U.S. RETAIL LANDSCAPE

Todd Hale, Principal Todd Hale, LLC September 21, 2015 Copyright ©2015 The Nielsen Company. Confidential and proprietary. • • • • • • • TABLE OF CONTENTS RetailButtonsHot (75) Perspective Gender (64) Retail What’s(50)Selling RetailingTrends EconomicDivide RetailNorm (3) isDisruptionthe • • • • • • • • • • ExperientialRetailing & HealthWellness DigitalRetailing Winningwith Shoppers ThatMatter Food Fight Right Private Brands RetailChannel Top Same Channel Shopping Channel S - elling - Sized Box store (92) R - sales etailers& Restaurants (18) ( Trends (76) 6 (84) (114) ) (19) (132) (140) (25) Behaviors (60) (23) (101) 2 RETAIL DISRUPTION IS THE NORM Copyright ©2015 The Nielsen Company. Confidential and proprietary. • • • • • • • Digital Source: variousnews releases & articles readby Todd in Hale spring & earlysummer of 2015 RETAIL DISRUPTION NORM THE better than Amazonprices entersJet online pure markets in majorselect deliveryservices 7 site called Live createda announced eliminate long atlines checkout Wal ordering Groupon versions Target & follow suit their ownwith launches DayPrime July 15 on flight a largeon scale U.S. commercialdroneoperations - Eleven partnering with Postmates with Elevenpartnering tooffer - Mart Mart & acquiring acquiring new naturalnew testing barcode delivery service delivery Naturally its division division has its SoopersKing online online by next year - & play market touting organic e & technology OrderUp mobile foodmobile - commerce could to to th take & • • • • • • • Brick & Mortar cereal line during nextthe colorsperceived from as artificial its General Food formatfocused & familieson wellness TargetTargetExpress toopen small with Millennial with plans FoodsWhole Marketsstores Detroit in the Kroger Group Royal preparesforinto entry U.S. market U.S Lion announces price price announces Lion creating acquiring acquiring all seven . . VAin HQ Mills Mills to agreed chain chain appeal the fifth the remove all flavors to open valueopen to format to acquire - biggest U.S. of the Hiller’s of the 2years to3 c ut programut metroarea Delhaize & 4 Copyright ©2015 The Nielsen Company. Confidential and proprietary. Source: ShareUnit NON 52 weeks ending 52 weeks NielsenAnswers, 06/29/2013 47.5% 21.2% 31.3% - *Lead *Lead LEAD BRANDS Total U.S. brand could be #1 or 2 depending on brand2 depending #1 or could be – All OutletsAll 52 weeks ending 52 weeks Combined (xAOC) 06/28/2014 21.1% 31.0% 47.9% – basedon WINNING SHARE approximately 50,000approximately 52 weeks ending 52 weeks 06/27/2015 48.0% 21.1% 30.9% top - selling brands private Other Brands Private Brands Lead Brands* brandunit share UPC - Point Change coded items versustwo Unit Unit Share yearsago + 0.5 - - 0.1 0.4 5 ECONOMIC DIVIDE Copyright ©2015 The Nielsen Company. Confidential and proprietary. Source: NielsenHomescan, 52 w/e GREATER SPENDING POWER INCOMEAS RISES Thousands $10 $0 $2 $4 $6 $8 < $25K 12/27/2014 $25K - $34K - excludesgas Annual Basket Ring $Per Household $35K - - onlyor Rx $49K - onlytrips $50K - $69K $70K - $99K $100K- $124K $125K- $149K $150K- $199K $200K+ 7 Copyright ©2015 The Nielsen Company. Confidential and proprietary. Source: NielsenHomescan, MOSTLY BECAUSE OF GREATER PERTRIP SPEND $100K -$124K $125K -$149K $150K -$199K $25K -$34K $35K -$49K $50K -$69K $70K -$99K $200K + < $25K Total U.S. 52 w/e 12/27/2014 Basket Per Ring Trip - excludesgas - onlyor Rx $38 $42 - only tripsonly $47 $51 $55 $59 $61 $62 $65 Trips PerShopper 133 136 136 137 138 138 139 141 142 8 Copyright ©2015 The Nielsen Company. Confidential and proprietary. 100% Source: NielsenHomescan, *HHI = Hardware/Home Improvement Preference: Channel % Household POWERSPENDING WITH THOSE SHOP AROUND 25% 50% 75% 0% Total U.S. 52 w/e  12/27/2014 - excludesgas P - onlyor Rx  Penetration - only trips P P P a retaila channel are skewed or high the to low income Reflects instances wherehousehold %penetration for P P P Income $200K Income $200K + Income < $25K P P P 9 Copyright ©2015 The Nielsen Company. Confidential and proprietary. Source: NielsenHomescan, Total U.S. 52 w/e 12/27/2014 drivenare ormoreIs thisdemand more to deals accessible the affluent? PURCHASES ON DEAL RISE WITH INCOME < $25K < 21 % of Dollar Purchases on a Consumer Perceived% ofDollar Purchases onaConsumer Deal $25K - $25K $34K 24 $35K - $35K $49K 24 $50K - $50K $69K 26 $70K - $70K $99K 27 $100K - $100K $124K 28 $125K - $125K $149K 28 $150K - $150K $199K UPC 28 - coded items $200K + $200K 28 10 Copyright ©2015 The Nielsen Company. Confidential and proprietary. Source: NielsenHomescan, Total U.S. 52 w/e 12/27/2014 Shares:Department GENERAL GENERAL MERCHANDISE, ALCOHOL PRODUCE & AFFLUENT SPENDMORE ON HEALTH BEAUTY, & 10% 15% 20% 25% 30% 35% 40% 45% 0% 5% % of TotalSpend P P P P is skewedis incometogroup Reflectsinstances where P Income $200K Income $200K + Income < $25K department share department share UPC – share index 115 > - coded items 11 FROZEN DEPARTMENT SHARE OF TOTAL STORE SPEND FALLS AS INCOME RISES Share of total store spend

9.4 9.3 9.1 8.8 8.6 8.1 8.0 7.7 7.3

< $25K $25K - $35K - $50K - $70K - $100K - $125K - $150K - $200K + $34K $49K $69K $99K $124K $149K $199K Frozen Food

Source: Nielsen Homescan, Total U.S. 52 w/e 12/27/2014 12

Copyright ©2015 The Nielsen Company. Confidential and proprietary. Confidential Company.The Nielsen Copyright ©2015 UPC-coded items SMALL VARIATION IN HOUSEHOLD SPEND FOR FROZEN FOODS Annual Dollar Buying Rate

$354 $337 $338 $347 $342 $345 $318 $328 $293

100

89

< $25K $25K - $35K - $50K - $70K - $100K - $125K - $150K - $200K + $34K $49K $69K $99K $124K $149K $199K Frozen Food Index to total households

Source: Nielsen Homescan, Total U.S. 52 w/e 12/27/2014 13

Copyright ©2015 The Nielsen Company. Confidential and proprietary. Confidential Company.The Nielsen Copyright ©2015 UPC-coded items FRESH PRODUCE DEPARTMENT SHARE OF SPEND RISES WITH INCOME Share of total store spend

5.3 4.9 5.0 4.4 4.1 3.7 3.4 3.1 2.9

< $25K $25K - $35K - $50K - $70K - $100K - $125K - $150K - $200K + $34K $49K $69K $99K $124K $149K $199K Fresh Produce

Source: Nielsen Homescan, Total U.S. 52 w/e 12/27/2014 14

Copyright ©2015 The Nielsen Company. Confidential and proprietary. Confidential Company.The Nielsen Copyright ©2015 UPC-coded items RAPID INCREASE IN FRESH PRODUCE SPEND AS INCOME RISES Annual Dollar Buying Rate

$240 $227 $212 $190 $171 $145 $128 $111 165 $94

64

< $25K $25K - $35K - $50K - $70K - $100K - $125K - $150K - $200K + $34K $49K $69K $99K $124K $149K $199K Fresh Produce Index to total households

Source: Nielsen Homescan, Total U.S. 52 w/e 12/27/2014 15

Copyright ©2015 The Nielsen Company. Confidential and proprietary. Confidential Company.The Nielsen Copyright ©2015 UPC-coded items Copyright ©2015 The Nielsen Company. Confidential and proprietary. CAGR$ sales : Annual $ BuyingRateAnnual Index Source: NielsenHomescan, U.S. 52 w/e 12/27/2014; Nielsen BEVERAGE BUYING AT EXTREMES THE $25 < $25K >$200K $150 $125 $100 $70 $50 $35 Avg. 4 ------$99K $69K $49K $34K $199K $149K $124K - year Wine 212 165 150 122 95 77 72 70 64 Answers Coffee + 7.0% , , Total 130 136 129 123 112 99 92 86 77 U.S. U.S. OutletsAll Combined(plusConvenience Bottled Water 128 121 116 111 108 97 99 89 84 , 52 , w/e 12/27/2014 Milk 103 107 109 107 107 104 102 96 89 Index > or = toIndex= 115 or> toIndex= 85 or< Carb + 1.7% 100 102 104 102 91 96 92 98 99 Bev UPC - coded items Beer 100 104 111 117 77 86 83 93 94 16 Copyright ©2015 The Nielsen Company. Confidential and proprietary. CAGR$ sales : Annual $ BuyingRateAnnual Index Source: NielsenHomescan, U.S. 52 w/e 12/27/2014; NielsenAnswers, Total U.S. OutletsAll Combined(plusConvenience 52 , FOOD BUYING AT EXTREMES THE $25 < $25K >$200K $150 $125 $100 $70 $50 $35 Avg. 4 ------$99K $69K $49K $34K $199K $149K $124K - year Produ Fresh 100 165 156 146 131 117 88 76 64 ce Yogurt + 5.9% 141 133 126 125 113 99 92 82 73 Spi 117 115 116 114 110 101 98 89 84 ces Cereal 105 110 109 105 107 105 103 96 86 w/e Index > or = toIndex= 115 or> toIndex= 85 or< 12/27/2014 Veggies Frozen - 0.2% 104 104 105 110 105 103 91 96 89 UPC - coded items Canned Canned Fruit 103 103 102 102 91 99 91 91 99 17 RETAILING TRENDS Competition heats up! Copyright ©2015 The Nielsen Company. Confidential and proprietary. Source: Company press Same TURNAROUND FOR SOME 10 -8 -6 -4 -2 0 2 4 6 8

- Store Home Depot Home

releases;monthly

Costco - Sales Sales Walgreens –

or quarterlynews releases

average Lowe's Kroger

growth Nordstrom

– excluding gas gas excluding

Dollar Tree Dollar

Rite Aid Rite Dollar General Dollar

green arrows arrows green Note: Whole Foods Whole

Red arrows performancesince 2009 Target

indicate largest positive swingin PetSmart

indicate worse than 2009;

CVS

2009

Walmart Sam's Club Sam's

Latest YearLatest

Kohl's

Macy's Kmart 19 GROCERY CHAINS POSTING SOLID SAME-STORE- SALES GROWTH % Same-Store-Sales Growth – average latest 52 weeks 8%

7%

6%

5%

4%

3%

2%

1%

0% Sprouts Kroger Save-A-Lot Delhaize Whole Fresh Foods Market

Source: Company press releases; monthly or quarterly news releases – excluding gas 20 Copyright ©2015 The Nielsen Company. Confidential and proprietary. Confidential Company.The Nielsen Copyright ©2015 Copyright ©2015 The Nielsen Company. Confidential and proprietary. 10 12 14 Source: Company press releases(excludinggas) Same inChange % VALUE PLAYER DRIVING STRONGER GROWTH -2 0 2 4 6 8 1st - 2nd Store - Sales Sales forlast sixreportedquarters 3rd 4th Sprouts 5th performanceisweakening growingat faster rate, but – “healthy living for“healthy living less” (current) 6th Sprouts Whole Foods Fresh Market 21 DELIVERING GROWTH, BUT WHOLE FOODS MOVING IN DIFFERENT DIRECTION % Change in Same-Store-Sales for last six reported quarters 7

6

5

4 Kroger 3 Whole Foods 2

1

0 1st 2nd 3rd 4th 5th 6th (current)

Source: Company press releases (excluding gas) 22 Copyright ©2015 The Nielsen Company. Confidential and proprietary. Confidential Company.The Nielsen Copyright ©2015 Copyright ©2015 The Nielsen Company. Confidential and proprietary. annual Source: STORES FIRST TOP RETAILERS 100 Revenue Rank 2014 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 ranking U.S. of retailersby Revenue magazine (July 2015 & July2008), Rank 2007 27 20 18 14 13 52 15 16 12 11 25 21 35 22 59 33 8 9 3 6 7 2 5 4 1 PURE domesticsales(based on 2014 & 2007 revenue),compiledby Kantar Retail Best Safeway Amazon.com Lowe's CVS Target Walgreen The Home The Kroger Co. Wal Company Delhaize America Dollar General Kohl's YUM! Brands H TJX Sears Royal Ahold / Ahold Rite Macy's Apple Store / Publix Super McDonald's - E - - - B B Grocery Caremark Aid Mart Mart Buy Holdings PLAY E Companies Stores TOP TOP 100 RETAILERS Depot Markets iTunes USA - 2015 & 2008 reports RETAILER LIST: IN2014AMAZON BECAME – Revenue Rank 2014 50 49 48 47 46 45 44 43 42 41 40 39 38 37 36 35 34 33 32 31 30 29 28 27 26 TO Revenue Moved Up (CPG) Rank 2007 80 54 45 51 36 61 60 29 10 48 91 18 81 23 40 53 38 28 ------MAKE TOP 10 Dollar Tree BurgerKing Worldwide Wendy's Trader Joe's Menard L Brands Bi Family Dollar Stores Starbucks Verizon Wireless Ross Stores 7 SUPERVALU Bed Bath Beyond & J.C. Penney Co. AT&T Wireless Gap Nordstrom Doctor's Assoc. Subway/ BJ's Wholesale Club Ace Hardware WakeFern ShopRite/ Company - - Eleven Lo Restaurant/Coffee Shop 23 Copyright ©2015 The Nielsen Company. Confidential and proprietary. annual Source: STORES TOP RETAILERS 100 LIST (CONTINUED) Revenue Rank 2014 75 74 73 72 71 70 69 68 67 66 65 64 63 62 61 60 59 58 57 56 55 54 53 52 51 ranking U.S. of retailersby Revenue magazine (July 2015 & July2008), Rank 2007 55 66 43 72 47 63 44 24 19 85 42 78 26 57 41 62 ------domesticsales(based on 2014 & 2007 revenue),compiledby Kantar Retail Sherwin DineEquity O'Reilly Automotive Food Market Toys "R" Us AutoZone Health Mart Systems Dunkin' Brands Group Army / Air Force Exchange Hy Company A&P Barnes & Noble Tractor Supply Co. WinCo Foods Chick QVC PetSmart GameStop Darden Restaurants Good Neighbor Pharmacy Dillard's Office Depot Staples Dick's Sporting Goods - Vee - fil - - A Williams TOP TOP 100 RETAILERS 2015 & 2008 reports – Revenue Rank 2014 100 99 98 97 96 95 94 93 92 91 90 89 88 87 86 85 84 83 82 81 80 79 78 77 76 Revenue Moved Up (CPG) Rank 2007 56 90 87 86 69 74 82 95 76 73 65 ------Dell Price Chopper Stater Bros. Holdings Sonic Chipotle Mexican Grill Belk Domino's Pizza True Value Co. Michaels Stores Advance Auto Parts Panera Bread Company Williams Ikea North America Services Burlington Coat Factory Ascena Retail Group Jack in the Box Neiman Marcus Defense Commissary Agency Alimentation Couche Hudson's Bay Big Lots Foot Locker Signet Jewelers AVB Brandsource Company - Sonoma Restaurant/Coffee Shop - Tard 24 Copyright ©2015 The Nielsen Company. Confidential and proprietary. Source AllDepartments GROWTH BETWEEN GAP CONVENIENCE VALUE & WINNING Billions : NielsenAnswers, Total U.S., 52 weeksending $100 $150 $200 $250 $300 $350 $400 $50 $0 Low GrowthLow – Dollar Sales &TrendSales Dollar Total measured channels: Drug Drug Stores 0.1% 06/27/2015 (vs. year ago ); * Club Stores,Club DollarStores, Mass Supermarkets VALUE & SUPERMARKETS 1.9% $811 Billion & up up Billion& - Merchandisers,Supercenters, & Military Value* 2.8% , BUTNOTMUCH 2.5% High GrowthHigh C - Stores 4.2% UPC - coded items 25 Copyright ©2015 The Nielsen Company. Confidential and proprietary. Supermarkets $2MM+ Source: Nielsen U.S. Store Counts CONVENIENCE VALUE & DRIVE STORE EXPANSION Expansion fromExpansion formats all Warehouse Clubs TDLinx Supercenters Convenience Dollar Stores Mass Merch Drug 1,320 3,886 4,150 but Mass Mass Merchandisers but 26,572 33,566 41,799 72% + of growth + of 72% from in 2014 vs. 2014 previousyear niche formatsniche 152,794 Value & Convenience vs. 2005 2014 26 Copyright ©2015 The Nielsen Company. Confidential and proprietary. Safeway CorpGrocery Source U.S. Store Counts NOT BIG OF PLAYERSTHE ALL ARE EXPANDING Expansion Expansion Kroger Corp Grocery Corp Kroger : NielsenTDLinx Delhaize Grocery Walmart Banner Albertsons LLC Publix Grocery Ahold Grocery Target - Tot - Kmart -Tot Counts reflectcorporate from Walmart,Target, Kroger, vs. 2014 Albertsons previous Publix,in year - owned grocery owned stores 763 973 1,081 1,099 1,328 1,363 1,801 2,646 vs. 4,328 2014 2005 • • • • Florida Florida Publix divestiturestores of168 stores 2,230combined after merged January in 2015 Safeway& LLCAlbertsons 2015fiscal ups supercenter growth; Walmart U.S. for almost a decade. industry’s biggest transaction supermarket retailer the in creating fifth the acquire Royal Ahold NV e - commerce to expansion 2015in Delhaize spend spend $1.3Bon cuts cuts back agreed to - Group spending spending for biggest U.S. , – a – 27 WALMART WIDENS STORE COUNT GAP U.S. Store Counts

Walmart Supercenter 3390

Walmart MM 464 • Walmart plans to add 200 to 220 Neighborhood Walmart Grocery 474 Market stores & 60 to 70 supercenters in FY 2016 • Target to open 15 stores in Target MM 1552 2015, including three distinct formats: eight TargetExpress locations, Super Target 249 one CityTarget & six general merchandise stores Kmart MM (Excl Sears) 962

Super Kmart 11 2014 vs. 2005

Source: Nielsen TDLinx 28 Copyright ©2015 The Nielsen Company. Confidential and proprietary. Confidential Company.The Nielsen Copyright ©2015 Copyright ©2015 The Nielsen Company. Confidential and proprietary. Bi-Lo/Winn-Dixie Source U.S. Store Counts EXPANSION FROM MOST REGIONAL GROCERS : Nielsen WinCo Foods SUPERVALU Giant Eagle Save Mart Wegmans TDLinx Smaller,a morewith nimble, Hy-Vee Meijer experimentingformatsnew with & A&P HEB 85 98 184 213 219 220 strong understanding 281 307 expanding • • • • filing Chapter A&P Safeway stores with of acquisitiondivested Albertsons & summer 2015 Meijer February 2015 Hy 2014 - Vee announces sale of 120 intomarketsnew enters entersTwin market Cities in expandsfrom 18to 168stores of their shoppers,of their 634 11 Wisconsin market in July2015 vs. stores after 827 2005 in 29 WHILE THE BIG GUYS WERE SLEEPING – LOOK WHAT WE DID! A successful introduction of a new format in a new market

Mariano’s has opened 32 locations since 2010, and plans for: • 34 by the end of 2015 • 39 by the end of 2016

“We have designed a store unlike any other, offering something for everyone,” said Bob Mariano, CEO and Chairman of Wisconsin-based Roundy’s in a public statement. Once there are 45 to 50 Chicagoland locations, Mariano hopes to expand into other markets.

dailynorthshore.com July 12, 2015

Sources: LogoBase; dailynorthshore.com (7/12/2015) 30 Copyright ©2015 The Nielsen Company. Confidential and proprietary. Confidential Company.The Nielsen Copyright ©2015 Copyright ©2015 The Nielsen Company. Confidential and proprietary. Fresh Market Source: Nielsen U.S. Store Counts FORHUNGER NATURAL/GOURMET & LOW PRICES Whole Foods Trader Joe's Save-A-Lot Sprouts TDLinx Aldi 167 192 387 431 Expansion fromExpansion all vs. 2014 2005 1315 in 2014in 1357 • • • possibly tenpossibly for2017 then 2016, secondhalf of Millennialwith up to five value formatstores Boston markets Houston,including flagship newstores in older forU.S.1,200 stores; plans for Whole operatestores2,000nearly expects2018,to by end of stores in Calif. of 2016;byend Aldi U.S. grocer, limited discountassortment Lidl , a $98 billion billion , a$98European market U.S.with in VA HQ to open approximatelyto open 45 Foods preparesforintoentry & NYC; plans open to sees potentialsees appeal appeal during 31 Copyright ©2015 The Nielsen Company. Confidential and proprietary. Fresh Market Source: Nielsen U.S. Store Counts FORHUNGER NATURAL/GOURMET & LOW PRICES Whole Foods Trader Joe's Save-A-Lot Sprouts TDLinx; businessinsider.com Aldi 167 192 387 431 Expansion fromExpansion all vs. 2014 2005 in 2014 in 1315 1357 — JPMorganChase a recentreport by naturalfood, according to topand sellerof organic becomeand thenation's Market surpass " Kroger businessinsider.com Whole Foods within twowithin years is expectedis to .“ (3/5/2015) 32 Copyright ©2015 The Nielsen Company. Confidential and proprietary. Sources: WholeFoods Market CAMPAIGNAD FOODS WHOLE LAUNCHESFIRST EVER NATIONAL HealthiestGrocery Store values of “ initiative will demonstrate the the multichannel advertising and the people who produce it, its history of celebrating food company’s purpose and deeper By communicating the Whole Foods Market America’s Oct. 20, 2014 20,Oct. .” 33 ALDI COMPETITOR LIDL PREPARES FOR ENTRY INTO U.S.

• “one of Europe's leading retailers, operating nearly 10,000 stores in 26 countries” • Investing $327 million to set up operations in the U.S., including their U.S. headquarters in Virginia (500 new jobs) and their U.S. regional headquarters & distribution hub in North Carolina (200 new jobs). • “Our philosophy is simple: We are focused on offering customers top-quality products at the most competitive pricing in convenient locations. W