The Future of Category Analytics – Win with Shoppers

1. The Future of Category Analytics – Win with Shoppers

2. Who is Acosta

3. Discussion Topics • A quick look at the evolution of category analytics • The need to focus on the shopper • New skills and methods needed • Bret Thurston • Sr. Manager Category Development – Hillshire Brands

4. The industry is evolving back to a local shopper focus - Everything Old is New Again(with a twist) Past 2012+ 1980’s Future Local Store Control National Strategies Shopper Based Offers Local Market Advertising One Plan for the Entire Chain Neighborhood/ Precision Marketing Limited Assortment Assortment as a Differentiator Assortment customization Private Brands as a Point of Difference Private Brands as a Margin Play Private Brands as a Point of Difference Small Neighborhood Stores Larger Super Stores Neighborhood Stores-Multi Formats “Shopper "focus Customer focus Efficiency focus

5. Category ManagementProcess-Driven Multiple Templates New Metrics like GMROI, DOS, Opp Gap, Market Coverage, etc

6. Cut the store into Micro units versus looking at how Shoppers were buying across the store Refrigerated Juice Shelf Stable Juice

7. Loyalty programs introduced New metrics like top shopper, trips, frequency, basket affinity, conversion, etc

8. Most do not align loyalty analytics to the category management process Loyalty Analytics Category Management Who are my Shoppers? Segment Loyalty Other What are their purchase Behaviors? Trips Frequency Basket Programs Loyalty offers Category Priority, Roles and Strategies and Tactics. Assessment Assortment, Pricing, Merchandising, Shelf Placement, and Scorecards Promotions Price reductions Features Displays

9. Need to move analytics from just a category focus to shopper focus

10. Our process is to continue the transition from traditional category management as retailers place more focus on their shoppers TODAY Driven by shopper insights along the path to purchase, and is more holistic to include the aisle, department, and store. Store YESTERDAY Path to Purchase Category Category CATEGORY TA Convenient, easy to shop, good variety. CATEGORY ROM Category Category Consumer High quality products, fun to shop, low prices. Home Delivery Store Store Category Category Category Category Category Category Category Category Convenient, easy to shop, good variety, low prices. Low prices, especially on HBC and Paper Products.

11. New shopper based analytical approach Strategic Tactical Report Progress & Adjust As Needed

12. Discovery Phase Product Shopper DNA Environmental Influence Retailer Shopper DNA What Discoveries can be made: • Who does my product appeal to? • What need do I fulfill? • How am I purchased? • How/when am I consumed? • Who does my store appeal to? • What is my position in the marketplace? • How is my store shopped? • What external factors are affecting households? • What is important to the shopper? • What does the path to purchase look like? Objective: Better understand who the shopper is at the Product and Retailer level, how they purchase the Product and shop the Retailer, and identify environmental issues that are affecting purchasing decisions.

13. Key Trends Impacting Our Industry • Shopper Landscape is Changing • Digital is Here and Growing Quickly • Retail Landscape is Changing • Marketing Spend is Shifting • Success is Driven by Innovative Growth Strategies

14. Tale of Two Shoppers Generational Economic Multi-cultural Source:AMGSA WBTB

15. Shoppers “Older consumers tend to use the new technology to do old things. Younger consumers use the new technology to do new things.” -Antone Gonsalves, “Gen Y Taking Technology to New Level” Shoppers

16. Digital is Here and Growing Quickly The Web Has “Quietly Encroached” on the Grocery Sector • The typical consumer spent 4% of their grocery budget over the internet • 52% of shoppers are using digital tools on the path to obtaining grocery goods • 32% of shoppers said they reclaimed online coupons • 31% used mobile phones for making lists, searching for recipes, and similar activities • 23% checked prices at multiple stores on the web before buying • Shoppers are buying online mainly for convenience (both shopping and delivery) and lower prices

17. Many changes in how shoppers view the shopping landscape Grab & Go at CVS Target pFresh Online Replenishment Increased Food Offerings Value Stores Walgreens Expands Fresh Dollar General (*Prototype) Urban / multiple formats Source: Kantar Retail , Nielsen

18. Opportunity Phase Buyer Conversion Share of Wallet Leakage • Is the Retailer converting Shoppers into buyers? • What is the value of increasing conversion rates? • How much of the Shoppers’ spend is captured by the Retailer? • If the sale is not captured at the Retailer, where is it going? • How does the competition treat the category? Objective: Establish consistent measures to benchmark Retailer store performance And identify areas of opportunity. Define a strategic purpose and quantify the value potential for the retailer.

19. Starting with a more holistic view shows shoppers are buying different categories more often at competitive retailers These are important categories that drive trips and larger baskets

20. Comparison of top 25 categories Retailer Source: IRI Reviews Latest 52 WE 1/22/12

21. If Retailer could convert Pet Food buyers at the same rate as competitors, sales would increase by $4.5MM. • Retailer buyer conversion = 33.7% • Avg conversion for other similar retailers= 40.2% $693,025 x 6.5= $4.5MM Source: Nielsen Channel Facts L52 WE 7/2/2011, Nielsen Planners 52 Weeks Ending 12/24/2011

22. Opportunity to drive additional sales in stores within three miles of Supercenter Correlation between Pet sales to Supercenter proximity Sales 24% higher Stores more than three miles Stores less than three miles Source: ACNielsen: Spectra

23. Diagnostic Phase Objective: Evaluate category performance on the basis of Shopper and traditional sales metrics to identify the levers of sales results.

24. Execution Phase Opportunity Discovery Diagnostic • WHAT do we know? • WHY is it important? • NOW WHAT do we do? • What is the cost? Objective: Articulate the key insights driving the business, the opportunity if addressed, and provide a clear and actionable recommendation that can be followed to close the gaps.

25. Bret Thurston Category Leadership

26. Hillshire Brands Customer Development Focus Capability Category Leadership Shopper Marketing Shopper Insights • Shopper Informed • Pricing and Promotion Expertise • KPI’s Against Shopper and Category • Change Management • Improved Communication • Specific KPI improvement • Shopper ROI’s via Shopper Marketing Development • Link Insights to Solutions • Shopper Integration into Category Leadership Platform • Promotional Shopper Insights

27. Advantaged Process for Shopper Development • Market Structure • Custom Shopper & Trip Segmentation • Proprietary Insight into Shopper Barriers • Supported by Well-developed Marketing and Advertising Support • Enhanced Platforms • Infused by Shopper Insight • Adv. Insight into Value & Promotion • Level Up customer loyalty • Merge Shopper, Category, and Retailer Needs with Insight • Shopper/Demand Based Assortment • Shelf Optimization and Theater Driven by Barriers

28. The journey is where we learn about consumer & shopper’s emotional and rational dynamics and identify the shopper’s triggers, barriers and opportunities The Shopper’s Journey Pre-Shop Shop Post Shop • How the store frames the choice and directs behavior • Store layout • Assortment modeling, Planograms • Fixture design • Shopper Marketing Programs • Influence of occasions and cultural assumptions about the category • Occasion, category and brand implications • Importance of promotion which drives channel and store choice • Understanding of the trip mission • How consumption, storage, packaging delights or frustrates • Promotional ROI • Product developments • Packaging development

29. Hillshire Brands’ Commitment to Shopper Focused Category Leadership Shopper Capabilities enable our strategies Customer Focused engagement strategies enable our partnerships Shopper Focused activation enables our success

30. Hillshire Brands Category LeadershipGuiding Principles Strong Category Leadership platformsinformed with shopper/category/customerinsights Clear understanding of and alignment to the customers’ category planning cycles, operational requirements, and category goals Investment in customer-facing category teams charged with driving retail partnerships and customizing our category leadership platforms tocreate unique activation plans for customers Disciplined approach to measuring resultsin order to ensure success

31. Hillshire Brands Building Capability to Ensure reaches all customers IRI Panel Shipments POS ACNielsen Data Updates Presentation Updates Data Updates Data Analysts Business Support, IT Hillshire Brands Category Leadership Acosta Partners Key Customers

32. Enable customization and ensure ROI Align with the customer to a level we are able to support well Fully engage in the areas where it makes sense to invest Ensure that we have a point of view on each of the customer’s strategies and tactics Become experts in areas that drive our business model forward with our customers

34. Closing thoughts

35. Industry needs to focus on delivering new analytics to drive business insights Rich Diagnostics driving hypothesis and begin understanding the why and prescribing what next Insights Basic analysis, tell what the data says, Smart text when possible, getting to the who, what, when, and where Observation Common when possible, automated, national and local Reporting Multiple sources, store level upc to total store, syndicated, panel, third party observation, etc. Data

36. * High ACV is>=50%, High Velocity is SPPD > Ctgry avg. WATCH OUT CONT TO GROW High ACV/Low Velocity High ACV/High Velocity AT RISK GROW ACV Low ACV/Low Velocity Low ACV/High Velocity Velocity Need to develop new metrics and common language Item ranking retailer productivity by point of distribution Item ranking retailer vs market ACV Old New

37. A learning environment is critical for consistency and to deliver the insights to participate as an “advisor”