presented by: michael moore procter & gamble. discussion outline current retail performance...

Presented by:Michael MooreProcter & Gamble

Discussion Outline

Current Retail Performance• Outside the Gate• DeCA Highlights, including Hawaii Review

Economic Indicators and Shopper Understanding

Looking Ahead – Points for Consideration

What’s Happening in Retail ?

http://www.costco.com/Home.aspx?cm_re=1_en-_-Top_Left_Nav-_-Top_logo&lang=en-US

http://www.wholefoodsmarket.com/

The TOP 10 US F/D/M/C/D* Retailers based on Dollars

Primary Str TypeUS Stores Sales (B) 1 Walmart Grocery 4,247 $374.52 CVS/Caremark Drug 6,327 $ 76.33 Kroger Grocery 3,270 $ 70.24 Costco Wholesale Club 392 $ 64.45 Target Conv. Mass 1,613 $ 63.46 Walgreen Drug 6,061 $ 53.87 Sears Holding Conv. Mass 2,488 $ 50.78 SuperValu Gro Whlse 4,374 $ 44.09 Safeway Grocery 1,528 $ 42.310 Publix Grocery 942 $ 23.0

Combined Total $862.6

Source: 2009 Marketing Guidebook Trade Dimension International

▸ Walmart dollar sales were up 7.4% this past year while adding 145 stores ▸ Target’s dollars were up 6.5% while adding 113 stores

DeCA would rank #27 among all US F/D/M/C/D

Retailers and #16 among US Food

Retailers *F/D/M/C/D = Food / Drug / Mass / Club / Dollar

Retail Outside the Gate

BJ’s 2Q09 Highlights

• Comps down 7.7% (gas hurt by 10.6%)

• Merchandise up 2.9% (hurt by deflation)

• Traffic up 4% but average transactions down 1%

• Food up 6% and gen merchandise down 2%

Safeway 3Q09 Guidance

• Lowering 3Q ID sales estimate to -3% to -4%

• Rolling out new Everyday Value Pricing campaign

Walmart 2Q09 Highlights

• U.S. Comps were down -1.5%

Costco 4Q09 Guidance

• Expecting comps to be down 1-2%

Wal-Mart Store Counts

U.S. Supercenters 2,610 StoresU.S. Discount Stores 892 StoresSam’s Clubs 597 StoresNeighborhood Markets 144 StoresMarketside 4 Stores

Total U.S. Stores: 4,247 Stores

International 3,416 StoresTotal Units: 7,663 Stores

U.S. Source: TDLinx Dec-08International Source: www.walmartstores.com – Includes Jan-09 D&S Acquisition

▸ Nearly 45% of Walmart’s stores are outside the US

Wal-Mart Store Count Growth

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Jan'85

Jan'86

Jan'87

Jan'88

Jan'89

Jan'90

Jan'91

Jan'92

Jan'93

Jan'94

Jan'95

Jan'96

Jan'97

Jan'98

Jan'99

Jan'00

Jan'01

Jan'02

Jan'03

Jan'04

Jan'05

Jan'06

Jan'07

Jan'08

Jan'09

Source: www.walmartstores.com

▸ Traditional discount stores continue to be replaced by Supercenters ▸ Supercenter share of Walmart in 2001 was 59% vs. 85% today

Discount

International

Supercenters

Sam’s Club

Neighborhood

Across categories, grocery prices continue to creep slightly higher, up 0.44% vs. year ago

$134.83

$136.67

$141.01

$143.03 $143.65

$130

$132

$134

$136

$138

$140

$142

$144

$146

4 Yrs Ago (12Wks Ending

5/21/05)


5/20/06)


5/19/07)

Year Ago (12Wks Ending

5/17/08)

Current 12 Wks(Ending 5/16/09)

Average unit price summed across 45

category-leading items.

Source: Nielsen Strategic Planner, Total U.S. Supermarkets

After sharp increases in 2007-2008, private label prices for top-selling items are now receding

$17.94 $18.05

$19.39

$20.54

$19.58

$17

$17

$18

$18

$19

$19

$20

$20

$21

$21


5/21/05)


5/20/06)


5/19/07)


5/17/08)


Average unit price summed across 15 category-leading

private label items.


Prices for top-selling branded items, however, continue to rise

$116.89

$118.62

$121.62$122.49

$124.07

$112

$114

$116

$118

$120

$122

$124

$126


5/21/05)


5/20/06)


5/19/07)


5/17/08)


Average unit price summed across 30 category-leading

branded items.


$30

$35

$40

$45

$50

$55


5/21/05)


5/20/06)


5/19/07)


5/17/08)


9 Key Non-Food Items20 Key Dry Grocery Items15 Key Perishable Items

Source: Nielsen Strategic Planner, Total U.S. Supermarkets, (one beer item excluded)

Sum of Average Unit Price

Perishable items like dairy, produce & meats show lower prices vs. last year

DeCA Performance

Dollar and Unit Sales by DeCA Region

Source: Nielsen Account Planner

▸ DeCA Worldwide dollar sales increased 5.5% during the 52 weeks ended 6/27/09!

▸ For comparison, Dollar Sales in TOTAL US FOOD only increased 1.9%.

▸ OCONUS saw an 8% increase in dollars• Europe +7.8%• Far East +8.6%

▸ Hawaii saw a +5.4% increase in dollars, to $237 million.

The Hawaii Market

0 10 20 30 40

Under $15,000

$15,000-$24,999

$25,000-$49,999

$50,000-$74,999

$75,000-$99,999

$100,000-$149,999

$150,000+

0 10 20 30 40 50 60

White Collar

Blue Collar

• Represents .4% of the US population and .4% of US HH’s• Average Household Size: 3.0• Median HH Income: $48,430

Percent of Total

0 10 20 30 40 50 60

Asian/Pac.Isl

White

Hispanic

Black

Percent of Total

Percent of Total

Source: 2009 Trade Dimensions International – Marketing Guidebook

Income

Ethnicity

Workforce

(+7.2% vs. YA)

(+1.6 pts vs. YA)

(+.5 pts vs. YA)

The Hawaii Market - Leading Retailers

Source: Marketscope 2009

Stores in Area Retail Share

SupermarketsSafeway 19 28.5Foodland Supermarket 30 15.7PAQ 12 6.8Star Markets 10 6.9KTA Super Stores 6 5.0All Others (incl. DeCA ~12.6%) 37.1

Drug StoresLongs 37 79.1CVS 1 8.8Walgreen 1 2.6Medical Center 1 0.2All Others 9.3

Mass Merchandisers Walmart 8 56.3Sears Holding 7 11.1Marukai 2 0.5All Others 32.1

DeCA Hawaii – Dollar Sales per Square Foot

$1,617$1,672

$1,075 $1,056 $1,006 $1,017$927 $937

$774 $813

$0

$475

$950

$1,425

$1,900

Pearl Harbor Schofield Barracks Hickam Barbers Point Kaneoke Bay

LY

TY

Military Retailer 2009 Fact BookSquare footage adjusted to 2009 listing

▸ Kaneoke Bay led in year-to-year growth (+5.0%) while Pearl Harbor was second at +3.4% ▸ The Hawaii DeCA stores outperform average US Supermarket performance per foot ($460)

by a considerable margin

Sales Area 50,797 46,744 41,691 9,660 37,607

+3.4%

-1.8% +1.1%+1.1%

+5.0%

DeCA’s Top 10 Vendors

$432.8

$313.9

$263.4$242.4

$190.7

$151.0 $150.2$134.7 $133.6 $121.9

$0.0

$100.0

$200.0

$300.0

$400.0

$500.0

Kraft P&G Tyson Pepsico Gen.Mills

Nestle Unilever Mil.Prod.

Conagra AAFES

FY 2007

Military Retailer 2009 Fact Book

$ Millions

▸ Purchases from the top 3 Vendors accounted for over $1 Billion in sales to DeCA ▸ These 10 vendors collectively accounted for over $2.1 Billion

New items generated over $21 billion in 2008

• Food & Beverage $10.5 billion

• Health & Beauty $3.9 billion

• General Merchandise $3.6 billion

• Non-Food Grocery $3.3 billion

• Sales from new items represent 5.7% of total sales reported by Nielsen in 2008.

Source: Nielsen Strategic Planner, 52 Weeks Ending 12/27/08, Total U.S. Grocery/Drug/Mass excluding Wal-Mart

Top 10 New Brands Introduced in 2008

2008

New Brands $ Volume

Zyrtec $208 MM

Bud Light Lime $110 MM

Gatorade Tiger $61 MM

Zyrtec-D $49 MM

Keebler Townhouse Flip Sides $43 MM

Children’s Zyrtec $36 MM

Tide Total Care - Detergent $30 MM

POWERade Zero $27 MM

PediPaws Pet Nail Trimmer $27 MM

Gillette Venus Embrace Razor $25 MM

Source: Nielsen Strategic Planner, 52 Weeks Ending 12/27/08, Total U.S. Grocery/Drug/Mass excluding Wal-Mart

Measure Data Comments Measure Data Comments

Gas

Prices

$2.50; -.02c vs month ago; -$1.31 vs year

ago

Consumer Sentiment

63.2; -2.8 points vs July ’09 (below 70 =

recessionary level)

Inflation Rate

-2.1% vs YA (vs 3% avg ’04–’07);

flat vs Jun ’09

Retail Sales Growth

-8.3% vs YA

(vs 6% growth avg ’04-’07).

Consumer Spending Growth

-2.2% vs YA (vs 6% growth avg ’04-’07); +0.4%

vs May ’09

Unemploy-ment Rate

9.4%; +3.7 pts vs YA; -0.1 pts vs. June due to decline in labor

force.

U.S. Consumer, Shopper and Economy Update 8-14-09

CPI, Jan ’04 – Jul ’09

Jan ’04–Jul ‘09

Jan ’04– Jul ’09

Jan ’04 – Jun ’09

U Mich, Jan ’04– Aug ‘09

Weekly Regular Grade, Jan 5 ’04– Aug 10 ‘09

There are several signs that the economy has hit bottom and is headed toward recovery:• Single family home starts, permits and sales are all up and inventory levels are down.• Manufacturing orders and production are expanding.

• Light-vehicle sales jumped to their highest rate since September 2008.

Measure Data Comments Measure Data Comments

Gas

Prices

$2.50; -.02c vs month ago; -$1.31 vs year

ago

Consumer Sentiment

63.2; -2.8 points vs July ’09 (below 70 =

recessionary level)

Inflation Rate

-2.1% vs YA (vs 3% avg ’04–’07);

flat vs Jun ’09

Retail Sales Growth

-8.3% vs YA

(vs 6% growth avg ’04-’07).

Consumer Spending Growth

-2.2% vs YA (vs 6% growth avg ’04-’07); +0.4%

vs May ’09

Unemploy-ment Rate

9.4%; +3.7 pts vs YA; -0.1 pts vs. June due to decline in labor

force.

CPI, Jan ’04 – Jul ’09

Jan ’04–Jul ‘09

Jan ’04– Jul ’09

Jan ’04 – Jun ’09

U Mich, Jan ’04– Aug ‘09

Weekly Regular Grade, Jan 5 ’04– Aug 10 ‘09

• However, the pace of recovery is unknown as initial growth is expected to come from an increase in production due to low inventory levels, vs. an increase in consumer demand.

• As job losses continue, consumers remain cautious about spending -- for example, back-to-school spending is expected to decline 7.7% this year.

U.S. Consumer, Shopper and Economy Update 8-14-09

“The New Joblessness”

• The number of jobs lost in this recession are now equal to the number of jobs gained over the previous 9 years, making this the only recession since the Great Depression to wipe out all job growth from the previous expansion.

• The current unemployment rate of 9.4% includes people who are not working and are looking for work. If “underemployed” workers – those who accepted PT work when they wanted FT or who have given up looking for a job – are also included, the rate increases to 16.3%, roughly 25MM people.

• While unemployment has taken only 16 months to double from 4.8% to 9.4%, long-term economic forecasts predict that the unemployment rate will not fall back below 6% until 2019. This is driven by an overall decline in the number of workers hired -- the ratio of new to existing workers has declined 33% since 2001.

• The outlook for recent college grads is bleak: employers expect to hire 22% fewer new grads from the class of ‘09 than they hired from the class of ‘08. More than 46% of employers said they are unsure about their hiring plans for fall ‘09, and 17% are already reporting that they expect to further trim their college hiring.

• Consumer bankruptcy filings jumped 34% in July vs year ago, driven by rising unemployment on top of high pre-existing debt burdens.

Recovered Economy

Most believe this will occur in 2012.

Afford to go on vacation

Give more to charities

“Adding some luxuries back.”

“Buy what we’re hungry for” (needs she’s deprived herself of; husband going to barber vs. her cutting his hair)

November 2008

Emotional and Uncertain

Disciplined Shopping & Deal Layering

Fighting Temptation

Shopping is a Duty

Redefining Needs

April 2008

Functional and Control Oriented

Smart Shopping

Avoiding Temptation

Shopping is an Experience

Scrutinizing Wants

Today’s consumer is resigned to the reality of living in a recession, but is feeling more prepared because her new behaviors from six months ago are now habits. She has become more confident in her ability to manage her budget, and her panic is turning to pride as she successfully navigates financial challenges.

The Consumer Mindset Evolution

June 2009

Proud and Prepared

What was new behavior in November is now habit

More coupons, buy on sale, use every cent thoughtfully.

Refresh ways to keep saving (library, morning movie)

Trade down on luxury ‘fluff’ to basic/practical

One Year From Now

Not a lot of change from 6/09 behavior

Start to add a few things back into the mix – go out to eat more often, movies, etc.

Think about resuming DIY projects.

“Getting back on track.”

“I scrutinize purchases and receipts now. I will never go back to many things that were wasteful.”

“I want to maintain what we have. If we don’t, it’s just stuff.”

“Things are now falling into line…we have a plan.”

“Everyone is impacted by the recession – people almost bond over it.”

“We live today by eating only half of the

cupcake.”

June ‘09 Consumer Quotes

• Retailer results are following consumers’ new habits: providing food for the household is the priority and as a result, the Food channel has seen strong trip growth and equity gains over the past year.

• Supercenter, Club, and Dollar have seen trip growth as they attract “new” and/or more frequent shoppers, but weak or declining equity may inhibit sustained growth post recession.• • Drug is faring the worst with a continued reduction in trips and flat to declining equity results.

• Of note, $$ per Trip are either declining or decelerating across all channels.

Shopper Trip Trends by Channel, through June ‘09

Understanding Your EquityUnderstanding Your Equity

• Allows You to differentiate vs. competition and improve sales & profitability.

• Matching P&G Brand Equities to Your Equity Strengths & Weaknesses can transform your shoppers’ perceptions.

Current Equity Benchmarks

Perceived ValuePerceived Value ExcellentVery Good Good Fair Poor

Exchange 25% 32% 29% 11% 2%

Commissary 52% 36% 9% 3% 2%

Shoppette 13% 25% 33% 14% 2%

Wal*Mart 12% 35% 36% 11% 4%

Target 9% 30% 35% 17% 1%

Today you own a

15% SHARE OF WALLET….

For every $100 she spends, she spends only ~$15 on base

and ~$85 at the competition.

KEY BUSINESS DRIVERSKEY BUSINESS DRIVERS

Source: AC Nielsen HH Panel, 52 weeks ending 12/31/08

““Outside the Gate”Outside the Gate”

▸ While many top retailers cut back, Walmart increased ad spending by 56%

$0 MM

$200 MM

$400 MM

$600 MM

$800 MM

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Source: Monitor Plus,Oct-07 – Sep-08 Vs. Year Ago

Total Advertising Spending

Looking Ahead

• Key Insights– Shopping Behavior Shifting Dramatically– Defined and Clear Equity will win the day and

the future.– Opportunity to Change the Game

• Vision• Collaborate• Innovate• Measure

presented by: michael moore procter & gamble. discussion outline current retail performance...

Documents

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