Mr. Thomas Milks
Director of Sales
DeCA provides benefit to diverse
patron base
•Activity Duty
–Officer
–Enlisted
•Guard/Reserve
•Retiree
•Single
•Married
•Families
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!
Food Stamp
WIC
Region
$ Value
$ Value
DeCA East
16,360,013
6,845,557
DeCA West
9,865,423
15,363,330
DeCA Europe
Totals
NA
6,657,761
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
4,516,892
3,090,083
127,630,435
93,744,094
DeCA Europe
Totals
Consumer segmentation affected by shifting
consumption patterns
Health
Age
Convenience
Gender
Lifestyle
Income
New
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%)
FY 2006 Vs. FY 2007
+1.7%
500
+3.4%
+1.9%
-0.8%
+2.1%
$ Millions
450
+2.5%
400
350
300
OCT NOV DEC JAN
Cumulative YTD
Sales
FEB MAR APR MAY JUN
FY 2006
FY 2007
$2.713B
$2.761B
FY 2007 Strategic Sales Target: $5.430B
JUL
AUG SEP
+$48M +1.8%
FY 2006 Vs. FY 2007
# Transactions
8.500
8.000
-1.0%
-1.3%
-1.2%
-0.4%
-.5%
7.500
-1.4%
7.000
6.500
6.000
OCT
NOV
DEC
JAN
FEB
MAR APR
FY 2006
46.014M
Cumulative Transactions
MAY
JUN
JUL
AUG
SEP
FY 2007
45.567M -0.447M -1.0%
Sales Per Transaction
Year
Oct
Nov
Dec
Jan
Feb
Mar
FY 2006
$58.28 $59.22
$61.15
$58.06
$58.93
$58.01
FY 2007
$58.57 $60.57
$62.83
$59.56
$61.27
$60.71
Apr
$58.71
May
$57.04
Jun
$58.05
Jul
Aug
$57.60 $57.74
Sep
$60.03
YTD
$58.96
$60.60
• 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 :
–
Dollar Savings: $44.8M (+2.8%)
$218.1M (+.6%)
* Based on Promotional Period Contributions to Total
Rank
Date
Net Sales
Event
1
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
Event
Year
DeCA
Worldwide
Cases
DeCA
Worldwide
Dollars
2005
1,599,283
$11,666,779
2006
1,828,631
$12,558,388
Percentage
Change
14.3%
7.6%
Event
Year
2003(S)
Units
Percent
Dollars
Percent
Change
Change
1,072,866
N/A
$5,391,897
N/A
2004(S)
2005(S)
1,936,651
2,886,471
80.5%
49.0%
$9,986,974
$14,064,224
85.2%
40.8%
2006(S)
2005(W)
2006(W)
4,195,379
1,568,386
2,053,793
45.3%
N/A
30.9%
$23,116,284
$8,342,999
$12,151,444
64.4%
N/A
45.6%
• 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
– Hot Foods
+40.6%
+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 trips
to store
• 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
• 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?
• 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
• 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
• 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?
• 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
• 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
• 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
• 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
• 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
• 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