’s price is right!! What Can We Do? 4 Traits of HBC Shoppers RETAILER IMPLICATIONS Help shoppers find the right products to satisfy the needs of each individual family member, the more shoppers will buy. Can leverage consumers’ changing lifestages and priorities to maintain loyalty and build sales. Ability to orchestrate shoppers’ choices and self-selections by validating their decisions and providing reassurance as they shop Opportunity to become the primary destination for all Personal Needs purchases for every member of the family – “one-stop shopping.” What 3-4 Changes Can We Make Now? 1. 2. 3. 4. Communicate Patron Savings… Loud and Often! Display, Display, Display! Highlight “New” in All Categories! Educate Her at Shelf! What is it worth? If military shoppers frequent military outlets 1 more time in a year… $335,000* *Source: AC Nielsen Homescan Panel Bausch & Lomb PreserVision Eye Vitamin and Mineral Supplement with Areds - 120 Softgels Actual Price at DeCA: $20.14 Patron Savings vs. Outside the Gate? ________% Bausch & Lomb PreserVision Eye Vitamin and Mineral Supplement with Areds - 120 Softgels Actual Price at DeCA: $20.14 Avg. Price Outside: $29.74 ($ Savings: $9.60) % Patron Savings: 32% Questions, Suggestions or Feedback? The hand fans are yours to remind you of the keys to winning our patrons back with up to 50% savings!!