1. Page Title 8.80 Lower content limit 7.03 Bottom margin 7.86 Content start 6.08 © Kantar Retail 2015 REconfigure REtail Strategies to Drive Competitive Advantage

2. Page Title 8.80 Lower content limit 7.03 Bottom margin 7.86 Content start 6.08 © Kantar Retail 2015 2 ‒ Disruption abounds. Adapting to and capitalizing on these disruptions is a formidable challenge for both manufacturers and retailers. ‒ Previous competitive advantage was achieved by investing billions in factories, distribution centers, and stores to achieve scale and efficiencies. ‒ As digital disintermediates retail, you must reconfigure your retail strategies to adapt to 21st century retailing. ‒ Only those retailers and suppliers who REengage shoppers, REimagine value, REinvent formats, and REtool commerce will thrive. REconfigure REtail Strategies to Drive Competitive Advantage

3. Page Title 8.80 Lower content limit 7.03 Bottom margin 7.86 Content start 6.08 © Kantar Retail 2015 3 ‒ Disruptive technologies are fragmenting shoppers’ relationships with retailers and brands. ‒ Competition for shopper mindshare is chaotic and intensifying— messaging and content must cut through the clutter of communication driven by constant connectivity. ‒ REengaging shoppers means driving personalization without sacrificing scalable operations. ‒ Retailers and suppliers must develop a robust understanding of their targeted shoppers across all touch points to drive distinctive offers, curated shopper experiences, and contextual engagement. Pillar I: REengage Shoppers

4. Page Title 8.80 Lower content limit 7.03 Bottom margin 7.86 Content start 6.08 © Kantar Retail 2015 The Major Polarizers Geography: Countries and Cities… Income: Haves vs. Have Nots Ethnicity: Non-majority populations Generations: Diversity & Technology Interests 4 Polarized by: Source: Kantar Retail analysis

5. Page Title 8.80 Lower content limit 7.03 Bottom margin 7.86 Content start 6.08 © Kantar Retail 2015 5 Where Spend the Most on Groceries/HH Essentials: Gen Y vs. Boomers Source: Kantar Retail ShopperScape ®, January–September 2014 Already Have a Different Store Choice Profile Gen Y more likely to choose Walmart and specialty supermarkets

6. Page Title 8.80 Lower content limit 7.03 Bottom margin 7.86 Content start 6.08 © Kantar Retail 2015 6 36% Growth 17% Growth Gen Y cohort had historically lagged all shoppers—especially Boomers, who have been most active buyers—in terms of conversion Seniors also increasingly converting to buyers Source: Kantar Retail ShopperScape ®, July 2013 and July 2014 Average Conversion Rate* (across 30 categories) * Conversion calculated as % have purchased category online/% have shopped for category online Gen Y Getting Serious about Buying Online

7. Page Title 8.80 Lower content limit 7.03 Bottom margin 7.86 Content start 6.08 © Kantar Retail 2015 Case Study: Save-A-Lot vs. ALDI Habit vs. Whole Package Source: Kantar Retail analysis, retailer web sites 7 Save-A-LotALDI vs.

8. Page Title 8.80 Lower content limit 7.03 Bottom margin 7.86 Content start 6.08 © Kantar Retail 2015 Source: U.S. Census Bureau, Current Population Survey, 2013 and Population Projections report NP2012- T4 8 Projections of the U.S. Population by Hispanic Origin: 2015 to 2030 Age of U.S. Population by Hispanic Origin: 2013 Hispanic Shopper Population Set to Grow Nearly half of Hispanic population currently younger than 25

9. Page Title 8.80 Lower content limit 7.03 Bottom margin 7.86 Content start 6.08 © Kantar Retail 2015 Source: Kantar Retail ShopperScape ®, May 2013–July 2014 9 Arrows indicate that Hispanic shoppers are significantly more likely to shop retailers than the average shopper (95% confidence level) 51% of Hispanic shoppers shop Amazon—about on-par with the average U.S. primary HH shopper Where Do Hispanics Shop? 63% 42% 35% 34% 29% Mass/Dollar/Club/Drug 22% 17% 14% 13% 12% Supermarket Hispanics More Likely to Shop Many Top Consumables Retailers 51%

10. Page Title 8.80 Lower content limit 7.03 Bottom margin 7.86 Content start 6.08 © Kantar Retail 2015 Engagement Can Mean Partners… 1010

11. Page Title 8.80 Lower content limit 7.03 Bottom margin 7.86 Content start 6.08 © Kantar Retail 2015 Sometimes You Just Gotta Dance…Lowe’s Foods 1111

12. Page Title 8.80 Lower content limit 7.03 Bottom margin 7.86 Content start 6.08 © Kantar Retail 2015 Defining The Elusive Notion of Omnichannel Retailing A consumer experience of perfect retailing execution TRADITIONALMULTI ADDRESSABLE Low High MultiBricks & Mortar OMINICHANNEL RETAILING HOW WE MARKET HOW WE SELL 12 Source: Kantar Retail analysis

13. Page Title 8.80 Lower content limit 7.03 Bottom margin 7.86 Content start 6.08 © Kantar Retail 2015 RE-ENGAGE SHOPPERS: 3 KEY POINTS More Specific – “Addressable Marketing” –The facilities should be the heart of the base, and a “mirror” of the culture of that environment – use the “Address” you’ve got More Personal –Digital communication platforms allow a more personal relationship in terms of shopping aids and value More Fun! –Millennial Shoppers don’t view it as a chore yet 1313

14. Page Title 8.80 Lower content limit 7.03 Bottom margin 7.86 Content start 6.08 © Kantar Retail 2015 14 ‒ As the mechanics of value become more personal, dynamic, contextual, and volatile, retailers and suppliers need to reimagine value as previous sources of differentiation are increasingly commoditized. ‒ Rather than a definition based almost solely on price, shopper value in the future will be defined by those who master the artful science of REimagining value by also delivering quality and service throughout the shopper’s brand journey. Pillar II: REimagine Value

15. Page Title 8.80 Lower content limit 7.03 Bottom margin 7.86 Content start 6.08 © Kantar Retail 2015 Generally Positive, Generally Improving Spending Intentions Fewer than three in 10 shoppers consciously planning to spend less Spend about the Same Spend Somewhat/ Much Less Spend Somewhat/ Much More Spending Intentions in Coming Month Compared with Same Period Last Year (three-month moving average among all primary household shoppers) Source: Kantar Retail ShopperScape ®, December 2009–December 2014 15

16. Page Title 8.80 Lower content limit 7.03 Bottom margin 7.86 Content start 6.08 © Kantar Retail 2015 More Shoppers Considering More than Price Gen Y, Seniors lead the shift; True for both Haves and Have Nots Now More Willing to Consider Factors Other than Price When Deciding Where to Shop (share of shoppers who say this statement describes them “perfectly”/”quiet well” or “somewhat”) Arrows indicate significant difference vs. 2013 (95% confidence level) Source: Kantar Retail ShopperScape ®, October 2013 and 2014 16

17. Page Title 8.80 Lower content limit 7.03 Bottom margin 7.86 Content start 6.08 © Kantar Retail 2015 Shopper Buzzword for 2015: “Stress Free” Motivation likely differs by cohort, but all increasingly interested Share of Shoppers Who Rate “Having a Stress-Free Shopping Experience” Among Top Four Most Important Aspects of Shopping Arrows indicate significant difference vs. 2014 (95% confidence level) Source: Kantar Retail ShopperScape ®, January 2014 and January 2015 17

18. Page Title 8.80 Lower content limit 7.03 Bottom margin 7.86 Content start 6.08 © Kantar Retail 2015 The Adaption of Pricing Strategies has Created an New Industry View: “The Hourglass” Source: Kantar Retail analysis; company reports 1818 Of the top 69 supermarket retailers in the KR database, there are roughly as many characterized as: Value (22) Premium (21) Mainstream (26)* “Have-Nots” “Haves” 26.8% (CAGR 4.2%) 12.0% (CAGR 1.9%) 60.7% (CAGR 5.6%) Projected dollar growth 2014E-2019E is: *Data as of 12/01/2014

19. Page Title 8.80 Lower content limit 7.03 Bottom margin 7.86 Content start 6.08 © Kantar Retail 2015 Walmart’s Savings Catcher tool is well positioned to address both sides of the value equation: spending as little as possible, and giving the feeling of getting a good deal. Source: Kantar Retail analysis; company Web site 19 Feeling Like I Got a Good Deal Spending as Little as Possible “Our customers didn't ask for Savings Catcher but they are loving it... And customers now have a real incentive to become digitally engaged” —Neil Ashe, Walmart’s Global.com CEO, Oct 2014 “Our customers didn't ask for Savings Catcher but they are loving it... And customers now have a real incentive to become digitally engaged” —Neil Ashe, Walmart’s Global.com CEO, Oct 2014

20. Page Title 8.80 Lower content limit 7.03 Bottom margin 7.86 Content start 6.08 © Kantar Retail 2015 REIMAGINE VALUE: 3 KEY POINTS More Specific –Mid-tier positioning confuses shoppers more than helps them – make ic clear what we stand for More Personal –More and more retailers will be delivering more and more promotions and price to individuals out of the public domain More Fun –Shoppers willing to consider other factors than price, in particular things that make shopping more stress-free! 2020

21. Page Title 8.80 Lower content limit 7.03 Bottom margin 7.86 Content start 6.08 © Kantar Retail 2015 21 ‒ The physical and virtual space in which the retailer engages the shopper is in flux. ‒ We are witness to a tremendous reallocation of capital deployment, a revenge of physical retail space, and a complete reboot of how store formats serve a more convenience-oriented, efficiency-motivated, and experience- craving shopper. ‒ Categories that were once bought in stores are now often not, and the nature of sales and service in-store has been permanently altered. ‒ The confluence of these changes demands a baseline REinvention of store formats and their purpose. Pillar III: REinvent Format

22. Page Title 8.80 Lower content limit 7.03 Bottom margin 7.86 Content start 6.08 © Kantar Retail 2015 Small Format Strategy Is Long-Term Growth Testing: “5K” Convenience Testing: “12K” Neighborhood Market Optimizing: “43K,” Neighborhood Market Source: Kantar Retail research and analysis 2222 Meeting diverse and changing customer needs

23. Page Title 8.80 Lower content limit 7.03 Bottom margin 7.86 Content start 6.08 © Kantar Retail 2015 Neighborhood Market Growth Holds Steady Source: Company reports, KRIQ, Kantar Retail analysis 2323 “I want us to be judicious about how many we grow next year because I’d like to give this team a chance to put their fingerprints on it.” –Doug McMillon, October 2014 Sales (USD Millions)Store Count Half of Walmart’s sales added in 2015 will be from small format

24. Page Title 8.80 Lower content limit 7.03 Bottom margin 7.86 Content start 6.08 © Kantar Retail 2015 The Top 10 “Grocers” Top 3 all have fundamentally different business models Source: Kantar Retail analysis; company reports 2424 Edible Grocery Sales (ranked by 2013E edible grocery sales) club mass How long until Amazon falls on this list? *Data as of 12/01/2014

25. © Copyright 2014 Kantar Retail Food Service Trend Has Limits: Expect meal planning initiatives to increase Source: Kantar Retail ShopperScape ®, November 2013 25

26. © Copyright 2014 Kantar Retail Quality & Fresh Come After Price Source: Kantar Retail ShopperScape ®, February/May/August 2014 26 Perimeter: Fresh Spend Most on Food/Groceries at Retailer All shoppers Ahold (all banners) Delhaize (all banners) HEBPublixWegmansMeijer Sample size11617327224259449116288 Price 74%66%77%75%68%60%72% High-quality fresh foods 45%50%36%54%55%61%47% Items I need are in-stock 38%35%42%38% 40%37% Convenience 28%34%29%27%31%26%27% Broad selection of foods I like to cook/eat 27% 24%31% 37%23% Top 5 Important Factors When Shopping for Food/Groceries Shading indicates significantly greater percentage vs. all shoppers; border indicates significantly lower percentage (95% confidence level) Better Merchandising Food Lion’s “Garden Cooler” Better Marketing Winn-Dixie Produce Hunt

27. © Copyright 2014 Kantar Retail How Conventional Retailers Play in This Space Source: Kantar Retail analysis; store visits 27 Execution in this category Designated refrigeration unit for nat/org frozen foods. Bulk Items: Typically natural/organic snack items (serve yourself). Curved shelves and signage to call out organic/natural products. SWAS

28. © Copyright 2014 Kantar Retail Space Evolving to Drive More Experiences Source: Kantar Retail research and analysis (Costco organic images courtesy of a client); Costco.com (Sept. 2013) 28 Costco’s Organic “Event” Roll-Out Extends to online… …And Coupons

29. © Copyright 2014 Kantar Retail THERE IS ALWAYS A PLACE FOR GREAT MERCHANDISING! 29

30. Page Title 8.80 Lower content limit 7.03 Bottom margin 7.86 Content start 6.08 © Kantar Retail 2015 Two Key Types of Online Grocery Shoppers Source: Millward Brown Digital Online Intelligence Survey, Spring 2012 and Summer 2013 3030 Dedicated Online Grocery Shopper Shops “true” online grocers (Amazon Fresh, Fresh Direct, and/or Peapod) Favors online for “core” grocery trips (stock-up, fill-in) Overall, grocery shops more often Shops online b/c it’s convenient Casual Online Grocery Shopper Shops Amazon (and often only Amazon) Favors online for “long tail” purchases and browsing Spends less on online orders Shops online to save money

31. Page Title 8.80 Lower content limit 7.03 Bottom margin 7.86 Content start 6.08 © Kantar Retail 2015 © MWG 2014. CONFIDENTIAL For Brick and Mortar Retailers, Online Grocery Baskets are Big and the Ring is High The Average Online Basket Value is $147.25 55 Items on Average Source: MWG ecommerce sales Jan to August 2014

32. Page Title 8.80 Lower content limit 7.03 Bottom margin 7.86 Content start 6.08 © Kantar Retail 2015 OUR EXPECTATION IS THAT RETAIL WILL BE A COMPONENT OF WHEREVER “GATHERING” TAKES PLACE Entertainment Education Healthcare Travel Worship Work 3232

33. Page Title 8.80 Lower content limit 7.03 Bottom margin 7.86 Content start 6.08 © Kantar Retail 2015 REINVENT FORMAT: 3 KEY POINTS More Specific –Stores need to reflect specific shopper insights and specific trips – more formats will meet more specific needs More Personal –Great in-store service (fueled by technology) will be a critical differentiator More Fun –Shoppers willing to consider other factors than price, in particular things that make shopping more stress-free! 3333

34. Page Title 8.80 Lower content limit 7.03 Bottom margin 7.86 Content start 6.08 © Kantar Retail 2015 34 ‒ Shoppers demand a seamless omni- channel experience, and most retailers and suppliers are underprepared to deliver truly multichannel commerce. ‒ There is enormous pressure at the intersection of retailer and supplier commerce models that is based on item at a price margins. ‒ Suppliers must fight to maintain mindshare in this more holistic profit equation. ‒ Only those retailers and suppliers who REtool their commerce models will thrive Pillar IV: REtool Commerce

35. Page Title 8.80 Lower content limit 7.03 Bottom margin 7.86 Content start 6.08 © Kantar Retail 2015 Penetration of Amazon Prime Membership (among all U.S, primary household shoppers) Prime Penetration Now Nearly One in Four Households More than 26 million households 21.5M 15.6M 11.2M Estimated number of households 26.2M 35 Source: Kantar Retail ShopperScape®, December 2011–2014, Kantar Retail estimates

36. Page Title 8.80 Lower content limit 7.03 Bottom margin 7.86 Content start 6.08 © Kantar Retail 2015 ‒ If the plan is to gain store distribution need clear visibility on how this product will change the economics of the shelf ‒ Primarily brick and mortar retailers desperately need help with two things Avoiding the speed to price compression of frequently comped items Building better definitions of omni-channel profitability ‒ GMROI seems like a good place to start! But physical assortments will need “return on capital” style measures in order for complex asset bases to survive TODAY, ASSESSING “SHELF LEVEL” INNOVATION REQUIRES UNDERSTANDING THAT INNOVATION’S ECONOMIC ROLE AT RETAIL 36

37. Page Title 8.80 Lower content limit 7.03 Bottom margin 7.86 Content start 6.08 © Kantar Retail 2015 RETOOL COMMERCE: 3 KEY POINTS More Specific –I have to make the most of every square foot and linear inch – unleash the power of category management and the partnership of suppliers to get there! More Personal –Shoppers will configure their own relationship to pricing – remember for Amazon price is an outcome, not a strategy… More Fun –What else do shoppers buy that makes them happy? 3737

38. Page Title 8.80 Lower content limit 7.03 Bottom margin 7.86 Content start 6.08 © Kantar Retail 2015 38 ‒ Disruption abounds. Adapting to and capitalizing on these disruptions is a formidable challenge for both manufacturers and retailers. ‒ Previous competitive advantage was achieved by investing billions in factories, distribution centers, and stores to achieve scale and efficiencies. ‒ As digital disintermediates retail, you must reconfigure your retail strategies to adapt to 21st century retailing. ‒ Only those retailers and suppliers who REengage shoppers, REimagine value, REinvent formats, and REtool commerce will thrive. REconfigure REtail Strategies to Drive Competitive Advantage