Transcript Slide 1

February 28, 2007
Mr. Thomas E. Milks
Director of Sales
• Organization
• Issues Affecting Consumer Package Goods
(CPG) Industry
• How We Did
• Perimeter
• Center Store
• 2007 Initiatives
Director
Sales
Tom Milks
PS
Perishable Div
Dave Shaw
PSP
Semi-Perishable Div
Randy Chandler
PSM
Resale
Contracting Div
Larry Hahn
PSC
Special Projects Div
Bill Mehler
PSS
Virtual Commissary
Transportation Div
Del Myrick
PSV
Category Mgt
Branch
PSM
Produce Support
Branch
Sarah Saunders
PSCP
Promotions
Branch
PSM
Brand Name Resale
Branch
Judge Mays
PSCB
Distribution/OPP
Donna Starkus-Ward
PSVO
Resale Commodities
Branch
Sheila Norfus
PSCC
Transportation
Arlene Ripp
PSVT
Resale Services
Branch
Phyllis McGowan
PSCS
Reset Team
Steve Sones
PSSR
Systems
Sharon Rahe
PSA
Business Systems
Carol Ricker
PSVS
Organization Effective January 22, 2006
• Globalization
• Continual product portfolio management
• Price line vs brand name products
• Rising costs
• Supply chain complexity
• Anti-aging products
• Chocolate – the darker the better
• Junk food made over
• Locally grown food
• Probiotics in yogurt and beyond
• Consumer segmentation affected by shifting
consumption patterns
– Health
Age
– Convenience
Gender
– Lifestyle
Income
• New
Traditional
• Redefine relationships
• Create value
• Achieve goals
• Customize programs
• Create “WOW” factor
• Last year sales vibrant
– $48M above prior year
– Perishable numbers simply outstanding
– Shift from center store sales occurring, but not
as severe as retail
• Promotional support continued to outpace
supermarkets
– Last year’s savings held steady at 32%
– DeCA’s temporary price reduction (TPR) dollar
fair share index highly developed @ 136
• Billboard categories drive results
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400 Power Buys
975 Primaries
200 Manager’s Special
• Overall lift percentages outstanding
–
–
Unit Lift ~ 51.5%
Dollar Lift ~ 25.6%
• Program generated $47.4 Million in savings over regular
DeCA price
–
Added an estimated 1.5 basis points to overall DeCA savings
percentage
• First quarter results very positive
– Sales up slightly more than FY year end goal (+$13.5M)
– European sales stronger than anticipated
– Future quarterly ACV contributions & calendar shifts will tend
to normalize early results
• December sales were exceptional
– Total exceeded $500 Million
– Largest single sales month of the new millennium
FY 2006 Vs. FY 2007
+1.7%
500
+1.9%
-0.8%
$ Millions
450
400
350
300
OCT NOV DEC JAN
FEB MAR APR MAY JUN
FY 2006
Cumulative YTD
Sales
$1401
JUL
AUG SEP
FY 2007
$1414
FY 2007 Strategic Sales Target: $5.430B
+$13
+1.0%
FY 2006 Vs. FY 2007
# Transactions
-1.0%
-1.3%
8.500
-0.4%
8.000
7.500
7.000
6.500
6.000
OCT
NOV
DEC
JAN
FEB
MAR APR
FY 2006
23.511
Cumulative Transactions
MAY
JUN
JUL
AUG
SEP
FY 2007
23.299
-0.212
-0.9%
Sales Per Transaction
Year
Oct
Nov
Dec
FY 2006
$58.28 $59.22
$61.15
FY 2007
$58.57 $60.57
$62.83
Jan
$58.06
Feb
$58.93
Mar
$58.01
Apr
$58.71
May
$57.04
Jun
$58.05
Jul
Aug
$57.60 $57.74
Sep
$60.03
$60.69
YTD
$59.57
Rank
Date
Net Sales
Event
1
1/31/2004
$26,032,612.39
Super Bowl
2
2/3/2007
$26,029,117.16
Super Bowl
3
11/18/2006
$25,255,742.11
Thanksgiving
4
2/2/2002
$24,835,463.69
Super Bowl
5
11/19/2005
$23,802,452.46
Thanksgiving
6
11/17/2001
$23,765,390.19
Thanksgiving
7
2/4/2006
$23,571,575.01
Super Bowl
8
3/3/2001
$23,308,730.41
Pay Day
9
7/1/2005
$23,169,866.86
July 4th
10
12/30/2005
$23,125,008.98
New Year's Eve
11
9/2/2006
$23,100,835.32
Labor Day
12
12/2/2006
$22,896,133.19
Pay Day
13
11/20/2004
$22,860,682.25
Thanksgiving
14
9/30/2006
$22,638,613.41
Pay Day
15
2/3/2001
$22,616,317.60
Pay Day
Event
Year
DeCA
Worldwide
Cases
DeCA
Worldwide
Dollars
Western
Region
Cases
Western
Region
Dollars
2005
1,599,283
$11,666,779
721,952
$4,970,431
2006
1,828,631
$12,558,388
845,636
$5,398,058
Percentage
Change
14.3%
7.6%
17.1%
8.6%
Summer Program
Year
Units
Dollars
2003
1,072,866
$ 5,391,879
2004
1,936,651
$ 9,986,974
2005
2,886,471
$14,064,224
2006
4,195,379
$23,116,284
2005
1,568,386
$ 8,342,999
2006
2,053,793
$12,151,444
Winter Program
• Began this FY (includes all holidays except Veterans Day)
• Four 7-day stores close on holiday
• Fifty-one 6-day stores close day after holiday
• FY 2007 impact to date (5 holidays)
– Sales measured for 1-week periods centered on holiday
– 55 stores that changed hours: +1.6%
– Rest of DeCA: +1.4%
• Bottom Line: No adverse impact
• What was the fastest growing sub-department???
– Produce?
– Deli?
– Bakery?
– Sushi To Go?
– Hot Foods?
Perimeter Departments
• All perishables dollars up $5.9M
• Perishable percent of Agency gain equals about 41%
• First quarter trends leading the DeCA way
• Produce
+5.6%
• Deli
+3.0%
• Bakery
+5.0%
• Sushi
+51.0%
• Hot Foods +14.3%
• Meat trend still down @ -3.2%, but improving
– Classification change impact disappears in March
A New Vision
• New procurement area
–
Area 6: Sales up $530K Nov / Dec ‘06
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Represents 4.6 % gain in produce sales
• ACV contribution grew to 7.3% for two
month period
• Produce contribution to area incremental
sales = 87%
• Introduction of tubs has shifted buying patterns
• MBU responded
• Cleansed mix through category review
• Altered case merchandising profile to maximize return
• Shift in merchandising expanded shelf space, reduced
number of pegs, and improved tub utility
• Anticipated impact on annual sales: Plus $1.5 Million
Class
Current
Shelves
Plus-Up
Total
Shelves
K1
2
4
6
K2
3
9
12
K3 – K5
8
6
14
• Intent is to billboard perishable departments
– Use in DeCA circulars/post newspaper inserts
– Parallels retailer norms
• Capitalize on customer’s menu driven psychology
• Build sales synergy & incremental volume across
total promotion package
• Early year results mirror previous successes
• 10 DeCA West events so far this fiscal year
• Most sales conducted over three-day period
• Total sales generated: $143,051
• Percent of total store sales same period: 0.37%
• Be aggressive – use “the glass is half full” approach
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–
–
Meat truckloads / seafood roadshows
Farmer’s markets / plant truckloads
Complement with special contractor sales efforts
• Use all authorized media/methods to get the word out
–
Be ready for perishable ads in base newspapers
• Coordinate efforts with local exchanges to maximize
return
• Cross-merchandise – build a “total store” plan & execute
• Which category is most “impulsive” ???
–
–
–
–
–
–
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Carbonated Beverages?
Energy Bars?
Salty Snacks?
Crackers?
Snack Bars?
Cookies?
Candy?
• Premium chocolate section
• Dark chocolates
• New item introductions
• Health & well being
– Antioxidants
– Organics
• Integrated merchandising set
– Toiletries over baby wipes builds sales synergy
– Brand blocking adds visibility
• Concept fully vetted thru virtual & in-store tests
• Baby wipes result:
– Dollars per purchase occasion up 24%
– Units per purchase occasion up 25%
• Toiletries result:
– Dollars per purchase occasion up 20%
– Units per purchase occasion up 8%
• Potential DeCA sales growth $1.3M
• What’s the most common error on 40-15s???
– Invalid GTTNs?
– Invalid case packs?
– Erroneous product dimensions?
– Erroneous tie & tier?
– Erroneous availability dates?
• 78% of 40-15s being returned
• Types of errors/omissions
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–
–
–
Missing/invalid GTTNs:
38%
Invalid case packs:
5%
Erroneous product dimensions: 5%
Erroneous tie & tier:
2%
● Product availability dates:
50%
● Refers to availability at distributor (FDS)
● Refers to availability for delivery (DSD)
• Pilot test successfully completed (Oct-Dec 06)
• Five participants
•
Kellogg’s, J&J, Nestle, Nabisco, Callard Bowser
• Twelve vendors added last month
• Additional vendors to be added monthly
• Participant consensus positive
• Deletion decision made (mfg or buyer driven)
• After 30 days, paperwork processed by File Maintenance
– Item flagged for phase out in DIBS
– Held on file for 30 days (60 days for NW box, Hawaii stores)
• If distributor wants to eliminate residual stock remaining
– Broker follows procedures in NTT 05-33 (12 January 05)
– DeCA receives 50% markdown for dead stock
• After 30 days as dead stock in DIBS, item deleted
• Hire front end buyer
• Evaluate return on investment
• CARTS/SCO impact
• Queuing line solution?
• Impulse items
• Internet business
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–
Develop/implement third party module
Expand special pack module, match mix to occasion
• Emphasize growth categories
–
–
–
Drive sales
Leverage competitive strengths
Focus mix changes on emerging segments
• Improve promotional flexibility
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–
–
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Correlate with partners’ strategic goals to maximize
incremental growth
Ensure capability to integrate new item launches and react
to changing market conditions
Extend departmental coverage to include perimeter
Assess success using pre-defined metrics
• Evaluate product mix frequently on marginal return basis
–
–
–
Relate to known segment trend information
Specify new item performance objectives up front
Periodically assess planogram sufficiency as SOP
• Create a focused view of future market conditions
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Collective effort thru Commissary Council
Use hard/soft data and manufacturer R&D insights
Predict most likely mix of goods/services demanded by
future consumers
Build suite of operational tactics to move forward
Establish 1/3/5 year objectives to measure movement
toward end state
Refine plans on the move as conditions/insights warrant
● 32 Categories downsized: Dollar Result +.71%
● 92 Categories upgraded: Dollar Result + 1.78 %
• Four categories reset @ Ft Lee in January 2006
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New planograms installed within first week
Sales impact evaluated for subsequent 24 week period
Dollar increases dramatic compared to same period PY
Gains ranged between 3.1% and 15.5% for identical mix
Overall change in dollars for categories involved + 7.4%
• 60 day set implementation policy could build sales quickly
– As more set results quantified, sales estimate to be developed
• MBU established look-ups to include regular case price
sent to store via normal file maintenance procedures
• Stores must use established look-ups to get sale price
• Scandown will be used to establish sale price
• Treasure hunt with club packs – build shopping fun
– Match your mix to patron faces
– Use as lever to enhance trade support throughout store
• Expansion of display-ready pallets
– Big buck opportunity @ minimal labor cost
– We’ll try to send visuals & details in advance electronically
• Streamlining promotional package size
– Eliminating listing of line item extensions
And Create Excitement!
• Focus on perimeter
– Produce
– Meat/Seafood truckload sales
• Cross merchandising
– Impulse items
• Club pack program
• Case pack sales
• Organics
• Execute