Re-Inventing Retail: Making a Difference at the Shelf Re-Inventing Retail: Making a Difference at the Shelf

Hire Acosta 2 Discussion Topics u Project Foundation/Timeline u Re-Invent Retail Strategy u Re-Invent Retail Coverage Model u Technology & Tools u How’s It Working?

Re-Invent Retail Strategy

Hire Acosta 4 Strategic Partners for Retail project Internal Acosta cross-functional team

Hire Acosta 5 Acosta Strategic Priorities Analytics / Assessment Bain analytic team Acosta taskforce Design Working Team – 8 months Bain design team Senior Acosta team Test and Pilot MEI NARS Technology – Canada test Test markets – test structure & process elements Pilot markets – test complete model Implementation Project team – 12 month commitment (planning/training) National Rollout – 6 months Re-invent Retail Scorecarding Strategic initiatives to address key industry dynamics:

Hire Acosta 6 Project Goal: Significantly Improve Distribution, Shelving, New Item Execution, and Merchandising

Hire Acosta 7 What Drives Performance for the Key Elements of Retail Services? DistributionShelving New item execution Merchan- dising Overall average Call frequency Time in Store Category/ Product knowledge Data/ Technology Customer Expertise Driver Frequency & time in store are the most important drivers of superior retail execution Rank ordered importance of drivers (1-5)

Hire Acosta 8 New Retail Model – Key Principles u Maximize SCALE through Syndicated Coverage u Enables greatest frequency & duration in highest volume stores u At the point of opportunity more often u Fewer stores…avg. 14 per rep = greater store expertise u 50% less drive time…More time in-store u Dedicated Retailer Vertical Teams u Greater retailer penetration u Enables more effective work in store u Full-Time Associates on coverage u Reduced turn-over…Higher Skill u Utilize part time for set work u Focused by Trade Class u Dedicated Fresh Team u Requires unique skill sets u State-of-the-art Technology system

Re-Invent Retail Coverage Model

Hire Acosta 10 Retail coverage variables Continuity Coverage Segmentation Store characteristics u Grocery u Mass u Natural/Specialty Product line u Core store u Dairy, Frozen, Grocery, HBC/GM u Fresh Products u Produce, Deli, Meat Channel u Volume u Buying authority u CDI & BDI

Hire Acosta 11 Coordinated Offering With Focused, Differentiated Services Segmentation by channel and product lines Fresh Products u Fresh foods team Core Store u Syndicated grocery teamCoverage team Frequency u 2X per mo. & 1x per mo. u 61% ACV Weekly coverage u 86% ACV 2x/month covg Key drivers of value u Ability to identify stores with high buying authority u Knowledge of product portfolio u Relationships with store- level decision-makers u Duration of coverage - work u Frequency of visits u Ability to respond to voids and OOS rapidly u Ability to leverage POS data proactively and reactively Wal*Mart u Dedicated Wal-Mart Teams u Anchor Team-WMSC u Syndicated-Div 1 u 2X/month-WMSC u 1X/month-Div 1 u In stock rates-99%+ u STS new items-98%/4 wks u Modular/Merchandising compliance u Improve product awareness with dept. level penetration/training GroceryMass

Hire Acosta 12 Priorities are Designed to Focus on the Highest Value Work Priority 1 Priority 2 Priority 3 Priority 4 New Items Distribution Voids Merchandising Questions Tasks (To-Do’s) ======== Rules engines designed to insure prioritization consistency & compliance Additional matrix for individual SKU volume Gatekeepers insure focus and allow for potential extreme exceptions

Technology & Tools

Hire Acosta 14 In-store opportunity identification – tools & technology DMS: In-store Distribution Management System Voids identified by retailer, by store, by period Resides on intranet site on ASSET Accessible to all Business Managers Data Prism: system for analyzing retailer POS data identifies distribution voids Void Algorithm: Developed with Bain Accurately identifies void items – driving efficiency MEI: Enterprise retail system Store-specific APL’s reside on PPC Communicates store specific opportunities Data sources: Syndicated Retailer POS TD Linx

Hire Acosta 15 Tools and Technology Store-Specific Call Plan National Strategy Local Opportunities & Activities Void Data Store Call Script (P1) New Items (P2) Voids (P3) Questions (P4)Tasks Store Specific Date Specific Acosta Prioritization System Store Specific APL Retailer POS Syndicated

How’s It Working?

Hire Acosta 17 Post Re-Invent Retail Results u Store coverage at 97% u Call per store averaging 2.3 per store per month u New Item speed to shelf at 63% in 4 weeks u Closing >90% of all identified voids each month u Averaging 9 hours coverage/store/month u Completing 95% objectives/call u Scan rates have improved 1.2%

Hire Acosta 18 Up 1.5 POINTS since inception of Re-Invent Retail… Over 32,000 net distribution points added. HBC manufacturer

Hire Acosta 19 Distribution Analysis Manufacturer C – Pre vs. Post Rollout Source: Manufacturer C Dashboards, Pre-Rollout Data (1/21/04) and Post-Rollout Data (11/06/04) Distribution Analysis Pre Rollout vs. Post Rollout

Hire Acosta 20 Fastest Manufacturer Speed to Shelf Results Ever!!!

Hire Acosta 21 Brand G Void Closure Q4 ’04 $8,600,000 annual impact for Brand G

Hire Acosta 22 How has RIR Impacted Manufacturer B at Retail So Far? u Distribution improving – scan data reflect positive changes in distribution…plus 2.8 points or 3.7% u Voids decreasing – 9.5% no scan reduction versus July ’04 – Nearly 5000 voids filled u New Item Speed to Shelf – STS has increased 50% (based on retail availability) – New Item at 94% tagged where authorized Based on MEI reports/ scan data.

Hire Acosta 23 Acosta Re-Invent Retail Model Recap u Scale u Creates the foundation for most efficient model u Syndicated model provides for greater efficiency u Greater frequency and duration in the store u Focused by Trade Class u Allows for greatest retailer knowledge u Superior tools and technology u Identifies greatest opportunity stores u Laser focused scripted tasks u Superior in-store performance u Full-time associates on coverage teams u Vertical by customer – provides greater focus u 42,000+ calls per month/2.4 average per store per month u At the point of opportunity