CAESARS PALACE l FEBRUARY 26, 20191

CGMCategory Growth Management

From Category Management to Category

Growth Management:

How You Become the Catalyst for Growth

Our job is to deliver Category Growth through

Value Creation

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Value (Growth) =Benefits

Price (RGM)

(CGM)

We are successful in driving growth when we optimize the ratio of CGM to RGM

It’s been a chaotic, disruptive, and uncomfortable retail market

“Never before has so much change produced so little value for the industry.”

“Organizations that have embraced the change are beginning to see returns.”

“Leadership is for the taking, if we are going to grow, we must get the courage to lead.”

“Leaders who have shifted their mindset from cost-cutting to investment for the future are perceived as successfully driving both their top and bottom lines.”

Pivot Points Return on Change Courageous Growth Switching Gears

Unlocking growth in

uncertain times

Making S.M.A.R.T.

Decisions

Let’s get on with it The 5 Gears of

Growth in a Post

Cost-Cutting Era

3

“A Growth Company has an investment mindset

because it has confidence in its strategy, brands,

and people to achieve real growth. It can be

confident because it has identified the right insights,

allocated resources appropriately, and achieved

strategic intimacy with its trading partners.”

Growth-Minded Business

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Growth Minded Manufacturers: Who Retailers Recognized as “Best in Class”

5

2018 Overall Composite for Manufacturers

47.7%

31.0%

20.5%

8.9% 8.6% 7.5% 6.9% 6.9% 6.6% 6.1%

PepsiCo Coca-Cola Procter & Gamble Kraft Heinz Kellogg Mondelez Nestlé Unilever Johnson &Johnson

AB InBev

Green box indicates improved rank >2 spots

Rank Change

2017 Rank 1 2 3 5 8 9 7 6 10 11

- - - +1 +3 +3 - -2 +1 +1

Source: Kantar Consulting PoweRanking® 2017 & 2018

Rank Change 2017 Rank

— 1

— 2

— 3

— 4

+1 6

+1 7

-2 5

+4 12

-1 8

+3 13

Green box indicates improved rank >2 spots

Source: Kantar Consulting PoweRanking® 2018

Growth Minded Retailers: Now and into the Future

Wal-Mart is expected to retain the #1 Position

2018 Overall Retailer Ranking 2033 Projected Retailer Ranking

79.7%

72.7%

42.4%

16.3%

11.0%

9.3%

7.0%

5.8%

5.2%

5.2%

Walmart

Amazon

Kroger

Costco

Aldi Sud (Aldi)

Target

Publix

CVS

Dollar General

Meijer

Rank Change 2017 Rank

— 1

— 2

+1 4

-1 3

— 5

+1 7

-1 6

— 8

— 9

+1 11

Wal-Mart achieves # 1 Position

58.6%

41.2%

27.4%

24.8%

17.5%

15.9%

14.1%

12.3%

9.9%

7.7%

Walmart

Kroger

Amazon

Target

Costco

Meijer

Publix

HEB

Wegmans

CVS

6

Case Study — Walmart’s Oscar Campaign

Walmart Dresses the People behind the Camera

7

What they do well: Convert both In Store and Online

8

WIN IN STORE WIN ONLINE

2018 Retailer Business Metrics — Best Practice Category Leadership

60.5%55.4%

33.8%

26.1%

15.3%10.8%10.8%

8.3% 7.6% 7.6%

2 1 3 4 5 6 13 8 7 12

+1 -1 - - - - +6 - -2 +2Rank Change

2017 Rank

Green box indicates improved rank >2 spots

Source: Kantar Consulting PoweRanking® 2017 & 2018

2018 Retailer Business Metrics — Best Use of Digital Platforms

63.5%59.5%

42.6%36.5%

11.5%8.8% 8.1% 7.4% 7.4% 5.4%

1 2 3 4 5 8 6 6 9 10

- - - - - +2 -1 -2 - -Rank Change

2017 Rank

How they do it: People, Partnerships, and Precision

9

PEOPLE PARTNERSHIP PRECISION

2018 Retailer Business Metrics ― Best Category

Management / Buying Teams

55.5%

49.0%

34.8%

29.7%

17.4%14.2%

11.0%11.0%11.0%7.7%

2 1 3 4 5 6 7 8 10 9

+1 -1 - - - - - - +1 -1Rank Change

2017 Rank

2018 Retailer Business Metrics ― Best Retailers to

Do Business With

42.3%41.1%

36.8%

27.6%

20.9%

13.5%11.0%10.4%

8.0% 8.0%

2 1 4 3 6 5 8 11 7 10

+1 -1 +1 -1 +1 -1 +1 +3 -2 -

2018 Retailer Business Metrics ― Most Innovative

Merchandising Approach

33.6%31.5%

25.5%23.5%

20.1%19.5%16.8%15.4%

8.1% 8.1%

1 2 4 3 5 6 7 9 12 16

- - +1 -1 - - - +1 +3 +6

Green box indicates improved rank >2 spots

Source: Kantar Consulting PoweRanking® 2017 & 2018

Best in Class Partnerships Achieve both Category AND Brand Growth

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Customer Dominated Strategic Intimacy

Completely Disconnected Manufacturer Dominated

Category Growth

Brand Growth

• Optimize my Assortment and Space

• Make the Shelf more Stoppable and Shoppable

1111

What Retailers Need from You

• Develop a long term vision and strategy for my aisle

• Get the shopper into my store or on my website

• Drive category growth

• Increase basket sizes

• Bring the shopper back again and again

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What Retailers ALSO Need from You

Some categories are seeing differential results

Source: Statista Reports

13

Annual $ Growth, 2015 - 2018

What’s Hot Annual Growth

Wine +6%

Bottled Water +5%

Spirits +5%

Cosmetics +5%

Snack Food +5%

Cold & Cough Remedies +4%

Pet Food +4%

Personal Hygiene +4%

Convenience Foods +4%

Adult Incontinence Solutions +4%

What’s Not Annual Growth

Hair Care +1%

Tea +1%

Laundry Care +1%

Sauces and Condiments +1%

Baby Diapers +1%

Dishwashing Detergents +1%

Soft Drinks +1%

Skin Care --

Cigarettes --

Juice -1%

+2.4%Annual Growth since 2015

And Some Brands are Really Good at Driving High Value Baskets

Source: Kantar Consulting ShopperGenetics

14

HH Products

& Cleaners

Health &

Wellness

Personal Care Food Beverages Alcohol

To achieve success, you must change organizational mindsets

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CATEGORY MANAGEMENT CATEGORY GROWTH MANAGEMENT

They work in the

sales organization

They help find space

for my new product

They optimize space

and assortment for

the entire category

They create the commercial

idea that sales and

marketing get behind

1616

Category Management

Optimizing the current environment

Category (Growth) Management

Being THE Catalyst for Growth

It starts with transforming your thinking first!

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POPULATION INFLATION CHANGING

BEHAVIOR

Category Growth Managers Find Growth in Three Places

18

CGM: Category Growth Management

The application of technology, insights, and strategy to optimize the

current situation and change consumer and shopper behavior at the

“believe, want, and need” level to maximize category growth.

19

The 5 Principles

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1. Category Growth Managers Steward Real Growth

2. Growth and Profitability Begins with Insights

3. Win with Technology to Free Up Think Time

4. Apply Whole Brain Thinking

5. Think Small, Scale Big

Principle 1 ― Category Growth Managers Steward Real Growth

Bring Marketing and Sales together to Build Demand and Drive Conversion

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BUILD DEMAND

More Consumers,

Consumer More,

More Often

DRIVE CONVERSION

More Shoppers,

Buying More,

More Often,

and at a Higher Value

Before you can have a consumer,

you first must have a shopper!

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INSIGHTS STRATEGY DEMAND

DRIVERS

Brands

Innovative

Marketing

CONVERSION

DRIVERS

Shopper

Marketing

Digital

Marketing

ENABLERS

Supply Chain

Sales Teams

Principle 2 ― Growth and Profitability begins with Insights

In the end, it is about delivering growth and profitability

Principle 3 — Win with Technology

Integrate “Best in Class” Tools and Technologies to Free Up Time

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Retail Intelligence Platform

Portfolio

Management

Image

Recognition

Virtual

Reality

Assisted

Merchandising

Assortment

& Space

Platform Services

User/Role Management Workflow Configuration

Analytics

Analysis & Reporting Dashboards Data logging

Data Layer

Enterprise Data Lake

VR INFINITY

TPM / TPO &

Retail Execution

XTEL

Principle 4: Apply Whole Brain Thinking

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Principle 5 — Think Small, Scale Big

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It’s no longer about brands and share

BIG MANUFACTURERS

Brand

Consumer

Customer

Category

Shopper

SMALL MANUFACTURERS

Category

Customer

Shopper

Consumer

Brand

Defense: I can maintain my shelf

presence and steal share because I can

“control” the shelf and launch line

extensions.

Offense: I can create a new business

because I innovate with insights and

develop products that consumers want

“ Think small,

but scale BIG

The 5 Principles of CGM

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PRINCIPLE INSIGHT ACTION

Category Managers Steward GrowthNeither Brands nor Sales is focused on the

category in the way they shouldOwn the Growth Agenda

Growth & Profitability Begins with

Insights

Finding an insight is hard, operating without

one is even harderDevelop new models for deriving insights

Win with TechnologyHumans cannot keep up with the speed of

change

Leverage technology to optimize so you can

think

Apply Whole Brain ThinkingAnalytics alone is not enough to achieve a

CGM mindset. Develop both left and right brain thinkinking

Thing Small, Scale BigSmall companies think differently, because

they have toDevelop a disruptive mindset

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Be A Growth-Minded Business

THE catalyst for Growth

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PIVOT POINTS RETURN ON CHANGE COURAGEOUS GROWTH SWITCHING GEARS

Unlocking growth in

uncertain timesMaking S.M.A.R.T. Decisions Let’s get on with it The 5 Gears of Growth

2015 2016 2017 2018Shopper First

Business Builders

One to One

Data Sharers

Talent Development

Speed

Magnitude

Amount

Relevance

Total Cost

Granularity

Reinvention

Ownability

Ways of Working

Truth Telling

Human Understanding

Get Gritty

Be Obsessed

Collaborate

Tech Commerce

Develop People

THANK YOUDan Raynak

Chief Client Officer

dan.raynak@kantarconsulting.com