the consumer & the economy...u.s treasury takes over fannie mae & freddie mac sept 15th...

Confidential & Proprietary

Copyright © 2010 The Nielsen Company

The Consumer & The Economy

Road to Recovery

Jeff Silvas

Director – Business Development



To understand where we are headed, we must know where we are and

where we came from



Yesterday Today Tomorrow

Understanding Where We are Headed



Sept 7th

U.S Treasury takes over Fannie Mae & Freddie Mac

Sept 15thLehman Brothers files for bankruptcyMerrill Lynch taken over by Bank of America

Sept 16thFederal Reserve & Treasury lend $85 bill to AIG

Sept 25thWarren Buffett infuses $5 bill to rescue Goldman Sachs

Sept 28th$700 billion government bailout

Oct 2ndIMF warns U.S. headed for deep recession

Oct 3rdPayrolls decline 159,000 - 9th straight month of decline

Oct 8thAIG receives additional $37.8 bill from TreasuryInterest rate cuts from major worldwide central banks

Oct 9thDow closes at 8600 - lowest since 200340% below all time high set almost one year ago

Oct 10thWorst week in Dows 112 year history

Unprecedented Events Were Happening Seemingly Daily



Yesterday

-3%

-2%

-1%

0%

Sep-08 Oct-08 Nov-08 Dec-08

Unit Sales Shopper Trips

-3%

-2%

-1%

0%


Transaction Size

0%

1%

2%

3%

4%


Store Brands

3%

4%

5%

6%


Consumers Responded as Expected



25

35

45

55

65

75

85

95

105

115

125

May

-01

Sep-0

1

Jan-

02

May

-02

Sep-0

2

Jan-

03

May

-03

Sep-0

3

Jan-

04

May

-04

Sep-0

4

Jan-

05

May

-05

Sep-0

5

Jan-

06

May

-06

Sep-0

6

Jan-

07

May

-07

Sep-0

7

Jan-

08

May

-08

Sep-0

8

Jan-

09

May

-09

Sep-0

9

Jan-

10

Jul-1

0

The Conference Board - Nine census regions, 5,000 US households; 1985 = 100

2001 2002 2003 2004 2005 2006

Consumer Confidence still Unstable

2007 2008 2009 2010

Consumer Confidence Index



Understanding Where We are Headed

Yesterday Today Tomorrow



Sources: U.S Leading Economic Indicators

Tepid Recovery = Tepid ConsumptionNov 08 Dec 08 Jan 09 Feb 09 Mar 09 Apr 09 May 09 Jun 09 Jul 09 Aug 09 Sep 09 Oct 09 Nov 09

Index of Leading Indicators:

Composite of ten indicators

Equity Markets

(Dow, NASDAQ, S&P)

Consumer Expectations

Index

Building Permits

New Factory Orders

Capacity Utilization

Productivity: Output per

man-hour worked

Weekly Jobless Claims:

4 wk moving avg

Avg weekly hours worked

Help wanted Ad Indexes

Positive Neutral Negative Early stages of moving to neutral



86%

95% 94% 91%

24%

26%

19%18%

90%

21%

U.S Households Continue Mired in a Recession, Long Term Sentiment Unchanged

Oct 2008 Apr 2009 Jul 2009 Oct 2009 Dec 2009

% of U.S. HHs that believe they are in a recession

% of U.S. HHs that believe they will be out of a recession in the next 12 mos

Source: Nielsen Global Consumer Confidence Survey



Source: Seasonally Adjusted U.S. Total Non Farm Employment, U.S. Government

15.3 MM still jobless

Monthly Job Gains/Losses

July 2010: 9.5% Unemployment

46% unemployed for longer than 27 weeks

Confidence Gaining in the Recovery as Labor Market Trend Continues

•-753K

•-582K

•-347K

•-504K

•-344K

•-211K•-225K•-224K

•64K

•-109K

•-26K

•35K

•230K

•290K

•-681K

•41,000

•-597K

•-380K

•-321K

•-175K

•-128K

•-161K•-137K

•-160K•-122K

•-144K

•-72K

•-779K

•-726K•-800,000

•-700,000

•-600,000

•-500,000

•-400,000

•-300,000

•-200,000

•-100,000

•0

•100,000

•200,000

•300,000

•Dec-

•07

•Jan-

•08

•Feb-

•08

•Mar-

•08

•Apr-

•08

•May-

•08

•Jun-

•08

•Jul-

•08

•Aug-

•08

•Sep-

•08

•Oct-

•08

•Nov-

•08

•Dec-

•08

•Jan-

•09

•Feb-

•09

•Mar-

•09

•Apr-

•09

•May-

•09

•Jun-

•09

•Jul-

•09

•Aug-

•09

•Sep-

•09

•Oct-

•09

•Nov-

•09

•Dec-

•09

•Jan-

•10

•Feb-

•10

•Mar-

•10

•Apr-

•10

•-26K•-26K•36K

July 2010



Top 10 States: Unemployment & Foreclosures

Unemployment Rate Foreclosure Rate (1 in)

1 Michigan 14.1% 1 Nevada 102

2 Nevada 13.2 2 Arizona 163

3 Rhode Island 12.7 3 Florida 163

4 California 12.5 4 California 195

5 S. Carolina 12.5 5 Michigan 226

6 Florida 12.2 6 Utah 275

7 Wash DC 11.9 7 Idaho 296

8 Illinois 11.4 8 Illinois 305

9 Mississippi 11.4 9 Georgia 331

10 N. Carolina 11.2 10 Maryland 407

Top 10 Unemployment/Foreclosure

Sources:

*Bureau of Labor Statistics (Feb 2010)

**Realty Trac (Feb 2010)



Source: BLS

Over 7 million jobs lost since Jan 2008

Seasonally Adjusted U.S. Total Non Farm Employment, U.S. Government

A Perspective to Consider



2,218

498

0

500

1,000

1,500

2,000

2,500

2000

- M

ar

2000

- Sep

2001

- M

ar

2001

- Sep

2002

- M

ar

2002

- Sep

2003

- M

ar

2003

- Sep

2004

- M

ar

2004

- Sep

2005

- M

ar

2005

- Sep

2006

- M

ar

2006

- Sep

2007

- M

ar

2007

- Sep

2008

- M

ar

2008

- Sep

t

2009

- M

ar

2009

- Sep

t

2010

- M

arch

Building Permits In thousandsSept 2005

Source: Census.gov

Apr 2009

Housing Trending Up, But Far Off Pre-Recession Levels & Foreclosures Rising



-23.4%

-4.1%

8.6%

1.3%

5.9%

-1.4%

0.0% 0.8%

-4.9%

4.2% 3.5%

21.3%

-25.1%

-2.3%

13.7%

0.2%

-2.0%-0.3%

0.4%

-30.0%

-25.0%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Jan-

09

Feb-

09

Mar-

09

Apr-

09

May-

09

Jun-

09

Jul-09 Aug-

09

Sep-

09

Oct-

09

Nov-

09

Dec-

09

Jan-

10

Feb-

10

Mar-

10

Apr-

10

May-

10

Jun-

10

Jul-10

YesterdayOn the Sidelines

TodayIn the Game

Dept of Commerce: Total Retail Sales ex Auto



In the Game but at Restrained LevelsToday

-1%

0%

1%

2%


Unit Sales

-3%

-2%

-1%

0%

1%


Transaction Size

0%

1%

2%

3%

4%

5%


Store Brands

Shopper Trips

-4%

-3%

-2%

-1%

0%




A “New” Normal Focused Around the Home

Source: Nielsen National People Meter Panel – Average TV viewership in the U.S., Nielsen Bookscan, Nielsen Online

> 1 MM Viewers Tuning

in During Primetime

Cookbook

sales +9%

Traffic to internet food

sites +11%

Blu-ray disc sales +86%

Avg # of video games purchased in

past 6 months :10



Dining: That Was Then...

Same store sales trends (Year Ago % Change)

FlemingsOn the Border

Mac GrillBonefish

Ruby TuesdayOutback

O'CharleysPF ChangsMimis Café

Ruth ChrisApplebees

Bahama BreezeRed Lobster

MaggianosChilisCarrabas

Cheesecake FacLandrys

Cap GrilleJ Alexanders

Grand LuxTexas Roadhouse

Olive GardenBenihanaCPKRed Robin

Kona GrillBJ's

Buff Wild WingsMortons

Grill Concepts

McCorm. & Schmicks

-10 -8 -6 -4 -2 0 2 4 6 8 10Source: Company Reports -NRN (Dec 22, 2008)

2007

20 of 32 operators reported same

store gains; Overall avg: +1%



MortonsRuth Chris

FlemingsCap Grille

McCorm. & SchmicksBenihana

Red RobinMac GrillOutback

Dave & BustersKona Grill

PF ChangsBonefish

CPK

O'CharleysFamous Dave's

MaggianosMexican Rest

ApplebeesLandrys

Mimis CaféBahama Breeze

Longhorn SteakhouseChillis

Grand LuxCarrabas

J AlexandersOn the Border

Ruby Tuesday

Cheesecake Fac Buff Wild WingsBJ's

Olive GardenTexas Roadhouse

Red Lobster

-30 -28 -26 -24 -22 -20 -18 -16 -14 -12 -10 -8 -6 -4 -2 0 2 4

Source: Company Reports - NRN (Nov 9, 2009); Latest Quarter

Q3 2009

Same Store Sales Trends

% Change vs Prior Year

Current Year Ago 2 Year Ago

-8.8% -4.2% +1.3%

And at its Worst…34 of 35 in Decline

Financial reporting thru Nov 9, 2009



MortonsMexican Rest

Ruth ChrisRed Robin

Famous Dave'sMimis Café

Kona GrillDave & Busters

O'CharleysBahama Breeze

BenihanaOutback

CPK

PF ChangsJ Alexanders

LandrysOn the Border

ApplebeesGrand Lux

CarrabasChillis

Cap GrilleRuby Tuesday

Texas RoadhouseMaggianosRed Lobster

Cheesecake Fac

McCorm. & Schmicks

BJ's

Olive GardenBuff Wild Wings

BonefishLonghorn Steakhouse

Flemings

-16 -14 -12 -10 -8 -6 -4 -2 0 2 4 6Source: Company Reports - NRN (March 8, 2010); Latest Quarter




-5.0% -7.6% -0.7%

Q4 2009

And Now… Still Negative, But Not as Negative – Against Severe vs. Easier Comps

Financial reporting thru Feb 10, 2010



Selected Fast Casual/Family Dining/QSR- declines much less severe than fine/casual dining

Cosi

Jack in the Box

Carl Jr's

Yum BrandsDennys

Sonic

Arbys

Bob Evans

Burger King

Hardees

Rubios

Qdobal Mex.

IHOP

Popeyes

Pei Wei

McDonalds Papa Johns

Frisch Big Boy

Dominos

Wendys

Tim Hortons

Chipotle

PaneraStarbucks

Pizza Inn

Chuck E. Cheese

Steak n Shake

-16 -15 -14 -13 -12 -11 -10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

Source: Company Reports -NRN (March 8, 2010); Latest quarter, except Lat 4 weeks for McDonalds, Carl’s Jr, and Hardees

Q4, 2009




-1.8% -1.2% +1.4%



Source: MultiAd Kwikee and Lou Malnati’s

If You Can’t Beat Them, Join Them

http://loumalnatis.fbmta.com/a/0/36510702314/36507304524/default.aspx



...and Celebrity Chef Brands Too

Selected Restaurant &

Celebrity Chef Brands

11.514.0

Dollar %-Change vs Two Years Ago

Unit %-Change vs Two Years Ago

Source: MultiAd Kwikee Source: The Nielsen Company; (U.S. FDM w/ Walmart); 52 weeks ending 04/17/2010; Food & Non-Alc Bevs



Giada De Laurentiis Partners With Target for Store-Brand Line

Source: Target & Food Network



18%

27%

32%

38%

42%

68%

82%

83%

Serve Store-Bought

Prepared Meal

Microwave Frozen Meal

Add Few Ingredients to

Prepared Meal

Reheating Leftovers

Baking Frozen Food in

Oven

Barbecuing

Preparing Most

Ingredients For Meal

Preparing Scratch Meal

Diverse Definition for Cooking

Which of the following would you consider “cooking?” Please select all that apply.

Source: Homescan® 09/2009 survey, a service of The Nielsen Company



69%

69%

71%

72%

73%

73%

75%

75%

77%

78%

82%

82%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

I enjoy cooking for company/guests

I know how to use many different spices

Flavor is more important than calories

I often seek out new recipes

Dinner should have meat and couple of side dishes

I really enjoy cooking and experimenting with recipes

I tend to repeat the same meals a lot

I know how to cook the different cuts/types of meat

I prefer to prepare meals from scratch

I like to learn about food and cooking

I like to try different recipes

Cooking makes me feel like I’m taking care of my family

% Agree Completely/Somewhat

In Tough Times, Cooking Delivers on Basic Consumer Needs



Social MediaGames DVD/Blu-ray

Source: Nielsen National People Meter Panel – Average TV viewership in the U.S., Nielsen Bookscan, Nielsen Online

Avg number of

games purchased in

past 6 months: 10

YTD thru 9/27/09,

Blu-ray sales are +86%

while DVD sales

are –12.7%

In time spent, member

communities top

video/movies, search

and email

Consumers are Focused on Home



4.0

4.5

5.0

5.5

6.0

6.5

7.0

7.5

8.0

8.5

19

50

-19

51

19

52

-19

53

19

54

-19

55

19

56

-19

57

19

58

-19

59

19

60

-19

61

19

62

-19

63

19

64

-19

65

19

66

-19

67

19

68

-19

69

19

70

-19

71

19

72

-19

73

19

74

-19

75

19

76

-19

77

19

78

-19

79

19

80

-19

81

19

82

-19

83

19

84

-19

85

19

86

-19

87

19

88

-19

89

19

90

-19

91

19

92

-19

93

19

94

-19

95

19

96

-19

97

19

98

-19

99

20

00

-20

01

20

02

-20

03

20

04

-20

05

20

06

-20

07

20

08

-20

09

Avg

Da

ily H

ou

rs

The gold bars indicate the years

that the U.S. was in a recession.

Based on Sept-Sept Broadcast Year Average, Live stream

8 out of 9 Past Recessions, TV Viewing has Increased



While Not Growing at the Pace of New Media, TV is Still King



Dining Location Openings Continued to Be at

Relatively Low Levels into 2010

Dining Location Openings and Closings

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

2004 2005 2006 2007 2008 2009 Q1 2010

New Closed

Source: Trade Dimensions® & TDLinx®, services of The Nielsen Company; thru Q1 2010



Consumers

Recalibrating a

“New Normal”



2005 vs. 2004% Chg Unit Sales Leaders

Source: Scantrack®, a service of The Nielsen Company; (FDM w/ Walmart) 52 weeks ending 11/28/09 (versus prior year) – minimum $100 million in sales

Desserts - Dairy 18%

Mens Toiletries 14%

Tea 13%

Yogurt 11%

Bottled Water 10%

Dressings / Salad 9%

Seasonal Merch 9%

Cough & Cold 8%

Wine 7%

Grooming Aids 6%

Personal Bath Needs 6%

Frozen Prep Foods 5%

Breakfast Foods 5%

Frozen Vegetables 5%

Skin Care 5%

Canning & storage 11%

Wine 7%

Vitamins 5%

Fresh Meat 5%

Dry Veg & Grains 5%

Dry Mix Prep Foods 4%

Flour 3%

Ref Juice & Drinks 3%

Salads, Prep Foods 3%

Frozen Novelties 3%

Frozen Vegetables 3%

Yogurt 2%

Jams & Jellies 2%

Liquor 2%

Cough & Cold 2%

2008 vs. 2007% Chg Unit Sales Leaders

Canning & Storage 11%

Fresh Meat 7%

Frozen Novelties 7%

Cheese 6%

Vitamins 5%

Dry Mix Prep Foods 5%

Baking mixes 5%

Yogurt 5%

Wine 5%

Pasta 5%

Fresh Produce 5%

Ref Juices & drinks 4%

Prepared Foods 4%

Condiments 4%

Shortening & oil 4%

2009 vs. 2008*% Chg Unit Sales Leaders

Consumers Actions Tell the StoryPersonal care & Discretionary has given way to At Home Meals & Preps



Trend Drivers: Dairy, Dry Grocery

Still Declining: Packaged Meat, Deli, Frozen Foods, Alcoholic bev,Fresh Produce

Trend Drivers: Dairy, Dry Grocery

Still Growing: Fresh Produce,Fresh Meat, Alcoholic Bevs, Deli, Packaged Meat, Frozen Foods,HBA, Non-Food Grocery,

3.0

2.2

3.5

2.0

-0.6-0.2

Retailer

Brands

Branded

Source: Scantrack®, a service of The Nielsen Company; (FDM w/ Walmart) ending 04/19/2010 (versus prior year)

% Unit Sales Growth for last 6 (4-week) periods

U.S. consumers turned to Retailer Brands in a down economy, but branded now improving

0.2

-0.6

0.7

1.0

0.10.2



0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

40,000,000

Nov -

07

Dec-

07

Jan-

08

Feb-

08

Mar-

08

Apr-

08

May -

08

Jun-

08

Jul-

08

Aug-

08

Sep-

08

Oct-

08

Nov -

08

Dec-

08

Jan-

09

Feb-

09

Mar-

09

Apr-

09

May -

09

Jun-

09

Jul-

09

Aug-

09

Sep-

09

Oct-

09

00:00.0

01:26.4

02:52.8

04:19.2

05:45.6

07:12.0

08:38.4

Unique Audience Time Per Person

Source: Nielsen Online NetView; US only; Home & Work Combined

Q1 Q2 Q3 Q4

2008 -7% -1% -3% +10%

2009 +17% +33% +29% +26%

% change in manufacturer

coupon redemptions -

Inmar

Coupons Back in Vogue w/More Visitors & More Time Spent on Coupon Sites



•Retailing

Trends



Discretionary Making Comeback, But Off Poor 2009; Weaker 2010 for Nat’l Grocers & Walmart

2008/2009

-15 -10 -5 0 5 10 15

Costco

BJ's

Sams

Kroger

Safeway

SuperValu

Dollar General

Dollar Tree

Family Dollar

Kmart

Walmart

Target

CVS

Walgreens

Rite Aid

Whole Foods

Kohls

Nordstrom

Macy's

JC Penney

Lowe's

Home Depot

Source: Company press releases; latest monthly results (excl fuel) for all but Sam’s Club, Kroger, Safeway, SuperValu, Dollar General, Family Dollar, Walmart, Dollar Tree, CVS, Kmart, Whole Foods, Home Depot, Lowe’s – latest quarterly report

2009/2010

-10 -5 0 5 10

Costco

BJ's

Sams

Kroger

Safeway

SuperValu

Dollar General

Dollar Tree

Family Dollar

Kmart

Walmart

Target

CVS

Walgreens

Rite Aid

Whole Foods

Kohls

Nordstrom

Macy's

JC Penney

Lowe's

Home Depot

Stock Up

& Save

Value &

Convenience

DiscretionarySpending



143,997

37,658

32,211

6,457

20,788

3,401

1,207

124,516

40,102

31,183

6,421

13,151

1,583

907

Convenience

Drug

Supermarkets

Mass Merch

Dollar Stores

Supercenters

Warehouse Clubs 2001

2009

Value Winning as Evidenced by Increased Store Count – Store Closings During Down Economy

U.S. Store counts

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

1,875

fewer

stores

since

end of

2007

Mass Merchandisers, Drug &

Convenience/Gas count off from

end of 2008



Walmart & Target Leading Store Expansion versus Major Grocers

708

1,020

1,495

1,515

1,613

2,468

1,304

1,744

4,309

1,250

682

1,565

549

1,460

2,433

2,088

1,056

3,218

Ahold

Publix Grocery

Safeway Corp Grocery

SuperValu Corp Grocery

Delhaize Grocery

Kroger Corp Grocery

Kmart - Tot

Target - Tot

Wal-Mart - Corp*

2001

2009

*Includes Division 1, Supercenters, Neighborhood Markets & Sam’s Club

U.S. Store counts“Walmart to focus on remodels & accelerating growth in new,

more efficient Supercenters”

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

Target to aggressively

expanding food offering &

focusing on remodels; testing

smaller format

Acquiring Ukrops

Closing 16 locations &

opening 120 to 130 new stores

in fiscal 2010; increased focus

on Bottom Dollar banner



98

77

80

64

70

50

38

100

95

86

59

51

50

45

Grocery

Mass Merch

Drug

Dollar

Supercenters*

Warehouse

Conv/Gas2001

2009

Value Winning As Evidenced By Consumer Acceptance

Benefits from

new store

openings

% Household Penetration

**

Source: Homescan®, a service of The Nielsen Company; excludes gas only or Rx only trips

** Note: Conv/Gas channel behaviors understated because of the high level of gasoline only

buys & purchases of immediate consumables *Includes Kmart, Target & Walmart



59

26

14

14

13

13

11

72

20

24

15

15

11

10

Grocery

Supercenters*

Mass Merch

Drug

Conv/Gas

Dollar

Warehouse2001

2009

Grocery & Mass trips

continue to drop

Value Channels Grabbing Trips

Trips Per household

**

*Includes Kmart, Target & Walmart

Source: Homescan®, a service of The Nielsen Company; excludes gas only or Rx only trips

** Note: Conv/Gas channel behaviors understated because of the high level of gasoline only buys &

purchases of immediate consumables



Walmart Sales Almost as Large as Next Four Competitors

Top 10 Grocery Chains

$0 $20 $40 $60 $80 $100 $120 $140 $160

Walmart

Kroger

Safeway

Supervalu

Ahold USA

Publix

Delhaize America

H.E. Butt

A&P

Meijer

Est. Annual ACV (billions)

Source: Progressive Grocer – May 2009

$152.8

$146.3



Aggressively Promoting “Unbeatable Prices” in Print Ads & on Billboard Located 2 Blocks from Target HQ



Some Big Players Going with Smaller Formats, But Marketside Expansion on Hold

Source: Company websites, Reuters, Orange County Register

http://www.gianteagleexpress.com/Default.aspx

http://fastfood.freedomblogging.com/files/2008/05/the-market_vons_1.jpg



Neighborhood Market by Walmart – Still in Expansion Plans with Focus on Fresh

Store Count 148

Avg. $ per Store $30 Million

Avg. Store Size 42,000

Planned Growth Appx. 10 per year



Source: Cincinnati Enquirer

Investing in New Formats & Stepping Up Marketing Activities



Less Is More at Retail as They Look to:

•Enhance in-store shopping experience:• Simplify shopping experience

• Providing right product mix for category & overall

store (SKUs reductions)

• Improve merchandising • Providing cleaner floors with fewer displays

•Enhance margins w/reduced costs & better

inventory management

•Grow store brands



% Change in All-Outlet Shopping

-5

-4

-3

-2

-1

0

1

2

3

4

5

09/

06/0

8

10/

04/0

8

11/

01/0

8

11/

29/0

8

12/27/

08

01/

24/0

9

02/21/

09

03/21/

09

04/18/

09

05/16/

09

06/13/

09

07/11/

09

08/08/

09

09/05/

09

10/03/

09

10/31/

09

11/28/

09

12/26/

09

01/23/

10

02/20/1

0

03/20/1

0

04/17/1

0

4-week period ending

Shopping Trips Shopping Basket $ Ring

Consumers Have Adjusted: Fewer Shopping Trips & Spending Less Per Trip

Source: Homescan®, a service of The Nielsen Company; excludes gas only or Rx only trips; versus year ago



% Change in All Channel Shopping Trips

-8

-6

-4

-2

0

2

4

6

09/

06/0

8

10/

04/0

8

11/

01/0

8

11/

29/0

8

12/27/

08

01/

24/0

9

02/21/

09

03/21/

09

04/18/

09

05/16/

09

06/13/

09

07/11/

09

08/08/

09

09/05/

09

10/03/

09

10/31/

09

11/28/

09

12/26/

09

01/23/

10

02/20/1

0

03/20/1

0

04/17/1

0


$70K +

$30 to $69.9K

< $29K

Trip Compression From Lower Income; Trip Growth From Affluent in Most 2009 Periods

Share of Basket Ring Dollars*

42%

36%

22%

* Latest Period




% Change in Retail Channel Shopping Trips

-15

-10

-5

0

5

10

09/

06/0

8

10/

04/0

8

11/

01/0

8

11/

29/0

8

12/27/

08

01/

24/0

9

02/21/

09

03/21/

09

04/18/

09

05/16/

09

06/13/

09

07/11/

09

08/08/

09

09/05/

09

10/03/

09

10/31/

09

11/28/

09

12/26/

09

01/23/

10

02/20/1

0

03/20/1

0

04/17/1

0


Supercenter

Club

Grocery

Dollar

Drug

Conv/Gas

Mass Merch


Value Retailers Winning Trips, But Tough Start to the Year w/Low Consumer Confidence & Poor Weather



“Great Recession” Driving Shifts in Consumer Shopping & Industry Innovation

• Value retailers winning & will likely maintain preferred status for many as economy improves

• Good news - discretionary retailers showing improvement

• Accelerated industry innovation & collaboration

• New formats

• Store expansion

• Meal deals

• Value messaging & promotions

• On-line engagements

• New & expanded offerings

• What are you doing to drive shopping trips & build baskets?

• Diverse retail shopper bases enables opportunities to differentiate via assortment, pricing, promotion, & communication



Buying

Trends



Inflationary Pressures Drove Stronger Growth Last Year – More Non-Edibles This Year

52-Weeks Ending April 18, 2009 % 52-Weeks Ending April 17, 2010 %

Vegetables & Grains-Dry 31.2 Canning/Freezing Supplies 35.5

Flour 28.2 Tobacco & Accessories 12.6

Pasta 22.7 Insecticides Repellants 9.3

Canning/Freezing Supplies 21.6 Vitamins 8.4

Shortening/Oil 16.4 Sugar/Sugar Substitutes 8.2

Butter & Margarine 12.9 Personal Soap/Bath Needs 6.9

Baking Mixes 11.6 Vegetables-Canned 6.7

Pet Food 11.1 Pizza/Snacks-Frozen 6.6

Vegetables-Canned 10.9 Condiments/Gravies/Sauce 5.9

Salad Dressings/Mayo/Top 10.2 Yogurt 5.6

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 April 18, 2009 % 52-Weeks Ending April 17, 2010 %

Canning/Freezing Supplies 14.3 Canning/Freezing Supplies 10.2

Combo Pack 10.8 Frozen Novelties 9.2

Wine 7.4 Vitamins 6.6

Vitamins 4.7 Personal Soap/Bath Needs 6.4

Fresh Meat 4.6 Nuts 6.2

Prepared Foods-Dry Mixes 4.4 Yogurt 6.2

Vegetables & Grains-Dry 4.3 Juices & Drinks-Refrigerated 5.7

Pasta 3.7 Fresh Produce 5.2

Baking Mixes 3.5 Fragrances - Women 4.8

Juices & Drinks-Refrigerated 2.8 Seafood-Canned 4.7

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



“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



In Summary

• The worst appears to be over…

• Restraint remains the new normal

• Home is where the heart and wallet is

• Value is top priority

• Store Brand growth continues

• Grocery consolidation intensifies

the consumer & the economy...u.s treasury takes over fannie mae & freddie mac sept 15th...

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