DEFENSE COMMISSARY AGENCY Your Commissary … It’s Worth the Trip! Sales Growth & Opportunities ALA Commissary Roundtable, April 30, 2015 Mr. Rogers Campbell Executive Director for Sales, Marketing & Policy

Your Commissary … It’s Worth the Trip! Defense Commissary Agency Agenda Sales Performance Sales Growth & Opportunities Swell Sales Objectives 2

Your Commissary … It’s Worth the Trip! Defense Commissary Agency Video 1 3

Your Commissary … It’s Worth the Trip! Defense Commissary Agency Agenda Sales Performance Sales Growth & Opportunities Swell Sales Objectives 4

Your Commissary … It’s Worth the Trip! Defense Commissary Agency Sales Trends - Sales Performance % Same Store Sales Trends October 1 – March 31

Your Commissary … It’s Worth the Trip! Defense Commissary Agency Sales Trends - Sales Performance 6 Source: Nielsen RDH Latest 26 Weeks Ending March 28, 2015 Market Dollar % Change vs YAGO DeCA+0.2% Remaining Market+1.9% xAOC+2.1%

Your Commissary … It’s Worth the Trip! Defense Commissary Agency Population Trends – Sales Performance Source: Total Population Count by Category: DEERS Point In Time Extract – as of July 2014, DRS#9331 Census.Gov (Note this is only U.S. Residents and does not include Military Serving Overseas, the reason this data set is used is to get an idea of growth in population for Nielsen RM and AOC store set which is CONUS only. Military channel is experiencing steep declines

Your Commissary … It’s Worth the Trip! Defense Commissary Agency Basket Size - Sales Performance

Your Commissary … It’s Worth the Trip! Defense Commissary Agency Basket Size Trends- Sales Performance +2.8% +3.0% +2.5% +1.2% -2.8% -6.0% -10.7% Sales Contribution

Your Commissary … It’s Worth the Trip! Defense Commissary Agency UPC-Coded Patron Savings 10 Source: Nielsen RDH CONUS ex AK HI – Only UPC Coded Products, excludes random weight meat and produce

Your Commissary … It’s Worth the Trip! Defense Commissary Agency Source: Nielsen Homescan Store Choice Drivers 2014 Strong Store Associations Weak Derived Importance Among Channel Shoppers Channel Index = 100 Commissaries Choice Drivers - Sales Performance Everyday Low Price Nearby Location Store Brand Friendly Employees Fresh Produce Trustworthy Company Well Stocked Specialty Products HBC Locally Sourced Products Fresh Meat

Your Commissary … It’s Worth the Trip! Defense Commissary Agency Agenda Sales Performance Sales Growth & Opportunities Swell Sales Objectives 12

Your Commissary … It’s Worth the Trip! Defense Commissary Agency Sales Growth & Opportunities Driving Sales 13 Staying connected and sharing best practices Engaging with the empowered shopper Winning the trip Driving the Health & Wellness growth wave

Your Commissary … It’s Worth the Trip! Defense Commissary Agency Sales Growth & Opportunities Staying Connected Keeping Current – Delivering a 21 st Century Commissary Benefit Voice of our Patrons – POS Demographics – Branding – Strategic Decisions Sharing Best Practices – What worked and didn’t work – Uniformity of practices 14

Your Commissary … It’s Worth the Trip! Defense Commissary Agency Demographics - Voice of Our Patron 15 Eligibility Validation Commissary Usage Non Usage Patrons Rank, Age Household Size Branch, Status Zip Code Demographics Category Management Marketing Customization Ability Local Promotions Benefits POS Demographics

Your Commissary … It’s Worth the Trip! Defense Commissary Agency Shopper Breakout – Voice of Our Patron 16

Your Commissary … It’s Worth the Trip! Defense Commissary Agency Commissary Shoppers – Voice of Our Patron 17

Your Commissary … It’s Worth the Trip! Defense Commissary Agency Eligible Shoppers – Voice of Our Patron 18

Your Commissary … It’s Worth the Trip! Defense Commissary Agency Industry Advertising 19

Your Commissary … It’s Worth the Trip! Defense Commissary Agency DeCA Brand Strategy Step 1 Discovery Step 2 Research & Insights Step 3 Brand Strategy 20 Brand Strategy Objective: Develop, define and deliver an updated Brand Strategy for the Commissary

Your Commissary … It’s Worth the Trip! Defense Commissary Agency DeCA Brand Strategy Research Objective: Build a foundational understanding from a patron perspective. 21 Step 1 Discovery Step 2 Research & Insights Step 3 Brand Strategy

Your Commissary … It’s Worth the Trip! Defense Commissary Agency DeCA Brand Strategy Step 1 Discovery Step 2 Research & Insights Step 3 Brand Strategy 22 Data Collection: Information was used to inform the design and tactics of the additional branding plans

Your Commissary … It’s Worth the Trip! Defense Commissary Agency DeCA Brand Strategy 23 Methodology: 11,745 Online Surveys144 In-Depth Interviews623 Intercept Surveys85 Shop Alongs18 Focus Groups

Your Commissary … It’s Worth the Trip! Defense Commissary Agency DeCA Brand Strategy Insights Gained: 81% feel the commissary supports them unlike other grocery stores 82% say that shopping at the commissary is a privilege The commissary can’t win on price Key Findings: The commissary has an advantage like no other grocery store The commissary is more than a grocery store; pivotal QoL role The privilege is ours alone Step 1 Discovery Step 2 Research & Insights Step 3 Brand Strategy 24

Your Commissary … It’s Worth the Trip! Defense Commissary Agency DeCA Brand Strategy 25 Step 1 Discovery Step 2 Research & Insights Step 3 Brand Strategy We’re Proud We’re Committed We’re More

Your Commissary … It’s Worth the Trip! Defense Commissary Agency DeCA Brand Strategy We’re Proud We’re Committed We’re More 26

Your Commissary … It’s Worth the Trip! Defense Commissary Agency DeCA Brand Strategy 27 What You Can Do The smallest details make the biggest difference If it’s not on the shelf, it can’t be sold Be a reflection of our patrons What You Can Do The smallest details make the biggest difference If it’s not on the shelf, it can’t be sold Be a reflection of our patrons Next Steps Store Signage Communication Meet, Greet Next Steps Store Signage Communication Meet, Greet

Your Commissary … It’s Worth the Trip! Defense Commissary Agency Sales Growth & Opportunities Engaging the Empowered Shopper eCommerce – CLICK2GO – Future with EBS Content Marketing – Digital Communications – Facebook – Sales flyer 28

Your Commissary … It’s Worth the Trip! Defense Commissary Agency Shift in Shopper’s Preferences - eCommerce 29 Source: Ibis World and VentureBeat eCommerce is evolving and is increasingly embracing the mobile presence Mobile shopping apps usage has grown faster than any other category of mobile apps

Your Commissary … It’s Worth the Trip! Defense Commissary Agency Where is DeCA? - eCommerce 30 CLICK2GO Piloted in 3 locations Fort Lee, Offutt AFB, Travis AFB Average Basket Size CLICK2GO: $ Brick and Mortar : $62.60 Source: Front End Sales/Transactions thru April 19

Your Commissary … It’s Worth the Trip! Defense Commissary Agency DeCA’s Future - eCommerce 31 EBS capabilities will assist with DeCA’s transition into the digital space.

Your Commissary … It’s Worth the Trip! Defense Commissary Agency Commissaries.com - Content Marketing 32 Key Communication Tool Links to all our Social Media Sites

Your Commissary … It’s Worth the Trip! Defense Commissary Agency Sales Flyer – Content Marketing Sales flyers posted for each Promotion on webpage & facebook 33

Your Commissary … It’s Worth the Trip! Defense Commissary Agency Sales Growth & Opportunities Winning the Trip Value Brands Promotions & Programs – Club Packs – Basket Building Rewards Card Customer Service Store Audits

Your Commissary … It’s Worth the Trip! Defense Commissary Agency Value Brand Quality brand names – store brand prices Response to continue demand for private label/store brand products Approximately 450 items; spanning more than 55 categories Save: 20-25% versus retail private label/store brands Save: 40% against similar national brand items Value Brands featured in each promotional flyers

Your Commissary … It’s Worth the Trip! Defense Commissary Agency Locating Opportunity- Value Brand DeCA Shoppers Purchase Private Label % HHs Purchasing….

Your Commissary … It’s Worth the Trip! Defense Commissary Agency Private Label vs Value Brand Shopper Older Shoppers Smaller Household Size Retirees Source: Spectra, POS Demographics Middle Age Shoppers Larger Households Families with Children

Your Commissary … It’s Worth the Trip! Defense Commissary Agency Basket Building - Promotions & Programs 38 Solution Mandated End Caps Encourage multiple purchases

Your Commissary … It’s Worth the Trip! Defense Commissary Agency Rewards Card Over 382,000 current users Coupon Redemptions grew 65% for FY14 New Age Technology Average Basket $157 Users spend more money! Average Basket $157

Your Commissary … It’s Worth the Trip! Defense Commissary Agency Sales Growth & Opportunities Health & Wellness Growth Healthy Lifestyle Festivals Natural, Organic and Gluten-Free Nutrition Guide Program – Educate Patrons on Nutritional Attributes – Late Summer 2015

Your Commissary … It’s Worth the Trip! Defense Commissary Agency Healthy Base Initiative

Your Commissary … It’s Worth the Trip! Defense Commissary Agency Agenda Sales Performance Sales Growth & Opportunities Swell Sales Objectives 42

Your Commissary … It’s Worth the Trip! Defense Commissary Agency Swell Allowance Program 43 Swell Allowance Program Mandatory Participation Except direct store delivered items, fresh meat, and produce. Rate Negotiations Began February 2, 2015, to be completed by June 5 th, 2015 (previously April 30 th ) Swell Rates Negotiated Rates take effect October 2015 Adjustments made after six months

Your Commissary … It’s Worth the Trip! Defense Commissary Agency Agenda Sales Performance Sales Growth & Opportunities Swell Sales Objectives 44

Your Commissary … It’s Worth the Trip! Defense Commissary Agency Sales Objectives Gas prices stable but, Patron willing to travel “Maintain” household counts and trips Opportunity to improve in store experience Fresh (produce, wellness) which will result in increased purchases DeCA demonstrated success in increasing basket size over past year Increase of 0.7 Trips ($65/trip) Increase of $3/Trip (14.5 trips/year) Source: Nielsen Homescan 52 Weeks Ending 12/27/14, Total Product Line

Your Commissary … It’s Worth the Trip! Defense Commissary Agency Convert Shoppers – Sales Objectives GROCERY MILITARY CLUB SUPERCENTER Medium Households already have vested interest in Military base ALL OTHER Source: Nielsen Homescan 52 Weeks Ending 12/27/14, Total Product Line Converting one shopper increases their annual spend with us $1456

Your Commissary … It’s Worth the Trip! Defense Commissary Agency Sales Objectives Although Economy is better, consumers are conservative with spending Sales lagging due to decline in shopping trips Market Overall Share of Wallet Growth Basket Size Growth Store Importance DeCA Improve in-store experience Minimize out of stocks ⁻Vendor Cuts ⁻Fill Rate ⁻Vendor Stocking Ethnic Foods Opportunities

Your Commissary … It’s Worth the Trip! Defense Commissary Agency Initiating Change Play Branding Video 48