Alli 60 mg Refill Pack 120 Capsules

10% Patron Savings vs. Outside the Gate?

HigherHigheror or

Lower?Lower?

Alli 60 mg Refill Pack 120 Capsules

Actual Price at DeCA:$50.64

Avg. Price Outside:

$64.91

($ Savings: $14.27)

% Patron Savings:

22%

William “Bill” T. Wood

Category Manager – Non Edibles

HBC Categories HBC Categories Represent 10 % of the Business!Represent 10 % of the Business!

HBC Categories $383 Million

10%

Dairy$391 Million

10%

Frozen $396 Million

10%Chilled Other$503 Million

13%

Center Store Other

$157 Million 4%

Nonfood$214 Million

6%

Grocery Food $1,806 Million

47%

Source: Nielsen RMS, HBC Category = DeCA definition

$41.60

$38.50

$25.20

$24.30

$19.70

$16.80PAIN RELIEF

SHAMP/COND.

BAR/ LIQUIDSOAP

SHAVINGNEEDS

VITAMINS &SUPPL.

ORALHYGIENE

Top 6 HBC Categories $166.2 Million = 43%52 WE March 20, 2010, $$ in mm

$-Share on Total Store

Higher Share for Oral Hygiene, Higher Share for Oral Hygiene, Vitamins and Shaving Needs than RMVitamins and Shaving Needs than RM

8.3%

10.8%

6.2%

10.0%

3.6%

6.6%

4.7%

6.4%

4.6%

5.2%

5.2%

4.4%

RemainingMarket

Commissaries

Oral Hygiene Vitamins Shaving Needs

Bar/Liq. Soap Shampoo/Cond. Pain Relief

130 160 184

Source: Nielsen RMS

136

52 WE March 20, 2010$-Share on HBC Categories

Share Index 112 84

Higher Focus on HBC than Higher Focus on HBC than Remaining Market !!Remaining Market !!

Source: Nielsen RMS

Perishables 43%

Perishables 33%

Center Store Other50%

Center Store Other 57%

HBC7%

HBC 10%

RemainingMarket

Commissaries

Index 78

Index 112

Index 149

52 WE March 20, 2010$-Share on Total Store

Calculation Example: 56.5%/50.3% = 112

Growth Opportunities with Bar/Liquid Soap Growth Opportunities with Bar/Liquid Soap and Vitamins. Need for Action with Pain Relief!and Vitamins. Need for Action with Pain Relief!

(0.7%)

10.3%

(3.7%)

7.8%

(3.0%)

(0.4%)

(0.2%)

6.1%

3.4%

3.9%

(2.7%)

(3.6%)

Oral Hygiene

Vitamins

Shaving Needs

Bar/Liq Soap

Shampoo/Cond.

Pain Relief

Remaining Market Commissaries

22.8%

23.4%

27.1%

23.1%

28.3%

23.7%

Source: Nielsen RMS

52 WE March 20, 2010%-chg. Vs YAGO Patron Savings

Health & Beauty Execution Excellence

More emphasis on display execution!

Review Display Compliance Reports

Create More Impactful HBC Endcap Displays!!Create More Impactful HBC Endcap Displays!!

Military Patrons – Shopper Segments Single soldiers – always on the go Young families – getting in and getting the job done to provide for

family Retirees – taking the time, enjoying the company and finding the

deals

Young Families Retirees

Single Soldiers

Military Outlets

Skin Care, Men’s and FragranceSkin Care, Men’s and Fragrance Will be a Significant Driver of Growth Will be a Significant Driver of Growth

Skin CareSkin Care

Men’s Beauty/Men’s Beauty/GroomingGrooming

FragrancesFragrances

Potentially, a $1 Trillion Business!Potentially, a $1 Trillion Business!

The market is predicted to grow to $1 T by 2020.

Beauty & Health Annual Spending Unlike most key categories throughout the store, she

spends more annually on Personal Needs as her product needs change at different lifestages.

Beauty & Health Annual Spending

$325

$345

$365

$385

$405

$425

$445

New Families(kids <6)

MaturingFamilies (kids

6-12)

EstablishedFamilies

(Teens 13-17)

Empty NesterCouples

Lifestage

An

nu

al D

olla

r S

pe

nd

ing

Nielsen HH Panel CY 08

Beauty & Health Annual Spending

HH’s with children spend +22% more annually than households without children.

Avg Annual Beauty & Health Spending - CY 04

$311

$381

$280

$300

$320

$340

$360

$380

$400

HH's without Children* HH's with Children**

Avg Annual Beauty & Health Spending - CY 04* HH's without children include singles and couples 18-54 yrs old without children.** HH's with children include new, maturing, and established families with children <18. Nielsen HH Panel CY 04

Beauty & Health Annual Spending

Remarkably, beauty & health annual spending for empty nester couples is +12% greater than HH’s with children!

Avg Annual Beauty & Health Spending - CY 04

$381

$425

$350$360$370

$380$390$400$410

$420$430

HH's with Children* Empty Nester HH's

Avg Annual Beauty & Health Spending - CY 04* HH's with children include New, Maturing, and Established Families. Nielsen HH Panel CY 04

The number of people 55+ has grown +27% from 2000–2010 This group is projected to grow another +28% from 2010–2020

Everyday beauty & health needs change at various lifestages Opportunity for retailers to grow sales across beauty & health

Demographic Trend - Graying of America

Graying of America Projections*

95.8MM

75.1MM59.3MM52.4MM

1990 2000 2010 2020

Years

Po

pu

lati

on

(M

illi

on

s)

# of Persons 55+

* US Census Data

“We want to feel confident in the choices we make for our families.”

“We want to do our best in helping our families achieve well-being every day.”

“We want to find products that fit the changing priorities of our family members and ourselves as we age.”

“We want to choose the right solutions for each family member’s needs.”

4 Traits of HBC Shoppers

Ability to orchestrate shoppers’ choices and self-selections by validating their decisions and providing reassurance as they shop.

RETAILER IMPLICATIONS

Opportunity to become the primary destination for all Personal Needs purchases for every member of the family – “one-stop shopping.”

Can leverage consumers’ changing lifestages and priorities to maintain loyalty and build sales.

Help shoppers find the right products to satisfy the needs of each individual family member, and the more shoppers will buy.

4 Traits of HBC Shoppers

20% Patron Savings vs. Outside the Gate?

HigherHigheror or

Lower?Lower?

Olay Pro-X Age Repair Lotion SPF 30 2.5 oz

Olay Pro-X Age Repair Lotion SPF 30 2.5 oz

Actual Price at DeCA:

$28.79

Avg. Price Outside:

$40.66

($ Savings: $11.87)

% Patron Savings:

29%

Military Patrons – In their own words…

Difficulty Finding New Items

“You can go to Walmart and you can go to somewhere else…get the new thing that my kids saw on the TV that they want. But you can’t go to the commissary…”

“9 times out of 10

I can’t find it”

“They’re behind the curve.”

“It takes them forever to get [new products].”

Assortment Problems“One time they have it, then they don’t have it anymore… That’s kind of annoying to me.”

“They don’t have a large selection at all.”

“It doesn’t seem to flow… Where’s the freaking mousse?”

Neil Stern

Senior Partner,

McMillan Doolittle

Why Get Excited About HBC?HBC has been one of the most consistently growing

categories in retailing over the past decade. Projected to continue that way as consumer concerns for

their health, well-being and appearance remains unabated.

The category is attractive to retailers due to new products driving incremental overall sales, higher overall margins and higher rings.

It is little wonder that most major retailers are devoting additional space, merchandise attention, enhanced displays and information to the category in an effort to win customers.

27

The Keys to Winning

1. Clear delineation of Health, Personal Care and Beauty

2. Create an environment that causes consumers to “Stop”

3. Use key organization principles within the category

Choices organized by brand, price point, promotion

Drive regimen sales, trade-up, and trial

4. Highlight “new” within the categories

5. Provide clear and compelling information on how to choose

6. Wow them—unique environment, great savings, etc.

28

Keys to Winning in Action:

Best Practices Mass Retailers: Target, Walmart and

Costco Supermarkets: Kroger and Stop & Shop Drug Stores: CVS and Shoppers Drug

Mart (Canada) Specialists: Ulta, Sephora and others

29

Facts on Walmart HBC

Walmart sales have moved from 45% to 51% grocery/HBC over the past 5 years

Walmart HBC sales were $18 billion in 2009

They have a 30% share of the US market

Note: The following pictures are intended to be thought-starters only.

Moving HBC Over to Food Side—More Prominence, More Traffic

Stopping Power—Wood Floors, Lower Profile, Slanted Aisles

But, Still Communicating Value

With Information/Promotion Now at Product Level…

1. Adjacencies: Health Interplays with Pharmacy…

2. Visual “Stopping” Power…Curves Promote Intimacy and Browsing

3. Organize—Brand, Price Points for Trade-Up

4. Promote Regimen Selling…

5. Focus on News…and New

6. Information…

7. Wow! Stopping Power, Trial, Uniqueness…

Costco: Wow! Can be a Price, or an Unexpected Item…

Great Pack and Price Point

Supermarkets Creating a Distinctive Look…

Color-Coding Health…

And Beauty…

With Way-finding, Information and Adjacencies…

And Help in Making Choices…

Walgreens Lowered Profile for Better Navigation

Focusing on New

And Better Information…

But the Bar Keeps on Rising…

With Enormous Product Choice…

DeCA Can Create Its Own Path to Winning1. Clear delineation of Health, Personal Care and Beauty

2. Create an environment that causes consumers to “Stop”

3. Use key organization principles within the category Choices organized by brand, price point, promotion Drive regimen sales, trade-up, and trial

4. Highlight “new” within the categories

5. Provide clear and compelling information on how to choose

6. Wow them—unique environment, great savings, etc.

57

Delight the Shopper

Provide In-Store Guidance

Make It Simple

Creating the Path To Meaningful Differentiation

Clear delineation of categories

Adjacencies, Layout, Assortment Basics

Category Organization

Principles

Brand, Trade-Up, Regimen Selling

Compelling Information … New

Wow!Best Prices

Unique Environment

Up

ward

Pro

gre

ssio

n

5858

What We Know Now…

We know the Health & Beauty categories are growing as consumer concern for their health, well-being continues.

We know how she shops… We know why she does not shop the

Commissary. We know the Commissary’s price is right!!

What Can We Do?

Ability to orchestrate shoppers’ choices and self-selections by validating their decisions and providing reassurance as they shop

RETAILER IMPLICATIONS

Opportunity to become the primary destination for all Personal Needs purchases for every member of the family – “one-stop shopping.”

Can leverage consumers’ changing lifestages and priorities to maintain loyalty and build sales.

Help shoppers find the right products to satisfy the needs of each individual family member, the more shoppers will buy.

4 Traits of HBC Shoppers

What 3-4 Changes Can We Make Now?

1. Communicate Patron Savings… Loud and Often!

2. Display, Display, Display!

3. Highlight “New” in All Categories!

4. Educate Her at Shelf!

What is it worth?

If military shoppers frequent military outlets 1 more time in a year…

$335,000*

*Source: AC Nielsen Homescan Panel

Final Final Showcase!Showcase!

Bausch & Lomb PreserVision Eye Vitamin and Mineral Supplement with Areds - 120 Softgels

Actual Price at DeCA:

$20.14

Patron Savings vs. Patron Savings vs. Outside the Gate?Outside the Gate?

________%________%

Bausch & Lomb PreserVision Eye Vitamin and Mineral Supplement with Areds - 120 Softgels

Actual Price at DeCA:

$20.14

Avg. Price Outside:

$29.74

($ Savings: $9.60)

% Patron Savings:

32%

Questions, Suggestions or Feedback?

The hand fans are yours to remind you of the keys to winning our patrons back with up to 50%50% savings!!