the military shopper thomas milks director of sales april 24, 2007

The Military Shopper

Thomas Milks

Director of Sales

April 24, 2007


Demographics


Who is the Military Shopper?

•HHLD Income $50K+•Female Head Age 55-64•Maturing Families Living Comfortably•Empty Nesters Living Comfortably•Affluent•Female Head Not Employed•Race Non-Caucasian•HHLD Head Not in Work Force•County Size B &C•South Region


Top Military shoppers

Total U.S.—52 w/e 12/31/05 Consumption index based on total dollar ring

BehaviorStageStart-Up FamiliesHHs with Young Children Only <6Small Scale FamiliesSmall HHs with Older Children 6+Younger Bustling FamiliesLarge HHs with Children (6+), HOH <40Older Bustling FamiliesLarge HHs with Children (6+), HOH 40+Young TransitionalsAny size HHs, No Children, <35Independent Singles1 person HHs, No Children, 35-64Senior Singles1 person HHs, No Children, 65+ Established Couples2+ person HHs, No Children, 35-54Empty Nest Couples2+ person HHs, No Children, 55-64Senior Couples2+ person HHs, No Children, 65+

Total

Source: Spectra BehaviorScape™ 60-Microsegment Framework/EnLighten/Mediamark Research Inc. Doublebase 2005.©2006 Spectra Marketing Systems, Inc. All Rights Reserved

130

ModestWorkingTowns

64 126

130 74 115114

CosmopolitanCenters

AffluentSuburbanSpreads

ComfortableCountry

StrugglingUrbanCores

Very High: 130+

Strs- Fd-(Mltry Cmmssry In lst 6 mnths: Any *

PlainRuralLiving

Total

Buyer Incidence FrameworkLifeStyle

114 105 179

100

High: 110-129

133 111

65

106 79

133 56

74 5192 73

123 140 155 50

111 139

60 117

63 54

89 173 110 41

80 44

92 76 80 49

84 52

94 49

74 104

106 132 104 57

86 70

140 179 168 37 72

116

103

107

115

68

77

85

77

106

*Framework of Respondents to a MRI Survery that the Repsondent himself had Shopped at a Military Commissary in the Last 6 Months*

93

130

99 127 127 69 108 62

164


Military shoppers are spending less of their wallet in the channel

MILITARY SHOPPERS % ALL OUTLET LOYALTY

MID YEAR 2006

15.9%

2.4%

7.8%

12.9%

1.2%

33.6%

1.4%7.2%

17.7% MILITARY

GROCERY

DRUG

MASS MERCH

SUPERCENTERS

CLUB

CONV/GAS

DOLLAR

ALL OTHER

Source: ACNielsen Homescan

Pt Chg vs MY

05

-0.7

-0.6

-0.1

-1.4

+0.3

+0.1

+0.3

-0.3

+2.3Driven by the

On-line Channel


Military shoppers are increasing their share of Food & Bev wallet outside of Military and Food/Drug/Mass

MILITARY SHOPPERS % ALL OUTLET FOOD & BEV LOYALTY

MID YEAR 2006

41.1%1.4%

3.0%

12.6%

1.0%

6.4%

0.8%

8.5%

25.2%MILITARY

GROCERY

DRUG

MASS MERCH

SUPERCENTERS

CLUB

CONV/GAS

DOLLAR

ALL OTHER


Pt Chg vs MY

05

-1.2

-1.4

-0.1

-0.1

+0.7

+0.3

+0.2

-0.1

+1.7

ACNielsen

Bob: preference to look at Food & Bev or Total Store?


Roughly 40% of Military shoppers shop Military on a monthly basis for their Food, HBC or Gen Merch; thus driving lower share of wallet



MILITARY SHOPPERS PENETRATION (% of Military HHs Purchasing in...)

100.0 98.0

81.990.7

62.3 60.3

49.5

72.1

58.049.7

69.569.6

86.380.4

97.9100.0

MILITARY GROCERY DRUG MASSMERCH

SUPERS CLUB CONV/GAS DOLLAR

Mid Year 2005 Mid Year 2006

Source: ACNielsen Homescan Total US

More Military households are shopping in Supers this year


All Channels were able to grow or maintain Buying Rate, with the exception of Grocery & traditional Mass Merch Discount

BUYING RATE(UPC Dollars Per Household)

$1,768

$262

$737$832

$153 $141

$903

$182 $143

$1,398$1,275

$1,429

$693

$265

$1,753

$1,306





Both Supers & Club were able to bring in more households

and increase the average $ per buyer at the same time


MILITARY SHOPPERSBUYING RATE

$1,165

$209

$710$811

$159 $139

$912

$208$125

$1,409

$1,275$1,375

$672

$218

$1,197

$1,306

MILITARY GROCERY DRUG MASS MERCH SUPERS CLUB CONV/GAS DOLLAR



Outside of the Military channel, Military shoppers have increased their per household spending in Grocery, Drug,

Club, and Convenience


Frequency is declining in all channels

FREQUENCY(Average Trips Per Household)

68.3

15.219.4

10.914.5 13.5

10.914.5 12.4

27.023.6

25.6

16.714.0

61.5

21.4






MILITARY SHOPPERSFREQUENCY

55.8

13.418.2

11.415.0

12.411.015.2

10.6

30.3

23.626.9

15.812.1

51.2

21.4





Military shoppers have also decreased frequency everywhere, only Conv/Gas was able

to maintain trips per shopper


Military households are stocking up more and making less trips

MILITARY SHOPPERSBASKET SIZE

$70.90

$10.60 $11.20$11.80

$20.90

$38.90

$15.70

$46.50

$54.00

$13.70

$83.20

$51.10

$42.50

$18.00$23.40

$61.00






Grocery loyalty driven by convenience trips

Military Shoppers % of channel dollars by trip type

9

13

19

29

41

62

68

70

21

21

26

27

28

17

19

34

32

30

26

21

10

11

37

34

24

18

10

3

5

1

26 9

Warehouse Clubs

Military

Supercenters

Mass Merch

Grocery

Drug

C-Stores

$ Stores

Immediate Fill In Routine Stock-up

Total US—ACNielsen Homescan Shopper Missions, 52wk end 7/2/05


Military Shoppers have decreased Buying Rate in most major Grocery chains

Dollars Per Military Shpr$1,275

$1,450

$288

$129

$750

$146

$583

$392

$1,035

$400

$441

$932

$1,306

$1,388

$309

$129

$652

$161

$648

$364

$433

$1,161

$516

$436

$682

$907

MILITARY

TARGET-TOTAL

WAL-MART-DIV 1

SAM'S

HANNAFORD-

KROGER

BJ'S

Mid Year2005

Mid Year2006



Bigger basket sizes driving overall annual spending per household

Trips Per Military Shpr23.6

36.7

30.7

21.1

16.1

19.6

16.8

11.7

8.8

8.5

7.3

5.0

21.4

35.4

26.9

19.3

18.1

17.8

17.7

13.8

11.7

9.5

8.6

7.3

7.3

4.9

MILITARY

H-E-B

WAL-MART-SUPER

KROGER

HANNAFORD-CORP

SAFEWAY-CORP

FOOD LION

WAL-MART-DIV 1

COSTCO

BJ'S

SAM'S

WALGREENS

TARGET-TOTAL

KMART-TOTAL

Mid Year 2005

Mid Year 2006

Military Shprs Dollars Per Trip$54

$25

$47

$19

$24

$23

$45

$88

$66

$15

$39

$29

$61

$26

$52

$27

$24

$21

$25

$47

$100

$72

$75

$18

$43

$33

MILITARY

H-E-B

WAL-MART-SUPER

KROGER

HANNAFORD-CORP

SAFEWAY-CORP

FOOD LION

WAL-MART-DIV 1

COSTCO

BJ'S

SAM'S

WALGREENS

TARGET-TOTAL

KMART-TOTAL



MILITARY CHANNELBUYER CONVERSION

46.5

66.9

43.3

63.6

71.7

42.4

65.8 67.2

54.6

47.3

57.350.6

79.9

69.3

48.253.6

45.8

60.156.0

79.8

DRYGROCERY

FROZEN DAIRY DELI MEAT FRESHPRODUCE

NON-FOOD ALCOHOLICBEV

GENERALMERCH

HEALTH &BEAUTY



Dry Grocery and Non-Food are the most highly converted departments in Military


Where do Military Shoppers go for Dry Grocery?

% of Military Shopper's Dry Grocery All-Outlet Spending

3.4 3.12.1

2.9 2.81.2 0.7

12.9

3.8 3.3 3.0 2.9 2.6 2.5 2.4 1.7 1.3 0.7 0.5

12.1

26.6

2.41.6

0.6

25.4

0.7

MIL

ITARY

WAL-M

ART-SUPER

SAM

'S

COSTCO

KROGER

HANNAFO

RD-CORP

SAFEW

AY-CORP

WAL-M

ART-DIV

1

FOOD L

ION

H-E

-B

TARGET-

TOTAL

BJ'S

WALGREENS

KM

ART-TOTA

L

Mid Year 2005Mid Year 2006


+0.8

Military Shoppers spend 25.4% of their Dry Grocery wallet

In Military; down 1.2 pts

+0.9


What categories are Military Shoppers purchasing in other channels?

GROCERY DRUG MASSPASTA CANDY BABY FOODCARBONATED BEVERAGES GUM CANDYFLOUR NUTS GUMPICKLES, OLIVES, AND RELISH CARBONATED BEVERAGES PET FOODFRUIT - CANNED TEA SNACKSVEGETABLES AND GRAINS - DRIED SEAFOOD - CANNED COOKIESCONDIMENTS, GRAVIES, AND SAUCES COFFEE CARBONATED BEVERAGESBREAD AND BAKED GOODS SNACKS BREAKFAST FOODSOUP COOKIES CRACKERSVEGETABLES - CANNED FRUIT - CANNED SOFT DRINKS-NON-CARBONATED

SUPERS CLUB DOLLARPET FOOD GUM CANDYPACKAGED MILK AND MODIFIERS FRUIT - DRIED GUMGUM NUTS SEAFOOD - CANNEDSOFT DRINKS-NON-CARBONATED SUGAR, SWEETENERS COOKIESBREAD AND BAKED GOODS SHORTENING, OIL SNACKSCANDY COFFEE BAKING MIXESBREAKFAST FOOD BREAKFAST FOOD FRUIT - CANNEDSUGAR, SWEETENERS SEAFOOD - CANNED NUTSSNACKS PACKAGED MILK AND MODIFIERS PREPARED FOOD-READY-TO-SERVEFLOUR SPICES, SEASONING, EXTRACTS PET FOOD

Top 10 Dry Grocery categories purchased by Military Shoppers at…

*Top 10 based on Share of WalletSource: ACNielsen Homescan, Mid Year 2006


Where do Military Shoppers go for Frozen?

% of Military Shopper's Frozen All-Outlet Spending

0.2 0.6 0.1 0.1

4.25.1

1.0

11.5

0.3 0.6 0.1

5.1

0.0

3.9 4.1

7.4 8.1

0.9 1.7

12.1

4.6

25.1

4.1 4.46.0

1.9

22.5

7.8

MIL

ITARY

WAL-M

ART SUPERS

TARGET TOTA

L

WAL-M

ART

WALGREENS

SAMS

KMART

SAFEWAY C

ORP

COSTCO

KROGER CORP

HANNAFORD C

ORP

FOOD LIO

NBJS

HEB CORP



-2.6

Military Shoppers spend 22.5% of their Frozen wallet

In Military; down 2.6 pts

+3.0


Where do Military Shoppers go for Dairy?

% of Military Shopper's Dairy All-Outlet Spending

0.3 0.8 0.5 0.1

3.8 3.3

0.7

12.2

0.4 1.0 0.3

2.9

0.1

4.0 3.6

7.8

4.3

0.62.6

12.9

2.5

24.0

2.6 3.2

6.7

2.3

24.4

3.9

MIL

ITARY

WAL-M

ART SUPERS

TARGET TOTA

L

WAL-M

ART

WALGREENS

SAMS

KMART

SAFEWAY C

ORP

COSTCO

KROGER CORP

HANNAFORD C

ORP

FOOD LIO

NBJS

HEB CORP



+0.4

Military Shoppers spend 24.4% of their Dairy wallet

In Military; up 0.4 pts

+1.3


Where do Military Shoppers go for Non-Food?

% of Military Shopper's Non-Food All-Outlet Spending

2.2

5.4

1.0 1.3 1.4 1.4 1.1

12.8

2.1

6.6

1.0

5.1

1.1 1.0

3.8 3.32.2

0.8 1.1

11.8

0.9

31.2

4.3 4.2

1.90.8

30.3

2.1

MIL

ITARY

WAL-M

ART SUPERS

TARGET TOTA

L

WAL-M

ART

WALGREENS

SAMS

KMART

SAFEWAY C

ORP

COSTCO

KROGER CORP

HANNAFORD C

ORP

FOOD LIO

NBJS

HEB CORP



-0.9

Military Shoppers spend 30.3% of their Non-Food wallet

In Military; down -0.9 pts

+1.2


Where do Military Shoppers go for HBA?

% of Military Shopper's HBA All-Outlet Spending

3.6

8.8

5.2

1.7 1.1 0.7 0.9

19.8

4.2

8.3

5.9

3.31.9

1.0

3.62.5

1.3 0.7 1.2

17.0

0.5

20.5

2.84.4

2.01.0

20.1

1.2

MIL

ITARY

WAL-M

ART SUPERS

TARGET TOTA

L

WAL-M

ART

WALGREENS

SAMS

KMART

SAFEWAY C

ORP

COSTCO

KROGER CORP

HANNAFORD C

ORP

FOOD LIO

NBJS

HEB CORP



-0.4

Military Shoppers spend 20.1% of their HBA

wallet In Military; down -0.4 pts

+0.5

+2.8

-0.5


In order to grow your business, you need to understand the Composition of Sales Volume

Household PenetrationH ow M any Peop le Buy

Purchase FrequencyH ow O ften They Buy

Purchase SizeH ow M uch They Spend Per Trip

Buying RateH ow M uch They Spend Per Year

Total Sales Volume

All sales volume can be broken down into these basic components

We need to increase at least one of these factors to grow sales

the military shopper thomas milks director of sales april 24, 2007

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