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From GM Resource to the ‘Hierarchy’
• The GMDC/Nielsen Hierarchy is part of a New General Merchandise (GM) Resource
• The Hierarchy enables the industry to organize and analyze data in a consistent “framework” across the GM industry players (Retailers / Wholesalers and Suppliers) and channels…common language and definitions
• The Hierarchy is being used to prioritize research study “deep dives” and serves as the backbone for a new data and analytics delivery tool supported by Nielsen's’ “Answers”.
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Size of the Prize: GM = $209 Billion
Source: Nielsen All-Outlet Projection.
• Out of $814 Billion in Total All Outlet Sales
• 25.7% is General Merchandise, or $209 Billion
• Food represents 15.2% of Total GM, or…
• $32.8 Billion in GM Sales is within Food Channel
GM Matters!
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Source: Nielsen All-Outlet Projection.
…but, the largest % of GM is from outsideFood/Drug channels
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Overall GM Department Channel TrendsSales trends are positive for Overall GM…
16%
6%
78%
Total GM Sales $209B (all outlets combined)
Food $32.8B in Sales, 2.6% growth
Drug $12.8B in Sales, -1.9% decline
All Other $163.5B in Sales, 2.1% growth
Source: GMDC / Nielsen Hierarchy Data: Total stores reporting 52 weeks through 9/25/12 (without projections)
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Defining the new GM Industry Hierarchy
“Items for me or my family to enjoy and experience…”
“Items I need to help run and manage our household…”
• Apparel
• Baby
• Candy
• Electronics & Personal Entertainment
• Pet
• Publishing (Reading Materials)
• Social Expressions
• Sporting Goods
• Toys
• Auto
• Electrical Appliances
• Hardware
• Home
• Household
• Kitchen
• Outdoor
• School and Office
• Seasonal
21
3
Source: GMDC/Nielsen Hierarchy.
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Next Levels of the Hierarchy…
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Level 1 CategoryNo. of Level 2
CategoriesNo. of Level 3
Categories
Apparel 6 13
Baby 9 21
Candy 8 24
Electronics & Personal Entertainment 7 47
Publishing (Reading Materials) 5 18
Social Expressions (Greeting Cards) 10 15
Sporting Goods 15 43
Toys 14 39
Seasonal 12 28
“Items for me or my family to enjoy and experience…”
1
“Items to better enjoy the seasons and holidays…”
3
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Next Levels of the Hierarchy…
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Level 1 CategoryNo. of Level 2
CategoriesNo. of Level 3
Categories
Automotive 5 41
Electrical Appliances 3 14
Hardware 10 60
Home 9 67
Household 11 41
Kitchen 10 37
Outdoor 12 57
Pet 9 32
School and Office 7 27
“Items I need to help run and manage our household…”
2
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GM Performance: Retailer Quartile Overview”Averages” don’t tell the whole story…
(6%) (3%) 0% 3% 6%
(6%)
(3%)
0%
3%
6%
1-Q(Worst)
2-Q
GM UPC Growth%
GM SalesGrowth%
4-Q(Best)
3-Q
Source: The Nielsen Company, Radian.
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…but the Best Performing Quartile Retailers have gained the most value from these categories…
Baby Candy Pet Kitchen Household
(8.4%)
6.5%
(3.6%)
(2.2%)
0.2%
(2.3%)
10.2%
2.3%
4.9%
2.2%
All Retailers (190) Best Performing GM Retailers (Q4)
• 3rd Largest “Mega” Category
• 4th Quartile Retailers: +6.1 point gap…
• 6th Largest “Mega” Category
• 4th Quartile Retailers: +7.1 point…
• The Largest “Mega” Category
• 4th Quartile Retailers: +5.9 point gap…
Source: The Nielsen Company, Radian.
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Smaller Role
Larger Role
BASIC/COREMinimal set of
basic GM categories.
RANGE OF ALTERNATIVES
TRADITIONALBasic/Core +
extend around Seasonal.
EXTENDEDBroader
presence in many categories.
TARGETED GMFocus in
“Signature” categories
DESTINATIONBroad deep in
most GM categories.
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Agenda
• Publishing Category Channel Performance
• Level 2 Magazines Category Channel Performance
• Food Channel Magazines Performance
• Food Channel Magazines Sales and Shopper Trends
• Level 3 Magazines Subcategory Sales Trends and Drivers
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Overall Channel PerformanceCategory: Publishing Level 1
Level 1 Publishing Category includes: Magazines, Books,
Newspapers and Maps / Atlas
FOOD CHANNEL
• $1.7 Billion
• (6%) 2012 Sale Decline
• 360 Average UPCs
DRUG CHANNEL
• $0.5 Billion
• (2%) 2012 Sale Decline
• 150 Average UPCs
ALL OTHER OUTLETS
• $1.8 Billion
• 2% 2012 Sale Increase
• 260 Average UPCs
Source: GMDC / Nielsen Hierarchy Channel Data: Total stores reporting 52 weeks through 9/25/12 (without projections)
42%
14%
45%
Total Publishing Sales $4.0B
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Overview – Contribution to Overall GMCategory: Publishing Level 1
FOOD
DRUG
ALL OTHER OUTLETS
5% (RANK 5)
4% (RANK 9)
1% (RANK 18)
Level 1 Publishing:Sales Contribution to GM by Channel
FOOD DRUG ALL OTHER
-6%
-2%
2%3%
-2%
2%
Level 1 Publishing: Sales Trend vs. Rest of GM
Category Trend Rest of GM Trend
• Publishing contributes 5% of overall GM sales in the Food channel and ranks 5th or 18 GM Level 1 categories
• Although sales are slightly higher in all other outlets, Publishing only contributes 1% of their GM sales and ranks last
• The Food channel has had a steeper decline than Drug or All others and lags overall GM sales growth by 9%.
• All Other Outlets managed to grow Publishing sales in parallel with the rest of GM categories.
Source: GMDC / Nielsen Hierarchy Channel Data: Total stores reporting 52 weeks through 9/25/12 (without projections)
Category Trend: DARK BAR Rest of GM Trend: LIGHT BAR
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Category Channel PerformanceCategory: Magazines Level 2
• Magazines drives the overall Publishing Level 1 Category sales with 50% to 60% of total sales
• Magazines are in substantial decline in both Food and Drug channels while Book sales have seen growth in both channels
FOOD CHANNEL DRUG CHANNEL
Level 2 Categories 2012 Sales % of 2012 L1 Sales
2012 Sales Trend 2012 Sales % of 2012
L1 Sales2012
Sales Trend
MAGAZINES $1,023,881,301 61% (8%) $292,587,248 53% (7%)
BOOKS $327,186,481 20% 1% $153,389,768 28% 11%
NEWSPAPERS $321,625,164 19% (6%) $101,627,561 18% (1%)
MAPS AND ATLAS $1,765,202 0.1% (26%) $2,216,457 0.4% (41%)
Total Publishing Level 1 $1,674,458,148 100% (6%) $549,821,034 100% (2%)
Source: GMDC / Nielsen Hierarchy Channel Data: Total stores reporting 52 weeks through 9/25/12 (without projections)
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Category Channel PerformanceCategory: Magazines Level 2
• Magazines UPC sold per period are declining as well but at a slightly slower rate than dollar sales.
• Average unit price is only 5% higher in the Drug channel compared to the Food channel.
Source: GMDC / Nielsen Hierarchy Channel Data: Total stores reporting 52 weeks through 9/25/12 (without projections)
FOOD CHANNEL DRUG CHANNEL
Level 2 Categories % of 2012 L1 Sales
Trend in UPCs Sold per Period
AverageUnit Price % of 2012
L1 SalesTrend in UPCs
Sold per PeriodAverage
Unit Price
MAGAZINES 61% (3%) $4.24 53% (6%) $4.55
BOOKS 20% (4%) $5.10 28% (10%) $4.78
NEWSPAPERS 19% 0% $1.43 18% (7%) $1.28
MAPS AND ATLAS 0.1% (5%) $7.64 0.4% (28%) $7.16
Grand Total 100% (3%) $3.14 100% (8%) $3.12
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Food Retailer Performance Category: Magazines Level 2 – Quartile Sales
2 Year UPC Compound
Annual Growth%
2 Year Sales Compound
AnnualGrowth%
Per Store Metrics
• $75K per year
• 534 UPCs / year
• $147 per UPC
Per Store Metrics
• $71K per year
• 538 UPCs / year
• $129 per UPC
Per Store Metrics
• $39K per year
• 459 UPCs / year
• $92 per UPC
Per Store Metrics
• $68K per year
• 557 UPCs / year
• $118 per UPC
Source: GMDC / Nielsen Hierarchy, Radian. Food Channel Analysis
(8.0%) (7.5%) (7.0%) (6.5%) (6.0%)
(12%)
(10%)
(8%)
(6%)
(4%)
(2%)
0%
1 - Q (Worst)
6798.0%
4 - Q (Best)
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Food Retailer Performance Category: Magazines Level 2 – Quartile Statistics
1st Quartile 2nd Quartile 3rd Quartile 4th Quartile
2012 Sales / Store(average)
$38,863 $67,980 $75,466 $71,111
2010 - 2012 Sales Growth (CAGR)
(10.1%) (7.5%) (5.8%) (6.0%)
UPCs / Retailer (average)
459 577 534 538
2010 - 2012 UPC Growth (CAGR)
(7.7%) (6.5%) (7.2%) (7.2%)
Sales / UPC / Store (average)
$92 $118 $147 $129
• The top three quartiles have a substantially higher sales per store basis.
• However, all quartiles are experiencing similar declines in sales and UPCs
Source: GMDC / Nielsen Hierarchy, Radian. Food Channel Analysis
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Food Retailer Sales Trends Category: Magazines Level 2
• Sales declines have been steady the last two years for most Food Retailer except the lowest performing quartile.
Source: GMDC / Nielsen Hierarchy, Radian. Food Channel Analysis
2010-2011 Growth 2011-2012 Growth
(9%)
(11%)
(8%) (8%)
(6%)(6%)
Sales Dollar Growth by Retailer QuartileQuartile 3 & 4
Quartile 2
Quartile 1
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Food Retailer Sales Per Unit TrendsCategory: Magazines Level 2
• All Food Retailer quartiles show a steady 2% increase in prices per year
Top Quartile Trends
• The top quartile has the highest sales per unit in the last 3 years
• Price differentials by quartile are small and do not drive store selection
Source: GMDC / Nielsen Hierarchy, Radian. Food Channel Analysis
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Food Retailer Shopper TrendsCategory: Magazines Level 2
• Buyer conversion in the Food Channel has remained high over the last 3 years although it did decline 4% last year. A substantial percent of Food Channel customers purchase magazines.
• Dollars per shopper declined only in 2012.
• The key driver of sales decline is the frequency of purchase (number of trips where magazines were purchased). Shopper trip including Magazines declined outside the food channel at similar rates to inside the food channel.
Source: GMDC / Nielsen Hierarchy, Radian. Panel Data Analysis
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Subcategory Sales DetailsCategory: Magazines Level 3 Subcategories
• “Magazines Unknown” represents unclassified titles including many new titles
FOOD CHANNEL DRUG CHANNEL
Level 3 Categories 2012 Sales % of 2012 L1 Sales
2012 Sales Trend 2012 Sales % of 2012
L1 Sales2012
Sales TrendLIFESTYLE AND ENTERTAINMENT
$346,904,955 34% (13%) $95,432,215 33% (11%)
MAGAZINES UNKNOWN $267,543,303 26% 6% $78,215,956 27% 4%
WOMENS $151,746,566 15% (12%) $39,781,023 14% (14%)
SPORTS, HUNTING, OUTDOOR
$59,191,665 6% (6%) $14,005,909 5% (3%)
FAMILY / HOME AND FOOD
$52,709,016 5% (15%) $5,218,923 2% (6%)
OTHER MAGAZINES $39,739,574 4% (3%) $10,520,634 4% 1%
GAMES AND PUZZLES $29,765,999 3% (8%) $16,818,200 6% (7%)
HEALTH AND FITNESS $28,442,172 3% (7%) $11,393,174 4% (9%)
TABLOIDS AND NEWS $20,351,756 2% (14%) $8,805,185 3% (5%)
TEEN AND CHILDREN $15,121,956 1% (21%) $7,863,815 3% (22%)
AUTOMOTIVE $12,364,334 1% (17%) $4,532,212 2% (17%)
TOTAL Magazine Level 2 $1,023,881,296 100% (8%) $292,587,246 100% (7%)
Source: GMDC / Nielsen Hierarchy Channel Data: Total stores reporting 52 weeks through 9/25/12 (without projections)
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Subcategory Sales DetailsCategory: Magazines Level 3 Subcategories
• “Magazines Unknown” represents unclassified titles including many new titles
Source: GMDC / Nielsen Hierarchy Channel Data: Total stores reporting 52 weeks through 9/25/12 (without projections)
FOOD CHANNEL DRUG CHANNEL
Level 3 Categories % of 2012 L1 Sales
Trend in UPCs Sold per Period
AverageUnit Price % of 2012
L1 SalesTrend in UPCs
Sold per PeriodAverage
Unit PriceLIFESTYLE AND ENTERTAINMENT
34% (5%) $3.86 33% (6%) $4.02
MAGAZINES UNKNOWN 26% 3% $5.85 27% 1% $5.90
WOMENS 15% (8%) $2.64 14% (12%) $3.61
SPORTS, HUNTING, OUTDOOR
6% (5%) $5.76 5% (5%) $5.37
FAMILY / HOME AND FOOD
5% (11%) $6.33 2% (3%) $5.91
OTHER MAGAZINES 4% (3%) $5.33 4% 0% $5.30
GAMES AND PUZZLES 3% (5%) $3.66 6% (12%) $3.63
HEALTH AND FITNESS 3% (4%) $4.74 4% (9%) $4.99
TABLOIDS AND NEWS 2% (13%) $7.44 3% (11%) $7.56
TEEN AND CHILDREN 1% (18%) $4.26 3% (20%) $4.21
AUTOMOTIVE 1% (11%) $5.79 2% (3%) $5.85
TOTAL Magazine Level 2 100% (3%) $4.24 100% (6%) $4.55
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Food Retailer Performance Category: Quartile Statistics – Relative Growth Rates
Overall GMLevel 1
Publishing Level 2
Magazines
1st Quartile (4.6%) (8.9%) (10.1%)
2nd Quartile (1.9%) (6.7%) (7.5%)
3rd Quartile 2.1% (5.2%) (5.8%)
4th Quartile 6.5% (4.9%) (6.0%)
Best to Worst: Growth Rate Advantage
(pts)11 4 4
• The top quartile retailers outperform the bottom quartile retailers by 4 points in Publishing and Magazines (but still a negative trend line)
Source: GMDC / Nielsen Hierarchy, Radian. Food Channel Analysis
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• All main subcategories are in sales decline – most in double digit decline this last year
• New titles and small distribution titles (Unknown and Other subcategories) have shown growth in the last year, mitigating a small amount of the overall category decline
• The Sports, Hunting and Outdoors subcategory and the Health and Fitness subcategory have about ½ the decline rate of other subcategories but account for just 9% of total sales
Subcategory Sales InsightsCategory: Magazines Level 3 Subcategories
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• Magazines is a $1B dollar business and rank 5th in overall GM sales - This is an important category to manage proactively
• Although Magazines are in a long term decline like other print media, 25% of Food Retail customers purchase this category – This is an important category for your customers
• New and low volume titles have sales growth that mitigate the overall decline – Retailers have to support assortment updates and regular category refinements
Implications for RetailersCategory: Magazines Level 2
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• Suppliers have to refine their go-to-market strategies and supply chains to remain profitable in a declining market
• The Food channel is central to the overall success for the Magazines category. Category refinements and title updates are critical to slowing the sales decline.
• Price increase have trimmed the overall sales decline but purchase frequencies are declining and is a critical risk to customer engagement and readership.
Implications for SuppliersCategory: Magazines Level 2
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• Improve overall data elements to capture clearer picture of the category• Provide “clean” and complete list of UPCs for new titles
• Identify Mainline vs. Check stand titles
• Identify retailer best practices that are mitigating decline• Cross-merchandising Outposts
• Renew emphasis of contribution margin of category• Category is still over $1 Billion in sales and delivers a 2 to 3 times greater
“contribution” margin than most any other category in the store.
Implications for SuppliersNext Steps