Mr. Thomas Milks

transcript

Mr. Thomas MilksMr. Thomas MilksDirector of SalesDirector of Sales

DeCA provides benefit to

diverse patron base

DeCA provides benefit to

diverse patron base

Patrons come from varied social and economic backgrounds!

Some are willing to pay a little more for quality…

Some live payday to payday, looking for the best price…

Some are just looking for the best value

All are looking to the “Commissary Benefit” to meet their needs!

Patrons come from varied social and economic backgrounds!

Some are willing to pay a little more for quality…

Some live payday to payday, looking for the best price…

Some are just looking for the best value

All are looking to the “Commissary Benefit” to meet their needs!

•Activity Duty–Officer–Enlisted

•Guard/Reserve

•Retiree•Single•Married•Families

Food Stamp

Region $ Value $ Value

DeCA East 16,360,013 6,845,557

DeCA West 9,865,423 15,363,330

DeCA Europe NA

6,657,761

Totals 26,225,436 28,866,648

Food Stamp

Region $ Value $ Value

DeCA East 16,360,013 6,845,557

DeCA West 9,865,423 15,363,330

DeCA Europe NA

6,657,761

Totals 26,225,436 28,866,648

Region Quantity $ Value

DeCA East 68,362,260 50,243,402

DeCA West 54,751,283

40,410,609

DeCA Europe 4,516,892

3,090,083

Totals 127,630,435

93,744,094

Region Quantity $ Value

DeCA East 68,362,260 50,243,402

DeCA West 54,751,283

40,410,609

DeCA Europe 4,516,892

3,090,083

Totals 127,630,435

93,744,094

Consumer segmentation affected by shifting

consumption patterns

Health

Convenience

Lifestyle

Consumer segmentation affected by shifting

consumption patterns

Health

Convenience

Lifestyle

Gender

Income

Gender

Income

Traditional Traditional

This year sales stronger than anticipated

Up $48M over last year (December a record @ $500M)

Produce contribution has grown full point since 2001

Decline in center store contribution concentrated in non-

food (-2.1%)

Transaction count declining (but @ lesser rate)

Last year’s decline more than double current year result

(-2.3% vs. -1.0%)

Average sale @ $60.60 continues to grow (up 2.8%)

This year sales stronger than anticipated

Up $48M over last year (December a record @ $500M)

Produce contribution has grown full point since 2001

Decline in center store contribution concentrated in non-

food (-2.1%)

Transaction count declining (but @ lesser rate)

Last year’s decline more than double current year result

(-2.3% vs. -1.0%)

Average sale @ $60.60 continues to grow (up 2.8%)

Cumulative YTD Sales

+1.8%+1.8%$2.713B$2.713B $2.761B$2.761B

FY 2006 FY 2007

FY 2007 Strategic Sales Target: $5.430B

+$48M+$48M

FY 2006 Vs. FY 2007FY 2006 Vs. FY 2007FY 2006 Vs. FY 2007FY 2006 Vs. FY 2007

OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP

Sales Per Transaction

Year Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep YTD

FY 2006 $58.28 $59.22 $61.15 $58.06 $58.93 $58.01 $58.71 $57.04 $58.05 $57.60 $57.74 $60.03 $58.96

FY 2007 $58.57 $60.57 $62.83 $59.56 $61.27 $60.71 $60.60

# Transactions# Transactions

Cumulative Transactions -0.447M -1.0%46.014M 45.567M

FY 2006 Vs. FY 2007FY 2006 Vs. FY 2007FY 2006 Vs. FY 2007FY 2006 Vs. FY 2007

OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP

FY 2006 FY 2007

• Promotional support continues to outpace supermarkets – DeCA’s temporary price reduction (TPR) dollar fair

share index up to 139

• Billboard categories drive results (dollar lift percentages)– 116% Manager’s Special– 54% Power Buys– 45% Primaries

• Overall lift percentages outstanding – Unit Lift ~ 52.8%– Dollar Lift ~ 31.5%

• Aggregate dollar results from program impressive – Sales: $52.9M - Average Per SKU Sales: $13K– Savings: $9.7M - Average Per SKU Savings: $2.4K

• Promotional support continues to outpace supermarkets – DeCA’s temporary price reduction (TPR) dollar fair

share index up to 139

• Billboard categories drive results (dollar lift percentages)– 116% Manager’s Special– 54% Power Buys– 45% Primaries

• Overall lift percentages outstanding – Unit Lift ~ 52.8%– Dollar Lift ~ 31.5%

• Aggregate dollar results from program impressive – Sales: $52.9M - Average Per SKU Sales: $13K– Savings: $9.7M - Average Per SKU Savings: $2.4K

• Periods 1 thru 5 Overall

– Dollar Sales Up 3.7%

– Dollar Savings Up 9.0%

• FY 07 Projection*

– Dollar Sales : $218.1M (+.6%)

– Dollar Savings: $44.8M (+2.8%)

• Periods 1 thru 5 Overall

– Dollar Sales Up 3.7%

– Dollar Savings Up 9.0%

• FY 07 Projection*

– Dollar Sales : $218.1M (+.6%)

– Dollar Savings: $44.8M (+2.8%)

* Based on Promotional Period Contributions to Total* Based on Promotional Period Contributions to Total

Rank Date Net Sales Event1 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

EventYear

DeCAWorldwide

Dollars

2005 1,599,283 $11,666,779

2006 1,828,631 $12,558,388

Percentage Change 14.3% 7.6%

EventYear

Units Percent

Change

Dollars Percent

Change

2003(S) 1,072,866

N/A $5,391,897

2004(S) 1,936,651

80.5% $9,986,974

2005(S) 2,886,471

49.0% $14,064,224

2006(S) 4,195,379

45.3% $23,116,284

2005(W) 1,568,386

N/A $8,342,999

2006(W) 2,053,793

30.9% $12,151,444

• What was the fastest growing sub-department???

– Produce?

– Deli?

– Bakery?

– Sushi To Go?

– Hot Foods?

• What was the fastest growing sub-department???

– Produce?

– Deli?

– Bakery?

– Sushi To Go?

– Hot Foods?

• All perishables dollars up $25.4M

• Sales trends leading the DeCA way

– Produce +4.8%

– Deli +1.8%

– Bakery +3.5%

– Sushi To Go +40.6%

– Hot Foods +9.5%

• Meat trend still down @ -2.9%, but

improving

• All perishables dollars up $25.4M

• Sales trends leading the DeCA way

– Produce +4.8%

– Deli +1.8%

– Bakery +3.5%

– Sushi To Go +40.6%

– Hot Foods +9.5%

• Meat trend still down @ -2.9%, but

improving

• New produce distribution system

• Resulted in improved sales, quality, and

pricing

– Minor concerns being worked expeditiously

• Decreased order-ship time

• Improved merchandising support

• Resulting in more frequent shopping

to store

• New produce distribution system

• Resulted in improved sales, quality, and

pricing

– Minor concerns being worked expeditiously

• Decreased order-ship time

• Improved merchandising support

• Resulting in more frequent shopping

to store

• New, improved specifications

• Resulted in increased yield

• Reduced labor

• Minimal impact on price

• Sales increasing

• New, improved specifications

• Resulted in increased yield

• Reduced labor

• Minimal impact on price

• Sales increasing

• 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

• 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

• Yogurt sales top ten growth category for several years

• Needed expanded category for entrance of pro-biotics

• In stock rates greatly improved

• Yogurt sales top ten growth category for several years

• Needed expanded category for entrance of pro-biotics

• In stock rates greatly improved

• Which category is most “impulsive” ???

– Carbonated beverages?

– Energy bars?

– Salty snacks?

– Crackers?

– Snack bars?

– Cookies?

– Candy?

• Which category is most “impulsive” ???

– Carbonated beverages?

– Energy bars?

– Salty snacks?

– Crackers?

– Snack bars?

– Cookies?

– Candy?

• Premium chocolate section

• Dark chocolates

• New item introductions

• Health & well being– Antioxidants– Organics

• 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 results– Dollars per purchase occasion up 24%– Units per purchase occasion up 25%

• Toiletries results– Dollars per purchase occasion up 20%– Units per purchase occasion up 8%

• Potential DeCA sales growth $1.3M

• Integrated merchandising set– Toiletries over baby wipes builds sales synergy– Brand blocking adds visibility

• Concept fully vetted thru virtual & in-store tests

• Baby wipes results– Dollars per purchase occasion up 24%– Units per purchase occasion up 25%

• Toiletries results– Dollars per purchase occasion up 20%– Units per purchase occasion up 8%

• Potential DeCA sales growth $1.3M

• Redefine relationships

• Create value

• Achieve goals

• Customize programs

• Create “WOW” factor

• Redefine relationships

• Create value

• Achieve goals

• Customize programs

• Create “WOW” factor

• Thanks for the San Diego Experience • Six Commissary Council Committees• Broad/comprehensive cooperation

– COOP Ads– Coupon Outreach– Systems Applications– Category Review Refinements– Promo Support Across Departments– Vendor Stocking– Promotional Response– Market Insights

• Thanks for the San Diego Experience • Six Commissary Council Committees• Broad/comprehensive cooperation

– COOP Ads– Coupon Outreach– Systems Applications– Category Review Refinements– Promo Support Across Departments– Vendor Stocking– Promotional Response– Market Insights

• 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

• 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

• What’s the most common error on 40-15s???

– Invalid GTINs?

– Invalid case packs?

– Erroneous product dimensions?

– Erroneous tie & tier?

– Erroneous availability dates?

• What’s the most common error on 40-15s???

– Invalid GTINs?

– Invalid case packs?

– Erroneous product dimensions?

– Erroneous tie & tier?

– Erroneous availability dates?

• 78% of 40-15s being returned

• Types of errors/omissions– Missing/invalid GTINs: 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)

• 78% of 40-15s being returned

• Types of errors/omissions– Missing/invalid GTINs: 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)

• 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

• 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

• Pilot test successfully completed (Oct-Dec

– Five participants

• Kellogg’s, J&J, Nestle, Nabisco, Callard Bowser

• Seventeen vendors currently participating

• Additional vendors in negotiation

• Program enhancements under review

• Pilot test successfully completed (Oct-Dec

– Five participants

• Kellogg’s, J&J, Nestle, Nabisco, Callard Bowser

• Seventeen vendors currently participating

• Additional vendors in negotiation

• Program enhancements under review

• Hire front end buyer

• Evaluate return on investment

• CARTS/SCO impact

• Queuing line solution?

• Impulse items

• Hire front end buyer

• Evaluate return on investment

• CARTS/SCO impact

• Queuing line solution?

• Impulse items

• Internet business– 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 – 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

• Internet business– 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 – 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

– 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 as conditions/insights warrant

• 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

– 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 as conditions/insights warrant

• 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

• 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

– Reducing number of secondary items

– Extending promotional support throughout K codes

• 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

– Reducing number of secondary items

– Extending promotional support throughout K codes

• Be aggressive – use “the glass is half full” approach

– 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

• Cross-merchandise – build a “total store” plan & execute

• Organics are growing rapidly in many markets

• Be aggressive – use “the glass is half full” approach

– 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

• Cross-merchandise – build a “total store” plan & execute

• Organics are growing rapidly in many markets

• Focus on perimeter

• Focus on impulse items

• Club pack program has become annual program

- Focus on hot deals as well as seasonal

• Case pack sales– Complement with exchange items where beneficial to both

– Support vendor stocking on every payday weekend

• Make sure you execute the plan