Woolworths Regional TV Market Review September 2011

RTM is the marketing bureau for Regional free to air TV

Regional consumers are a key element in Woolworths long term success Regional consumers represent 44% of all regular Woolworths customers Woolworths is almost 80% more popular in regional than metro Regional TV is a cost efficient way to contribute to Woolworths national growth 25 Woolworths stores in rural “satellite” TV market have no support – Coles very active in this market

Regional TV covers all areas outside capital cities and reaches 36% of population QLD NNSW SNSW TAS VIC REG. WA DIARY

Populations of major regional TV markets are comparable with the metros People Source: ATR & OZTAM 2011, Nielsen Media Research 2010 NNSW 2,079 SNSW 1,410

Regional TV coverage includes large cities and fast growing coastal suburbs Newcastle & Central Coast Gold Coast Wollongong & Illawarra Canberra

Rural “Diary” markets: 19% of total regional population Regional WA Port Pirie/ Broken Hill Satellite Griffith Mildura Darwin Loxton/Mt Gambier

Satellite broadcasts into 5 states and territories PORT PIRIE & BROKEN HILL Pop: 137,000 GTS/BKN (7) STHN X 10 (10) NT Pop: 94,136 22% of SATELLITE IMPARJA (9) 7CEN (7) Rural QLD Pop: 173,381 41% of SATELLITE Rural NSW Pop: 80,366 19% of SATELLITE Rural VIC Pop: 33,813 8% of SATELLITE Rural SA Pop: 42,481 10% of SATELLITE Loxton/Mt Gambier Pop: 126,000 WIN SA (7) RTSSES (9) Source: Nielsen Media Research Regional TV Diary Markets

Urbanisation and high population growth changing the profile of regional Australia Seachange: Baby boomers and young families Lower cost of living and lifestyle are main attractions Rural populations moving to regional hub towns Less than 4% of households depend on farming

Population Increase: 2001 vs Source: ATR & OZTAM 2011 Australian population moving North and to the coast. Over 30% growth in 10 years in some regional areas National average QLDNSWVICTASMETRO

3 % 8 live in Regional TV markets Source: OzTam AGB Nielsen ,547,000 Australian GB’s with children 5-12

Regional consumers’ willingness to spend grew this year by 9% – against national trend Source: foreseechange 2005 – 2010: annual average, 2011: June 2011 survey Spending per discretionary $1000

Average household incomes in regional TV markets are within 10% of national average Source: Roy Morgan Single Source (12mths to Mar 2011 ) P25-54: Average household Income

Home price to income ratio is significantly lower in regional TV markets – eases overall cost of living pressure House price vs. income multiple Source: Residex median house *(includes apartment price) Jan – Jun 2011 & Roy Morgan Single Source 12 mths to March 2011

Incomes in regional and rural Australia are growing well above the national average Average household income growth since 2004 (P25-54) Source: Roy Morgan Single Source (12mths to Mar 2011 – 2004 )

Regional consumers are more optimistic about their current financial outlook… …and are more likely to spend on discretionary items over the coming year.

Seachange… … 20% for baby boomers …80% for families

Regional GB’s are more likely to be traditional mums with more children and bigger weekly spend Source: Roy Morgan Single Source (12mths to March 2011)

Woolworths is easily the most dominant supermarket choice for regional GB’s Source: Roy Morgan Single Source (12mths to March 2011)

Woolworths regional customers account for 44% of national total – Reg. NSW 2 nd biggest market 000’s of GB’s with Kids Mainly Shopped at Woolworths Source: Roy Morgan (12 Months to March 2011)

Woolworths is more popular in regional in every state except Victoria – NB high usage in satellite area % of GB’s with Kids Mainly Shopped at Woolworths Source: Roy Morgan (12 Months to March 2011)

Regional markets have been a key business growth driver for Woolworths over past 5 years % of GBs w/ Kids who mainly shopped at Woolworths since 2007 Source: Roy Morgan Single Source 12 months to March

Coles have had no regional growth over past 5 years and are down YOY in regular regional customers % of GBs w/ Kids who mainly shopped at Coles since 2007 Source: Roy Morgan Single Source 12 months to March

Woolworths dominates Coles in all regional markets except Victoria – where Woolworths gained customers % of GB’s with Kids Mainly Shopped at Woolworths vs. Coles Source: Roy Morgan (12 Months to March 2011) +7%+1%-2%-5%+4%-1% N/C

Woolworths has dominant market share in all rural markets except Satellite and Loxton/MtGambier – where it is losing customers to Coles % of GB’s with Kids Mainly Shopped at Woolworths vs. Coles Source: Roy Morgan (12 Months to March 2011) +22%-11%-7%+9%+36%-21%-14%+4%+21%+4%+10%-41%

25 Woolworths Stores located within Imparja's Broadcast footprint (or within 100kms of the area) 27 Coles Stores located within Imparja's Broadcast footprint (or within 100kms of the area)

Regional supermarket choice driven by price and quality – and even more so when living in less populated rural areas Source: Roy Morgan Single Source (12mths to March 2011)

Quality, choice of new products and Australian grown are especially important in rural areas Source: Roy Morgan Single Source (12mths to March 2011)

Woolworths share of TV budget allocated to regional matches the category average Source: Nielsen Media Research AdEx Note: 50% allocated to multiple product campaigns Period: July 2010 to June 2011 Woolworths Coles Metcash Bakers Delight Bakery Franklins Brumby's Bakery Michels Patisserie FoodWorks Bi-Lo Total Total TV $ $49.4m $36.9m $10.6m $2.6m $2.1m $1.1m $1.6m $809k $2.2m $419k $108.1m

Woolworths advertising awareness is low in the Satellite market compared to most other areas GBs with kids – % advertising awareness which applies to Woolworths Source: Roy Morgan (12 Months to March 2011)

FTA TV is a more dominant medium in regional Australia Source: Roy Morgan Single Source (12mths to March 2011)

News & current affairs Local TV ads Promotions Community sponsorships Regional TV is part of the community… “We live here too” …means greater engagement

Regional TV delivers higher engagement through… Play RTV sizzle reel and sample of regional TV localised TVC’s and promos

Two uniquely regional TV based strategies to drive sales growth and increase customer loyalty…

…we are a major customer of farmers, growers and manufacturers through every Australian state and territory…we are committed to helping sustain the communities that support our stores… A series of RTV spots to show produce from the local region that is in the local Woolworths store “ ”

Weekly specials on Regional TV for each regional sub-market driving customers to online for each store – would work in Satellite or overlap markets

Regional TV offers Woolworths a clear opportunity for cost efficient advertising driven growth… … a small increase in the allocation of total TV funds to regional will have disproportionately high impact