1. Retail market: Home and Garden Briefing notes and sales support for news media sales teams

2. This deck is split into two sections: Section 1 An overview of the Australian retail market Media owners must understand the competitive environment and business needs of their clients in order to provide optimal advertising solutions. Section 1 of this deck won’t make you an instant expert, but it will help get you up to speed on the most important facts about the category. Section 2 Focus on Home and Garden This report will focus on Home and Garden retail. Additional reports will discuss other key retail sectors. Section 3 Support slides for sales presentations Every great sales presentation is tailored for each client, but there some points fit most clients within a category. Section 3 contains research about how consumers make home and garden purchases, and the contribution news media makes in the decision process. What’s in this deck?

3. Section 1 Retail market: an overview

4. Retail: core of the consumer economy Turnover: $24.9bn per month Over 134,819 retail businesses employing 1.3m people Sources: Australian Bureau of Statistics: 8501.0 - Retail Trade, Australia, March 2016. 6291.0.55.003 - Labour Force, Australia, Detailed, Quarterly, 2016. 81650 Counts of Australian Businesses, including Entries and Exits, Jun 2011 to Jun 2015.

5. Retail growth prospects for 2016 Retail growth was strong for most of 2015 despite less than expected growth for the Christmas/post- Christmas sales period. Forecasts for the remainder of 2016 are for continued growth albeit at a reduced rate. Source: www.trading economics.com/australia/retail-sales-annual/forecast; ABS

6. Retail: key sectors Retail $24.9 billion/month Food $10.1bn Household goods $4.4bn Cafes, restaurants & takeaway food $3.4bn Clothing, footwear & accessories $2.0bn Department stores $1.6bn Other retail $3.4bn Source: Australian Bureau of Statistics 8501.0 - Retail Trade, Australia, March 2016. Household goods is the second largest retail sector (furniture, housewares, electrical/ electronic goods, hardware, building and garden supplies): 17% of all retail spend Food retail (supermarket/grocery, liquor, specialty food): 43% Cafes, restaurants & takeaway : 14% Clothing, footwear, accessories : 7% Department stores : 6%

7. Retailers: big spenders on advertising According to the latest Advertisers Report, retailers make up 4 of the top 5 advertisers, and 11 of the top 25. Retail accounts for 47% of total adspend for the top 25 advertisers. –Furniture retail adspend: $141.9 million (10 th position) –Retailers are also big spenders on news media, accounting for almost half of the top 25 newspaper advertisers. Source: Ebiquity, Advertisers Report, 2014.

8. Section 2 Home and Garden

9. Household goods: #2 retail sector Turnover $4.4bn each month –17% of total retail spend Average amount spent on furniture or homeware during last visit: $502.55 Average amount spent on hardware/gardening during last visit: $104.90 Sources: Australian Bureau of Statistics, 8501.0 - Retail Trade, Australia, March 2016; Ebiquity, 2014 Advertisers Report; emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending March 2016.

10. Furniture: where do consumers shop? IKEA and Harvey Norman remain the dominant furniture retailers. IKEA's store expansion has fuelled company growth, widening the gap between closest rival Harvey Norman. Figures refer to shoppers during the 12-months to March 2016. Sources: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending March 2016.

11. Gardening and hardware: where do consumers shop? Bunnings remains dominant player in the garden and hardware industry with 12.3 million visitors in the 12- months to March 2016, 9 million more than closest rival Mitre 10. Figures refer to shoppers during the 12-months to March 2016. Sources: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending March 2016.

12. Furniture and homeware shoppers: who are they? Primarily female o Female: 54% o Male: 46% Millennials to Baby Boomers o People aged 35 to 64: 31% o Women aged 30 to 44 over index by 17% Higher social grades o Social grade A over index by 12% o Social grade A women over index by 17% Figures refer to people who purchased furniture or homewares in the last 12-months. Source: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending March 2016.

13. Garden and hardware shoppers: Who are they? Older age groups o People aged 45 to 64: 34% o Average age: 47yrs o Men aged 45 to 64 over index by 16% Higher social grades o Social grade A over index by 7% o Men in social grade A over index by 9% Figures refer to people who purchased garden/hardware products in the last 12-months. Source: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending March 2016.

14. Shoppers value quality and modern design Figures refer to people who intend to buy furniture or homeware in the next 12-months. Source: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending March 2016.

15. Section 3 Support slides for sales presentations

16. The following slides provide general supporting arguments to assist sales teams when building client-specific presentations. The purpose is to open discussion, to demonstrate a basic understanding of factors that drive supermarket sales, and to show how news media can help to influence the sales process. These slides are intended to be used in a presentation after recapping the brief, and before presenting analysis and recommendations tailored to the specific client. Needless to say, they can and be should be adapted to suit your particular presentation requirements. About these slides Recap client/agency brief Supermarket industry support slides Client specific analysis Recommendations

17. Industry outlook Expectations for growth in the retail furniture sector over the five years through to 2020-21: 2.1% (annual growth forecast) Garden and Hardware industry revenue is projected to grow by an annualised 3.1% over the next five years through 2020-21 Sources: IBIS World, Furniture Retailing in Australia, March 2016; IBIS World, Hardware and Building Supplies Retailing in Australia, March 2016.

18. News media delivers Every year 12.7 million Australians buy furniture/ homewares or garden/hardware products. An overwhelming majority of them – 93 per cent – read news media each month, making it a powerful advertising platform for retailers. News media delivers large numbers of garden and homewares buyers Source: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending March 2016; Nielsen DRM March 2016, People 14+ only.

19. News media readers buy more often than non-readers They are 17% more likely to buy furniture or homewares in the next 12 months than non-readers. Readers are better prospects than non-reader Source: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending March 2016; Nielsen DRM March 2016, People 14+ only.

20. Readers spend more than non-readers Average amount spent during last visit Furniture stores Homeware stores Average Total news media readers$632.7 (+14%) $182.2 (+27%) Heavy newspaper readers (7+ issues a week)$713.8 (+29%) $226.3 (+56%) Non-news media readers $554.6 $145.3 Source: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending March 2016; Nielsen DRM March 2016, People 14+ only. Readers spend 16% more on furniture and 17% more on homewares than non- news media readers.

21. Retailers can reach big spenders with online news media. The 20 per cent of purchasers who spend the most on Home and Garden products are 6 per cent more likely to read digital news formats. Reach more big spenders with online news media Source: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending March 2016; Nielsen DRM March 2016, People 14+ only.

22. The right combination Over a four week period 1.7 million furniture/homeware buyers only read print newspapers, 1.3 million only read digital news media, while 7.8 million read both. The optimal mix of print and digital varies from by brand. For example emma data shows that print newspaper media readers are more likely to shop at Harvey Norman than online readers, while the opposite is true for IKEA. The most effective way of reaching buyers is advertising in both print and digital news media Source: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending March 2016; Nielsen DRM March 2016, People 14+ only.

23. A gloss finish A recent study commissioned by NewsMediaWorks shows that furniture retailers who invest in direct marketing can increase campaign performance by inserting catalogues in print newspapers. According to the study, some 60 per cent of shoppers recall seeing a catalogue or brochure inserted in a newspaper. Of these shoppers, 44 per cent recalled that this catalogue or brochure was for a furniture retailer. Source: NewsMediaWorks Inserted Advertising Survey, August 2015

24. Most readers consider newspapers more useful than online advertising or social media when deciding on furniture and homeware purchases. Some 23 per cent of readers consider newspapers useful, compared with 19 per cent for online advertising, and 12 per cent for social media. Figures refer to people intending to buy furniture or homewares in the next 12-months. Source: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending March 2016, Nielsen DRM March 2016, People 14+ only. Which media do shoppers turn to? News media Online Advertising Social Media

25. News media excels at reaching shoppers 5.5 million people plan to purchase home and garden products in the next year 5.1 million of these intending buyers read news media each month. Source: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending March 2016, Nielsen DRM March 2016, People 14+ only.

26. Print 78% Digital 73% In print and digital: the right combination The combined reach of print and digital news media: 94% of people planning to buy home or garden products in the next 12-months. Source: emma™ conducted by Ipsos MediaCT, People 14+ for the 12 months ending March 2016, Nielsen DRM March 2016, People 14+ only.

27. A recent Creative Benchmarking study shows local newspaper advertising attracts shoppers and improves brand perceptions One in four (25%) of people who saw the IKEA ‘Inspiration delivered online’ ad said they would visit one of the stores advertised, and a slightly higher percentage (28%) said they would go online for further information. The intention to search online was almost three times the ad performance norm, with the website prominently featured in the ad. The ad also significantly boosted brand equity for IKEA. Two in five respondents said the ad improved their overall understanding of the retailer. Print ads work hard for local retailers Source: NewsMediaWorks, Creative Benchmarking: Print ads work hard for local retailers, February 2015.

28. Client specific analysis & recommendations This is the point to bridge to a client specific discussion. Each presentation will need to be individually tailored to suit the client and their objectives, but the logical flow from here is to move on to Analyses that address the client’s specific situation, challenges and opportunities. Solutions using your inventory, giving clear reasons why they are appropriate to the client’s specific needs, and suggestions on how they can be used most effectively.

29. newsmediaworks.com.au