Center Store Consumer Insights Our Consumers & Shoppers

How the Landscape is Evolving –Economic Conditions –Changes in Shopper Behavior –Channel Trends –Continuing Behaviors Consumer “Value” Revisited Implications Our Consumers & Shoppers

Sources: U.S Leading Economic Indicators Starting to see a modest recovery in key economic indicators Feb 09 Mar 09 Apr 09 May 09 Jun 09 Jul 09 Aug 09 Sep 09 Oct 09 Nov 09 Dec 09 Jan 10 Feb 10 Index of Leading Indicators: Composite of ten indicators Equity Markets (Dow, NASDAQ, S&P) Building Permits New Factory Orders Capacity Utilization Help Wanted Ad Index Economic Conditions Positive Neutral Negative

Economic Conditions Source: Seasonally Adjusted U.S. Total Non Farm Employment, U.S. Government; 2. Shopper Loyalty Card Data from Leading National Retailer % Unemployment Rate Unemployment remains high, yet jobs increased significantly in March % of shoppers are worried about their job security, down from 20% a year ago 2 U.S. Jobs Lost or Gained

Economic Conditions Consumer confidence has improved recently The Conference Board - Nine census regions, 5,000 US households; 1985 =

Our Consumers & Shoppers Impact

Changes in Shopper Behavior 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% JuneJulyAugustSeptemberOctoberNovemberDecember % of consumers Cutting holidays abroad Cutting car purchase Buying higher quality premium food and beverages Increasing or maintaining spending on “staycations” Spending on Indulgences Shoppers increase their hesitancy with big expenses, but continue to indulge in food and beverage Source: Data Monitor “Recovery from Recession” March 2010

Changes in Shopper Behavior Shoppers began spending more in late 2009 –Personal savings dropped to 3.1% in February 2010 from almost 5% a year ago 2 Total Retail Sales ex Auto % Change vs. Prior Year Source: Dept of Commerce - Total Retail Sales exc. Auto; 2. Bureau of Economic Analysis

Shopping trips increased in 2009 Average Shopping Trips per Household All Outlet % Change vs. Prior Year Changes in Shopper Behavior Source: IRI Consumer Network; 52 weeks ending 12/27/2009 and same period prior years

Changes in Shopper Behavior Shoppers making less trips to Center Store Grocery, but increasing units purchased per trip Dollar Sales per Trip Shopper Trips Unit Sales per Trip Source: IRI April 2010 Total U.S. All Outlets, Total Edible Grocery

+1%+0%+1%+3% Item Trips per BuyerItem $ per Trip Commissary shoppers are increasing their trips, and have significantly higher spend per trip than Grocery Channel shoppers Source: Nielsen Homescan Changes in Shopper Behavior

Source: Nielsen Homescan +5% +2% +12% +3% Commissary growth outpaced Grocery during recession onset,but slowed during 2009 Changes in Shopper Behavior

Source: Nielsen RMS March 2010 Outside the gate, consumers are increasing their purchases Changes in Shopper Behavior

Grocery Mass/SC Dollar 65% 20% 6% 4% Military Convenience Pharmacy Share of Redemption 12% 16% 71% 26% 20% Redemption Growth 0%100% Coupon redemption grew 27% in 2009 across all channels Changes in Shopper Behavior Source: Nielsen April2010

Our Consumers & Shoppers Lessons

Shopping Behaviors % of Shoppers Participating in Activity Shoppers’ quest for bargain hunting is beginning to slow, but is still strong Source: IRI 2010 FMI Economic Survey; Americanism Study: IRI Economic Trend Database, IRI AttitudeLink Survey of 1,067 Consumers Continuing Behaviors

Pre-planning has become more important to shoppers Where Purchase Decisions Are Made % of Shoppers Source: Longitudinal Economic Study Series, IRI AttitudeLink, n=1,000 + shoppers Continuing Behaviors

64% of shoppers work from a pre-made list –Of those shoppers, store flyers are key in list-making preparation Source: IRI April 2010 List Making Behaviors

Reason for Impulse Purchases Away From Lists 66% of shoppers admit to varying from their list Continuing Behaviors

# Annual Meals Prepared & Consumed In-Home per Person Source: The NPD Group Home meals at highest level since 1993 Continuing Behaviors

Our Consumers & Shoppers “Value”

Source: The NPD Group; 2. Economic Resource Service, Food Business News March 2010 Food price inflation in 2009 was only 0.5% for food-at-home, but 3.5% for food-away-from home 2 Reasons for Preparing Meals at Home Consumer Value: Revisited

Brand value remains important to shoppers, especially pre-store decisions What is important to you in making a decision on brand? % of Shoppers Source: Longitudinal Economic Study Series, IRI AttitudeLink, n= Shoppers IN-STORE FACTORPRE-STORE FACTOR Consumer Value: Revisited

For consumers, “Value” continues to be much more than a price point –Value assessments are complex & ever changing –Value is perceived as all that a brand or product has to offer – and weighed in context of a price point and a host of alternative choices Mom: “It’s what I get for what I pay” Source: The J.M. Smucker Company

Consumer Value: Revisited 25 Source: The J.M. Smucker Company 30% 23% 18% 12%

Consumer Value: Revisited 26 Source: The J.M. Smucker Company 30% 23% 18% 12% Quality is paramount in purchase decisions Rely on brand names to deliver quality Willing to pay a premium for certain benefits, like health & wellness Brand & Quality Lovers

Consumer Value: Revisited 27 Source: The J.M. Smucker Company 30% 23% 18% 12% Quality is paramount in purchase decisions Rely on brand names to deliver quality Willing to pay a premium for certain benefits, like health & wellness Brand & Quality Lovers Focus their purchase decisions on fewer, yet high quality products Not driven by price or sales Reduce overall buying and make thoughtful decisions to ensure they can afford the high quality items they like Quality Savvy

Consumer Value: Revisited 28 Source: The J.M. Smucker Company 30% 23% 18% 12% Quality is paramount in purchase decisions Rely on brand names to deliver quality Willing to pay a premium for certain benefits, like health & wellness Brand & Quality Lovers Focus their purchase decisions on fewer, yet high quality products Not driven by price or sales Reduce overall buying and make thoughtful decisions to ensure they can afford the high quality items they like Quality Savvy These Moms are smart shoppers who look for good prices & deals, but they do not buy on price alone Generally less willing to pay a premium for convenience, preferring to “do-it-myself” Family Values

Consumer Value: Revisited 29 Source: The J.M. Smucker Company 30% 23% 18% 12% Quality is paramount in purchase decisions Rely on brand names to deliver quality Willing to pay a premium for certain benefits, like health & wellness Brand & Quality Lovers Focus their purchase decisions on fewer, yet high quality products Not driven by price or sales Reduce overall buying and make thoughtful decisions to ensure they can afford the high quality items they like Quality Savvy No overarching value philosophy with respect to grocery purchasing Neither strongly price-oriented, nor quality-driven Still appreciate deals, some aspects of value, some convenience elements, and small indulgences, but not overly so Drifters These Moms are smart shoppers who look for good prices & deals, but they do not buy on price alone Generally less willing to pay a premium for convenience, preferring to “do-it-myself” Family Values

Consumer Value: Revisited 30 Source: The J.M. Smucker Company 30% 23% 18% 12% Quality is paramount in purchase decisions Rely on brand names to deliver quality Willing to pay a premium for certain benefits, like health & wellness Brand & Quality Lovers Focus their purchase decisions on fewer, yet high quality products Not driven by price or sales Reduce overall buying and make thoughtful decisions to ensure they can afford the high quality items they like Quality Savvy Very price conscious Hunt for bargains in order to get by from paycheck-to- paycheck Need to stretch every dollar and will do whatever it takes to find the best price Brands are not very important, since price trumps all else Price Dependents No overarching value philosophy with respect to grocery purchasing Neither strongly price-oriented, nor quality-driven Still appreciate deals, some aspects of value, some convenience elements, and small indulgences, but not overly so Drifters These Moms are smart shoppers who look for good prices & deals, but they do not buy on price alone Generally less willing to pay a premium for convenience, preferring to “do-it-myself” Family Values

Implications Worst of recession appears to have passed, yet we remain in challenging times Consumer restraint will likely become “the new normal” Consumers are better informed and more demanding. Important to engage with them in both traditional & new ways Success can be achieved by connecting with consumers & shoppers at the right place & time … anytime inside the gate Targeted efforts will become more important: – Opportunity to increase trips inside the gate as consumers are shopping more outlets – Opportunity to increase impulse purchases Continue to leverage insights to remain relevant with our consumers Trusted brands and retailers will continue to win with innovation & differentiation

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