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Confidential & Proprietary Copyright 2008 The Nielsen Company

U.S. Retailing& Consumer Trends

Jeff Gregori

The Nielsen Company

October 23rd, 2008

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December 19, 2012 Confidential & ProprietaryCopyright 2008 The Nielsen Company

U.S. Retailing & ConsumerTrends

Page 2

Economic Outlook

U.S. Retail Trends

Key Consumer Trends Health & Wellness

Key Insights &Recommendations

Agenda

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Page 3

Overall Cost of Living Rising SharplyConsumers Can Not Keep Up With Necessities

Source: U.S. Department of Labor Statistics (Consumer Price Index; U.S. City Average); USDA, NAR, BLS

Fuel OilGallon

GasolineGallon

Breadpound

GroundBeefpound

Chickenpound

Eggsdozen

Milkhalf

gallon

48%

35%27%

16%10%13%

7% 3%

Wages

Housing

- 8%

12 Month Percentage Increase, Selected Items (March 2007 vs. March 2008)

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Page 4

Consumers Combining Trips, Eating Out Less, StayingHome, Cutting Spending @ Alarming Levels!

78% combining shopping trips & errands (+ 10 pts from YAGO),

52% eating out less (+ 14 pts),

51% staying home more often (+ 12 pts) &

63% of U.S. consumers are reducing spending (+ 18 pts)!

Nielsen Homescan Gas Impact Study

Saving Money in What & How they Buy & Where They ShopImpact higher gas prices had ondriving & spending habits? Check all

Jun/Jul05

Jun/Jul06

Jun07

Jun08

Buy less expensive grocery brands 17% 22% 19% 35%

Use more coupons 20% 24% 21% 32%

Shop more @ Supercenters 22% 26% 23% 28%

Buy Larger, Economy Size 10% 11% 10% 16%

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Page 5

So, Tough Times for Growth & How ImportantAreValue, Variety & Convenience to You?

How are youequipped to competeagainst Value, Variety or

Convenience? Are you providing Value,

Variety & Convenientsolutions to categoryconsumers & retail

shoppers? An integral part of these

themes is innovation

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Page 6

U.S. Retailing Trends

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Page 7

145,624

37,399

32,027

6,584

19,805

3,178

1,167

124,516

39,660

30,682

6,421

13,151

1,583

907

Convenience

Drug

Supermarkets

Mass Merch

Dollar Stores

Supercenters

Warehouse Clubs

2001

Mid-2008

Value & Convenience Winning AsEvidenced By Increased Store Count

U.S. Store counts

Supermarkets have not grown atthe rate of other retail channelsno wonder the channel has lost

shopping trips!

Source: Trade Dimensions & TDLinx, services of The Nielsen Company

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Page 9

99

81

81

64

68

51

41

3.8

100

95

86

59

51

50

45

3.6

Grocery

Mass Merch

Drug

Dollar

Supercenters*

Warehouse

Conv/Gas

Military2001Mid-2008

*Includes Kmart, Target & Wal-Mart Supercenters

Value Winning As Evidenced By ConsumerAcceptance

Benefits fromnew store

openings

% US household penetration

Source: Homescan, a service of The Nielsen Company** Note: Conv/Gas channel behaviors understated because of the highlevel of gasoline only buys & purchases of immediate consumables

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Page 10

59

26

15

14

14

13

11

20

72

20

24

15

15

11

10

24

Grocery

Supercenters*

Mass Merch

Drug

Conv/Gas

Dollar

Warehouse

Military 2001Mid-2008

Grocery & Mass tripscontinue to drop

*Includes Kmart, Target & Wal-Mart Supercenters

Value Channels Grabbing TripsTrips per household


-17%

-18%

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Page 11

Value Retailing Driving Price Compression

$98

$64

$49

$40

$23

$19

$14

$63

$82

$51

$39

$32

$19

$10

$11

$59

Warehouse

Supercenters*

Mass Merch

Grocery

Drug

Conv/Gas

Dollar

Military

2001

Mid-2008

*Includes Kmart, Target & Wal-Mart Supercenters**Source: Progressive Grocer

Average $ basket ringtotal expenditures

**


One StopShopping

A Key StrengthFor Military

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Page 12

Military Channel mostly competing for LargerStock Up Trips (>$64) very similar to Club

7

14

22

32

51

55

73

12

16

24

28

30

24

23

18

18

30

32

28

26

13

10

6

29

47

30

23

12

11

11

3

41

Warehouse Clubs

Supercenters

Mass Merch

Grocery

Drug

C-Stores

$ Stores

Military

Immediate Fill In Routine Stock-up

Total USNielsen Homescan52 weeks ending 7/1/2006

% of channel dollars by trip type

Immediate = $31 $125

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Page 13

0

20

40

60

80

100

%U.S.Hhld

sClub

Grocery

Mass

Drug

Supercenter

Dolla

r

Milit

ary

$100k +

$70 - $99.9k

$50 - $69.9k

$40 - $49.9k

$30 - $39.9k

$20 - $29.9k< $20k

Next to Club, no channel appeals more to higherincome households than the Military Channel

What can theMilitary Channel

learn from Clubretailers?

% sales from all shoppers

Source: Homescan, a service of The Nielsen CompanyTotal US52 weeks ending 6/28/2008

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Page 14

Value channel (Dollar, Mass & Club) growthcoming from ALL income segments!

-10

0

10

20

Dollar Stores Total Mass Grocery Club Drug

Low Income Mid-Income High Income

Source: MY 2008 Vs. MY 2007 Account Shopper Profiler

Low Income = < $20K, Mid Income $20K-$99.9K, High Income >$100K

$ % Chg V. Year Ago - By Income Group

Flat

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Page 15

Low income households unlikely to trade up,but high income households will trade down

7884

40 30

79

46

65

87

63

50

81

4147

78 7568

83

33

Dollar

Stores

Wal-Mart Target Club Drug C-Stores

Low Income Mid-Income High Income

Source: Mid-Year 2008 Homescan

Low Income = < $20K, Mid Income $20K-$99.9K, High Income >$100K

Penetration By Income Group

11 MillionHHs

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Page 16

Dollar Stores Expanding Assortment

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Page 17

Retailers How Are the Winners Winning?

Convenient Shopping Solutions

BAG & CHECKOUT ASYOU SHOP!

ANTICIPATE SHOPPERNEEDS

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Page 18

Marketside Wal-Marts Newest Banner

First 4 Locations Near Phoenix, AZ 7561 E. Baseline Road, Mesa 910 E. Elliott Road, Gilbert 950 N. McQueen Road, Chandler 838 W. Elliott Road, Tempe

15,000-20,000 Square Feet of Selling SpaceHalf the Size of a Neighborhood Market

This new banner allows Wal-Mart to attractupscale shoppers without the Wal-Mart

name or the Big Box image.

http://www.marketside.com

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Page 19

Retailers Performing Well In Tough Economy

Costco July sales rose 14%, same-store up 10% BJs July same-store sales up 16.7%, excluding gasoline,

same-store up 7% Dollar Tree posted 12.5% increase in sales during fiscal

2nd qtr, comp-store up 6.5% Kroger 1st qtr sales up 11.5%, identical supermarket

sales up 9.2% with fuel & 5.8% without Family Dollar July sales rose 7.2%, same-store up 4.6% Walgreen Co. July sales up 10.7%, same-store up 4.1%

Wal-Mart 2nd qtr sales up 10.1%, same-store up 4.5%

Source: Industry e-newsletters & company web sites

= Stock-up & SaveConsumer Motivation

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Page 20








= Value SeekingConsumer Motivation

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Page 21




2nd qtr, comp-store up 6.5% Kroger 1st qtrsales up 11.5%, identical supermarket




= Value & ConvenienceConsumer Motivation

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Page 22








= Value & 1-Stop ShopConsumer Motivation

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Page 23

Key Consumer Trends

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Page 24

Make them key component ofmessaging and/or understandhow to take advantage of

indulgent consumers

Improve reaction time to newdiets & eating trends

In-store health clinics growing Wal-Mart to add 400 by 2010

Short & Long-term Growth Can BeAccomplished With Consumer FocusHealth & Wellness opportunitiesare here to stay

GrainsVeggiesFruitsOils

DairyMeat/Beans

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Page 25

Many Health & Wellness Claims ShowStrong Growth vs. Year Ago

Health & 52-Week Chg VsWellness Claim Dollar Sales Year AgoNatural $21.8 Billion +11.4%Low Fat $14.9 Billion +3.9%Absence of Specific Fat $13.3 Billion +30.5%

(Trans Fat or Saturated Fat)

Reduced Calories $11.3 Billion +9.7%

Cholesterol Free $10.6 Billion +8.6%Fat Free $10.0 Billion +5.2%Reduced Fat $8.5 Billion +9.6%No Calories $5.8 Billion -0.6%Caffeine Free $5.5 Billion -2.2%Organic $4.7 Billion +22.5%

Multi-Grain $2.1 Billion +16.6%Antioxidants $1.9 Billion +15.8%Good Source of Fiber $1.6 Billion +1.8%

Source: Nielsen LabelTrends, Total U.S. FDMxWM, 52 Weeks Ending 9/6/08

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Page 26

12%

12%

6%

6%

23%

15%

32%

37%

24%

19%

73%

143%

Fat Presence

Natural

Calorie Presence

Preservative

Presence

Organic

Fiber Presence

% Chg. 4 Yrs. Ago

% Chg. YA

$4.7 Billion

$3.5 Billion

Organics Have Grown Considerably Over 4 Years, butSales Volume Small Compared to Other H&W Trends

$13.6 Billion

$17.3 Billion

$21.9 Billion

$46.8 Billion

52 Week Sales

Source: Nielsen Strategic Planner, 52 Weeks Ending 8/9/08

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Page 27

Recent Weeks Show Less Aggressive Organic Growth

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

4WkE

nd10/09

/04

4WkE

nd01/01

/05

4WkE

nd03/26

/05

4WkE

nd06/18

/05

4WkE

nd09/10

/05

4WkE

nd12/03

/05

4WkE

nd02/25

/06

4WkE

nd05/20

/06

4WkE

nd08/12

/06

4WkE

nd11/04

/06

4WkE

nd01/27

/07

4WkE

nd04/21

/07

4WkE

nd07/14

/07

4WkE

nd10/06

/07

4WkE

nd12/29

/07

4WkE

nd03/22

/08

4WkE

nd06/14

/08

4WkE

nd09/06

/08

% Chg. $ Sales

% Chg. Units

Source: Nielsen Strategic Planner

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Page 28

Organic % Chg. Organic Shr.Department Dollar Sales YA of Dept.Fresh Produce (UPC-coded) $869 Million +26% 6.3%

Dairy $1,475 Million +20% 3.5%

Fresh Meat (UPC-coded) $30 Million +23% 1.9%

Dry Grocery $1,836 Million +24% 1.3%Frozen Foods $339 Million +23% 1.1%

Deli (UPC-coded) $28 Million +27% 0.5%

Packaged Meat $37 Million +25% 0.4%

Alcoholic Beverages $24 Million +32% 0.1%

HBA $41 Million +27% 0.1%

Total Organics $4,680 Million +23% 1.3%

In which aisles are Organic products mostprevalent? UPC Fresh Produce & Dairy

Source: Nielsen Strategic Planner, 52 Weeks Ending 8/9/08

O i C i L Th 1% Sh f M

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Page 29

Organic Sales % Organic ShareCategory Dollar Sales Chg.YA of Category

Milk $1,018 Million +18% 7.5%Fresh Produce (UPC-coded) $869 Million +26% 6.3%Soft Drinks Non Carb $67 Million +4% 6.1%Yogurt $180 Million +21% 5.0%Baby Food $167 Million +23% 4.4%Eggs $142 Million +29% 4.1%Dessert/Fruit/Toppings Froz $40 Million +36% 3.6%

Soup $139 Million +17% 3.3%Dried Fruit $34 Million +46% 3.0%Jams/Jellies/Spreads $52 Million +45% 2.9%Tea $70 Million +28% 2.8%Cereal $185 Million +12% 2.5%Breakfast Foods $56 Million +60% 2.4%Flour $12 Million +37% 2.4%

Canned Vegetables $72 Million +36% 2.2%Total Organics $4,680 Million +23% 1.3%

Organics Comprise Less Than 1% Share for MostCategories

Source: Nielsen Strategic Planner, 52 Weeks Ending 8/9/08Nielsen tracks 76 categories with organic claim.

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Page 30

Big Names in OrganicsSome Manufacturers have created Organic Line Extensions

Source: Nielsen Strategic Planner: FDM 52 Weeks Ending 1/27/2007

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Page 31

Big Names in OrganicsSeveral Large Manufacturers Produce Organic Products

Under a Different Brand Names

Source: Organic News

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Page 32

Driven tohealth by

all means

Dedicated tohealththroughsmartnutrition andweightmanagement

High belief in thevalue of supplements

less concern withfood

Low beliefin the valueof healthycategories

16%FOOD

ACTIVES

19%FENCE

SITTERS

19%MAGIC

BULLETS

25%WELL

BEINGS

(% of U.S. general population adults)

17% EAT,DRINK & BE

MERRYS

Least concerned& knowledgeable

about health &healthy eating

Meet the Health &Wellness Segments:

Health & Wellness Nielsen &NMI Service Introduction

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Page 33

1823 22

14

2319 20

23

15

24

Well Beings Food Actives Magic Bullets Fence Sitters Eat Drink &

Be Merry

Total Military Shoppers Total Mkt Shoppers

23% of Military Shoppers are Food Actives

% Shoppers

Source: Homescan, a service of The Nielsen Company

93 117 98 95 95Shopper

Index

Military Shoppers most likely to be FOOD ACTIVES and

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Page 34

Military Shoppers most likely to be FOOD ACTIVES andEAT DRINK & BE MERRY type shoppers

WELLBEINGS

FOODACTIVES

MAGICBULLETS

FENCESITTERS

EAT DRINK &BE MERRYS

MILITARY 97 108 98 89 105

Whole Foods 241 35 162 45 23

Wegmans 134 127 71 88 88Costco 111 111 117 81 82

Sams Club 88 117 118 85 91

Safeway Grocery Corp 106 93 105 106 94

Target Banner 105 101 92 100 103

Wal-Mart Banner 84 93 94 110 115

Read as: Costco $ sales are 11% greater than industry among WELL BEINGS

Dollar Spend Index v. Avg HH

Source: Homescan, a service of The Nielsen CompanyTotal US52 week ending 09/06/2008

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Page 35

FOOD ACTIVES

FOOD ACTIVE 16%Health-Related

Eating healthy is vital, over three-fourths eatheart smart

Believe maintaining proper weight is key tohealthful living

Low use of natural and organic food

Most apt to count calories and use artificialsweeteners instead of sugar

Highest use of prescription drugs; lowestuse of alternative healthcare

(% of population)

Branding Influences

Most likely to choose products for which theyhave a coupon

Lower than average levels of LOHASenvironmental values

Dedicated to health throughhealthy eating, avoidingnegatives and adding thosewith nutritional benefits.

FOOD ACTIVES are drivenby a desire for balance ofexercise, nutrition, andweight management.


Health & Wellness Segments Show Different

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Page 36

Health & Wellness Segments Show DifferentCategory Preferences

WELLBEINGS

FOODACTIVES

MAGICBULLETS

FENCESITTERS

EAT DRINK &BE MERRYS

Yeast 159 129 69 155 27

Flour 130 100 108 91 78

Fresh Produce 120 111 108 91 77

Yogurt 119 112 111 84 80

Wine 129 125 113 78 66

Beer 91 95 90 107 114

Read as: Flour $ sales are 30% greater than average HH among WELL BEINGS

Source: Homescan, a service of The Nielsen CompanyTotal US52 week ending 09/06/2008 upc-coded products

Dollar Spend Index v. Avg HH

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Page 37

Summary & Closing Thoughts

K I i ht & R d ti

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Page 38

Key Insights & Recommendations

1. More than ever, shoppers of all economic means are seekingvalue

Combining shopping trips

Eating more meals at home & doing more at-home entertaining

Seeking the right mix of value, variety, & convenience

BUT AT ACCELERATED LEVELS

The Military Channel is more important than ever to itscustomers

More shoppers are taking advantage of the Military Channel asUPC product penetration has increased to 3.8% (4.4 MM) butshopping frequency is has eroded

How aggressive are we advertising The Military Channel Valueproposition to shoppers versus Mass, Dollar & Club stores?

K I i ht & R d ti

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Page 39

2. The Military Channel Health & Wellness strategy should consider thefollowing elements:

Key Assortment Drivers of Health & Wellness

o Natural, Preservatives, Fat and Calorie Presence Claims offer theMilitary Channel opportunity to build Health & Wellness equity with itscustomers more than Organics

o Potential Organic category entry points for the Military Channelincludes:

Primarily Center Store - Non-Carb Soft Drinks, Baby Food,Soup, Dried Fruit, Jams/Jellies, Tea, Cereal, Breakfast Foods& Canned Vegetables

Perimeter Areas Milk, Yogurt, Eggs

Organic Frozen can be a differentiation point for Military versuscompetitive channels. This sector is undeveloped forOrganics, but the Total Frzoen Dept is real strength at Military.


Ke Insights & Recommendations

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Page 40

3. The Food Actives Shopper Segment is a significant opportunity for

the Military channel to drive growth with Health & Wellness

o A big target for Military as 23% are considered Food Actives(1MM+ Shoppers)

75% eat Heart Smart and Count Calories

Most likely to use Artificial Sweeteners instead of Sugar

Most likely to choose products for which they have a Coupon

o While these shoppers already spend 8% more than the

average shopper in Military, we need to define ourselvessomewhere between Sams (117) & Wegmans (127)


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Confidential & Proprietary Copyright 2008 The Nielsen Company

Thank You!

Mid-Year Update

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Page 42

Appendix

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Page 43

Health & Wellness Segmentation Methodology


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Page 44

NMIs analysis of the U.S. populations attitudes and behaviors

regarding health and wellness has long indicated that there areclearly identifiable psychographic health and wellness segments.

In 2001, NMI developed a proprietary health and wellness

segmentation of U.S. consumers. Based on more than 40 measures,the Health and Wellness segmentation has become a cornerstone of

the Health & Wellness Trends Report(HWTR). The five segments

identified have been quite robust over time, displaying strong

consistency from year to year.

NMI Health & Wellness Segmentation Methodology


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Page 45

The formal analytical model measures commonalities and differencesbetween five distinct consumer groups using k-means cluster analysis. Thecomprehensive statistical modeling process used to derive NMIs health and

wellness consumer segmentation is based on the following techniques andmethodologies:

Exploratory and confirmatory factor analysis of nearly 200 measures of consumerattitudes and behaviors regarding health and wellness, organic products,supplements, exercise, and many other topics. The analysis identified more than

25 potential factors The identification of 31 measures from the factor analysis that best represented

each of the potential factors identified and maintained consistency with theprevious years segmentation solution

K-means cluster analysis which examined numerous potential solutions todetermine which segmentation model provided the optimal solution, based on the

following criteria:

Maximum differentiation between consumer groups

Maximum homogeneity within each consumer group

NMI Health & Wellness Segmentation Methodology


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Page 46

NMI: Unparalleled Expertise in Health,Wellness & Sustainability

NMI is an international strategic consulting, market

research, and business development company

specializing in the health, wellness, and sustainability

marketplace.

Since 1990, NMI has focused on thewell-being of people and products, and

the environmental and socialresponsibility of the planet. NMI ownsthe only H&W consumer database.


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Page 47

EAT, DRINK & BE MERRYSEAT, DRINK & BE

MERRYS 23%

Health-Related

Least likely to agree that consumption of healthy,nutritious food is important to a healthy lifestyle

Lowest monthly expenditure on healthy andnatural products

Driven more by taste and to select emotional,feel-good products

Least likely to read labels

(% of population)

Branding Influences

Most likely to choose store brand and buy on price

Least likely to associate personal values withbrand choice

Least concerned about healthand healthy eating; leastknowledgeable about health-related benefits. Know theyshould eat healthier, but dont.

Most focused on taste.


GS

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Page 48

WELL BEINGS

WELL BEING 25%Health-Related

High use of healthy food such as soy

food/beverages, fiber, organic food/beverages Spend significantly more on healthy and natural

products

As challenged to eat right as other segments, yetare the most successful at healthy eating

Choose natural/organic over conventionalAbove average use of alternative healthcare

(% of population)

Branding Influences

Least likely to base purchase decisions on price; choosequality regardless of cost; concerned about brand image

Most likely to shop natural channel, including Trader Joe'sand Whole Foods Market

Early adopters and influencers

Purchase from companies that share their values

Driven to health by allmeans, including food,supplements, and otherproducts. Strong preference

for concepts that are naturaland organic, with strongenvironmental linkage.


MAGIC BULLETS

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Page 49

MAGIC BULLETS

MAGIC BULLETS 19%Health-Related

Above average interest in, understanding, and useof organic and natural food/ beverages

Highest use of functional/fortified food/beverages

Highest usage of weight loss food and artificialsweeteners

Highest use of OTC, alternative healthcare,homeopathic remedies, condition specificsupplements, VMHS; high use of Rx

(% of population)

Branding Influences

Average brand loyalty, less concerned with brandimage

After WELL BEINGS, most likely to shop TraderJoes and Whole Foods Market

More likely to choose products for which they havea coupon

High belief in and usage ofsupplements for health, andless concern with food. Amongthe groups most activelymanaging weight, sensitive to

environmental concerns, andsome leanings toward naturaland organic. Healthyconvenience resonates with thisgroup.


FENCE SITTERS

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Page 50

FENCE SITTERS

FENCE SITTERS 17%

Health-Related

Lower belief in the connection between diet andhealth

Less than average use of most healthy foodcategories

Less concerned about sugar, high fructose corn

syrup, and artificial sweeteners

(% of population)

Branding Influences

Average brand loyalty

Concerned about brand image

More likely to buy on price

Less environmentally sensitive

Primarily younger householdswith kids, who buy on price andare driven by the family diet.

They are neutral on most healthissues, with a low belief in the

value of healthy categories


G d Ali t B t NMI & H

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Page 51

Good Alignment Between NMI & HomescanConsistent Segment Sizes

25 19

1619

19 22

17 16

23 24

NMI H&WS Homescan H&W

EAT, DRINK, & BEMERRYS

FENCE SITTERS

MAGIC BULLETS

FOOD ACTIVES

WELL BEINGS

%Population %Households

Source: NMI 2007 H&W Consumer Trends Database; Homescan, a service of The Nielsen Company


Wh i th Milit Sh ?

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Who is the Military Shopper?

HHLD Income $40K+ Female Head Age 55+Affluent Suburban Spreads Younger Bustling Families Empty Nest Couples Senior Couples Not In Work ForceAfrican AmericanAsian Non-Caucasian

Demographics of the

averageMilitary Shopper HHLD Income $40K+ Female Head Age Under 35 Female Head Age 65+ 2 Member Household 3 4 Member Household 5+ member HouseholdAffluent Suburban Spreads Younger Bustling Families Empty Nest Couples Senior Couples Not In Work ForceAfrican AmericanAsian Non-Caucasian

Demographics ofHEAVYMilitary Shopper

Your Most Important shoppersHeavy Shoppers represent approximately

82% of total military volume

Wh i th Milit Sh ?

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Who is the Military Shopper?

HHLD Income $40K+ Female Head Age 55+Affluent Suburban Spreads Younger Bustling Families Empty Nest Couples Senior Couples Not In Work ForceAfrican AmericanAsian Non-Caucasian

Demographics of the

averageMilitary Shopper HHLD Income $50K - $99k Female Head Age 65+ Modest Working Towns Senior Couples Not In Work ForceAfrican AmericanAsian Non-Caucasian

Demographics ofLIGHT

Military Shopper

Light occasional shoppersLight Shoppers represent approximately

18% of total military volume

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