ACM Self-Checkout at Jewel: Any Size Order, Any Time

1. Jewel Osco and PSI January 8, 2003 A N Y S I Z E O R D E R, A N Y T I M E

2. Agenda • Introductions and expectations • PSI ACM self checkout key advantages • ACM self checkout program at Jewel • Goals and overview • Description • Importance to Jewel’s success • Program outline details • Measurements • Self checkout “Best Practices” review • Summary and next steps

3. ACM 700 self checkout key advantages • Any size order any time • Higher sales and item throughput • Lower intervention rates • Incremental security • Intuitive system makes ACM easiest to use

4. Key advantages - continued • Faster throughput at peak times • Faster processing of non-barcoded items with graphic images • Modular configuration options fit all store formats and sizes • Flexibility to accommodate use of baggers

5. Jewel Store #3162 ACM floor plan

6. ACM Self Checkout at Jewel

7. Success criteria for ACM self checkout at Jewel • Industry-identified self checkout goals • Enhance customer service • Increase store labor productivity and profits • Improve competitive advantage

8. Prove success with ACM self checkout study • ACM self checkout study program quantitatively proves self checkout success • Monitors self checkout sales, items and customer throughput • Increased customer utilization = higher customer acceptance • Increased self checkout sales and item throughput = increased opportunity for labor savings • Establishes customer service improvements • Reduced customer line size • Identifies opportunities for labor productivity improvements • Locate opportunities to reduce labor hours on the entire front-end • Increase in overall front-end productivity levels

9. Program overview • Customer line size and labor utilization survey • Pre-self checkout • Post-self checkout • Measurement criteria • Front end sales, item and customer transaction throughput • Self checkout and conventional lanes • Shopper line size per open lane • Number of associates working on a customer order • Labor hours used on front-end, self checkout and conventional • Labor hours earned from self checkout • Post-install consumer survey

10. In-store customer line size and labor utilization survey provides accurate, credible data • Real-store data supports ROI • Labor hour savings opportunities • Customer service improvements • Based on in-store observations and data analysis • Collect store-specific information, pre- and post-self checkout • Observe customer lines and front end staffing • 15 minute intervals, 12 hours per day for 7 days • Collect data on store customer line size per lane • Conventional lanes, Self checkout and service desk • Collect data on labor scheduling and resource utilization • Count actual associates servicing customer orders • Assess information on labor scheduling and labor productivity levels • Gather information on front-end procedures and policies

11. Customer line survey form

12. In-store customer survey • Goal - obtain information on customer’s perception of self checkout • Why they choose self checkout • How often do they use self checkout • What do they like about self checkout • Knowledge of self checkout at other stores • PSI interviews customers as they exit the store

13. Supporting information needed from Jewel • Retailer self checkout goals and expectations • Self checkout throughput • Labor savings • Customer service improvements • Weekly store throughput numbers • Sales, items, and customer transactions • By hour, by day • Conventional lanes and self checkout • Actual weekly labor schedules for front-end staff • Identified by function • Shopper’s assistant, bagger, carry/out, service desk, supervision, etc. • Store labor projection factors and productivity analysis data

14. Program timetable

15. Roles for effective implementation

16. Sample Charts from Previous Studies

17. Comparison survey data (Sample)

18. Consumer line survey data (Sample)

19. Consumer line survey data (Sample)

20. Why shoppers use ACM self checkout (Sample) (Multiple responses accepted) It’s easy to use There were lines at the other lanes It’s fun Lanes handle small and large orders equally well I like to do it myself I like to bag my own groceries My children like it I don’t have to deal with the cashier 52% 52% 50% 45% 32% 23% 18% 0% 0% 20% 40% 60%

21. Consumer survey data (Sample) Somewhat prefer ACM Much prefer ACM Somewhat prefer Other Both about the same

22. Keys to Success

23. Recipe for success • Company-wide commitment to support program • Set goals for ACM Self Checkout • Customer service • Labor reduction/reallocation • Throughput, sales, items and transactions • Select measurements and monitor performance • Implement operational “Best Practices” for ACM at store level • Publish results with focus on improved performance • Retrain as necessary

24. Best Practices implementation crucial to success • Keep ACM lanes open • Open self checkout lanes to match store hours • Train and staff lanes appropriately • Staff self checkout with friendly, courteous associates • Train associate to be at front of lane to assist customers • Communicate self checkout benefits to customers and store associates • Provide bagging assistance at the lanes as needed • Actively manage entire front end • Open conventional lanes next to self checkout first • Manage self checkout as part of the overall front end • Develop labor schedules using ACM lane capacity to improve service while reducing hours

25. Summary and next steps • ACM self checkout offers Jewel unique advantages • Easiest to use, fastest, friendly, flexible • PSI self checkout study provides replicable tool to prove success • Next steps • Review the study outline and provide feedback to customize it for Jewel’s needs (1/15/03) • Set up store level meeting to review with store team (prior to 1/19/03) • Review training materials and “Best Practices” to make sure they comply to Jewel’s standards and policies (02/05/03)

26. Appendix Operational Best Practices

27. Operational best practices • Operational best practices really works! • Successful implementation requires commitment • Management support • Goal setting and measurement • Training on best practices • Best practices • Lane always on • Appropriate staffing and training • Actively manage entire front end • Responsibilities • Cashier, front end manager, store manager

28. Best practices programs have increased usage by 35% * 2001 utilization program. Percent of total store including deli, pharmacy, and other non front end depts.

29. Successful implementation requires 3 commitments • Management support • Goal setting and measurement • Training on best practices

30. Management support • Strong, outspoken support from Executive, Division, District, and store management • Weekly inspection of SCO performance through management reporting, rankings and measurements • Actions to improve all stores’ performance • Address underperforming stores • Support continuous adherence to best practices

31. Goal setting and measurement • Store specific goals for SCO customers, items and sales, measured by • Absolute numbers • As a percentage of total front end numbers • Store specific goals on labor hour reduction/reallocation • Store specific goals on customer service levels (e.g., number of shoppers waiting in line) • Measure goals weekly and communicate absolute and relative performance of all self checkout stores

32. Training on best practices • Complete training provided to all stores • Initial start-up training • On-going support and re-training for all front end associates, particularly new associates • Incorporate SCO training into present front end training • Leverage PSI-developed training materials • Develop internal training programs and documentation • Leverage internal SCO experts

33. Best practice #1: ACM lanes always open • SCO lanes open when the store is open, handling express and full service • Close only for maintenance, cash loading or balance closing • At off-peak hours, set up conventional lane nearest SCO lanes or customer service desk to accept suspended orders • Staff lanes with a trained SCO cashier • Use signage and consumer education material to drive usage • Change “express lane” signage to accept full or express sized orders to accommodate traffic volume

34. Best practice #2: Appropriate staffing and training • Assign the most customer friendly associates to the SCO lanes • Train SCO lane associate to be available at front of lane to assist customers • Scan for customers who want full service • Encourage new users and show them how to use the lanes • Answer questions and guide use • Bag for customers to increase service and throughput • Enhance security through presence at the lane • Provide dedicated baggers if available at other lanes • Train all store associates, particularly front end associates, on use of SCO

35. Best practice #3: Actively manage entire front end • Adjust front end schedule to achieve labor reallocation goals whilemaintaining service levels • Reduce conventional lane hours, especially during off peak times • Open conventional lanes as full service lanes first and as express only when needed • Open conventional lanes near SCO lanes first, then spread out • Open conventional express lanes only when third conventional lane needed • First express located next to SCO lanes, then full service next closest • Close non-productive conventional lanes and reallocate labor to other departments

36. SCO cashier responsibilities • Consumer friendly and proactive with assisting customers • Work at lanes, not at paystation as much as possible • Remain at SCO lanes, do not leave to perform other tasks • Priority of tasks • Tender at the paystation when needed (< 10%) • Help customers at lane • Proactively seek new customers • Help customers bag their orders • SCO lane area maintenance

37. Front end supervisor responsibilities • During off-peak periods use flexibility of SCO lanes • Close conventional lane and reassign cashier to other tasks • During busy periods at the SCO, assist SCO cashier • Bagging customer orders • Providing assistance to customers at the lanes • Proactively seeking new customers • Schedule SCO lanes and front end as one • Utilize SCO lane capacity to absorb conventional lane volume during cashier breaks and lunches • Schedule SCO lane training for new front-end associates • Manage SCO lanes as part of overall front end

38. Store management responsibilities • Provide positive environment for SCO success • Provide support to SCO lane staff • Ensure qualified associates are assigned to SCO lanes during scheduled hours • Communicate SCO benefits to store associates and customers • Manage SCO as tool to improve store performance • Strive for improvement, review store performance and front end labor schedules regularly • Monitor performance of the lanes, using SCO and POS reports

39. Summary: Significant improvements are achievable Requires: • Management support • Goal setting and measurement • Training on best practices