1. MacDill AFB POD Meeting March 10-14, 2008 Produce Agenda  National and Regional Advertising  Merchandising  Organics  Outreach  COOL  Training

2. National Produce Ads  Advertising in Commissary Base Newspapers and Specials Flyer  2-3 produce items on front page  National pricing  Dates range from 3 days to 3 weeks  Monthly frequency  All stores participate

3. 3 COMMISSARIES REACHED Belvoir Belvoir Lewis Lewis Oceana Oceana McChord McChord Meade Meade San Diego 1 San Diego 1 Miramar Miramar Bragg (North/South) Bragg (North/South) Campbell Campbell Quantico Quantico Travis Travis Little Creek Little Creek Nellis Nellis Langley Langley MacDill MacDill Jacksonville Jacksonville Myer Myer Andrews Andrews Pendleton Pendleton Benning Benning Scott Sam Houston Bliss Lackland McGuire Eglin Luke Davis-Monthan Pensacola Norfolk ² Hood (I&II) Kirtland Eustis Jackson Offutt Knox Lee Stewart Hunter Commissary Specials Circulation Summary - 2008 50% of DeCA Conus Sales Base Paper Circulation: 2,000 circulars placed in each store: Total Distribution: 758,400 82,000 98,000 578,400 Broadcast email to MilitaryShoppers.com registrants:

4. Advantages of a National Ad  Potential of reaching 750,000 patrons  Creates an engaging, eye catching display when you walk in the store  Expands sensory experience while shopping  Reinforces the importance of fresh and emphasizes the changes that DeCA is making in the store.

5. National Ad Internal Motivators  Complete support for the ad from headquarters to store level  Ability to secure valuable real estate in the store to “Go Big”  Drives competition among commissaries to build bigger displays  Every store is on the same retail price, easier to monitor and analyze performance

6. Disadvantages of a National Ad  May not be the “BEST” retail price in every region  Loss of regional preferences when all stores must conform to the same unit of measure (lbs Vs each)  Length of ad (3 weeks) is not industry standard for produce, can’t be as “sharp” as regional promotions  Length of ad affects the weekly promo’s and impacts our choice of items to promote for the national ad

7. Advantages of Regional Ads  Ability to write very aggressive retail price points Shortened lead time Shortened lead time Not trying to coordinate five other produce contractors Not trying to coordinate five other produce contractors  Highlight and support local growers Fresher to market Fresher to market Local connection Local connection  Ability to react quickly to market conditions Take advantage of grower abundance Take advantage of grower abundance

8. Challenges for Regional Ads  Participation and execution of ads at store level Ad items are not mandatory Ad items are not mandatory Additional space may not be allocated to the ad items Additional space may not be allocated to the ad items Produce Managers may not post ad items or discuss the merchandising of the items with the produce team Produce Managers may not post ad items or discuss the merchandising of the items with the produce team Timely changing of retails and point of sale Timely changing of retails and point of sale

9. Super Bowl Avocado Ad Fort BelvoirSeymour Johnson

10. Merchandisers and the Role They Play  Assist the produce department to meet goals.  Training How receptive is the produce team to change? How receptive is the produce team to change? Following guidelines of merchandiser. Following guidelines of merchandiser. Consistency day to day, store to store. Consistency day to day, store to store.  Increased communication with DeCA supervision. Merchandisers will follow up with Store Management at end of each visit. Merchandisers will follow up with Store Management at end of each visit. Coordinate up coming events (Farmers market, promotional items, demos, etc.) Coordinate up coming events (Farmers market, promotional items, demos, etc.)

11. Best Practices What keeps the patrons coming back?  Provide the best produce available at the best price.  National Ads  Farmers Markets, Sidewalk Sales, and Case Lot Promotions add excitement to the produce department and generate increased sales.  Sampling of product / demos  Store participation in weekly ads through eye appealing well merchandised displays.  Departmental customer service: produce personnel should have knowledge of product, seasonal changes, and market trends.  Cleanliness of the produce department.  Proper ordering-ensuring the racks are always filled.  Proper rotation of product.

12. Designated Display Area  “Designated Store Entrance Mass Displays” allow the produce department to make a clear positive statement when patrons walk in the door.  Opportunity to attract patrons to the produce department by eye appealing well merchandised displays with bold ad pricing exhibited.  Results: High volume sales less shrink.

13. Organics Here is Where DeCA Stands:  Generally 4-8 foot sets – segregated.  Primarily packaged programs. Exceptions are the mountain and Ohio Valley areas.  Reluctance by stores to handle due to higher prices  Sales flat + 2%  Participation in promotions is light, with many stores not participating.

14. What is the Commercial World Doing with Organics?  National supermarkets are making commitments of up to 75 items  Regional supermarkets are making commitments to over 100 items  Price is not an issue  Offer segregated and integrated sets  Organic fresh fruit and vegetable sales up 11% nationwide  Commercial promotional participation is mandatory

15. Trends  Organic foods are the fastest growing segment in the food industry  Consumers are increasingly conscious of eating healthy and consuming more fresh fruit and vegetables including organics then they did 10 years ago  Higher income families and families with at least two children are likely the biggest organic purchasers  Science is now finding that organic fresh fruit and vegetables can be nutritionally superior to conventionally grown fruit and vegetables. Other studies are showing that organically grown produce contains more flavonoids than conventionally grown produce  Organically grown fruit and vegetables used to be sold only at natural food stores and farmers markets. Now, major commercial stores have chosen to offer expanded organic produce choices reflecting public demand and making it commonplace  Fresh herb and bunched vegetable programs being offered are organic instead of conventional  Larger PLU stickers and “bowtie” wraparound PLUs are being used in bulk programs  Consumers are prepared to pay more for organic products

16. Recommendations for DeCA Moving Forward  Commitment to organics. Dedicated sets based on store volume and clientele.  Increase participation by stores in the organic programs and promotions. More discipline  Offer organics in national ads.  Expand sets to offer more variety including bulk organic fruit and vegetables.  Sample organics in stores  Consider slightly higher shrink rate for organics  Consider the top sellers as core items  Merchandise in high traffic areas

17. Outreach Projects  Pre-natal Classes  Fun Runs  Fitness Centers  On Base Newspaper Ads  Changes to WIC  Walk to Wellness How can we help generate a greater level of participation, on base, to support the Commissary Benefit.

18. COOL  History of COOL  Coming… Sept 2008 COOL will be mandatory, however without knowing the rules, implementation is an unknown.  More reasonable than the original proposal State designation will suffice State designation will suffice  Penalties to retailers have changed Significantly reduced penalties Significantly reduced penalties Reduces liability to the retailer Reduces liability to the retailer Onus more on supplier Onus more on supplier No new record keeping requirements No new record keeping requirements

19. Five Basics to Increase Sales  Quality  Stock Level  Cleanliness  Customer Service  Signage

20. Quality  Backroom Procedures  Defined Area for Perishables  Visual Inspection  Culling  Price vs. Allocation  Product Handling  Rotation

21. Stock Level  Order Guides  Product Location/Family Groupings  Space Allocation  Rotation Practices  Working efficiently  Display Technique  Organics / Commingling

22. Cleanliness  Cleanliness Starts with You  Work Neat  Avoid Cross Contamination  List of Approved Cleaning Agents  Cleaning Schedules  Cardboard Baling

23. Customer Service  Greetings  Attentive  Samples  Personal Pride  Exceed Expectations

24. Signage  Signs – Descriptive, Accurate  Conform to DeCA standards  Report missing signs to management  Promote Multiples

25. Thank You Thank you for allowing us to freely discuss the opportunities and challenges the produce industry, DeCA and the produce contractors meet each day. We look forward to strengthening our partnership with the commissaries, increasing sales, driving customer satisfaction to new heights and delivering the maximum benefit to the military patron.