"Illuminating the Black Hole" - Describes the mission and reasoning behind the In-Store Implementation Network. Proposes a path to industry collaboration and solutions that will improve retail performance of merchandising, marketing and promotion.

1. Retail’s Space-TimeContinuum How In-Store Implementation Solutions Can Re-Order Our Universe V 2.2 2010 In-Store Implementation Network

3. Shelf conditions are an informational “black hole” for merchants and marketers

5. Accuracy In Question Feb. 14, 2010 In-Store Implementation Network 4 Intro n=176 [ SN, Mar. 20, 2009]

6. Lack of Measurement Feb. 14, 2010 In-Store Implementation Network 5 Intro [ CPGmatters Nov. 17, 2008]

7. Industry Demands Improvement Feb. 14, 2010 In-Store Implementation Network 6 Intro Which of the following ISI practice areas is of highest importance within your organization today? 38% Plan-O-Grams 27% Promotions 15% Displays

8. Compliance Gap 7 In-Store Implementation Network Feb. 14, 2010 Intro 35% indicated no process to track compliance Another 7%don’t know!

9. Methods Employed 8 In-Store Implementation Network Feb. 14, 2010 Intro Among Those Who Say They Track Compliance: Heavy reliance on spot-checks; sign-offs; and self reporting

10. Promotion Breakdown Approximately 50% of authorized retail promotional displays are not erected or erected late… This amounts to an estimated $25 billionof ineffective spending annually by CPG manufacturers. Feb. 14, 2010 In-Store Implementation Network 9 Opportunity Source: “In-Store Implementation: Current Status and Future Solutions” (2008)

11. Excess Shelf Stocks An estimated 86% of stock on hand in food stores reflects quantities in excess of seven days of supply. This oversupply accounts for approximately $46 billionin stagnant capital industry wide. Actual net cost to the grocery industry may approach $3.3 billionat a discount rate of 5% per year. Feb. 14, 2010 In-Store Implementation Network 10 Opportunity Source: “In-Store Implementation: Current Status and Future Solutions” (2008)

12. Out of Stocks Shelf-level oversupply coexists with an intractable out-of-stock problem amounting to 8.3% overall, and 16% or higher on the fastest moving items. 70 to 75% of these are a direct result of retail store practices, costing the typical retailer about 4% of net sales. This works out to a revenue loss or displacement of $20 - 25 billion. Feb. 14, 2010 In-Store Implementation Network 11 Opportunity Sources: Gruen, et al and “In-Store Implementation: Current Status and Future Solutions” (2008)

13. Bottom Line The ISI Sharegroup estimated the total cost of sub-optimal merchandising performance is at least 1% of gross product sales, or $10 - $15 billionof the $1.5 trillion total annual sales across the food, drug and mass channels. Feb. 14, 2010 In-Store Implementation Network 12 Opportunity Source: “In-Store Implementation: Current Status and Future Solutions” (2008)

14. Search for Solutions It’s time for an ISI Industry Initiative Together we can illuminate the “black hole” Connect store operations with merchandising Identify new standards for in-store sensing Define better performance benchmarks Feb. 14, 2010 In-Store Implementation Network 13 Call to Action

15. The ISI Sharegroup Story Feb. 14, 2010 In-Store Implementation Network 14 ISI Back Story Formed in 2007 by like-minded visionaries from consumer packaged goods, retail, technology and consulting firms:

16. The ISI “Working Paper” Feb. 14, 2010 In-Store Implementation Network 15 ISI Back Story Published April, 2008 15,000 words 1,000+ downloads P.1 coverage Supermarket News Progressive Grocer article Numerous media pickups Widely-cited

17. Fast-Forward: The ISI Network Feb. 14, 2010 In-Store Implementation Network 16 ISI Back Story

19. What is required

20. When action is required

22. Handle exceptions in real time

24. Report current store conditions

26. ISI “Communities of Interest” Master Store Planning Store Capacity-Based Planning Planogram Compliance Promotion Compliance New Product Compliance Shopper Media Compliance ISI Communications Feb. 14, 2010 In-Store Implementation Network 19 ISI Network Three Primary Initiative Areas: Planning, Compliance, Communications

28. Capacity Planning: Balances in-stock vs. assortment vs. labor

29. Cluster-level planning with store-level allocation helps limit complexity

30. At what point(s) do we take this down to store level?“Intelligent Loss of Work”

32. Pay for Performance ideal

33. Promotes “intelligent loss of work”

34. New reality-based performance standards emergeThe Four Compliances: Planogram, Promotion, New Product, Media

36. Update to more structured communications, i.e. portals working from common data

37. “Many-to-many” solutions required

38. Sharing of insights in real timeISI’s Breakthrough Opportunity

39. Help Illuminate the “Black Hole” Industry collaboration is imperative Room for many under the ISI tent Big vision – bigger payoff Cases -> Benchmarks -> Best Practices ISI Benchmark Study: Q3 2010 Feb. 14, 2010 In-Store Implementation Network 23 Conclusion

40. Join Us! James Tenser, Director 520-797-4314 jtenser@instoreimplementation.com 24 In-Store Implementation Network Feb. 14, 2010 Conclusion