PLCB Category Management Review

1

PLCB Category Management Review PWSA December
14, 2007

2

Agenda

• Clustering Solution
• Core Methodology
• Shelf Set Strategies Next Steps

3


Clustering
4

Former Clusters

• Cluster 1 Wine Enthusiasts
• - 62 stores
• - Warehouses 1 2 only

• Cluster 2 Premium Wine Development
• - 72 stores
• - All Warehouses

• Cluster 3 Popular Wine Development
• - 105 stores
• - All Warehouses

• Cluster 4 Mainstream Spirits Low Tier Wine
• - 38 stores
• - Warehouse 1 only

• Cluster 5 Metro Ethnic
• - 36 stores
• - Warehouse 1 only

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Former Clusters

• Cluster 6 Brown Goods Low Tier Wine
• - 117 stores
• - Warehouses 2 3 only

• Cluster 7 Brown Goods Development
• - 151 stores
• - Warehouses 2 3 only

• Cluster 8 Urban Ethnic
• - 36 stores
• - Warehouses 2 3 only

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Why We Changed?

• Less is more
• Greater store similarity (Demographics)
• Less variance in category performance
• Increased Efficiency
• Core Assortment
• Marketing Plans
• HH Income / Cost of Living by Region

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Objectives

• Core List
• Marketing Plans
• i.e. Distribute and Promote the Correct Codes
  in the Correct Stores

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Clustering Process

• Demographic Data Pull
• Demographic Analysis
• - Original Cluster Designation

Step 1
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About the Demographic Data

• Store Specific Demographic Data
• Adult Population
• Referenced Against Total Pennsylvania
• Indices Generated For
• Income
• Education
• Lifestyle
• Ethnicity

Primary Indicators of Consumption Patterns
Secondary Indicators of Consumption Patterns
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Process

• Sales Data Pull
• - By Store / Code
• Sales Data Analysis
• - Secondary Cluster Designation

Step 2
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Analysis

• DEVELOPMENT INDICES GENERATED FOR
• Price Segmentation
• Display Category

Hierarchy of Analysis
1. Price Segmentation
2. Category Development
3. Demographic Data
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Process

• PLCB Regional Manager / Broker Validation
• Final Recommendation

Step 3
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5 Clusters Identified

• Cluster 1 Upscale Metro / Suburban (105 Stores
  / 26.5 TTL Sales)
• - Avg. Household Income - 91K
• - Education Level - 41 College Graduation Rate
• - Ethnicity No Statistical Significance
• - Key Price Segmentation Super Premium
• - Display Category Drivers Specialty, US Cab,
  US Chard, Scotch, Tequila

• Cluster 2 Mid-Scale Suburban (122 Stores /
  25.7 TTL Sales)
• - Avg. Household Income - 70K
• - Education Level - 29 College Graduation Rate
• - Ethnicity No Statistical Significance
• - Key Price Segmentation No Discernable Driver
  
• - Display Category Drivers No Discernable Driver

• Cluster 3 Rural / Blue Collar (226 Stores /
  31.0 TTL Sales)
• - Avg. Household Income - 55K
• - Education Level - 21 College Graduation Rate
• - Ethnicity 93 Caucasian
• - Key Price Segmentation Value / Standard
• - Display Category Drivers Economy, Box,
  Beverage, Blended, Canadian

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Cluster Overview

• Cluster 4 Rural / Low Volume (102 Stores /
  5.4 TTL Sales)
• - Avg. Household Income - 49K
• - Education Level 15 College Graduation Rate
• - Ethnicity 97 Caucasian
• - Key Price Segmentation Value
• - Display Category Drivers Blended, Bourbon,
  Canadian, Beverage, Economy, Box

• Cluster 5 Metro / Ethnic ( 66 Stores / 11.5
  TTL Sales)
• - Avg. Household Income - 47K
• - Education Level - 20 College Graduation Rate
• - Ethnicity 38 African-American
• - Key Price Segmentation Value
• - Display Category Drivers Brandy/Cognac, Gin,
  Beverage, Economy, Flavored Wine

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Core Assortment
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Objectives

• Capture Top Performing SKUs By Cluster
• Increase Similarity of Code Selection by Store
• Enable Promotions To Be Run Across Each Cluster

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Core Methodology

• 52 Wk Sales Data By Cluster By Code
• - Regularly Listed Items Only
• Rank Sales (Descending)
• Data Analyzed at Specific Capture Rates
• Analysis Indicates Most Efficient Capture Rate -
  75
• - Capture Rates Beyond 75 Show Diminished
  Returns

Analysis
Solution
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Results

Results at Store Level - Average of 40 New
Distributions
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Access to Core Lists

• Vendor Login
• Report and File Downloads
• Product Assortment Reports (under Applications)

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Next Steps
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Schematics

• Evaluate 2005 Merchandising Test Results
  Industry Best Practices
• Establish PLCB Shelving Standards
• - Days of Supply
• - Facings Min. / Max.
• - Right-Sizing Departments and Categories
• 3rd Party Validation

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Store Layouts

• Develop Category Adjacency Methodology
• - Vendor Partner Consumer Research Driven

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Implementation

• Store Specific Schematics Generated
• - Store Level Data
• - Actual Days of Supply
• - Reflects Actual Code Assortment
• - Addresses Store Level Anomalies
• Phased Rollout
• Continual Bi-Annual Maintenance

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Product Mgmt Personnel Changes

• Matt Schwenk and Bruce Becker Full-time
  ERP beginning in January
• Tabitha Eyler Head planogrammer
• Marc Hazur Wine and Spirits Education
• Steve Nehilla Wine Club
• Jane Merritt Online Store
• Alma Kocher Temporary SLO / Hotline Supervisor

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THANK YOU