Nielsen State of the Consumer: 2011 Consumer Holiday Spending Expectations

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1 Nielsen State of the Consumer:

2 Polarized Consumers: Shopper trips correlating to HH Income Shopper Trips: 2 year trend 4% -1% -3% -3% -12% -7% -9% < $20K $20K - $29K $30K - $39K $40K - $49K $50K - $69K $70K - $99K $100K + Household Income Approximately 20% of HHs earn over $100k 2 Source: Nielsen Homescan, 52 w/e 7/2/2011 versus 7/4//2009 excludes gas-only or Rx-only trips

3 Polarized Consumers: Retail spending being driven by affluent HHs Retail Spending: 2 year trend 4% -1% -3% -2% -2% -9% -8% Approximately 20% of HHs earn over $100k < $20K $20K - $29K $30K - $39K $40K - $49K $50K - $69K $70K - $99K $100K + Household Income 3 Source: Nielsen Homescan, 52 w/e 7/2/2011 versus 7/4//2009 excludes gas-only or Rx-only trips

4 U.S. consumer confidence remains near recessionary levels Nielsen Consumer Confidence Index Q05 3Q05 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 4 Source: Nielsen Global Online Consumer Confidence and Opinion Survey 2Q11

5 Concerns continue and underscore a fragile state of recovery 5 Source: Nielsen Global Consumer Confidence Survey (2Q 2011) - US

6 Discretionary $ s slowing and no spare cash increasing as holiday season approaches Once you have covered your essential living expenses, what do you do with your spare cash? I spend it on 50% 45% 40% U.S. Avg - 2Q10 U.S. Avg - 2Q11 35% 30% 1 in 3 reporting no spare cash 25% 20% 15% 10% 5% 0% Savings Paying No spare Home Out of Vacations Apparel Tech Prods Retirement Investing Debts cash Improv Home Ent. Funds 6 Source: Nielsen Consumer Confidence Survey

7 Expect new normal behaviors to impact the holiday season Combining Trips: 66% Shopping More Supercenters: 24% Eating out less: 36% More at home: 36% Value Brands: 19% Combining Trips: 75% Shopping More Supercenters: 29% Eating out less: 52% More at home: 48% Value Brands: 34% Combining Trips: 66% Shopping More Supercenters: 24% New Normal Eating out less: 46% More at home: 40% Value Brands: 31% More Coupons: 22% More Coupons: 35% More Coupons: 37% Pre Recession Recession Post Recession Source: Nielsen Homescan Surveys

8 State of the Consumer Nielsen Consumer Holiday 8

9 Most complete and comprehensive survey Nielsen consumer survey of 25,000 demographically representative households throughout the U.S. fielded in early September NQuest weekly consumer surveys of 250 shoppers and their planned spending this holiday season Special focus on Black Friday expectations beginning early October 9

10 Summary of the Season Close to 20% of consumers have already begun shopping as of the first week in September 52% plan to spend 500 or less 25% plan to spend between $100 and $250 62% of consumers plan to use shopping lists 46% of respondents report plans to eat out less 40% plan to stay at home more 37% plan to use coupons 31%plan to buy value brands The polarization among consumers, as illustrated by the following slides, will significantly impact this holiday season. Look for online, club stores, toy and consumer electronics retailers as well as categories such as gift cards, tech, vacations and toys to perform well this season Expect restrained holiday entertainment (at-home & away-from-home) for all but the affluent 10

11 Consumers heading into holiday shopping with virtually same intent to buy as % of HH Holiday spend vs Year Ago All levels of spending similar to Same less More Undecided Do not purchase Compared to year ago, do you plan to spend more, about the same, or less money on holiday gifts? 11 Source: Nielsen Homescan Survey September 2011

12 Same level of spending expected across most HH s with exceptions at lower income levels < $20K $20K - $29K $30K - $39K $40K - $49K $50K - $69K $70K - $99K $100K + % of households Same Less Compared to year ago, do you plan to spend more, about the same, or less money on holiday gifts? 12 Source: Nielsen Homescan Survey September 2011

13 More top income households planning to spend the same as last year % indicating they plan to spend the same as year ago < $20K $20K - $29K $30K - $39K $40K - $49K $50K - $69K $70K - $99K $100K Compared to year ago, do you plan to spend more, about the same, or less money on holiday gifts? 13 Source: Nielsen Homescan Surveys

14 While increases in planned spending cuts among lower income groups % indicating they plan to spend the Less 0 < $20K $20K - $29K $30K - $39K $40K - $49K $50K - $69K $70K - $99K $100K Compared to year ago, do you plan to spend more, about the same, or less money on holiday gifts? 14 Source: Nielsen Homescan Surveys

15 Channel winners this holiday season: Online and value retailers, such as dollar stores, should do well this season For each of the following types of channels, do you plan to spend more, about the same, or less money for holiday gifts as compared to year ago? 14% 12% '09 Planning to spend more '10 Planning to spend more '11 planning to spend more 10% 8% 6% 4% 2% 0% Dollar Strs Online Mass Merch/Disc Supercenters Club Strs Grocery Strs Toy Strs Book Strs Conv/Gas Cons Elec Home Improv Strs Dept Strs Pet Strs Liquor Strs Drug Strs Office Supply 15 Source: Nielsen HH Survey Sept 09 Source: Nielsen Homescan Surveys

16 Channel winners deep dive: Value retailers will attract shoppers, but retailers resonating with $100K plus HHs should do well For each of the following types of channels, do you plan to spend more, about the same, or less money for holiday gifts as compared to year ago? 18% 16% Online HH <= $50k planning to spend more HH >=$100k planning to spend more 14% 12% 10% 8% Club 6% Toy & Book Consumer Electronic 4% 2% 0% Dollar Strs Online Mass Merch/Disc Supercenters Club Strs Grocery Strs Toy Strs Book Strs Conv/Gas Cons Elec Home Improv Strs Dept Strs Pet Strs Liquor Strs Drug Strs Office Supply 16 Source: Nielsen HH Survey Sept 09 Source: Nielsen Homescan Survey September 2011

17 Category Winners this holiday season: Technology (Including items such as cell phone, e-readers, pc tablets, laptops), gift cards & traditional holiday items For each of the following types of products, do you plan to spend more, about the same, or less money for holiday gifts as compared to year ago?? 10% 9% '09 Planning to spend more '10 Planning to spend more '11 Planning to spend more 8% 7% 6% 5% 4% 3% 2% 1% 0% Gift Cards Source: Nielsen HH Survey Sept 09 Toys Apparel Tech Products Books Videogames Bed & Bath Acc Vacations DVD/Blue Ray Source: Nielsen Homescan Surveys Cookware/Kitchen Music CDs Sporting Goods Jewerly 17

18 Category Winners deep dive: Universal appeal of gift cards, technology (Including items such as cell phone, e-readers, pc tablets, laptops), vacations & traditional holiday items For each of the following types of products, do you plan to spend more, about the same, or less money for holiday gifts as compared to year ago?? 10% 9% GC Tech HH <= $50k planning to spend more HH >=$100k planning to spend more 8% 7% 6% Vacations 5% 4% 3% 2% 1% 0% Gift Cards Source: Nielsen HH Survey Sept 09 Toys Apparel Tech Products Books Videogames Bed & Bath Acc Vacations DVD/Blue Ray Cookware/Kitchen Source: Nielsen Homescan Survey September 2011 Music CDs Sporting Goods Jewerly 18

19 Entertainment: Majority of households planning on the same level with slight increase in those planning to do more Compared to year ago, do you plan to spend more, about the same, or less money on holiday entertainment at home? Compared to year ago, do you plan to spend more, about the same, or less money on holiday entertainment away from home? More About the Same Less Don t Know More About the Same Less Don t Know Source: Nielsen Homescan Surveys

20 Entertainment deep dive: Any increases in at home or away from home entertainment will be driven by HH s earning over $100K Compared to year ago, do you plan to spend more, about the same, or less money on holiday entertainment at home? Compared to year ago, do you plan to spend more, about the same, or less money on holiday entertainment away from home? More About the Same Less Don t Know 0 More About the Same Less Don t Know HH s <= $50K HH s >= $100K 20 Source: Nielsen Homescan Survey September 2011

21 Nielsen State of the Consumer: