Confidential & Proprietary Copyright © 2010 The Nielsen Company U.S. Buying Trends July 26, 2010 Todd Hale SVP, Consumer & Shopper Insights Version 8

Confidential & Proprietary • Copyright © 2010 The Nielsen Company

U.S. Buying Trends

July 26, 2010

Todd Hale SVP, Consumer & Shopper Insights

Version 8

Confidential & ProprietaryCopyright © 2010 The Nielsen Company

April 18, 2023 Page 2U.S. Buying Trends

Buying Trends



Edible Departments Driving Growth; Less Growth in Fresh Meat & Dairy (Where Prices Have Been Cut)

LatestLatest

TotalTotal DairyDairyFreshMeat

FreshMeat

DeliDeliFreshProduce

FreshProduce

AlcoBevAlcoBev

DryGrocery

DryGrocery

PkgdMeatPkgdMeat

HBAHBA NonFoodNonFood

GeneralMerch

GeneralMerch

Source: Scantrack®, a service of The Nielsen Company; (U.S. FDM w/ Walmart) 52 weeks ending 06/12/2010 (versus prior year); UPC-coded

FrozenFrozen



LatestLatest

TotalTotal DairyDairyFreshMeat

FreshMeat

DeliDeliFreshProduce

FreshProduce

AlcoBevAlcoBev

DryGrocery

DryGrocery

PkgdMeatPkgdMeat

HBAHBANonFoodNonFood

GeneralMerch

GeneralMerch

Source: Scantrack®, a service of The Nielsen Company; (U.S. FDM w/ Walmart) 52 weeks ending 06/12/2010 (versus prior year); UPC-coded

FrozenFrozen

Non-Edibles Leading Unit Decline

Economy driving consumers to make

trade-offs or buy less

Economy driving consumers to make

trade-offs or buy less



Softness in Recent Quarter Driven by Price Cuts

LatestLatest

TotalTotal

DairyDairy

FreshMeat

FreshMeat

DeliDeli

FreshProduce

FreshProduce

AlcoBevAlcoBev

DryGrocery

DryGrocery

PkgdMeatPkgdMeat

HBAHBANonFoodNonFood

GeneralMerch

GeneralMerch

Source: Scantrack®, a service of The Nielsen Company; (U.S. FDM w/ Walmart) 13 & 52 weeks ending 06/12/2010 (versus prior year); UPC-coded

FrozenFrozen



Source: Company websites

Price Wars in Chicago



Weekly Value E-mails & Continuity Value Promotion from Dominick’s

Source: Dominick’s customer email advertisements; Jewel-Osco



Aggressively Promoting “Unbeatable Prices”; Carry 25,000 Items at Less Than $1

Source: Walmart sale circular, January 3 - January 9, 2010



Value Price Program

Source: Katy Batdorff | The Grand Rapids Press | New signs at a Spartan-owned Family Fare in Kentwood highlight the store's sale prices



Food Lion Launches Low Price Heritage Campaign

Source: Food Lion



A&P Lowering Prices Too



Kroger: “Low Prices Plus More”

Source: Kroger



Sweetbay Going Public w/Price Comparisons

Source: http://www.takebackyourlist.com/



A Caution for Retailers on Price Rollbacks

•Be careful what you ask for!

•Price rollbacks are market-wide:–No competitive advantage for individual retailers so no inherent traffic gains

•Nielsen research shows that price rollbacks reduce category dollars:–Categories are far less price-sensitive than brands–Category volume will increase slightly, but not as much as price goes down – so dollar sales go down



Consumer Packaged Goods Prices Have Fallen & Units on Promotion Have Grown

% Change Unit Prices

-2

0

2

4

6

All Departments

% Change Feature and/or Display Unit Sales

-8-4048

12

10/04/08 11/01/08 11/29/08 12/27/08 01/24/09 02/21/09 03/21/0904/18/0905/16/09 06/13/09 07/11/09 08/08/09 09/05/0910/03/09 10/31/09 11/28/0912/26/0901/23/1002/20/1003/20/1004/17/1005/15/1006/12/10

Source: Scantrack®, a service of The Nielsen Company; (U.S. FDM w/ Walmart) 4 week periods (versus prior year); UPC-coded



-10

-5

0

5

10

15

20

Category % Unit Price Change

48 categories w/decrease up to 9.1%

2 categories w/increase 17.7– 18.4%

4 category w/increase 10.6–12.4%

58 categories w/increase 0–4.9%

Most Category Prices Up Marginally or Falling in Latest Quarter

Source: Scantrack®, a service of The Nielsen Company; (FDM w/ Walmart), 13-weeks ending 06/12/2010 (versus prior year) – 117 major category groupings

5 categories w/increase 5.1–7.7%



What a Difference From Year Ago: 41% of Categories w/Price Cuts Versus 18% 2009

% of Categories w/Unit Price Change of:

4

48

50

18

41

2238

24

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

-0.1% to -9.1%

0% to 4.9%

5% to 9.9%

10% to 14.9%

15% +

06/13/2009 06/12/2010

13-week period endingSource: Scantrack®, a service of The Nielsen Company; (FDM w/ Walmart) – 117 major category groupings



-25

-20

-15

-10

-5

0

5

Seasonal Gen Merchandise

Baby Food

Seafood-Canned

Diet Aids

Candles/Incense & Acces

Juices Drinks-Shelf Stbl

Dough Products-Refrig

Frozen Novelties

Flour

Light Bulbs Telephone

Shortening/Oil

Vegetables & Grains-Dry

Pet Food

Pasta

Ice Cream

Cereal

Only One of the Categories w/Biggest Unit Price Cuts Grew in Dollar Sales

Source: Scantrack®, a service of The Nielsen Company; (FDM w/ Walmart), 13 weeks ending 06/12/2010 (versus prior year) – 117 major category groupings

% Unit Price Change % Change in $ Sales



Weak Total Store Performance – Price Cuts & Heightened Promotions Not Working

% Change Dollar Sales

-2

0

2

4

6

% Change Unit Sales

-5

0

5

10/04/08 11/01/08 11/29/08 12/27/08 01/24/09 02/21/09 03/21/0904/18/0905/16/09 06/13/09 07/11/09 08/08/09 09/05/0910/03/09 10/31/09 11/28/0912/26/0901/23/1002/20/1003/20/1004/17/1005/15/1006/12/10

All Departments

Or would situation be worse without

value efforts?


Avg U Price Chg, 13 w/e 06/12/10:

Positive: 67

Neutral: 2 Negative: 48 (categories)



Percent Change in Unit Prices

-15

-10

-5

0

5

10

09/13/08 12/13/08 03/14/09 06/13/09 09/12/09 12/12/09 03/13/10 06/12/10

13-week period ending

Total All Depts Alcoholic Bevs Dairy Deli

Dry Grocery Fresh Meat Fresh Produce Frozen Foods

General Merch HBA Non-Food Grocery Pkgd Meat

Lower Prices Versus the End of 2008, w/Some Increases in Recent Quarters

Source: Scantrack®, a service of The Nielsen Company; (U.S. FDM w/ Walmart); versus prior year




-3

0

3

6

9

12

% Change Unit Sales

-8-6-4-20246

10/04/08 11/01/08 11/29/08 12/27/08 01/24/09 02/21/09 03/21/0904/18/0905/16/09 06/13/09 07/11/09 08/08/09 09/05/0910/03/09 10/31/09 11/28/0912/26/0901/23/1002/20/1003/20/1004/17/1005/15/1006/12/10

Dry Grocery

Similar Trend for Dry Grocery DepartmentAvg U Price Chg, 13 w/e 06/12/10:

Positive: 12 Neutral: 1 Negative: 27 (categories)





-4

0

4

8

% Change Unit Sales

-4

-2

0

2

4

10/04/08 11/01/08 11/29/08 12/27/08 01/24/09 02/21/09 03/21/0904/18/0905/16/09 06/13/09 07/11/09 08/08/09 09/05/0910/03/09 10/31/09 11/28/0912/26/0901/23/1002/20/1003/20/1004/17/1005/15/1006/12/10

Frozen

Frozen Department Was on Stronger Trend







-10-8-6-4-2024

% Change Unit Sales

-3

0

3

6

9

10/04/08 11/01/08 11/29/08 12/27/08 01/24/09 02/21/09 03/21/0904/18/0905/16/09 06/13/09 07/11/09 08/08/09 09/05/0910/03/09 10/31/09 11/28/0912/26/0901/23/1002/20/1003/20/1004/17/1005/15/1006/12/10

Dairy

Prices Have Risen & Are Generating Better Trend on Dairy Dollar Sales







-2

0

2

4

6

8

% Change Unit Sales

-2

0

2

4

6

10/04/08 11/01/08 11/29/08 12/27/08 01/24/09 02/21/09 03/21/0904/18/0905/16/09 06/13/09 07/11/09 08/08/09 09/05/0910/03/09 10/31/09 11/28/0912/26/0901/23/1002/20/1003/20/1004/17/1005/15/1006/12/10

Deli

Deli Department Holding Up Better Than Most







-2

2

6

10

% Change Unit Sales

-202468

10/04/08 11/01/08 11/29/08 12/27/08 01/24/09 02/21/09 03/21/0904/18/0905/16/09 06/13/09 07/11/09 08/08/09 09/05/0910/03/09 10/31/09 11/28/0912/26/0901/23/1002/20/1003/20/1004/17/1005/15/1006/12/10

Packaged Meat Growth Stalled in Recent Periods

Packaged Meat Avg U Price Chg, 13 w/e 06/12/10:






-9-5

-137

1115

% Change Unit Sales

-4

0

4

8

12

10/04/08 11/01/08 11/29/08 12/27/08 01/24/09 02/21/09 03/21/0904/18/0905/16/09 06/13/09 07/11/09 08/08/09 09/05/0910/03/09 10/31/09 11/28/0912/26/0901/23/1002/20/1003/20/1004/17/1005/15/1006/12/10

Lower Prices Not Bolstering Fresh Meat Dollar or Unit Sales

Fresh Meat Avg U Price Chg, 13 w/e 06/12/10:






-2

0

2

4

6

8

% Change Unit Sales

-4

0

4

8

12

10/04/08 11/01/08 11/29/08 12/27/08 01/24/09 02/21/09 03/21/0904/18/0905/16/09 06/13/09 07/11/09 08/08/09 09/05/0910/03/09 10/31/09 11/28/0912/26/0901/23/1002/20/1003/20/1004/17/1005/15/1006/12/10

Fresh Produce

Fresh Produce Sales Improving Avg U Price Chg, 13 w/e 06/12/10:





% Change Unit Sales

-6

-4

-2

0

2

10/04/08 11/01/08 11/29/08 12/27/08 01/24/09 02/21/09 03/21/0904/18/0905/16/09 06/13/09 07/11/09 08/08/09 09/05/0910/03/09 10/31/09 11/28/0912/26/0901/23/1002/20/1003/20/1004/17/1005/15/1006/12/10

HBA

Continued Weakness in Health & Beauty


-2

-1

0

1

2







-2

0

2

4

6

8

% Change Unit Sales

-8

-6

-4

-2

0

2

10/04/08 11/01/08 11/29/08 12/27/08 01/24/09 02/21/09 03/21/0904/18/0905/16/09 06/13/09 07/11/09 08/08/09 09/05/0910/03/09 10/31/09 11/28/0912/26/0901/23/1002/20/1003/20/1004/17/1005/15/1006/12/10

Non-Food Grocery

Continued Weakness in Non-FoodAvg U Price Chg, 13 w/e 06/12/10:






-12

-8

-4

0

4

% Change Unit Sales

-15

-10

-5

0

10/04/08 11/01/08 11/29/08 12/27/08 01/24/09 02/21/09 03/21/0904/18/0905/16/09 06/13/09 07/11/09 08/08/09 09/05/0910/03/09 10/31/09 11/28/0912/26/0901/23/1002/20/1003/20/1004/17/1005/15/1006/12/10

General Merchandise

Continued Weakness in Non-Edibles, with General Merchandise Suffering the Most







0

3

6

9

% Change Unit Sales

-2

0

2

4

6

10/04/08 11/01/08 11/29/08 12/27/08 01/24/09 02/21/09 03/21/0904/18/0905/16/09 06/13/09 07/11/09 08/08/09 09/05/0910/03/09 10/31/09 11/28/0912/26/0901/23/1002/20/1003/20/1004/17/1005/15/1006/12/10

Alcoholic Beverages

The Shining Star of DepartmentsAvg U Price Chg, 13 w/e 06/12/10:





Same-Store-Sales Trends

-8

-6

-4

-2

0

2

4

6

1 2 3 4 5 6

Last Six Reported Quarters

KrogerSam's ClubWalmartSafewaySuperValu

As Prices Fall, So Have Same-Store Sales Trends for These Retailers

Source: Company Press Releases



Unit Sales Growing Slower or Declining Faster (in Recent Quarter) in Most Dept’s

LatestLatest

TotalTotal

DairyDairy

FreshMeat

FreshMeat

DeliDeli

FreshProduce

FreshProduce

AlcoBevAlcoBev

DryGrocery

DryGrocery

FrozenFrozen

PkgdMeatPkgdMeat

HBAHBA

NonFoodNonFood

GeneralMerch

GeneralMerch

Source: Scantrack®, a service of The Nielsen Company; (U.S. FDM w/ Walmart) 13 & 52 weeks ending 06/12/2010 (versus prior year); UPC-coded



Inflationary Pressures Drove Stronger Growth Last Year

52-Weeks Ending June 13, 2009 % 52-Weeks Ending June 12, 2010 %

Canning/Freezing Supplies 26.1 Canning/Freezing Supplies 30.1

Vegetables & Grains-Dry 24.8 Tobacco & Accessories 9.1

Flour 22.6 Sugar/Sugar Substitutes 8.1

Pasta 19.7 Vitamins 7.7

Seasonal Gen Merchandise 14.3 Nuts 6.3

Shortening/Oil 13.4 Snacks/Spreads/Dip-Dairy 6.2

Butter & Margarine 11.4 Yogurt 6.2

Baking Mixes 11.1 Vegetables-Canned 5.5

Vegetables-Canned 11.1 Wine 5.3

Pet Food 11.0 Pizza/Snacks-Frozen 5.1

Top 10 Fastest Growing Categories (Dollar %—Change vs YAGO)

Source: Scantrack®, a service of The Nielsen Company; (U.S. FDM w/ Walmart) – *minimum $100 million in sales



This Year it Is Less About Food Basics

52-Weeks Ending June 13, 2009 % 52-Weeks Ending June 12, 2010 %

Canning/Freezing Supplies 15.2 Frozen Novelties 9.2

Combo Pack 8.1 Canning/Freezing Supplies 8.2

Wine 6.4 Nuts 7.2

Fresh Meat 6.0 Fragrances - Women 6.5

Prepared Foods-Dry Mixes 5.2 Seafood-Canned 6.2

Vitamins 4.9 Vitamins 6.1

Pasta 4.3 Yogurt 5.6

Baking Mixes 3.7 Juices & Drinks-Refrig 5.4

Frozen Novelties 3.4 Pizza/Snacks-Frozen 4.8

Juices & Drinks-Refrig 2.7 Fresh Produce 4.8

Top 10 Fastest Growing Categories (Unit %-Change vs YAGO)

Source: Scantrack®, a service of The Nielsen Company; (U.S. FDM w/ Walmart) – *minimum $100 million in sales



Hy-Vee “Get Growing”

Source: Hy-Vee



Store Brand $ Share

14.0

14.5

15.0

15.5

16.0

16.5

17.0

17.5

18.0

06/16/07 09/08/07 12/01/07 02/23/08 05/17/08 08/09/08 11/01/08 01/24/09 04/18/09 07/11/09 10/03/09 12/26/09 03/20/10 06/12/10

Store Brand $ Share Growth Began in Mid-2007; Leveled Off, But Still Growing

Source: Scantrack®, a service of The Nielsen Company; (U.S. FDM w/ Walmart) – 4-week increments

Initially Led By Rising Commodity Prices

Still Posting Share Gains

+1.9

Share point Gain from 2007



Store Brand $ Share

36.5

37.0

37.5

38.0

38.5

39.0

39.5

40.0

40.5

41.0

41.5

06/16/07 09/08/07 12/01/07 02/23/08 05/17/08 08/09/08 11/01/08 01/24/09 04/18/09 07/11/09 10/03/09 12/26/09 03/20/10 06/12/10

Dairy

Dairy Department, Where Price Cuts Were Deep, Off From 2008 & 2009 Highs

+ 0.1





Store Brand $ Share

0.0

5.0

10.0

15.0

20.0

25.0

30.0

06/16/07 09/08/07 12/01/07 02/23/08 05/17/08 08/09/08 11/01/08 01/24/09 04/18/09 07/11/09 10/03/09 12/26/09 03/20/10 06/12/10

Deli Frozen Foods Fresh Meat Fresh Produce Dry Grocery Packaged Meat

Long-Term Store Brand $ Share Growth in Other Edible Departments

+ 3.7

+ 2.7

+ 4.0

+ 5.4

+ 1.5

+ 0.6





Store Brand $ Share

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

06/16/07 09/08/07 12/01/07 02/23/08 05/17/08 08/09/08 11/01/08 01/24/09 04/18/09 07/11/09 10/03/09 12/26/09 03/10/10 06/12/10

Non-Food Grocery HBA General Merch

Solid Store Brand $ Share Growth in Non-Food and Health & Beauty Department

+ 1.8

+ 3.3

+ 1.6





Store Brand Unit Share Growth Continues, But Softness in Latest Three Periods

Still Posting Share Gains

Real Shifting Gains From

Brands

+ 1.7



Store Brand Unit Share

18.0

18.5

19.0

19.5

20.0

20.5

21.0

21.5

22.0

22.5

23.0

06/16/07 09/08/07 12/01/07 02/23/08 05/17/08 08/09/08 11/01/08 01/24/09 04/18/09 07/11/09 10/03/09 12/26/09 03/20/10 06/12/10




35.0

36.0

37.0

38.0

39.0

40.0

41.0

42.0

06/16/07 09/08/07 12/01/07 02/23/08 05/17/08 08/09/08 11/01/08 01/24/09 04/18/09 07/11/09 10/03/09 12/26/09 03/20/10 06/12/10

Dairy

Dairy Dragging Down Store Brand Unit Share, But Still Growing Long-Term

+ 1.4






0.0

5.0

10.0

15.0

20.0

25.0

06/16/07 09/08/07 12/01/07 02/23/08 05/17/08 08/09/08 11/01/08 01/24/09 04/18/09 07/11/09 10/03/09 12/26/09 03/20/10 06/12/10

Frozen Foods Dry Grocery Deli Fresh Meat Fresh Produce Packaged Meat

Store Brand Growth in Other Edible Departments, But Slippage in Latest Periods


+ 2.3

+ 2.5

+ 1.1

+ 2.7

+ 4.6

+ 0.3





0.0

5.0

10.0

15.0

20.0

25.0

06/16/07 09/08/07 12/01/07 02/23/08 05/17/08 08/09/08 11/01/08 01/24/09 04/18/09 07/11/09 10/03/09 12/26/09 03/10/10 06/12/10

Non-Food Grocery HBA General Merch

Gradual Store Brand Unit Share Growth in Non-Edibles

+ 2.3

+ 2.9

+ 2.2





% of $ Sales (FDM w/WM)

38.8

26.6

21.3

17.5 17.2 15.9 14.9 14.6

0.88.6

13.7

Da

iry

De

li

Fro

zen

Fo

od

s

Fre

sh

Me

at

Fre

sh

Pro

du

ce

Dry

Gro

ce

ry

HB

A

No

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oo

dG

roc

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Pa

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ag

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Me

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Ge

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Me

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Alc

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oli

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ev

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Retailer Brand $ Share Varies by Department

17.2% AVG ( + 0.3 pts)

Greater development in food & beverage; share growth in all departments, but Dairy

(-1.1 +1.0 +0.6 +1.9 +1.9 +0.3 +1.1 +0.6 +0.7 +0.6 +0.1)

Source: Scantrack®, a service of The Nielsen Company; (U.S. FDM w/ Walmart) 52 weeks ending 06/12/2010 (versus prior year)



% of Unit Sales (FDM w/WM)

40.1

22.2 21.920.0

18.9 17.5 16.7 16.3

0.9

14.114.8

Da

iry

No

n-F

oo

dG

roc

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Fro

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Fo

od

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Dry

Gro

ce

ry

De

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HB

A

Fre

sh

Me

at

Fre

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Pro

du

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Ge

ne

ral

Me

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Pa

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ag

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Me

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Alc

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Retailer Brand Unit Share Varies by Department

21.9% AVG ( + 0.4 pts)

Greater development in food & beverage; share growth in all departments but Dairy

(-0.2 +1.0 +0.5 +0.1 +1.0 +0.9 +1.6 +2.0 +0.8 +0.6 +0.1)

Source: Scantrack®, a service of The Nielsen Company; (U.S. FDM w/ Walmart) 52 weeks ending 06/12/2010 (versus prior year)



Stronger $ Growth from Store Brands & Overlap in Just Three Mega-Categories

Branded* % Store Brands* %

Canning/Freezing Supplies 30.0 Fragrances - Women 77.6

Tobacco & Accessories 9.2 Canning/Freezing Supplies 69.5

Snacks/Spreads/Dip-Dairy 9.0 Laundry Supplies 26.5

Nuts 7.7 Fruit-Dried 23.2

Yogurt 7.2 Wine 22.0

Vitamins 6.2 Cookware 21.3

Wine 5.1 Skin Care Preparations 20.1

Insecticides Repellants 5.0 Combo Pack 20.0

Candy 4.8 Detergents 19.7

Frozen Novelties 4.7 Personal Soap/Bath Needs 18.8

Pizza/Snacks-Frozen 4.4 Cosmetics 17.8

Vegetables-Canned 4.0 Diet Aids 16.8

Baking Supplies 3.8 Soft Drinks-Non Carb 15.2

Tea 3.6 Tea 14.8

Pickles/Olives/Relishes 3.5 Gum 14.5

Categories on both lists

Non-Edible Categories

Top 15 Fastest Growing Categories

(% $ Change)

Edibles no longer

dominate store brand

list

Source: Scantrack®, a service of The Nielsen Company; (U.S. FDM w/ Walmart) 52 wks ending 06/12/2010 (versus prior year) – *minimum $100 million in sales



Stronger Unit Growth from Store Brands & Duplication in Just Two Categories


Frozen Novelties 9.6 Fragrances - Women 69.7

Snacks/Spreads/Dip-Dairy 8.6 Canning/Freezing Supplies 58.5

Seafood-Canned 8.4 Combo Pack 21.8

Canning/Freezing Supplies 8.1 Fruit-Dried 19.6

Nuts 8.1 Fresh Produce 19.2

Yogurt 6.8 Cookware 17.2

Vitamins 6.0 Wine 17.0

Juices & Drinks-Refrig 5.5 Personal Soap/Bath Needs 15.8

Shortening/Oil 4.8 Tea 15.3

Pizza/Snacks-Frozen 4.8 Tobacco & Accessories 14.9

Wine 4.5 Salad Dressings/Mayo/Top 14.7

Pkg'd Milks & Modifiers 4.5 Fresh Meat 13.7

Bread & Baked Goods 3.7 Cosmetics 12.7

Spices/Seasoning/Extract 2.8 Beer 12.3

Condiments/Gravies/Sauce 2.8 Skin Care Preparations 12.0

Top 15 Fastest Growing Categories

(% Unit Change)

Edibles less dominant on

store brand list; is duplication

from similar or different

consumers?Source: Scantrack®, a service of The Nielsen Company; (U.S. FDM w/ Walmart) 52 wks ending 06/12/2010 (versus prior year) – *minimum $100 million in sales





Non-Edibles Top the List of Categories Driving Bigger Unit Declines


Film & Cameras -35.7 Computer/Electronic Prods -84.0

Ethnic HABA -13.9 Deodorant -39.9

Seasonal Gen Merchandise -13.1 Film & Cameras -26.6

Juices/Drinks-Frozen -11.8 Insecticides Repellants -23.1

Diet Aids -11.5 Light Bulbs Telephone -22.1

Computer/Electronic Prods -10.9 Snacks/Spreads/Dip-Dairy -20.9

Office/School Supplies -10.8 Gum -20.8

Battery/Flashlite/Charge -10.2 Housewares Appliances -13.9

Pain Remedies -9.1 Men's Toiletries -12.7

Kitchen Gadgets -8.6 Seasonal Gen Merchandise -11.4

Baby Needs -8.5 Lawn and Garden -10.9

Fresheners/Deodorizers -8.4 Battery/Flashlite/Charge -10.6

Pet Care -8.2 Hair Care -10.5

Magazines Selected Title -7.8 Disposable Diapers -10.1

Feminine Hygiene -7.8 Juices/Drinks-Frozen -9.6

Top 15 Declining Categories

(% Unit Change)


Faster declines for store brands





Good $ Growth For These Non-Edible Categories, But Considerable Duplication



Tobacco & Accessories 9.2 Canning/Freezing Supplies 69.5

Vitamins 6.2 Laundry Supplies 26.5

Insecticides Repellants 5.0 Cookware 21.3

Family Planning 3.5 Skin Care Preparations 20.1

Personal Soap/Bath Needs 3.2 Combo Pack 20.0

Cosmetics 2.7 Detergents 19.7

Lawn and Garden 2.5 Personal Soap/Bath Needs 18.8

Shaving Needs 0.4 Cosmetics 17.8

Grooming Aids 0.4 Diet Aids 16.8

Motor/Vehicle Care/Acc -0.1 Vitamins 12.0

Cookware -0.3 Pain Remedies 11.8

Deodorant -0.4 Kitchen Gadgets 10.8

Medications/Remedies -0.5 Buckets/Bins/Bath Acc 10.1

Men's Toiletries -0.6 Lawn and Garden 8.9


Top 15 Fastest Growing Non-Edible Categories

(% $ Change)

Is duplication driven by similar or different

consumers?





Weaker Overall Unit Growth for Non-Edibles, But Store Brands Gaining Traction



Vitamins 6.0 Canning/Freezing Supplies 58.5

Personal Soap/Bath Needs 2.2 Combo Pack 21.8

Family Planning 1.1 Cookware 17.2

Buckets/Bins/Bath Acc 0.0 Personal Soap/Bath Needs 15.8

Cookware -0.2 Tobacco & Accessories 14.9

Cosmetics -0.4 Cosmetics 12.7

Disposable Diapers -0.5 Skin Care Preparations 12.0

Tobacco & Accessories -0.8 Detergents 10.4

Sanitary Protection -0.9 Pain Remedies 9.1

Insecticides Repellants -1.7 Kitchen Gadgets 8.4

Detergents -2.0 Vitamins 6.3

Fragrances - Women -2.1 Diet Aids 4.8

Shaving Needs -2.4 Feminine Hygiene 4.7

Motor/Vehicle Care/Acc -2.7 First Aid 3.8

Top 15 Fastest Growing Non-Edible Categories (% Unit

Change)

Store brands showing

resurgence






29 Large Store Brand Share Categories

Source: Scantrack®, a service of The Nielsen Company; (U.S. FDM w/ Walmart) 52 weeks ending 06/12/2010 – 117 major category groupings

14 categories w/40 + share

15 categories w/30 to 40 share

18 categories w/20 to 30 share 27 categories w/share

below 10

43 categories w/10 to 20 share

21.9% Total Store

0

10

20

30

40

50

60

70

Store Brand Category Unit Shares



Store Brand Share Strength in Commodity Categories or Those with Little Differentiation

1st Tier: 64.1 – 41.4 share 2nd Tier: 40.7 – 30.8 share 3rd Tier: 30.6 – 22.1 share

Milk Juices/Drinks-Frozen Ice Cream

Eggs-Fresh Pain Remedies Butter & Margarine

Sugar/Sugar Substitutes Dessert/Fruit/Tops-Froz Pasta

First Aid Pickles/Olives/Relishes Ice

Wrapping Materials Bags Paper Products Nuts

Vegetables-Canned Table Syrups/Molasses Dough Products-Refrig

Vegetables & Grains-Dry Bread & Baked Goods Medications/Remedies

Fruit-Canned Charcoal/Logs/Accessries Flour

Cot Chs/Sour Cream/Topping Bottled Water Laundry Supplies

Unprep Meat/Seafood-Frz Kitchen Gadgets Pkg'd Milks & Modifiers

Cheese Vitamins Disposable Diapers

Shortening/Oil Jams/Jellies/Spreads Candles/Incense & Acces

Vegetables-Frozen Cough and Cold Remedies Pet Care


Store Brand Unit Share Rankings Food & Beverage



Store Brand Share Strength in Commodity Categories or Those with Little Differentiation

4th Tier: 21.8 – 18.6 share 5th Tier: 18.3 – 16.3 share 6th Tier: 16.0 – 13.0 share

Fruit-Dried Salad Dressings/Mayo/Top Buckets/Bins/Bath Acc

Spices/Seasoning/Extract Fragrances - Women Pet Food

Breakfast Foods-Frozen Snacks/Spreads/Dip-Dairy Prepared Foods-Dry Mixes

Seafood-Canned Yogurt Office/School Supplies

Baked Goods-Frozen Baking Supplies Cookware

Feminine Hygiene Light Bulbs Telephone Soft Drinks-Non Carb

Film & Cameras Combo Pack Crackers

Condiments/Gravies/Sauce Fresh Meat Packaged Meat

Cookies/Ice Cream Cones Motor/Vehicle Care/Acc Juices & Drinks-Refrig

Baby Needs Cereal Prepared Foods-Rdy Serve

Desserts/Gels/Syrups Lawn and Garden Household Supplies

Dressing/Salad/Pr Fd-Deli Sanitary Protection Grooming Aids

Frozen Novelties Fresh Produce Battery/Flashlight/Charge





Categories with Strong Marketing & High Level of Innovation at Bottom of Share Groupings

7th Tier: 12.9 – 9.0 share 8th Tier: 8.4 – 3.6 share 9th Tier: 3.0 – 0 share

Family Planning Housewares Appliances Baby Food

Carbonated Beverages Detergents Hair Care

Personal Soap/Bath Needs Prepared Foods-Frozen Fresheners/Deodorizers

Soup Shaving Needs Wine

Juices Drinks-Shelf Stbl Baking Mixes Tobacco & Accessories

Breakfast Foods Diet Aids Gum

Coffee Candy Canning/Freezing Supplies

Tea Puddings/Desserts-Dairy Beer

Skin Care Preparations Insecticides Repellants Computer/Electronic Prods

Oral Hygiene Cosmetics Deodorant

Snacks Liquor Ethnic HABA

Pizza/Snacks-Frozen Men's Toiletries Magazines Selected Title

Household Cleaners Seasonal Gen Merchandise Coolers





Store Brands Now Growing Share from Lead Brands as well as Smaller Brands

All Category Unit Share Trends

25.9% 25.6% 25.2% 25.0%

20.1% 21.1% 22.4% 22.3%

54.0% 53.3% 52.7%52.4%

0%10%20%30%40%50%60%70%80%90%

100%

CY 2007 CY 2008 CY 2009 YTD Thru6/12/10

Lead Brands* Store Brands Other Brands

* Lead brand could be # 1 or 2 depending on store brand share

Change versus 2007

- 1.3 Pts

+ 2.2

- 0.9

Source: Scantrack, a service of The Nielsen Company; (U.S. FDM ex/ Walmart) – based on 50,000 top-selling brands



Stronger Store Brand Share in Markets w/High Retailer Concentration

0%

5%

10%

15%

20%

25%

30%

OA

HU

NE

W Y

OR

KM

ILW

AU

KE

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KL

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ES

MO

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SC

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EW

OR

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AN

SM

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PO

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GH

AM

HA

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RD

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WS

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ISP

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AD

EL

PH

IAM

IAM

IP

ITT

SB

UR

GH

BO

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ON

SA

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NC

ISC

OC

LE

VE

LA

ND

KA

NS

AS

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YO

MA

HA

HO

US

TO

NW

AS

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GT

ON

DC

WE

ST

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XA

SS

AC

RA

ME

NT

OC

HA

RL

OT

TE

TA

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AR

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RM

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SD

AL

LA

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OS

AN

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SR

ICH

MO

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AT

TL

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LB

AN

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Total U.S. Grocery18.7%

Store Brand Dollar Share of Store

Lower presence of dominant retailers

Lower presence of dominant retailers

Higher presence of dominant retailers:

(Kroger, HEB, Wegmans)

Source: Scantrack®, a service of The Nielsen Company; (U.S. Grocery Channel) 52 weeks ending 03/20/2010



Consumer Perception of Private Label Quality is Strong; Value for Money Dropping as Higher Quality Now Seen

71 7463 65 67

58

3337

20 1811 11

Store brandgood

alternativeto namebrands

Quality ofSB is at leastas good as

namebrands

SB usuallyare good

value for themoney

Some SBare higher

quality thanname brand

SB forpeople on

tightbudgets &can’t afford

the best

Don’t feelcomfortableserving SB

to my guests

2008 2009

Consumer panel survey on Retailer Brands:Quality & Price/Value

Consumer panel survey on Retailer Brands:Quality & Price/Value

% saying they Agree/

Strongly Agree:

% saying they Agree/

Strongly Agree:

Source: Homescan®, a service of The Nielsen Company PanelViews survey 2008 & 2009



45

43

36

30

27

Fewer Carry-Out/ HomeDelivery Meals

Use More Private Label

Use More BasicIngredients

Make Coffee at Home

Serve Desserts LessOften

Generational Gap in How Consumers Cope in Economic Downturn - Younger Using More Private Label

Due to Economic Downturn? % saying they would …

Due to Economic Downturn? % saying they would …

Greatest Gen

Boomers Gen X Millennials

32 45 50 50

35 41 48 50

35 37 36 35

33 31 27 26

25 28 25 26

Greatest Generation: born Prior to 1946; Boomers: 1946-1964, Gen X: 1965-1976, Millennials: 1977-1994Source: Homescan® 09/2009 survey, a service of The Nielsen Company

Total US HH



In departments & categories with extreme price gaps, the potential to enhance sales is significant

Do You Have Your Value Equation Right?

Source: Scantrack®, a service of The Nielsen Company; (U.S. FDM w/

Walmart); 4-weeks ending 06/16/2007 vs 4-weeks ending 06/12/2010

Health & Beauty

Health & Beauty

Read as: Frozen Foods department

store brand prices 25% lower than branded

Non- FoodNon- Food

Gen MerchGen

Merch DairyDairy DeliDeliDry

GroceryDry

GroceryFrozen Food

Frozen Food

-100%

0%

% Price Gap: Store Brand versus Brand

1 cent decrease in the price gap between Store Brand vs. Brand = $400MM annual sales



Kroger’s New "mirra" Beauty Care Brand

Source: Kroger.com



“Wegmans’ Special Blends Is a New Line of Private-label Frozen Mixed Vegetables”

Source: Wegmans



HEB Rolls Out Household Cleaning Tools with Sweepstakes Promotion

Source: http://www.heb.com



Supervalu Leverages Consumer Research to Roll Out New Baby Line

Source: SUPERVALU



Source: IGA

A New Look & Focus From IGA



Store Brand Food & Beverages From Duane Reade

Source: DuaneReade.com



7-Eleven Continues March into Private Label Territory

Source: 7-Eleven.com

“7-Eleven stores already has introduced approximately 225 private-label food and non-food products under the 7-Select brand, and another 40 new items are scheduled to be in stores before the end of the year.”



Photo: Associated Press

7-Eleven’s Store Brand Beer



…In With the New Target “up & up” Store Brand

Source: Company website



The Number One Reason Why Store Brands Will Have Continued Success

Source: Walmart national ad



Store Brand Growth – Linked to Downturn or Long-term Trend?

Don’t let price gaps get too large & drive declining category sales

Don’t de-list high penetration, high frequency or strong niche brands & drive shoppers to retailers who carry them

Do promote store brands with brands where there is limited shopper overlap to drive category sales

Do promote store brands along with non-competitive or complimentary branded offerings to build larger baskets

Do select credible suppliers & hold them to high standards

Retailer Do’s & Don’ts:



Manufacturer Do’s & Don’ts:

Store Brand Growth – Linked to Downturn or Long-term Trend?

Be current in branded versus store brand pricing analytics

Be proactive in assortment analytics to show why your brand assortment aligns well w/store brand assortment

Provide retail partners with analytics to show which of your branded offerings make good promotional partners

Take a collaborative approach to how you assess branded versus store brand risks & opportunities – retailer focus has never been greater

Explore options for using excess capacity for store brand production



Buying Trends

Summary



“Great Recession” Driving Fundamental Shifts in Consumer Buying

Back to basics & increased at-home consumption continue

Store brand success will continue

Risk for mid-tier brands as retailers make room for expanded store brand offerings & seek to eliminate clutter & simplify shopping experience

Manufacturers move store brand manufacturing or direct-to-consumer options

Can retailers make gains in categories with high marketing support and/or high levels of innovation?

Premium & discretionary brand segments and retailers need to innovate & work harder than ever to differentiate & give consumers a reason to buy

Confidential & Proprietary • Copyright © 2010 The Nielsen Company

Thank You

[email protected]

Documents

Confidential & Proprietary Copyright © 2010 The Nielsen Company U.S. Buying Trends July 26, 2010 Todd Hale SVP, Consumer & Shopper Insights Version 8