Anderson News Company Distribution PracticesKaleidoscope Profiling

Wal-Mart Meeting

February 3, 2008

Kaleidoscope Consumer Profiling

Kaleidoscope combines– Geography (who lives

around the store)– Market Profile (who shops

the store)– Demographics (details of

who lives around and shops the store)

– Lifestyles (how they spend time and money)

– What magazines they buy Rural Blue Collar

Market Segmentation Is Knowing Who the Consumers Are and How

They BehaveDemographics are the statistics of who you are

– Age– Income– Ethnicity– Education

Magazine purchasing habits also help identify who you are– Do they buy US News and Robb Report.– Do they buy Jet and Ebony

Kaleidoscope uses demographics and magazine purchase data to identify the lifestyles that live in a geographic area

Kaleidoscope also bundles the many consumers into one of 17 descriptive lifestyles

Affluent Family

African American

Rural Blue Collar

MoreExamples

Cincinnati

Analyzing Metro Markets

Middle Class Family 40.0% 60.6%

Affluent Family 11.0%

Golden Years 11.0% 16.4%

Blue Collar 5.0% 7.6%

Middle Class Singles 17.0%

PercentShoppingIn This Store

Percent Living In Store’s Radius

Hispanic Mix 10.0% 15.3%

Other 6.0%

Cluster Group

AffluentFamilies

HispanicMiddle Class

Families

Store Profile Example

These Consumers are not shopping in this store based on Magazine Sales

The Radius around a store depends on Population Density.The more dense the population the smaller the radius

Kaleidoscope Lifestyle

Kaleidoscope Consumer Profiling

Accuracy– 80% Absolute Certainty– 10% A Shade of Gray Off– 10% Needs to be Challenged

by Local Input

Empowering Local Associates– Training– Shared Data– Exception Reporting Affluent Family

Title Ranking Anderson ranks titles to maximize sales for the Retail

Customer– Annual unit sales

– Cover price

Regional titles are managed locally and through our

regional title management tools

New titles are ranked according to its competitive set and

potential as gauged by the purchasing department

Ranks are calculated by identifying a select group of stores that are highly representative of each lifestyle and class of trade.

Ranks are calculated each month using sales from the previous rolling year.

Ranks are calculated for:– 17 lifestyles– 5 classes of trade

Food stores Convenient stores Drug stores Mass market Military

Ranks include sales index calculations that are used for various analysis tools.

Rank Title

1 People

2 Nat Enq

3 Star

4 First

5 In Style

6 Cosmo

7 Oprah

8 Cook Light

96 Motor Trend

104 Arch Digest

145 Essence

181 Ebony

286 Low Rider

385 Jet

Rank Title

1 Nat Enq

2 People

3 Star

4 Wom World

5 Jet

6 Essence

7 Ebony

22 In Style

44 Low Rider

59 Cook Light

158 Motor Trend

409 Arch Digest

AffluentMass Market

African Amer.Mass MarketRankings allow us to insure the

best potential titles are available

Sales Index by Lifestyle

0

20

40

60

80

100

120

140

160

180

200

MCS ASC AFM COL ASN UGY AFR HSP MCF ECH GYR RMC

Car & Driver Automobile Street Rodder Hot Rod

Index Correlation Model

Bipad Title AFM AFR ASC ASN COL ECH FGH GYR HSP MCB MCS MCW RMB RMW UGY Correl3915 CAR AND DRIVER . 179 58 185 192 153 64 90 80 105 67 78 187 118 41 93 1.00

Bipad Title AFM AFR ASC ASN COL ECH FGH GYR HSP MCB MCS MCW RMB RMW UGY Correl3915 CAR AND DRIVER . 179 58 185 192 153 64 90 80 105 67 78 187 118 41 93 1.003920 ROAD AND TRACK . 210 56 231 314 164 71 108 81 123 72 80 228 122 52 103 0.96

47173 HOME ENTERTAINMENT & DESI 505 27 427 489 303 56 120 87 238 91 40 400 303 63 79 0.9610350 REAL SIMPLE 340 88 345 317 309 146 107 173 164 136 203 363 216 82 160 0.953991 ISLANDS 466 56 595 633 357 138 162 185 245 64 143 516 197 93 66 0.953811 BODY & SOUL WHOLE LIVING 456 104 565 582 493 150 28 74 278 161 135 579 333 85 159 0.958193 AUTOMOBILE MAGAZINE . 222 85 287 321 182 131 139 122 165 99 93 332 152 85 128 0.94

34809 MOTOR TREND 140 62 132 172 112 83 83 94 109 89 93 144 117 68 93 0.9410645 IN STYLE . 275 76 374 272 246 108 137 115 163 97 149 405 178 70 98 0.9410049 SI SWIMSUIT . 181 63 218 198 200 93 110 131 130 118 129 208 153 90 96 0.9310095 MONEY 230 103 222 263 151 86 73 140 123 94 129 220 144 58 99 0.931986 HOME 345 77 406 479 244 60 117 206 183 113 131 359 135 98 137 0.93

Topics for DiscussionRetail Is DetailKaleidoscopeOPACOSTARSNew Store ProcessMerchandisingCentral DistributionOpportunities

Optimal Product Assortment [OPA] Snapshot Overview

The OPA Snapshot adds and deletes titles.

It is a snapshot of what will fit on the rack at the time it is approved.

Every snapshot is saved for three years so we can evaluate decisions.

We run OPA 2-3 times annually on each store

Optimal Product Assortment [OPA] Snapshot Overview

The OPA Snapshot combines the title list for each Lifestyle of the store.

This creates a high to low list unique for that store that only has authorized titles for that store.

When this snapshot is approved, the most productive titles not in the store are added and the titles that less productive are deleted.

Each store can have a custom Expansion Factor to meet retailer-desired merchandising and turns.

OPA SnapshotLifestyle Lists

On the left are the ranks for an Affluent Mass Market and an African American Mass Market. Take a moment to notice the differences.

Also notice that the top titles remain in the top of both lists. These checkout titles remain in most stores.

The Snapshot builds a custom list by combining each list weighted average of that store’s lifestyles

The result is a title list for the store that is customized for that store’s shoppers.

Arch Digest104

Essence145

Jet385

Low Rider286

Ebony181

Motor Trend96

Cook Light8

Oprah7

Cosmo6

In Style5

First4

Star3

Nat Enq2

People 1

TitleRank

Arch Digest409

Motor Trend158

Cook Light59

Low Rider44

In Style22

Ebony7

Essence6

Jet5

Wom World4

Star3

People2

Nat Enq1

TitleRank

AffluentMass Market

African Amer.Mass Market

Motor Trend127

Arch Digest266

Jet195

Low Rider165

Ebony94

Essence75

Cook Light34

In Style14

Wom World8

Star3

People2

Nat Enq1

TitleRank

Store SpecificRank

At the time the snapshot is taken the rack data is critical. The length and shelves are used to calculate how many titles fit on the fixture– Length of Rack– Shelves– Pockets– Multiple Fixtures

Look right at how many titles are chosen (Rank = # of titles) for slight changes in rack data

Rank Title

1 Wom World

2 Nat Enq

3 People

4 TV Guide

5 Star

6 Globe

360

410

420

430

440

500

580

600

650

700

Blue CollarMass Market

20’ 12 Shelves

20’ 14 Shelves

32’ 12 Shelves

36’ 12 Shelves

Facing Formula: ML Length (in Feet) x Shelves x 1.5

OPA Snapshot Rack Data

OPA SnapshotExpansion Factor

The Expansion factor Determines how many more titles to send than will fit on a full faced rack.

What to do with the extra titles

– Overlap part of the fixture

– Turn the lowest sellers

– Fill in holes left by prematures

or sell outs

Rank Title

1 Star

2 People

3 Nat Enq

4 Wom World

5 Cosmo

6 TV Y Novelas

430

450

475

500

520

550

600

650

700

Hispanic

0% Expansion

10% Expansion

20% Expansion

60% Expansion

Title Cut-offs based on a 24 foot, 12 shelf mainline

Optimal Product Assortment [OPA]

Snapshot OverviewThe Base for a new title is

calculated on sales of competitive titles in the same store.

Titles that are identified for deletion are kept if they meet the sales check. The sales check is calculated by using 75% of the store’s median sales.

The store presented to the right has a cut line drawn at 520 titles

Adds and Deletes are determined based on their sales ranks– Truckin’ is Added to store based on annual

sales (notice frequency) Trucks is Deleted from store.

The sales check is determined for each store based on their mainline median.– Robb Report is kept because its sales are

greater than the sales check of 2.75. Another title will be removed.

Rank Sale Title

1 Woman’s World

2 Nat Enquirer

3 People

4 Globe

5 Family Circle

6 Country Weekly

300

350

400 New 1.0 Truckin (Monthly)

450

520

530

550 1.0 Trucks (Bi-Monthly)

600

650 3.0 Robb Report

Max Titles

Golden Years

OPA SnapshotCut Line/Sales Check