1. Category Project Conducted by: Chau Nguyen Randy Aaron Horton

2. INTRODUCTION

3. Household Cleaner (Fall 2010) In total GM%, household cleaners get 26.80% in Marsh Super Market, and then 35% to 39% for strong national brands in our store auditing. Private label receive a large GM%; from 45% to 55% with copy cat brands, or Premium-lite store brands. The retailers are more in control in this category because of increasing GM / profit. Retailers & many small manufacturers continued to make more new products with minimized costs, while suppliers most enhance products’ characteristics & limit cost.

4. IMPORTANCE OF DEPTH

5. GROSS MARGIN $

6. GROSS MARGIN %

7. Strongest Manufacturers Clorox – 3 stores per item between 34 SKUs – 26.8% stocking rate SC Johnson – 3 stores per item between 31 SKUs – 26.1% stocking rate

8. Demographics Highly purchased in $70,000+ households Multiple-member households Windex most popular among 5+ member households Windex primarily for under 35 year olds and Lysol for middle-age Increasing sales for under $20,000 households since 2003 Private labels are heavily consumed by both low & high income families

9. Category Role : CASH MACHINE In store audit, high GM % & medium Sales volume. → more development with increasing assortments & depth in a long run of brands competition. Based on Ad Hoc Base and Demo: – Sales volume: down a little for low income & increasing for middle-income. – Household size: +2 members family. – Essential item with 91% as household penetration & 89.3% repeated buyers

10. BRANDS

11. Brands Competition No one brand is in control of household category The market is shared by PL, some strong national brands ( Windex, Lysol, Clorox, 409, Fantastik and Mr. Clean ) and many brands from small manufacturers. Retailers are playing hard with non-stop production of new products, directly competing with national brands on quality and on price

12. DG’s PL compete directly with Windex of SC Johnson and with Mr. Clean of P&G on both share of facings (3 facings) and price (only 1/2) DG guarantees best value for customers: quality (if customers don’t satisfy, refund) price-sensitivity

13. FACINGS Most PL gained best part in share of facings and share of SKUs in small stores (niche market such as DG, IGA) But strong national brands such as Windex and Clorox try to fight back and also has strong influence in big stores (Wal-Mart, Harps).

14. SKU’s & The Battle for Shelf Space Total SKU #s found: 194 within 10 stores PL plays big part in share of SKUs but strong national brand try to gain share of facings. → uncompromising struggle Retailer is in control with rather high GM% BrandSKUs% of Category Windex168.25% Lysol157.73% Clorox94.64% Mr. Clean115.67% Private Label3920.10%

15. Average GM% by national brand

16. Stocking Rate by Suppliers ManufacturesStocking Rate SC Johnson26.1% Reckitt Benckiser2.7% Clorox26.8% P & G19.3%

17. Cost Estimation Our cost estimation is consistent with “Cash Machine” role for Household product. For strong brand like Windex, the cost is high and range from 0.07 to 0.10 ¢/ounce. For PL, cost is ultimately low and from 0.01 to 0.07¢/ounce. We lower the cost when counting items with bigger size package & increase cost for smaller size.

18. Role of Private Labels Higher gross margins Low-price Difficult to differentiate

19. Average GM% by PL

20. Private Labels Presence Increasing presence – Same number of facings – New items because of high gross margins Private consumption is increasing across most demographics

21. Private Labels vs. National Brands ITEM $ (000)DOLLAR SHAREITEM PENETRATION % REPEAT BUYERS (% 2+ TIME BUYERS) HOUSEHOLD CLEANERS WEST SOUTH CENTRAL 300,056.00.791.089.3 CTL BR ND- LIQ - CLEANERS - NON- DISINFECTANT WEST SOUTH CENTRAL 2,454.63.98.431.0 WINDEX ND- LIQ - CLEANERS - NON- DISINFECTANT WEST SOUTH CENTRAL 1,615.92.63.515.1 LYSOL ND- LIQ - CLEANERS - NON- DISINFECTANT WEST SOUTH CENTRAL 441.40.71.49.8

22. Suggested Strategy for Wal-Mart Increase strategy 36 total facings while the Harp’s on Garland had 55 total facings. Small selection of private labels and high number of facing s

23. GM% by FACINGS No.