THE MEAT DEPARTMENT S ROLE IN TOTAL STORE SUCCESS. Sherry Frey Nielsen Perishables Group

THE MEAT DEPARTMENT S ROLE IN TOTAL STORE SUCCESS Sherry Frey Nielsen Perishables Group

TODAY Role of the Meat Department in Total Store Success Lens of Evolving Consumer Behaviors and Baskets Winning in Total Store Vision and Benchmarks 2

FRESH AND ITS SHOPPERS ARE INCREASINGLY VALUABLE TO STORES 29% FRESH FOOD CONTRIBUTION TO TOTAL STORE SALES 39% 32% 16% 7% 5% MEAT PRODUCE DELI BAKERY SEAFOOD FRESH BASKETS ARE VALUABLE $34 AVERAGE BASKET SIZE (total store) $70 $54 $52 $52 $74 MEAT PRODUCE DELI BAKERY SEAFOOD As goes meat can go the basket Source: Nielsen Perishables Group FreshFacts ; 2012; Homescan, TSV 3

Center Store Equivalized Dollar Velocity Copyright 2012 The Nielsen Company. Confidential and proprietary. WINNING IN TOTAL STORE: FIRST-EVER LOOK AT CENTER STORE AND PERIMETER PERFORMANCE Strong in Fresh, Opportunity in Center Store Strong in Fresh and Strong in Center Store 39% Highest fresh to total store - meat is 16% of total store 32% Above national fresh contribution - largest fresh assortment High perishables buyer conversion but low total store buyer conversion Highest meat dollar velocity Fresh Equivalized Dollar Velocity Highest meat share of fresh - meat is 13% of total store Highest buyer conversion across center store and fresh Fresh Equivalized Dollar Velocity 28% Low fresh share of total store - meat is 11% of total store 27% Lowest fresh share of total store - meat only 10% of total store sales Lowest total store buyer, perishables and meat buyer conversion Large performance gaps on key fresh categories: fresh pork, berries, apples, potatoes, tomatoes Opportunity in Fresh and Center Store Strong in Center Store, Opportunity in Fresh Sources: Nielsen Perishables Group FreshFacts Total US 52 weeks ending 12/29/2012 (Food Coverage Area); Homescan, TSV 52 weeks ending December 2012 4

UNDERSTAND EVOLVING SHOPPER Eating but not cooking Engaged in food and cooking 5

EATING BUT NOT COOKING 6

Copyright 2012 2013 The Nielsen Company. Confidential and proprietary. STRONGEST FRESH GROWTH IN CONVENIENCE NOT JUST FOR FAMILIES 8% DOLLAR GROWTH VOLUME GROWTH 5% CONVENIENCE 4% STAPLES 1% Highest Indexing Consumer Groups Value-Added Chicken Breast Premium-on-the-go Families Value-Added Pork Healthy Living Couples Lunchmeat Combo Packs Healthy Living Couples 19% 62% CONTRIBUTION TO FRESH DOLLAR SALES Source: Nielsen Perishables Group FreshFacts Total U.S. 52 weeks ending 9/29/2012 vs. Year Ago; Products in each group are not mutually exclusive FreshFacts Powered by Spire/Consumer Essence Segmentation 7

CONVENIENCE PRODUCT INNOVATIONS FOR DIFFERENT DAY PARTS Lunch and Dinner Breakfast Smaller Meal Occasion: Snacking & Smaller HH Source: MultiAd Kwikee & company websites 8

ENGAGED WITH FOOD AND COOKING 9

ENGAGED WITH FOOD Food & cooking websites 67 to 91 million unique monthly visitors Spend more than average on both fresh and center store Source: Nielsen BookScan; Nielsen NetView, Home & Work; Nielsen Online Views Survey March & April 2012 (n= 50,643) 10

CREATIVE restaurant quality meals at home increasingly SOPHISTICATED and global palates PASSIONATE about understanding food INTRIGUED by sourcing: production and processing methods EDUCATED on health Food Technology, January 2012 11

Copyright 2012 2013 The Nielsen Company. Confidential and proprietary. CATEGORIES WITH PRIORITY ATTRIBUTES DRIVING GROWTH 7% 8% DOLLAR GROWTH VOLUME GROWTH 5% 5% 3% 3% HEALTHY PREMIUM INDULGENT MULTICULTURAL GLOBAL 37% 9% 3% CONTRIBUTION TO FRESH DOLLAR SALES Source: Nielsen Perishables Group FreshFacts Total U.S. 52 weeks ending 9/29/2012 vs. Year Ago; Products in each group are not mutually exclusive 12

Billions Copyright 2012 The Nielsen Company. Confidential and proprietary. HEALTHY LABEL CLAIMS GROWING Sales range from $70B for fat claims to $64M for health claims Label Claims Dollar Sales and Unit Change $80 Fat presence $70 $60 $50 $40 $30 $20 Natural +4% Preservative Presence +3% Salt or Sodium Presence +.5% Organic +9% Protein Presence +10% Hormone Antibiotic Free +12% Iron Presence +4% $10 $0 52 Weeks Ending 11/24/2012 Source: Nielsen Scantrack & Nielsen Label Trends; UPC-coded; Total U.S. - All Outlets Combined 13

ENGAGED IN FOOD AND COOKING Pack Size/Price Small Packs/ Premium Priced Family Packs/ Moderately Priced Value Packs Natural/ Organic Natural/Organic Share of Sales Dollar Sales % Change vs. Year Ago Sources: Nielsen Scantrack & Nielsen Label Trends Total U.S. - All Outlets Combined; Photo Sources: Company websites 14

ASSORTMENT: IF IT S NOT THERE, YOU CAN T SELL IT Strong in Fresh, Opportunity in Center Store Highest share of fresh sales to processed sales; similar processed SKU count as upper right Least number of SKUs in fresh and processed meat Opportunity in Fresh and Center Store Strong in Fresh and Strong in Center Store Carried the most SKUs * Almost as many SKUs as upper right Poor efficiency per SKU, especially for fresh pork, fully cooked meat, breakfast sausage and dinner sausage Strong in Center Store, Opportunity in Fresh * SKU defined by impressions per store, per week Sources: Nielsen Perishables Group FreshFacts Total US 52 weeks ending 12/29/2012 (Food Coverage Area); Homescan, TSV 52 weeks ending December 2012 15

ASSORTMENT: IF IT S NOT THERE, YOU CAN T SELL IT Strong in Fresh, Opportunity in Center Store Value-added pork, value-added chicken breast and value-added beef Chicken wings Pork tenderloin Beef chuck Strongest dollar velocity of Lamb & goat beef steaks (porterhouse Whole chickens ++ has 23% of loin sales, 3x Dinner sausages ++ sales velocity of other Fowl & exotics quadrants) Strong in Fresh and Strong in Center Store Chicken breast Chicken thighs Grinds: Fresh beef, pork, chicken, turkey Fully-cooked meat Bacon Breakfast sausage Franks Beef round Center cut pork chops Value-added pork Beef rib Beef rib Whole hams ++ Packaged lunch meals ++ Turkey and ham lunch meat ++ Half hams ++ Pork loin chops Selling faster dollar and volume velocity across most steak categories than upper right but with almost 50% of steak volume sold on promotion Opportunity in Fresh and Center Store Strong in Center Store, Opportunity in Fresh ++ denote products with more skus than upper right quadrant Sources: Nielsen Perishables Group FreshFacts Total US 52 weeks ending 12/29/2012 (Food Coverage Area); Homescan, TSV 52 weeks ending December 2012 16

DECLINING MEAT PROMOTION ACTIVITY VOLUME % ON PROMO VS. YEAR AGO -2.4-1.4-0.4 +0.1-1.3 AVG. RETAIL PRICE VS. YEAR AGO MEAT PRODUCE +1.5% DELI BAKERY SEAFOOD +2.8% +2.7% +4.7% +4.5% Source: Nielsen Perishables Group FreshFacts ; 52 weeks ending 9/29/2012 vs. Year Ago MarketTrack CIRCULAR PRINT AD COUNT -0.3% TOTAL PERISHABLES +4.7% -3.7% MEAT DEPARTMENT PROMO AVERAGE PRICE +2.5% TOTAL PERISHABLES +5.0% MEAT DEPARTMENT 17

PRICING AND PROMOTION ACTIVITY Strong in Fresh, Opportunity in Center Store Strong in Fresh and Strong in Center Store 35% Percentage of volume on promotion, but very effective promotions (high lift) 90% Baseline translating to strong everyday meat sales Highest everyday and promoted meat prices of all quads 34% Lowest percentage of volume sold on promotion; highest subsidized 41% Highest percentage of volume on promotion, strong lift on promotion and low subsidized sales - only being shopped for sales!!! 39% 79% Lower baseline volume 81% High percentage of meat volume sold on promotion Lower baseline; lowest lift on promotion Opportunity in Fresh and Center Store Strong in Center Store, Opportunity in Fresh Sources: Nielsen Perishables Group FreshFacts Total US 52 weeks ending 12/31/2011 (Grocery channel only); Homescan, TSV 52 weeks ending December 2011 18

PRICING AND PROMOTION ACTIVITY Strong in Fresh, Opportunity in Center Store 44% fresh pork on promotion Strong in Fresh and Strong in Center Store 41% chicken breast on promotion 25% ground beef sold on promotion 32% bacon sold on promotion 35% fresh meat/33% processed meat sold on promotion 35% ground beef sold on promo (10 pts higher than any quad) High every day prices on fresh chicken, franks, packaged meals 50% beef chuck on promotion Half of chicken breast and beef steak volume sold on promotion Almost 40% of processed meat sold on promotion Opportunity in Fresh and Center Store Strong in Center Store, Opportunity in Fresh Bottom quads promote more meat and more perishables overall. Sources: Nielsen Perishables Group FreshFacts Total US 52 weeks ending 12/31/2011 (Grocery channel only); Homescan, TSV 52 weeks ending December 2011 19

WHAT A TOTAL STORE PERSPECTIVE COULD LOOK LIKE.

DESIGN ADS AROUND CONSUMER NEEDS NOT DEPARTMENTS Trip Drivers Meat Meal Solutions Produce Beverage Club Packs/ Large Pack Sizes What s New! (in season & new products) Deli HBC Bakery Making your life easier convenience solutions Shopping List Basics 21

DESIGN ADS LIKE A FOOD MAGAZINE Healthy dinners Quick weeknight cooking Weekend cooking Weekly shopping list - One shopping list = 5 meals 22

Copyright 2012 2013 The Nielsen Company. Confidential and proprietary. PROMOTE TO ATTRACT CONSUMERS DO THIS Don t cover up fresh Closer to the consumption moment NOT THIS $4.99 lb Source: Market Track 23

Copyright 2012 2013 The Nielsen Company. Confidential and proprietary. PROMOTE TO ATTRACT CONSUMERS Source: Market Track 24

SOLUTION-ORIENTED ADJACENCIES Source: Innovation Center for US Dairy Market Track, Hannaford Bros. 25

MERCHANDISE BASED ON TRIP MISSION Source: Giant Carlisle 26

FOCUS ON THE BASKET TOP 10 CENTER FOOD STORE CATEGORIES IN MEAT BASKET - SUPERMARKETS BEEF Frozen Meal Starters Charcoal /Logs Prep Foods Dry Mixes Pasta Vegetables Canned Condiments Dries Veg & Grains Spices Seasonings Frozen Vegetables Dough Products POULTRY SS Meal Starters Veg & Grains Frozen Meal Starters Shortening Oil Spices Seasonings Pasta Seafood-canned Flour Table Syrups Frozen Vegetables SEAFOOD Wine Ref Meal Starters Snacks Spreads Dips Seafood Canned Veg & Grains Dried Spices Seasonings Shortening Oil Unprep Frozen Meat and Seafood Meal Starters- SS Flour Key merchandising and co-promotion opportunities!!! Source: Nielsen Homescan, TSV 52 weeks ending December 2011 In Basket Trips indexed to Total Grocery Basket Trip 27

Copyright 2012 2013 The Nielsen Company. Confidential and proprietary. FOCUS ON THE BASKET 28

MERCHANDISE TO CREATE EXCITEMENT, CAPTURE IMPULSE PURCHASES AND EASE THE SHOPPING TRIP 29

WINNING IN TOTAL STORE Strong in Fresh, Opportunity in Center Store Strong in Fresh and Strong in Center Store Opportunity in Fresh and Center Store Strong in Center Store, Opportunity in Fresh 30

WINNING IN FRESH DOESN T GUARANTEE TOTAL STORE SUCCESS Sources: Nielsen Homescan Total Shopper View 31

WINNING IN FRESH DOESN T EVEN GUARANTEE TOTAL FRESH SUCCESS Contribution to total store sales*: FRESH ENTHUSIASTS 23% 51% 22% FRESH MODERATE FRESH ELUSIVE Highest Indexing Specialty cheese Berries Packaged salad Cooking vegetables Tomatoes Fin fish Citrus Apples Shrimp Breads Highest Indexing Beef Pork Chicken Processed lunch meat Hams Deli prepared chicken Cakes Deli entrees Deli salads Donuts Source: Nielsen Perishables Group FreshFacts Shopper Insights powered by Spire, 52 weeks ending 9/29/2012 *Remaining 6% of shoppers not coded for Spire Essence segments Highest Indexing Packaged meals Fully cooked chicken Meat franks Processed lunch meat Cakes Deli pizza Fully cooked beef Breakfast sausage Fully cooked other meat Other miscellaneous meat items 32

WINNING IN TOTAL STORE Meat is 13% of all store sales For every million dollars of total store sales, they average $122K of meat department sales and 41K lbs Most retailers in this group are selling above $100K of meat for every $1M of total store sales Best retailer sells $204K and 83Klbs They carry a wide assortment and have very strong everyday meat sales 91% of sales are baseline/everyday Sell 34% of volume on promotion 33

TOTAL STORE SUCCESS: 3B Best in Class Benchmarks Consumer Behavior Basket Perspective 34

QUESTIONS? For more information: Sherry Frey sherry.frey@nielsen.com

METRICS AND METHODOLOGY Equivalized center store and perimeter sales velocity Source Point-of-sales metric from Nielsen and Nielsen Perishables Group Measure Background or Methodology Indexed retailers across the country, based on their Equivalized sales velocity of aggregated center store and perimeter departments. Included food and categories that are sold in food stores (excl pharmacy and gas). The universe of food retailers includes traditional grocery retailers, mass/ supercenters and club and represents more than 90% of where fresh food is sold today. SKUS Impressions per store per week Metric calculated from fresh point of sales data Used in fresh categories that include random weight items to get to the closest perspective of count of unique items selling. Baseline volume Metric calculated from fresh point of sales data Quantifies expected volume sales of a product or category using a weighted moving average of weekly observations of normal, non-promoted volume. Buyer conversion Metric from Nielsen Homescan panel Available for retailers, by store and category. Helps to understand if a category buyer is being converted and buying that category in the retailer s store. % of volume on promotion Metric calculated from fresh point of sales data Shows the percentage of volume that came from a product sold on promotion. A product is considered to be on promotion when there is a 5% or $0.09 discount. Subsidized volume Metric calculated from fresh point of sales data The percentage of promoted volume that would have sold regardless of the promotion. Calculated by comparing expected volume from the promotion to actual volume from the promotion. 36