2009 Grocery Store SuperStudy Plugging into the Profit Power of Eggs

2009 Grocery Store SuperStudy

Plugging into the Profit Power of Eggs

December 2009

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Dairy and Egg Financial Impact

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Financial Contributions – Willard Bishop SuperStudy™ 2009

– Benefits• Benchmarking visibility in to category profitability• Enables keener category management and retail analysis by

factoring financial contributions in to recommendations; Yields more informed decision making by incorporating bottom line insights

– Definition• Comprehensive total-store analysis that evaluates every item

and its financial performance• Sales & space; Profitability & financial contribution• SKU performance aggregated in to department, category and

subcategory reporting

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– Methodology• 52 weeks of retailer data: sales, cost of goods, cash discounts• Retailer cost-to-serve (warehouse, transportation, and store

activity-based costs)• Store visits to collect space and product handling practices (time

study)• Product information including case packs, dimensions and

merchandising space

Financial Contributions – Willard Bishop SuperStudy™ 2009

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Key Concepts

The SuperStudy P&L– The fundamental result is an industry benchmark profit & loss

statement. All measures and emerging best practice analytics tie back to these core metrics:

• Sales• subtract Cost of Goods• add Trade & Terms• equals Adjusted Gross Profit (AGP)• subtract Activity Based Costs (ABCs)• equals True Profit (TP)

– Leverage insights against the profitability, or real cash contribution, of sales

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Dairy Department Overview

– The Dairy department contributes disproportionately to overall profits

Top 5 Grocery Departments (Weekly Sales)

3X its share of space

5X its share of space!

Source: Willard Bishop 2009 Grocery SuperStudy™

Dairy Share of Total Store

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Dairy Category Overview

– Eggs yield the highest True Margin of all Dairy categories, a result of high turns, efficient use of space and low costs-to-serve

Source: Willard Bishop 2009 Grocery SuperStudy™

Eggs Share of Dairy

1.8X its share of space!

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Sales

Average Weekly Sales Dollars Per SKU– Very effective/efficient use of variety and assortment

Source: Willard Bishop 2009 Grocery SuperStudy™

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Sales

Average Weekly Unit Sales Per SKU

Source: Willard Bishop 2009 Grocery SuperStudy™

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Sales

81% of EGG SKUs are Making Money!

Source: Willard Bishop 2009 Grocery SuperStudy™

81.04%

67.72%

56.88%

80.58%

73.60%77.78%

69.04%72.04%

Fluid Milk Cheese RefrigeratedJuice

Yogurt Eggs Margarine-Butter

Cultured RefrigeratedBaking

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Profitability

Weekly Profit Per Square Feet– Overall Egg space delivers solid profit contributions in both

adjusted gross and true profits for the Dairy Department

Source: Willard Bishop 2009 Grocery SuperStudy™

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Return on Inventory Investment

Source: Willard Bishop 2009 Grocery SuperStudy™

True Profit Return on Inventory Dollar– Annual True Profit (gross profit plus trade spending less ABCs)

per dollar of inventory tied up on the shelf

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Shelf Performance

High Turns Translates to Positive Cash Flow– Great balance in low day of supply and high turns to drive

productivity (a product can’t make money just sitting on the shelf)

Days of Supply Average Turns per Year

Source: Willard Bishop 2009 Grocery SuperStudy™

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Space Performance

Average Weekly Sales Dollars/Sq. Ft. Facing

Source: Willard Bishop 2009 Grocery SuperStudy™

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Average Weekly Profit Dollars/Sq. Ft. Facing

Space Performance

Source: Willard Bishop 2009 Grocery SuperStudy™

$32.04

$17.92$18.87

$34.68

$31.42 $30.98

$15.96

$4.21

$6.68

$37.89

$18.52

$21.02

$25.09

$7.20

$21.25

$24.65

Fluid Milk Cheese RefrigeratedJuice

Yogurt Eggs Margarine-Butter

Cultured RefrigeratedBaking

Adjusted Gross Profit per SFF Weekly True Profit per SFF

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Profit Contribution Relative to Space and Sales

Space Performance

Source: Willard Bishop 2009 Grocery SuperStudy™

20%

14%16%

7% 7%

5%

7%

32%

21%

11% 11%

8%7%

5%4%

27%

6%

4%

11%9%

6%

3%

21%

33%

Fluid Milk Cheese RefrigeratedJuice

Yogurt Eggs Margarine-Butter

Cultured RefrigeratedBaking

Share of SFF Share of Sales Share of TP

Eggs represent 7% of Dairy

space but 11% of True Profits!

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High True Profit per Unit Sold

Per Unit Performance

True Profit per Unit Weekly Movement

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The incredible edible egg™

Summary of Egg Insights– Strong Sales and Trends– Versatile and Healthy are Core Consumer Benefits– Extremely Profitable; Fast Turns; Space that Performs