POPAI 2014 Mass Merchant Member Report © 2014 POPAI.  All rights reserved. Confidential unpublished property of POPAI.   Use and distribution limited solely to authorized users.  The use, disclosure, reproduction, modification, transfer, or transmittal of this work for any other purpose by any means without written permission of POPAI is strictly prohibited.

Methodology Entry Interviews/Pre-Shop 2,991 shoppers ages 18 years or older were screened for living in a household without members in the advertising, market research, grocery or mass merchandising industries. Interview included questions about planned category and brand purchases which were documented from shopping lists or shopper recall. General shopping information was captured as well. Shoppers were asked to return at the conclusion of their shopping trip for a follow-up exit interview with a team member. Exit Interviews/Post-Shop Post-shopping exit interviews probed on items purchased and gathered shopper perceptions of the store’s shopability and attitudes towards the shopping experience. Register receipts were scanned in order to capture and code all purchase information down to the brand level. A comparison of reported pre-store planned items and actual purchases is at the core of this study. Over 21,000 purchases were recorded. Demographic and profiling information were captured as well. Eye-Tracking A sub-set of 219 shoppers from the 2,955 who passed the screening criteria and agreed to wear eye-tracking headwear were directed to the eye-tracking team who set up each shopper prior to entering the store. Shoppers were asked to embark on their trip and shop the store as they normally would.

Display Audit Prior to conducting the shopper intercept interviews, ethnographers logged and audited every characteristic in each store The purpose was to evaluate channel trends and the overall influence of displays The audit also included a photo of each displays and was coded for the following: DISPLAY TYPES: -END-CAP -IN-LINE -POWERWING/SIDEKICK -FLOOR STAND -DEMO DISPLAYS LOCATION OF EACH DISPLAY: END OF AISLE Back-of-Store Center-of-Store Front-of-Store IN-AISLE RACETRACK Side PLACEMENT Secondary Primary CHARACTERISTICS Static Integrated Motion Freestanding Interactive

EYE TRACKING METHODOLOGY To compliment the interview data, POPAI also used eye-tracking to provide additional insight into the shopper journey Eye tracking was done in 2 store for each Mass Merchant chain (total of 6 stores) Objectives for eye tracking were: Understand shopper behavior, in particular their reaction and interactions to/with the displays in-store Measure shopper behavior as shopper naturally shop Observe and measure shopping behavior providing measurements at: Shopper Path Category/Shelf Display Engagement Integrate shopper behavior results with self-reported pre-and-post surveys

Shopper Trip Planning: List Type Nearly half of all mass merchant shopper have some sort of a mental list, supporting the opportunity for visual in-store marketing cues to “remind” shoppers 34% of all mass shoppers enter the store with no list at all, a significant difference from grocery shoppers Mental List Written List Digital List No List 47% vs. 48% 15% vs. 36% 5% vs. 3% 34% vs. 13% A E 2012-Grocery 2014-Mass Merchant Sig. differences noted using 95% confidence A: Total Mass E: Grocery PL3. What kind of shopping list did you prepare today?

Television Advertising Info received in mail/newspaper Shopper Trip Planning: Pre-Store Media Use Shoppers within the Mass Merchant channel do less pre-store planning and research than grocery shoppers suggesting there is more opportunity for in-store purchase decisions Television Advertising 2% vs. 2% Info received in mail/newspaper 18% vs. 23% Info from any coupon 14% vs. 25% 2 for 1 Info via electronic sources 9% vs. 30% Store circular/Print advertising 21% vs. 30% None 62% vs. 55% 2012-Grocery 2014-Mass Merchant PL4. Which of the following did you use to plan your shopping trip today?

Shopper Trip Planning: Category Planning TOP SPECIFICALLY MASS MERCHANT PLANNED SUB-CATEGORIES: Mass Merchant shoppers plan for a mix of both grocery and non-grocery items, however the top three-planned sub-categories are within the grocery product mix Insight: Brands within these categories may potentially have to try harder to win the purchase conversion at the shelf as they are most planned product categories Entrée Shelf Stable 75% Fresh Fruit 74% Fresh Vegetable 73% 2014-Mass Merchant PP1. For the first planned product mentioned did the shopper purchase the:

Packaged Sweet Baked Goods Shopper Trip Planning: Category Planning TOP LEAST MASS MERCHANT PLANNED CATEGORIES: A mix of both grocery and non-grocery items fall within the top least planned categories in the Mass channel Insight: Many of these categories are considered “non-essential” and are considered to be “fun” categories which stress the importance of placing them on displays to call out easily influenced shoppers Packaged Sweet Baked Goods 83% Magazines 97% Energy Drinks 85% 2014-Mass Merchant PP1. For the first planned product mentioned did the shopper purchase the:

Shopper Trip Planning: Trip Type Prior to the shopping trip shoppers were asked to distinguish their shopping trip between the following trip types: If there were there research products with no specific purchases planned: 12% If there were at the store to pick up one or two specifically planned items: 58% If there were at the store to pick up several items: 30% Additionally shoppers were asked if they were planning to buy ANY groceries and to classify the trip Stock Up 15% vs. 26% Quick Trip 62% vs. NA Fill-In 23% vs. 74% 2012-Grocery 2014-Mass Merchant S6. Which one of the following statements best describes the primary purpose of your overall shopping trip today? S7b. Which one of the following statements best describes the purpose of your GROCERY shopping trip today?

Average Basket Size For Mass Trips Due to the nature of the Mass Merchant channel a variety of trips were accounted for Notably even shoppers who had no intention to purchase any products emerge from Mass stores with an average of at least 4 products Here to browse or research products-no specific purchases planned 4 6 15 Here to pick up just one or two specifically planned items Here to pick up several or many items that you planned to buy

Average Basket Size Grocery Shoppers Overall Mass Merchant shoppers a larger basket size compared to their 2012 Grocery counterparts Fill-In Trips of more than just a few items that I need before my next stock-up N/A Quick trip to get a few items that I need now Routine stock-up trip 11 19 17 10 24 Average Basket Size For Grocery Shoppers 2012-Grocery 2014-Mass Merchant

Trip Length & Accompanying Shoppers The fact that mean spend more time in the grocery store than mass retailers is likely not due to the greater difficult in the store, as both men and women give significantly higher ease of shopping scores to grocery store categories. Rather, the greater amount of time is probably due to the greater number of purchases made in grocery. Sig. differences noted using 95% confidence A: Mass; E: Grocery OB2. Ethnographer: Indicate Shoppers Gender OB3. Is the shopper alone or accompanied by others? ((Single Select)) OB4/5. Ethnographer, please indicate the gender/age range of the persons accompanying the shopper. CS6.1. How easy or difficult was it for you to shop the <<CS1a>> section?

In-Store Decision Rate The In-Store Decision Rate for the Mass Merchant Channel is 82% Although the in-store decision rate continues to climb to a high of 82% the difference in channel should be accounted for the difference. Since mass merchant shoppers spend less time conducting pre-store research and frequently walk in without a list it is not surprising the in-store rate is so high 66% 70% 76% 82% In-Store Decision Rate

In-Store Decision Rate: Gender Implication: Although the gender gap is not large, women are more likely than men to make some or all of their purchase decision in the Mass Merchant Store 2014 Mass Merchant 24% 76% 2012 Grocery 71% 29% 82% 18% 72% 28% 2014 Planned Purchase 2014-In-Store Decision 2012-In-Store Decision 2012 Planned Purchase Sig. differences noted using 95% confidence A: Male; B: Female PP1. For the first planned product mentioned did the shopper purchase the:

In-Store Decision Rate: Age Although there is not a strong correlation between age in the Mass Merchant channel, a strong correlation exists with in-store decision rates declining with age in the 2012 Grocery data This should be kept in mind when promoting and display products for older adults In-Store Planned

2014 Top 10 Brand Mentions and Conversion Brand Conversion Despite the large variety of product choice shoppers have in the store many of today’s brands received over 50% for in-store conversion However the absence of full conversion suggests the power of in-store marketing and the importance of placing products on display in the store to motivate easily swayed shoppers 2014 Top 10 Brand Mentions and Conversion BRAND COMPLETED PURCHASE Kraft 90% Pepsi 76% Kellogg’s 85% Dove 71% Purina Pampers 68% Colgate 78% Tide 67% Charmin 77% Coca-Cola 65%

Shopper Segments: The Formation Shoppers are clustered into segments to understand the attributes and characteristics that are most important as they decide where to shop through the following steps: Shoppers were asked to rate their level of agreement with a broad set of lifestyle and shopping characteristics on a five-point scale Factor analysis was used to create shopper groups based on these lifestyle and shopping statements These factor groupings form the basis of the creation of shopper segments, which can be analyzed for shopping behavior patterns, price sensitivity, retailer preferences, retailer loyalty, demographic differences, and opportunities for conversion The factor analysis yielded four unique segments, each defined by their purchase drivers These segments have unique attitudes and behaviors as they relate to their shopping patterns and retailer selection

Shopper Segments: Breakout TIME STRESSED 29% vs. 27% Average Basket: $54 83% In-Store Decision Rate Describe themselves as easily tempted EXPLORER 23% vs. 23% Average Basket: $44 82% In-Store Decision Rate Describe themselves as impulsive TRIP PLANNER 22% vs. 24% Average Basket: $48 81% In-Store Decision Rate Describe themselves as controlled and restrained BARGAIN HUNTER 26% vs. 26% Average Basket: $39 81% In-Store Decision Rate Describe themselves as controlled and planner 2012-Grocery 2014-Mass Merchant

Display Placement Location of Display Compared to the 2012 study, one immediate difference can be seen in the placement of displays In 2012 over half of all displays were found in secondary locations, however in the 2014 study an overwhelming amount are placed in the primary aisle Location of Display

Location In-Store of Display Display Placement Similar to the 2012 Grocery study, displays placed at the end of aisle remain popular with almost half of all 2014 Mass Merchant displays Location In-Store of Display

Type of Display Display Type 2012 Grocery 2014 Mass End Cap 31% 77% The 2012 Study found that Floor stands were favored more than any other type of display, however in the 2014 Mass Merchant study it was seen that end caps are overwhelming used by brands Display Type 2012 Grocery 2014 Mass End Cap 31% 77% In-Line 13% 10% Powerwing/Sidekick 2% 6% Floor Stand 52% 4% Demo Display N/A 3% In-Store Media

Top Display Lift Categories Display Lift Index The average display lift for the Mass Merchant Channel is 1.5 Battery 17.4 Makeup 14.7 Toothpaste 7.1 Candy 4.1 Top Display Lift Categories

Demographics: Household Income The annual household income has decreased from the 2012 Grocery sample Within the Mass Merchant Channel 70% have a household income of $35,000 or more compared to 75% in 2012 Household Income

Demographic: Education Level A shift in the education profile of shoppers can be seen with 49% of Mass Merchant shoppers holding a college degree or higher, compared to the 54% in 2012 Education Level

Demographic: Employment The full-time workforce has increased from 50% in 2012 to 54% in 2014 Employment

Demographic: Ethnicity The 2014 sample is more ethnically diverse than the 1995 and 2012 study, with 65% White/Caucasian compared to 75% in 2012 and 85% in 1995