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Mr. Thomas Milks

Sales. Mr. Thomas Milks. Director of Sales. Marketing The Benefit. "Inside and Out". Marketing the Benefit--"Inside and Out". 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 …

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Mr. Thomas Milks

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  1. Sales Mr. Thomas Milks Director of Sales

  2. Marketing The Benefit "Inside and Out"

  3. Marketing the Benefit--"Inside and Out" 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!

  4. 2006 Food Stamp & WIC Redemption Food Stamp WIC 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

  5. 2006 Coupon Redemption RegionQuantity$ 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

  6. Important Issues Affecting CPG Industry Consumer segmentation affected by shifting consumption patterns Health Convenience Lifestyle New Age Gender Income Traditional

  7. DeCA's Response : Our View At The Half 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%)

  8. Commissary Sales--Total DeCA YTD FY 2006 Vs. FY 2007 +1.7% +3.4% +1.9% -0.8% +2.1% +2.5% FY 2006 FY 2007 $2.713B $2.761B Cumulative YTD Sales +$48M +1.8% FY 2007 Strategic Sales Target: $5.430B

  9. DeCA Customer Transactions FY 2006 Vs. FY 2007 # Transactions -1.0% -1.2% Millions -0.4% -1.3% -.5% -1.4% -0.447M -1.0% 46.014M 45.567M Cumulative Transactions 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

  10. FY 2007 YTD Promotion Recap • 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

  11. Promotional Period Results • 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

  12. DeCA's Top 15 Sales Days of the 21st Century

  13. DeCA's Case Lot Sales

  14. Club Pack Sale History

  15. Perishable Departments • What was the fastest growing sub-department??? • Produce? • Deli? • Bakery? • Sushi To Go? • Hot Foods?

  16. The Producers • 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 Perimeter Departments YTD

  17. Produce • 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 trips to store

  18. Meat • New, improved specifications • Resulted in increased yield • Reduced labor • Minimal impact on price • Sales increasing

  19. Prepackaged Deli Changes • 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

  20. Yogurt • Yogurt sales top ten growth category for several years • Needed expanded category for entrance of pro-biotics • In stock rates greatly improved

  21. The Center Store • Which category is most “impulsive” ??? • Carbonated beverages? • Energy bars? • Salty snacks? • Crackers? • Snack bars? • Cookies? • Candy?

  22. Reinventing the Candy Aisle • Premium chocolate section • Dark chocolates • New item introductions • Health & well being • Antioxidants • Organics

  23. The Baby Care Center • 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

  24. Need for Strategic Partnerships Increasing • Redefine relationships • Create value • Achieve goals • Customize programs • Create “WOW” factor

  25. Partnership at Work • 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

  26. March Ad -- 80,000 Circulated

  27. May/June Ad 220,000 Circulation

  28. Meat & Produce Ads • 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

  29. The Item Selection Form • What’s the most common error on 40-15s??? • Invalid GTINs? • Invalid case packs? • Erroneous product dimensions? • Erroneous tie & tier? • Erroneous availability dates?

  30. Data Quality • 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)

  31. Dead Stock Program • 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

  32. Swell Allowance Program • Pilot test successfully completed (Oct-Dec 06) • Five participants • Kellogg’s, J&J, Nestle, Nabisco, Callard Bowser • Seventeen vendors currently participating • Additional vendors in negotiation • Program enhancements under review

  33. What We Plan for 2007 • Hire front end buyer • Evaluate return on investment • CARTS/SCO impact • Queuing line solution? • Impulse items

  34. What We Plan for 2007 • 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

  35. What We Plan for 2007 • 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

  36. May 2007 Case Lot Procedures • 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 Does Not Apply to DSD

  37. Promotions: 2007 • 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

  38. How To Grow Sales • 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

  39. How To Grow Sales • 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 ...And Create EXCITEMENT!

  40. How To Grow Sales?? "WOW"!!! CREATE

  41. Thank You

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