Grocery Optimization

A New Framework for Adapting to the Fast-changing Needs of Grocery Customers Authored by Bill Bishop, Chairman, Willard Bishop LLC November 2008 Sponsored by

“We shall require a substantially new manner of thinking if mankind is to survive.” – Albert Einstein

High prices and other pressures are driving unprecedented changes in grocery shopping, and food retailers must keep pace or risk losing business. This calls for a change in mindset—away from a reactive approach that responds after shifts in customer behavior to an adaptive approach that routinely tests the effectiveness of new responses. This new mindset allows food retailers to respond more quickly to the changing consumer without abandoning their go-to-market strategies. The good news is that the necessary information and tools are available, and the direction on where to take the business can be found in a retailer’s well-defined Value Proposition. This paper shows how to bring them together so a retailer can adapt more quickly and confidently to emerging shopping behavior. Food retailers find themselves operating in a world that’s very different from just a few years ago, and many are struggling to adapt to today’s more dynamic environment. Customers—particularly those under 30 year’s old—find that they have access to more information and new shopping options. At the same time, some competitors have come forward with more sharply defined offers based on hard decisions about what they do and don’t want to be in the market. Studies have shown that this has worked well at both the bottom of the market and at the top (Aldi at the bottom and Whole Foods at the top, for example)1. Even within mainstream food retailing, some companies have changed the competitive dynamics by using data from loyalty card programs. Customer-identified transaction data has been available since Ukrop’s Supermarkets pioneered loyalty programs in the early 1990s, but the recent success of Tesco and Kroger, among others, has shown how this information can be used to strengthen the connection with customers. Today it’s evident that building the capability to use this information is essential just to be able to compete successfully. These and other changes mean that each food retailer needs to focus more intently on how they create and deliver value to their customers. This requires defining value in terms that everyone in the company can understand and deliver. This paper is based on extensive input from a cross-section of senior retail marketing, merchandising, and operations executives--but it is 1

See “The World According to Shoppers,” Coca-Cola Retailing Research Council study, 2005.

intended for those who are interested in strategy, regardless of their titles. The core proposition is that a retailer’s strategic vision of how they will create value must be translated consistently into store-level execution and regularly adapted to meet changing customer needs. The challenge is to do this in a seamless and continuous manner. This paper lays out a new strategic framework that food retailers can use to more quickly and confidently evolve their business in response to changing customer shopping behavior. It’s based on understanding strategy as the way a company creates the unique fit among all the activities it performs, and that success depends on how well the company executes all of those actions—not just a few2. The adaptive framework described here harnesses the power of a range of information technologies and other capabilities to continuously sense and respond to changing customer behavior, and it uses the retailer’s own sharply defined Value Proposition to focus resources where they will have the greatest impact. Here is a summary of the paper. It first looks at factors supporting the need to take a different approach to responding to the changing customer. Second, it reviews the concept of the Value Proposition. Third and finally, it lays out a new adaptive framework, describing where and how this approach can help a food retailer keep pace with the rapidly changing customer.

Why Take a Different Approach? The speed and magnitude of change in grocery shopping behavior appears to have overwhelmed the reactive ability of many grocery retailers. While this may be a short-term issue in part, it also signals the need to consider responding to the changing shopping behavior in an entirely different way. New Influences on Shopping Behavior – A number of new developments make it increasingly difficult for food retailers to accurately anticipate shopping behavior. 1. The growing number of shopping options, brick and click, expand choice but also drive higher customer expectations. The recent surge of economic growth accelerated development of retail “selling capacity,” and customers are trying out their new options. When customers experience a higher level of service in one retail setting, they begin to expect it from others. This “raises the bar” in 2

Michael Porter, “What is Strategy?” Harvard Business Review, November/December 1996.

ways that are not always obvious to the retailer. (Why are more customers are buying groceries on Amazon, for example?) 2. Sales driven by merchandising events are becoming more important. Customers are increasingly drawn to the excitement of merchandising events, whether they’re seasonally driven or built around the release of a new toy, book, or electronic game. As the power of these events grows, retailers are including additional categories and even departments. This is creating broad sales swings that are driven by factors that go well beyond the usual item pricing and promotion. 3. The expanding availability of information on products and outlets helps customers make better decisions, but it also encourages them to look for help when making those decisions. Much of this information comes from traditional sources, but increasingly it comes from influential “communities of interest” on the internet like WebMD. Customers need help interpreting this information and incorporating it into their purchasing decisions. As a result some are turning to new services for assistance. Ukrop’s Grocery Shopping Network is one such example; this web-based program uses shoppers’ dietary requirements to search for items that are on promotion and to recommend recipes that include those ingredients. Evinc, a kiosk being piloted at Long’s Drug, sorts through a range of similar products to find the best value for an individual customer. 4. Targeted communications are influencing shopping behavior because they can be more relevant and compelling. Dunnhumby’s success at Kroger shows that customized promotions can create a stronger bond with shoppers. Personalized promotions frequently operate “below the radar” where competitors are unable to track their performance. Adding just these four new influences significantly complicates the conventional processes used to understand and model grocery shopping behavior in the near term—and they make long-term modeling nearly impossible. Need for Quicker Reaction Organizations frequently don’t respond as expected to new information— particularly if it signals the need for significant change. A normal reaction to this kind of information is to “circle the wagons” and wait until it becomes impossible to ignore.

In the classic, “Beyond the Stable State,” Donald Schon describes the costs and risks of ignoring new information and postponing change until it is forced on an organization by crisis. He maintains that a better solution is for the organization to become more adaptive--to continuously monitor key aspects of the environment and routinely “test” the effectiveness of new responses to that evolving environment. An adaptive approach offers food retailers an attractive alternative to the traditional reactive mindset because it can help the organization adjust more quickly and systematically to the increasingly complex set of influences impacting shopping behavior. It moves the retailer from a static strategy to one that’s continuously adapted to the needs of the marketplace.

Creating Value for the Customer There’s a lot of emphasis today on being more customer-centric, but how is this translated into practical terms that everyone in the business can understand and deliver? One useful tool to do this is the Retail Value Proposition, which includes both the retailer’s Overall and Personal Value Propositions.

The Retail Food Value Proposition Value = (Price x Quality x Service x Assortment x Facili ty)

The Overall Value Proposition One way is to develop an Overall Value Proposition that describes how a retailer intends to create value using five familiar areas of high customer interest. 1. Price: the price image of the store. 2. Product quality: the reputation for quality with particular emphasis on perishables, but also for own label. 3. Service: the recognition for delivering service at the checkout and across the entire store. 4. Product choice: the tradition of providing the range of products customers want and the availability. 5. Store atmosphere: the physical condition and appearance of the store. Development of this Overall Value Proposition begins with an analysis of what is important to and needed by the retailer’s customers, and it includes

an evaluation of the retailer’s own strengths and limitations in meeting those needs. A well-defined customer Value Proposition captures the retailer’s vision of how they will win customers by:  Making a dominant offer in one or two of the areas that are important to their customers.  Maintaining no less than a parity position in the other areas so customers have no reason to leave for another retailer. This Value Proposition becomes the filter for evaluating the impact of merchandising actions and operating decisions on customers. It helps focus a retailer’s efforts to ensure that they are all aligned on the same go-tomarket strategy. Some retailers have used this approach with great success.  Wegman’s, for example, dominates on service developed through a strong organizational culture and great people, combined with quality delivered through exceptional perishables.  Kroger, by contrast, dominates with store-specific product choice combined with strong price reputation. In both cases, these retailers have translated what they stand for into a strong and sustained competitive advantage. Looking more closely, however, this is not the only way they create customer value. These retailers and a few others have also used the connections formed with their shoppers through loyalty programs to deliver a Personal Value Proposition.

The Personal Value Proposition This creates value for the retailer’s core customers – the approximately 25% of customers that generate roughly 75% of a retailer’s sales and an even larger percentage of profitability. These customers shop with the retailer often enough to reveal their overall needs. One way that retailers are using customer loyalty data is to develop different shopper segments for which they can tailor appeals. These segments are based solely on shopping behavior--not demographic information and not attitude surveys. The method involves tagging certain products to indicate attributes related to specific patterns of lifestyle-driven shopping behavior. For example, broccoli, whole grain bread, and kefir would all be tagged for their health-related attributes. When customers purchase enough products with similar health attributes, they can be put into the segment of healthy customers. A single customer can be assigned to more than one segment; for example, they can be both health and timeconvenience shoppers.

Once this kind of tagging is in place, a retailer can do the following. 

Assign customers to specific segments based on their purchases and prioritize them according to their contribution to both sales and profit.



Identify information and promotional offers that are relevant to their needs.



Predict when shoppers are ready to move in or out of a segment and help them in this process by providing the necessary information or products.

The Personal Value Proposition delivers unique value in two ways, i.e., through: 

The relationship value that comes from the compliment of being given access to an exclusive service.



The service value that comes from the retailer’s efforts to satisfy the customer’s unique needs.

Some retailers report that customers benefiting from the Personal Value Proposition—while only a small percentage of the total—account for most of their overall growth. It’s now becoming clear that to be successful, food retailers must learn to deliver customer value in both ways, i.e., through: 

An Overall Value Proposition that improves the shopping experience for all customers.



A Personal Value Proposition that provides the reason for core shoppers to build personal loyalty over time.

The next step is to put a framework in place that can make this happen.

Developing More Effective Responses to the Changing Customer When it comes to adapting to the changing customer, the goal for food retailers is to shorten response time while maintaining a connection with their go-to-market strategies. We’ll look at ways to deliver both the Overall and Personal Value Propositions.

Adapting the Overall Value Proposition Redefining the Value Proposition

Reformulating

Delivering

Overall Value Proposition

Evaluating Customer Reaction

Evaluating

Focusing resources on top value creators

Implementing

Executing the value proposition for the customer

There are two parts to the framework illustrated above: one is the Overall Value Proposition that describes how the retailer will win in the marketplace; the other is an adaptive process that continuously modifies and enhances the value proposition’s impact on customers.

Adapting the Overall Value Proposition The process begins with delivery of the retailer’s Overall Value Proposition and ends with its reformulation for use in the next iteration of the cycle. There are four stages. Delivery: Deciding where and how to translate the detail of the Value Proposition to actions in the store so that it has the intended positive impact on customers. Planning all the different ways to deliver great service across the store, for example, if that is the dominant element. Implementation: Activating the detailed delivery of the Value Proposition in each store, in the circular, and on the website. Staying with the example of great service, this point would be demonstrated in associate behavior throughout the store and emphasized in both the circular and on the website. Evaluation: Determining what is and is not working about the Value Proposition. This is done by analyzing sales information and measuring attitudes periodically for target shoppers. This learning forms the foundation for the next stage. Reformulation: Adapting the definition, delivery, and implementation of the Value Proposition in order to better align it with the needs of target shoppers. Implementing this process gives a food retailer the capability to regularly adjust to the changing customer at several levels of activity.

Levels of Adaption of the Overall Value Proposition Defining New Responses Increasing the total value delivered Reshaping the Current Offer Better aligning with emerging customer behavior and expectations Fine-Tuning the Current Offer More fully satisfying the needs of target customers

Levels of Adaptation of the Overall Value Proposition The adaptive process uses a range of analytical tools to enable the retailer to continuously create greater value for target customers. The goal is to deliver the Value Proposition in a way that brings it into closer alignment with the behavior, needs, and expectations of target shoppers. The process is designed to operate simultaneously at three different levels. Fine-tuning Current Offers: Make small changes in the business that move the current Value Proposition closer to fully satisfying customer needs. Reshape the Current Responses: Redefine the expression of the current Value Proposition to bring it into closer alignment with customer behavior, needs, and expectations. Defining New Responses: Identify changes and additions to the Value Proposition that increase the total value created by the retailer.

Fine-tuning Current Offers When fine-tuning the Value Proposition, the focus is on “getting it right” for target customers. This means ensuring that the value customers expect to find is there for them; frequently, it means finding ways to shorten response time to better meet customer demands. What might success look like? Today most food retailers rely primarily on the skill of the associate to write an order. When the associate is experienced and familiar with the category, this can work well; but if he or

she has neither experience nor familiarity with the category, order quality can deteriorate. When a store implements computer-assisted ordering, it can more quickly and accurately trigger restocking orders for the shelf. This creates value for the customer in terms of fewer out-of-stocks and value for the retailer by increasing inventory turns. Three examples illustrate how fine-tuning shortens lead time and significantly increases value. 1. Computer-guided replenishment: As noted in the example above, grocery retailers continue to rely heavily on associates to write orders, even though computer-guided replenishment was implemented successfully by Shaw’s Supermarket in the 1980s. The challenge has always been to maintain item-level perpetual inventories. New systems that closely match delivery and sales forecast information are making it more practical to maintain perpetual inventories and for retailers to capture the full benefits of a highly automated replenishment process. 2. New item cut-ins: A significant amount of the lag time involved in getting new items on the shelf mobilizing the labor necessary to do the work. Research has found that the lost sales and profits resulting from these lags are significant3. Today retailers can more accurately forecast the labor requirements for cut-in work using Activity-Based Costing embedded in tools like Reset AnalyzerTM. Using this tool, the lead time can be shortened for the most valuecreating cut-ins by prioritizing the work. This is done by: 

Developing a sales forecast for the results of each new cut-in.



Prioritizing the cut-ins based on the ROI of each one (the expected sales increase divided by the labor requirements).

This type of prioritization helps ensure that the most valuable cut-ins always gets accomplished first. 3. Price optimization: Retailers appreciate the increased margins delivered by price optimization, but it’s becoming evident that if the frequency of setting new prices is selectively increased even greater benefits can be realized. Six months is a typical interval for all categories, however, recalibrating high-priority categories as frequently as every month can create significantly more value. This is particularly valuable when there are significant cost increases or competitive price changes in destination categories or among known-value items (KVIs). 3

Documenting the Value of Merchandising, Willard Bishop Consulting, National Association of Retail Merchandising Services, March 2000.

Fine-tuning current efforts to shorten response time isn’t limited to computer-guided replenishment, new-item cut-ins, and price optimization. There are opportunities in areas like labor scheduling where more timely forecasting can also create additional value.

Reshaping Current Response Reshaping involves enhancing the current offer by bringing together new combinations of existing information, or by bringing together new information and tools that open up previously unrecognized options. What might success look like? A merchant working in one part of the business can be unaware of the growth in products with similar attributes in other areas of the business. For instance, today, products in different categories with similar health attributes may be growing faster than total store sales, but this isn’t evident to category managers. If merchants were able to look at the sales of all “healthier products” with similar attributes across categories, they could see the full impact of customer buying and begin to adapt plans accordingly. Three examples help illustrate the power of seamlessly introducing new information sources into a retailer’s efforts to sense and serve customer expectations. 1. Customizing store-specific assortments: While market-level sales data provides a good indication of what’s selling overall, it doesn’t apply to sales in a specific store’s neighborhood. Demand potential information, which is built from household demographic and lifestyle data collected on those living in the specific trade area, can help a retailer better respond to the needs of their local shoppers. One retailer identified in the research for this paper is using this type of information to develop a matrix that matches the size and extent of departmental offers to the expected trade-area demand for individual stores. Another is using it to determine which of their stores should offer restaurant-type foodservice and how extensive that offering should be. Sources for this information include Spectra, Buxton and Associates, and geoVue. It can be used to add greater customization to store-specific planograms, and there is also an opportunity to use advanced methods to optimize price and assortment during this process. 2. Keeping competitive market baskets current: As price competition intensifies, more food retailers are recognizing the need for a welldefined pricing strategy driven by an up-to-date competitive market basket--a carefully selected cross-section of items that signals the desired price message to customers. Over time, shifts in buying patterns make it necessary to update the market basket. Loyalty card data that is segmented by the price sensitivity of households can help in this process. By showing how the purchases of a

retailer’s price-sensitive customers shift over time, this information suggests where adjustments can be made to update the market basket. 3. Creating merchandising events: As retailers refine their capabilities to execute multi-department events, the opportunities to aggressively create new events increase. Seeking out seasonal patterns in product categories not normally considered seasonal can help a retailer create new events beyond the familiar. Several retailers identified during this research have identified and begun to merchandise against a broader set of department trends related to the Valentine’s Day holiday. They’re moving beyond candy and greeting cards to include wine, bakery, and fresh produce, making this a much more storewide event. The recent GMDC study on merchandising event best practices has a section containing IRI information for a number of categories that reveal surprising seasonal patterns which can be used to build such events.

Defining New Responses The challenge here is to find the new responses that build on the retailer’s Value Proposition and to avoid those that dilute or compromise it. One way to do this is to identify the unsatisfied and emerging needs of your customers and then decide if responding to them is consistent with your current Overall Value Proposition. Partnering with customers—particularly with proactive shoppers—is one method retailers can use to identify and define new opportunities to create value. Proactive shoppers are not easy to recognize – they come from all ages, backgrounds, and income levels—but they are identifiable. They are not shy about reaching out to find solutions that fit their unique needs; they are often armed with information from online searches; they are likely to be inquisitive and curious. Also, they tend to notice a great deal about all the places they shop. These customers can reveal how expectations and needs are evolving, so it’s worthwhile to make friends with them, to get their opinions on new products, to ask them what they’re interested in these days, and to invite their participation. Partnering with them engages retailers in customerdriven innovation. One retailer participating in this project reported that he was pleased to have customers that brought in samples of the types of products they’d like to have the retailer sell in their stores. The responsibility for innovation of the Value Proposition cannot rest with the customer alone. Food retailers also need a process for anticipating the future and what it may mean to their customers. Two methods for identifying and defining future enhancements to a food retailer’s Value Proposition hold potential.

The Foresight to Insight to Action process described in Bob Johansen’s book, Get There Early, published by the Institute for the Future, has been used extensively by leading consumer packaged goods manufacturers and is now being used by food retailers. Disruption: Overturning Conventions and Shaking Up the Marketplace, a book written by Jean-Marie Dru, shows retailers how they can identify the conventions in thinking that define and sometimes limit their ability to deliver greater value. These approaches—and no doubt others—can help food retailers ensure that they routinely consider new concepts for strengthening their Value Propositions, and test them with their proactive customers to get their reactions.

What might success look like? Food retailers typically rely on traditional market research as a way of comparing their performance versus competition. This is useful in identifying vulnerabilities, but it doesn’t provide much guidance on how to create new value. If market research shows that a retailer is not maintaining a parity position on an important element of the Value Proposition (front-end service, for example), the retailer can take advantage of feedback from their best proactive customers to identify the ways that they’re being underserved and get specific guidance and reactions to possible solutions. This is done by: 

Recruiting a small sample of the retailer’s best proactive customers, i.e., those who use the retailer as their primary store.



Talking with a small part of the sample (as few as 12 to 15 individuals) to develop an understanding of the issues and identify potential ways to improve service.



Surveying the remainder of the sample to quantify and validate the ideas coming out of the limited discussions.

A process like this allows the retailer to relatively quickly and efficiently understand responses from the customer point of view. In one such case, dissatisfaction was eliminated by providing guidance and support so customers could learn how to use self-checkout systems more effectively. This type of customer feedback system gives the retailer specific guidance on where and how to enhance the overall Value Proposition. Here is how it can be applied in two other areas. Bringing new items into the assortment: Food retailers are always looking for opportunities to bring new items into the assortment that will eliminate the need for their best customers to visit other stores. The

customer feedback process can identify those products so the retailer can decide which items to add to the offer. Experience shows that when food retailers solicit and use this type of feedback, they experience a “double win,”—not only do sales go up, but loyalty (share of spending) increases. Retailers who have loyalty card information can use that data to help prioritize the importance of potential new items based on the value of the shoppers who are requesting them; similarly, it can help them avoid delisting items that are purchased by their most valuable shoppers. Choosing new service enhancements: While food retailers have access to a range of new technologies to enhance customer service, (such as portable self-scanning devices), determining which of them warrants investment can be a challenge. The customer feedback system can help a retailer determine target customer reaction to new options. One retailer used this feedback system to identify the customer benefits from portable self-scanning. They found that speed at the checkout was the most important benefit, but shoppers also associated significant benefit with feeling in greater control over the prices they paid for sale items and over their total level of spending.

Moving to a Real-time Personal Value Proposition Until now, most personalized offers have been delivered through direct mail, retailer websites, or through a kiosk at the entrance to the store. Today, however, there are at least two ways to deliver personalized offers at the most relevant time and location during the shopping trip—electronic shelf communication and portable self-scanners. An appealing feature of both systems is that the technical infrastructure can be paid for by other applications, so this real-time personalized Value Proposition doesn’t necessarily require special investment in a separate infrastructure. Electronic shelf communications include electronic shelf labels and other media such as shelf-edge TV. Portable self-scanning devices have the benefit of engaging the customer during the shopping trip by giving them greater control over their basic shopping. Using those means that offers can be personalized based on purchases made during the trip and in proximity to products, not just based on shopping history. Looking forward, it’s likely that these applications will make it practical to offer web-based capabilities to customers as they shop. It’s also likely that other electronic devices such as cell phones will be used, making it even more cost-effective to deliver an online shopping experience in the store.

There are good reasons to push forward aggressively to implement these processes. Most importantly, online shopping is growing rapidly and companies like Amazon have demonstrated the power to create targeted customer value that is cutting brick-and-mortar retailers out of at least some of the business. For example, one household identified during this research was using an online, non-store retailer as their sole source of baby diapers. For these shoppers, some of the related service provided-triggering orders automatically based on consumption patterns--created significant additional value and dependence on the system. Additionally, it’s becoming evident that retailers can also customize the value proposition by introducing a “filter” for at least some of the products they sell to customers. The application of filters for natural or organic has contributed significantly to the brand strength of retailers like Whole Foods and Trader Joe’s. Some customer segments—and certain households—are looking for help in filtering the assortment so they can better satisfy their self-defined needs and preferences--for products that are sustainable or healthy, for instance.

Implementing the New Framework The “speed of life” requires managers to move from problem-solving to managing dilemmas for which there are no solutions, making traditional reactive behavior less effective. There just isn’t enough time to go through all the steps involved in the reactive process. Retailers who continue to rely exclusively on this approach to reading and responding to customer expectations will always be playing catch-up. Shifting to an adaptive approach where continuously reading and responding to customer expectations is the norm provides food retailers with a more sure-footed framework for increasing sales and profits by:  

More rapidly improving the shopping experiences and strengthening customer loyalty. Reducing the cost of “reactions” that frequently doesn’t fully respond to customer expectations.

Key enablers to make bring this framework alive include:     

A clear strategic vision for moving forward. Synchronized data to provide rich and accurate item-level information A portal for suppliers to contribute to the process. An execution management system that ensures the details of the Value Proposition is translated to the stores. An ability to commit adequate financial and human resources.

The next steps for piloting this new framework for developing adaptive behavior include:



Stress-testing the ideas in this paper through feedback and discussion to determine if and how they can be put into practice.



Modeling the potential dollar benefits of implementing the framework in different areas of the business in order to define the potential size of the prize.



Considering the organizational implications--will a retailer need a Customer Czar, or a set of customer managers who work in parallel with category managers?



Piloting the framework to confirm proof of concept and ROI.

Call to Action Most food retailers are looking for “the next big thing” for winning and retaining customers. They see the success that companies like Tesco and Kroger have had with loyalty data and they realize they need to tap into something similar (and ideally even more effective). The intent of this paper is to lay out what food retailers need to do to catch up with the leaders in the field and move to the next generation of competitive strategies and tactics. It’s based on the belief that food retailers are competing for customers— not just against other retailers. This means emphasizing a well-defined, Value Proposition, one that describes what the retailer stands for and why they are “a little different and a little better” option for customers. New is the idea that there are actually two Value Propositions--the Overall and the Personal--and that a retailer must coordinate their delivery in order to create both a great shopping experience and strong customer loyalty. The potentially big new idea put forth in the paper is that retailers can now deliver a real-time Personal Value Proposition by enabling the experience of shopping online while customers are shopping in the store. All these ideas require that the food retailer have the financial, technical, and human resources to execute the vision, but now at least they have a full description of a “new destination.”

About Willard Bishop LLC At Willard Bishop we believe that in an increasingly crowded, incredibly complicated marketplace, clarity has become a priceless commodity. Information is not insight. Facts, figures, and findings only form a foundation. Knowledge without know-how is not enough. We solve business problems and identify opportunities to drive profitable growth. One of our clients has said, “You’re the industry ‘go-to’ group because you understand the whole picture, i.e., retailer, manufacturer, and shopper. By blending all of this together, Willard Bishop provides a unique value-add.” For over 30 years, we have helped clients develop and implement go-tomarket strategies that improve both top-line sales, e.g., Pricing Strategy, and bottom-line profits, e.g., Activity-Based Cost-driven Space Optimization. We accomplish this by going beyond the numbers to develop strategic implications and actionable recommendations for our clients. Companies we’ve worked with include: Coca-Cola and Kraft, Procter & Gamble and Tyson, Safeway and Supervalu, 7-Eleven and ExxonMobil. Our annual report, The Future of Food Retailing, is recognized as the preeminent source charting the changes taking place in the consumer goods retail marketplace. Visit us a www.willardbishop.com to learn more.

November 2008 Oracle Corporation World Headquarters 500 Oracle Parkway Redwood Shores, CA 94065 U.S.A. Worldwide Inquiries: Phone: +1.650.506.7000 Fax: +1.650.506.7200 oracle.com Copyright © 2008, Oracle and/or its affiliates. All rights reserved. This document is provided for information purposes only and the contents hereof are subject to change without notice. This document is not warranted to be error-free, nor subject to any other warranties or conditions, whether expressed orally or implied in law, including implied warranties and conditions of merchantability or fitness for a particular purpose. We specifically disclaim any liability with respect to this document and no contractual obligations are formed either directly or indirectly by this document. This document may not be reproduced or transmitted in any form or by any means, electronic or mechanical, for any purpose, without our prior written permission. Oracle is a registered trademark of Oracle Corporation and/or its affiliates. Other names may be trademarks of their respective owners. 1108