Points of Impact FMS Retail Operations Survey 20042005

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Points of Impact FMS Retail Operations
Survey2004-2005
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Survey Overview

• Survey conducted Oct/Nov/Dec 2004
• Store Names removed
• Results compiled by FMS
• Responses represent 250 stores

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Methodology

• Major categories single/multi
• Four Formats
• Conventional/Discount/Upscale/LAS
• Four Focus areas
• Sales / Margins / Expenses / Competition

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Retailer Insights

• Competition ranking
• Impact on operation
• Competitive Actions and review
• What did work?
• What didnt?

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Methodology

• Specifics and averages requested
• Nearly all respondents from Single Store
  operations were owners, Multi-Store Respondents
  were
• Owners 54
• CFO/Controller 27
• Executive Management 19

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Number of Years in Business
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Points of Impactin Your Retail
OperationFMS/NGA Operations PerformanceIndepen
dents Supermarkets Survey2004-2005
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Survey Participation

• Thanks Goes to
• NGA
• Retailer respondents
• Retailers taking my calls
• All of you here today

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Points of ImpactAreas of Focus

• General Trends
• Competitive Climate
• Departmental Margins/Expenses
• Total Store Expenses
• Shrink
• Employee expenses

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Points of Impact

• Third Year at reviewing operations
• Nomenclature and definitions can vary
• Perceptions vs. Reality of respondents
• Survey based on response vs. statistic

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Points of Impact

• Primary purpose- spur thought and questions have
  ability to benchmark your company to others
  around the country

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Store Formats
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Stores Represented by Region
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Stores Represented
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Weekly Sales Volume Single vs. Multi Operator
Up 2.55
Up 3.96
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Sales Trend by FormatMulti Store Operator
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Business Climate
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Percentage of Single-Stores Remodeled Last Year
Over 100,000 Expenditure
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Percentage of Multi-Stores Remodeled Last Year
Over 100,000 Expenditure
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Percentage of Multi-Store Owners Anticipated
Change in Store Count
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Competitive Direct Impact Single Store
Operators
Scale of 1-5, 5 Most Direct Impact
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Competitive Direct Impact Multiple Store
Operators
Scale of 1-5, 5 Most Direct Impact
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Major Reason for Shopping Primary Store
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Major Reason for Shopping SuperCenter
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Wal-Mart Supercenter Impact

• 192 Supercenters opened in 2002
• 1258 Supercenters nationwide
• Conversion experience 20 to 50 lift in G.M.
• 86 increase in profitability
• Supercenters will outnumber Discount stores in
  2004

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Most Typical Response to Supercenters

• Establish strategies and objectives
• Remodel/Refresh
• Improve Customer Service
• Special Promotions
• Improve overall signage
• Advertise unique items and themes
• GM/HBC/Pharmacy emphasis

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U.S. Census Bureau1996 - Nov 2002 Monthly
Retail Trade SurveySector Services Statistics
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Grocery StoresAnnual Percentage Change
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Grocery vs. DrugAnnual Percentage Change
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Grocery vs. SupercentersAnnual Percentage Change
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(No Transcript)
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Gross Margins
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Total Net Gross MarginSingle v Multi Operators
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Total Net Gross Margin by Format
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Net Grocery Margin
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Net Meat Margin
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Net General Merchandise Margin
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Net HBC Margin
N/A
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Net Produce Margin
40
Net Bakery Margin
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Net Deli Margin
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Net Seafood Margin
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Net Dairy Margin
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Net Frozen Foods Margin
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Average Net Gross Profitby Department
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Average Net Gross Profitby Department contd
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Average Sales Distributionby Department
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Average Sales Distributionby Department contd
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Average Wage by Department
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Average Wage by Department
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Retail Gross MarginsUS Census Bureau
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(No Transcript)
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Employee Costs
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Sales per Labor Hour
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Wages as a of Total Sales
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Full Time vs. Part Time Employees
FT
PT
PT
FT
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Percentage of Health Care Cost Increase in 2004
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Average Cost of Health Care Per Employee in 2003
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Health care costs listed as one of the top
concerns by respondents nearly listed as
often as the concern of competing with Wal Mart
stores.
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(No Transcript)
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Store Expenses
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Advertising Cost as a of Total Sales
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Rent as a of Total Sales
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Depreciation as a to Total Sales
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Interest as a to Total Sales
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Average Store Inventory by Format
67
Average Square Footage
68
Average Inventory Per Sq. Foot
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Inventory Turns
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Net Profit Pre-Taxas a of Total Sales
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Economic Outlook
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Survey General FindingsSales

• Grocery Sales are flat
• S/C and Drug out-performing
• Discounters leading increases
• Capital investments pay dividends
• Focus on primary shoppers
• Find new things to sell
• Treat customers as individuals

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Survey General FindingsMargins

• Grocery store margins are rising
• S/C margins are declining
• Drug store margins are flat
• Single operator stores tend to have higher
  margins throughout
• Retailers focus on improving mix
• Opportunity lies in new categories

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Survey General FindingsStore Expenses

• Health Care -largest cost increase
• Single stores tend to cover more employees and at
  a higher rate
• Health Care Costs up 14 -17
• Pension/ 401 K available in 58-63
• Advertising costs lower for multi
• Single stores 67 more profitable

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THANK YOU!
Jon McCormick President, FMS
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Questions?orComments?