Shopper-Led Way (SLW) is Metcash Food & Grocery s approach to category management.

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1 Shopper-Led Way (SLW) is Metcash Food & Grocery s approach to category management. Our aim is to enhance the offer to the shopper and through this grow sales and margins for Retailers. We will be compiling simple state based layouts for you to implement which will; Apportion the right space for each category. Place each category in the correct flow/sequence. Recommend an appropriate range for each category and sub category based on retail scan sales and consumer insights. Identify a core range. 1

2 To ensure we make the correct recommendations for your store we will be using a variety of information sources such as :- Global Trends National Trends Aztec Shopper Tracker Retail scan sales Supplier data Our recommendations will include:- Category growth plans Category Roles Space Allocation Planograms Promotional Mix Over the next 18 months the national merchandise team will complete a detailed analysis of our major categories & develop strategic category plans for; Confectionery, Cereal, Salty Snacks, Soft Drinks,, Biscuits, Ice Cream, Cheese, Yoghurt, Table Sauces, Canned Fish, Frozen Vegetables, International Foods, Pet, Laundry, Skin Care, Cosmetics, Hair Care & Styling, Hair Colour, Nappies, Baby Formula, Baby Food, Toilet Tissue, Vitamins & Supplements, Nicotine Replacement Therapy. 2

3 Understanding SLW Category Roles When determining any category space adjustments we will ensure our current category roles are considered. Categories are measured on their respective importance to a shopper, the degree of which the category is pre-planned and the relative elasticity in sales we can achieve through additional focus. HERO POWER TRAFFIC ROUTINE 3

4 Understanding SLW Category Roles How does an Opportunistic category behave? Categories that compliment the overall offer. Primary Competition is often non-supermarket. e.g. Officeworks for Stationery. How does a Routine category behave? Staples/basic items on shoppers weekly list. Will not be forgiven by shopper if out of stock. Shopper not expecting inspiration in this category. Unlikely to be the basis for differentiation. Credible range architecture not more than the comp, with emphasis on core range. Focused on price and trust. Promotions used as a reminder to convey range position. Aware of the importance of ranging favourite brands. Use Private Label as trust label fighter. Role in the catalogue is to convey range authority. it s handy to be able to get it there ROUTINE what I expect in any good supermarket 4

5 Understanding SLW Category Roles How does a Traffic category behave? Not the basis for differentiation. Frequently purchased basket fillers that can include impulse. Typically highly branded and promotionally led. High volume and key contributors to IGA Sales. Not highly profitable due to the pricing and promotional pressures. Allocate off-location space for promo, but ensure promotional volumes can be met from the aisle. (excluding bulky items). Everyday shelf prices has to match the competition. Promotion is a primary tool to drive category traffic. Match depth and frequency of promotion. How does a Power category behave? Categories that will differentiate IGA to the shopper. Important to our target shopper. Shopper expecting inspiration in this category. Important to IGA as a key source of sales & profit. NPD, Premium Trade Up are focus areas of the power category. Look at broader competitive set to develop range architecture. Sell more and generate additional cash profit generating a halo effect across shopper mission. Range is highly responsive to customers needs within the category. High growth categories. To increase in-store theatre and greater above the line marketing. Invest in greater volume over time to deliver greater GP. TRAFFIC Items I set out to buy POWER TRAFFIC The reason I switch supermarkets ROUTINE ROUTINE 5

6 Understanding SLW Category Roles How does a Hero category behave? Has to address a unique shopper need. Increase emotional connection with the shopper customer. Hero categories must meet all the Power Criteria. Must deliver a sustainable competitive advantage. Limited number of categories that IGA can be famous for. Our proposition in these categories needs to be unbeatable by any other mainstream supermarket. Differentiation is critical. Leveraging the differences of the independent network. HERO POWER TRAFFIC ROUTINE why I shop at IGA 6

7 SLW Category Role Examples Routine Traffic Power Hero Opportunistic Bleach Dishwashing Skin Care Pet Treats Swimming Pool Fabric Softeners Laundry Detergent Baby Nappies Pet Accessories Media Paper Towels Toilet Tissue Vitamins Tobacco Baby Needs Canned Veg Breakfast Health Fds - Cereal Indian Foods Toys Sugar Snack Foods Health Fds - Cook Baby Food Socks Sports Drinks Soft Drinks Health Fds - Snack Baby Formula Underwear Canned Fruit Health Fds Sport Confectionery- Gift Frozen Fish Frozen Ice Cream Fresh Milk Frozen Pizza Dips/Pates Frozen Meals GM Stationery GM Plastic Ware 7

8 SLW Trial Current Market Analysis National Market Share IGA Market Share Capsules, 10.7% Speciality, 13.7% Accessories, 2.2% Accessories, 2.5% Speciality, 14.8% Capsules, 5.2% Roast & ground, 16.8% Instant, 56.5% Instant, 60.9% Roast & ground, 16.5% 8

9 SLW Trial Pilot store results Pilot Results (Shown as % improvement TY v LY) Number of Baskets The total number of transactions (Shown as % improvement TY v LY) Average Basket Size How much do they spend in the Category? (Shown as % improvement TY v LY) = Retail Sales How much revenue you generate (Shown as % improvement TY v LY) Pilot Stores - Control Stores- Pilot Stores- All Categories +2.3% +8.6% +11.1% -7.5% +7.2% -0.8% +0.1% +2.6% +2.7% Comparative Results (12 week Period Ending 27 th June 2015) - Pilot Vs Control Vs Total Store + 9.8% +1.6% % + 2.2% + 6.0% + 8.4% Shopper Led Pilot Stores beat Total Store Trends and Control Store Trends is in more baskets x each basket is valued at higher $ = More Retail Sales and GP $ 9

10 SLW Trial Pilot store results (ctd ) Measuring the shift in Commodity Mix (Pilot v Control) 4.00% 3.00% 2.00% 1.00% 0.00% -1.00% -2.00% -3.00% -4.00% ROAST And GROUND COFFEE COFFEE CAPSULES COFFEE ACCESSORIES INSTANT COFFEE SPECIALTY COFFEE P ilot Change in Commodity Mix Control Change in Commodity Mix The positive retail sales and GP trends have been driven by a shift in the Category Sales mix. Pilot Stores have experienced a greater sales contribution within the Growth / Premium segments that the shoppers are looking to purchase - Roast & Ground and Capsules 10