07 Ricardo Jardim Version1

GRUPO PÃO DE AÇÚCAR BRASIL Relationship Management Marketing September / 2007

GPA Highlights Scale/Negotiation Power

Largest retailer in Brazil, with R$ 16.5 billion gross sales in 2006

Brand Positioning /Segmentation

Multiformat structure/ well located stores in the main markets of Brazil

Differentials

Assortment, store environment, services and consumer knowledge

Infra-structure

Largest distribution chain of the country

Strong cash generation

One of the highest EBITDA margin among its peers and a solid capital structure

Growth since the IPO (1995 – 2006) Total Sales (million)

Number of Stores 549

218

1995

16,461

2,912

2006*

1995

Sales Area m2 (thousand)

2006

Market share (%) 13.3%

1,218

7.2% 271

1995 * 4 convenience stores

2006

1995

2006

Stores Localization 2

Goiás 1

Piauí 4

Distrito Federal 15 5 Minas Gerais 4

Pernambuco 10 2 Alagoas 1 Sergipe 1 Bahia 3

Mato Grosso do Sul 1 São Paulo 95 44 9

166 42 4

Jun 2007 162

Rio de Janeiro 9 14 17 62

Paraná 2

stores

84 stores

Ceará 19 2 Rio Gde do N. 1 Paraíba 4

180 stores

62 stores

42 stores

9 stores

539 stores 1,214,325 m2

Stores Geography 152 stores Pão de Açucar 7 stores Comprebem

12 million Clients 9,4% increase over 2006

Average Ticket São Paulo...............99 Rio de Janeiro..........9 Brasília....................11 Goiânia.....................2 Paraná......................4 Ceará......................19 Piauí.........................4 Pernambuco.............2 Paraíba.....................2 CB Pernambuco.......6 CB Paraíba...............1

R$ 26,00 8,6% increase over 2006

Shopping Frequency

3.5 times a month

Our Consumer Profile • Consumer profile – demanding; – selective; – wants more choice; – wants a quicker shopping experience; – wants value for money; – wants to be heard and have a sense belonging. • From the Loyalty Programs’ point of view: – cardholders pursue privileges and distinction; – it must be relevant; – reward must be compatible to devoted effort.

Relationship Program Timeline Feb/00

Aug/00

São Paulo Launch Brasília Launch

Oct/03

Nationwide Launch

2005

Jan/07

Sep/06

Program review

New Phase Statistics

Number of cardholders N.of act cardholders (within month) Average cardholder purchase Average cardholder basket Participation over PA sales Participation of PA ticket Profit Margin participation

1.787.000 434.241 244,3 57,1 37,00% 17,40% 31,7

Our new Program Phase Test Mais in Brazil      

1.700.000 participants in 148 stores 24% activation 36% total revenue share (16% total ticket share) 4,34 visits a month Average Ticket: R$57,00 Average Spend: R$248,00

Strategy  Exclusive offers and in-store marketing



 

POS Exclusive labels



Radio messages



Highlight Mais offers on promotional prints

Exclusive Items Acquisition 



Feb/07 – Fine crystal glasses

Incentive  

Retail in the blood campaign Boosted retail in the blood campaign

Mais in the new Phase      

- 8 months live

58.200 participants in all 6 respective stores 56% activation 51% total revenue share (31% total ticket share) 4,53 visits a month Average Ticket: R$72,00 Average Spend: R$326,00

Strategy  Focus on marketing the New Phase  Direct Mail for route migration  Action plans for inactive clients  Review the financial situation thought consultancy  Update participants registration information  Provide stimuli for prize claims  Include all nationwide offers and attach them to the points system  Define and adjust roll outs

The Program Goal “Turn the Mais Program into a main tool for Brand Loyalty and Differentiation, so that it becomes a self-sustained business.”

Premises 1

2 Simplicity

Relevance

3 Profitability

The program objectives Objectives – Simplicity  Assess processes’ efficiency at IT operation and channels – Relevance  Test product attractiveness  Assess consumer behaviour changes – Profitability  Evaluate program indicators and business case feasibility

The Six Participant Stores •

Real Parque

•

Jardim Sul

•

Morumbi

•

Maranhão

•

Angélica

•

Iguatemi

Number of participants 40.792 Period Sep 2006 to Mar 2008

New Program Summary RELATONSHIP

RECOGNITION

New Identification Form - Sticker

Customized Offers based on Client Profile

Personalized Client Communication

Promotion benefits and advantages in

Personalized In-store Communication

institutional actions

Communication Channels: • 'Ponto Digital Mais' – electronic Terminals • Own and Exclusive Website • 'Fale Mais' – Client Service Hotline

Partnerships Cooking Tips and Recipes Invites for courses and workshops

REWARDS Points Prize Claims

IBM RISC P595 AIX

Production Environment Compute Server

Metadata Server

SAS/MA Campaign, Data Mining and Management Reports

Middle-Tier (Marketing Automation)

Clustered with MA Middle-Tier Server WebSphere 5.1

IBM RISC P595 AIX

Client acceptance and test environment Compute Server

SAS Compute and Medatada

Middle-Tier

BI and MA Middle-Tier Server WebSphere 5.1

Middle-Tier (BI)

Ruler of Actions – New Phase AUG/06

SEP/06 – Launch

Mailing Invite

Welcome

OCT/06

E-mailing PIN's and Registration confirmation

Mailing PIN's

E-mailing Ebão! Maliling Ebão! November

Xmas gifts and Events December

Mailing & E-mailing Ebão! January

NOV/06

DEC/06

JAN/07

Mailing & E-mailing Ebão! February

FEB/07

Mailing & E-mailing Rejects

MAR/07

Ruler of Actions – New Phase

Mailing TAEQ

APR/07

Mailing Ebão! June

MAY/07

Points Exchange Incentive

JUL/07

JUN/07

E-mailing Ebão! May

AUG/07

In-store Ebão promotion

Five routinely monthly actions Ten periodically relationship and route migration actions Four hits per client for this period

MAIN RESULTS

New Clients Monthly 13.657 12.221

13.406

New Program Launch

New Strategy 8.874

10.390 11.422

5.217 3.778

911 848 786

806 639

531

372

422

MirrorEspelho Stores Lojas

Total Brasil Total

jun/07

mai/07

abr/07

272

186

fev/07

279

jan/07

jun/06

Pilot Stores Lojas Piloto

547 486

371

dez/06

322

271 mai/06

abr/06

mar/06

fev/06

jan/06

314

561

472

nov/06

381

569

386

out/06

319

667

507

354

ago/06

317

400

set/06

451 523

384

696

jul/06

481

603

698

681

jul/07

756

mar/07

795

Activation Monthly New Program Launch 58,8%

58,2% 58,4% 58,5%

57,0% 56,1%

56,4% 56,6%

57,7%

55,5%

57,0% 56,4% 55,5%

54,9%

New Strategy

56,2%

55,9% 54,1%

55,1% 53,8%

57,7%

55,1% 55,2%

53,7%

54,8% 52,8% 54,7% 52,0% 52,1%

58,5%

57,6% 57,9% 57,5%

56,6% 56,6% 56,8% 56,0%

55,6%

52,1%

27,0% 25,8%

Pilot Stores Lojas Piloto

MirrorEspelho Stores Lojas

24,7%

24,2% 24,4% 24,3%

Total Brasil Total

jul/07

jun/07

mai/07

abr/07

22,9%

mar/07

jan/07

dez/06

22,3%

fev/07

23,1% 22,3%

nov/06

23,1% 22,8%

out/06

jul/06

jun/06

mai/06

abr/06

mar/06

fev/06

jan/06

23,5%

24,1%

24,0%

set/06

24,5% 24,4%

ago/06

26,3% 26,2%

Revenue Share Monthly New Program Launch

New Strategy

•53,2% •51,4%

•52,2%

•50,3% •49,7% •49,9%

•44,8%

•45,9% •45,8% •44,0%

•45,0% •45,0%

•45,7% •43,9%

•45,0%

•46,8% •47,0% •46,0% •46,4%

•46,3% •44,9% •44,5% •44,6%

•44,3%

•43,2% •43,6%

•36,3%

Pilot Stores

Mirror Stores

•33,1%

Total

•mai/07

•abr/07

•mar/07

•fev/07

•jan/07

•30,9% •30,6%

•dez/06

•nov/06

•out/06

•set/06

•32,1% •31,9% •31,8%

•31,8%

•ago/06

•jun/06

•mai/06

•abr/06

•mar/06

•31,2%

•37,1% •37,0%

•34,2% •34,6%

•33,6%

•jul/06

•32,5% •33,0%

•32,3% •32,4%

•fev/06

•jan/06

•31,3%

•48,0% •48,2%

•jul/07

•44,2%

•44,9% •44,9%

•47,6% •47,8% •47,4%

•jun/07

•45,8% •45,4% •45,9%

•46,6%

Ticket share per store Monthly New Program Launch

New Strategy

32,7% 30,4%

31,0%

31,8%

29,2% 29,3% 27,4%

27,9% 27,7%

26,4% 24,4% 23,1% 23,0% 22,8% 22,5% 22,6% 22,6%

21,9%

22,7% 22,6% 22,6%

19,5%

20,0%

19,3% 19,1% 19,0% 18,8% 19,1%

20,1% 20,2%

16,1%

Lojas Piloto Pilot Stores

14,5%

17,5% 17,4%

15,1%

Lojas MirrorEspelho Stores

abr/07

mar/07

fev/07

jan/07

dez/06

nov/06

13,5% 13,5% 13,4% 13,4%

out/06

12,9%

set/06

ago/06

jul/06

jun/06

mai/06

abr/06

mar/06

13,8% 13,5% 13,5% 13,8% 14,1% 13,5% 14,0%

fev/06

jan/06

13,4%

16,6%

Total Total Brasil

jul/07

20,2% 20,1% 20,1% 20,2%

jun/07

20,8%

mai/07

20,3%

21,5% 21,5%

Shopping Frequency Monthly New Strategy 4,4

4,3

4,4

4,3

4,2 4,0 3,9 3,5

3,8

3,9

3,9 3,7

3,6 3,8

3,5

3,7

4,3 3,8

3,9

3,8

3,9

4,0

4,0

4,0

4,5

4,5

3,9

4,3 4,2

4,4

4,4

4,3

4,3

3,1

3,1

jul/07

4,6

jun/07

New Program Launch

3,8

3,6 3,4 3,2

Pilot Stores Lojas Piloto

MirrorEspelho Stores Lojas

3,1

3,2

Total Brasil Total

mai/07

2,9

abr/07

2,9

mar/07

3,0

fev/07

3,0

jan/07

3,1

dez/06

set/06

3,0

nov/06

3,2

out/06

3,0

ago/06

3,1

jul/06

abr/06

mar/06

fev/06

jan/06

3,0

2,9

2,9

3,2

jun/06

3,2

mai/06

3,7

Average Ticket Monthly

84,32

83,19 84,93

82,92

82,81

85,30

82,67

82,30

82,28

89,34 86,68

81,45

80,36 72,25 73,10

58,16

59,62 57,44

57,44

84,94

72,08

72,11

57,11

57,11

57,10

84,97

79,72 71,04

68,30

60,40

85,66 86,76

85,42

73,24

58,36

88,10

88,99

76,02

57,80

88,89

86,22

jul/07

84,28

87,62

86,84

jun/07

86,72

100,51

New Strategy

mai/07

New Program Launch

59,26

57,11

58,83

60,25

59,65

73,53

59,43

73,29

71,25

59,42

Pilot Stores Lojas Piloto

Mirror Lojas Stores Espelho

abr/07

mar/07

fev/07

jan/07

dez/06

nov/06

out/06

set/06

ago/06

jul/06

jun/06

mai/06

abr/06

mar/06

fev/06

jan/06

58,43

Total Brasil Total

Average Spend Monthly 367,41

New Strategy

New Program Launch

332,49

324,57

319,58 306,41

320,35

319,47

311,76

318,09

316,95

308,84

304,60

302,59

326,46 313,30

291,10 286,68

284,09

279,09

269,06

263,53

274,85

246,77

246,77 225,13 224,96

240,84

260,79

228,59

232,97 235,81

266,84

254,97

254,53

255,69

249,60 248,10

243,78 244,30

229,94 231,87

220,36

Pilot Stores Lojas Piloto

MirrorEspelho Stores Lojas

Total Brasil Total

jul/07

jun/07

mai/07

abr/07

mar/07

fev/07

jan/07

dez/06

nov/06

out/06

set/06

ago/06

jul/06

jun/06

mai/06

abr/06

mar/06

210,45

fev/06

jan/06

264,85

276,95

229,39 230,01 214,69

276,46 276,50

266,06 264,73 262,65

247,15

284,08

303,57

280,44

Margin Participant Stores New Program Launch

New Strategy

23,8% 23,5% 22,2%

21,9% 22,0% 21,4%

21,6% 21,3%

21,8%

21,8%

21,7%

21,5% 21,1%

21,2%

21,0%

20,1%

19,8%

20,3%

20,3% 19,9% 20,1%

19,5% 20,2% 19,8%

20,0% 19,7% 20,0% 18,7%

19,4%

20,0%

20,1% 20,6%

19,5%

19,8% 19,7% 19,6%

19,8%

Mais Clients Clientes Mais

Non-MaisNão Clients Clientes Mais

jul/07

jun/07

mai/07

abr/07

mar/07

fev/07

jan/07

dez/06

nov/06

out/06

set/06

ago/06

jul/06

jun/06

mai/06

abr/06

mar/06

fev/06

jan/06

18,6%

Status and Next Steps – Next Steps

– Status 

Relevance:

•



•

Relevance:

Tests realized for route migration, inactives, and

•

Products adjustment

purged points

•

Test Lifecycle actions

•

Proposed registration update

•

Actions for stimuli and prize claims

Profitability:

•

Reviewed financial situation through consultancy

•

Follow up and cost control

•

Financial provision and reviewed the main



Profitability • • •

Validate stimuli Propose actuarial calculations for points provision Update business case

concept



Simplicity:

•

Reviewed Identification Channels

•

Devised new strategic training

•

Devised new strategic internal marketing

•

Simplicity •

Enhance operational systems

•

Optimize analytical and financial reporting

•

Devise trigger actions attached to lifecycles

Roll Out Strategy for Brazil All respective units trained in 4 months Program Start Month 01 March Month 02 April Month 03 May

Month 04 June

Location

# of stores

Brasília/Goiânia: 15 Rio: 9 Paraná: 4 Recife/João Pessoa: 5

33

Interior:13 Campinas/Vale: 15 Baixada:8

36

São Paulo Capital 57 New phase 6

63

Fortaleza (19) Teresina (4)

23

Links

The Card Previous MAIS Card

New MAIS Card

Selected Communication Channels

Direct Mail

E-mail

Exclusive Channels Exclusive Website Points statement , exclusive offers, tips, additional information etc

Fale Mais (Client Service Hotline) – Inside Clients Homes

Terminal Mais Points statement, client registration update, prizes information, offers etc

In-store Communication

Posters

Vertical Banner

Stopper s

In-store Communication

Additional Ebas Communication Poster and Stopper

Uva

+50

Pós Barb a

+40

Exclusive Offers Stopper

Multi-channel poster

Cartaz de preço 1/4

Label New Price Label

Benefits, Recognition, and Events Pão de Açucar Marathon

Customized Gifts Tips and Recipes

Double points during our Anniversary Campaign

Invites for Events

Points Awards

There are various ways for clients to have points awarded and accumulated. Points are called:

Rewards and Points Points Any purchase awards points! The bigger the amount, the higher the number of points awarded Other means to get points: - Birthday bonus - First membership anniversary bonus

Promotional Points Specific products Specific days Specific stores Shopping frequency

'The path to loyalty is hard and long, but once you are there... celebrate...maintain..and innovate'

RJ

That's a Wrap

Thank You