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2nd Tier Retailer Profiles December 2011

An Overview of the British Second Tier Retail Market 2011

2nd Tier Retailer Profiles December 2011

Table of Contents
Introduction 1.0 Introductory Note 1.1 Key Issues in the Convenience Sector 1.2 Facts and Figures 1.4 Market Segmentation 1.5 Logistics within the Convenience Sector 1.6 Consumer Demographics & Trends 1.7 Ranging 1.8 Future for Convenience 1.9 Outlook 2012

1 1 4 6 10 10 12 12 13

Buying Groups Nisa-Todays Spar (UK) Ltd Wholesalers Booker Costco Wholesale UK Ltd Landmark Cash & Carry Ltd Makro Spar Member Wholesalers Appleby Westward Ltd Blakemore Retail Capper & Co Ltd (now part of Blakemore Retail) CJ Lang & Son Ltd Henderson Group James Hall & Co Ltd Symbol Groups Costcutter Supermarkets Ltd Londis Musgrave Retail Partners GB Mace P&H McLane Convenience Multiples Budgens Musgrave Retail Partners GB Martin McColl One Stop Independent Supermarket E.H. Booths Discounters Aldi Stores Ltd Lidl UK Netto Poundland Health Store Holland & Barrett

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35 34 41 44

46 48 50 51 53 55

57 61 65

69 73 75

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81 84 86 88

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2nd Tier Retailer Profiles December 2011


1.0 Introductory Note This report looks at the broader Second Tier Retail Sector in the United Kingdom. Although particular focus is given to Convenience stores in the initial stages of this report, other channels are included. This report includes profiles of a number of operators in the following segments of the second tier retail sector: Buying Groups Wholesalers Symbol Groups Convenience Multiples Independent Supermarkets Discounters

To be classified under convenience a store must satisfy three criteria: 1. Size and Opening Hours: The store must be less than 3,000 sq. ft. and open for long hours 7 days a week. 2. Main Business Activity: All stores must sell food and drink, for consumption off the premises. 3. Product Categories: The store must sell at least eight of the following fifteen categories: Alcohol Bakery Chilled food Confectionery Fast food / Food-to-go Frozen food Fruit / Vegetables Health & beauty Household / Non-food National lottery Milk Newspapers / Magazines Packaged groceries Snacks Soft drinks Tobacco

1.1 Key Issues in the Convenience Sector 1. In 2011, the UK convenience market was valued by IGD at 32.4 billion, (37.84 1 billion) an increase of 4.9% on 2010. 2. Although this represents a slowdown on the growth experienced during 2010 (+6.3%), the sector continues to grow ahead of total grocery (+2.9%). 3. IGD forecasts that growth will continue at a compound annual growth rate (CAGR) of 5.5% to 2016 with value reaching 42.3bn by that time. 4. The total number of UK convenience stores continues to fall, but those that remain are becoming increasingly efficient and sales continue to grow ahead of the total grocery market. 5. Changes - such as smaller households and longer working hours - are altering shopper habits and helping to drive convenience sales with many now moving towards a little and often approach to grocery shopping. 6. While still relatively unconsolidated, the sector is becoming increasingly well organised as operators from across the market broaden their capabilities and improve their in-store offer. 7. In the challenging economic climate, well established categories such as confectionery and soft drinks have performed well alongside developing product groups such as fresh and chilled foods. High levels of price inflation have also given tobacco and BWS a boost in the last 12 months.

IGD Convenience retailing 2011, retrieved 06.12.11

2nd Tier Retailer Profiles December 2011


8. Although increasing competition is a key feature of this market, it is notable that close to 60% of all sales in the sector come through independent retailers, either under a symbol group fascia or as non-affiliates. 1.2 Facts and Figures In April 2011, the number of convenience stores in the UK was 48,168, 0.4% down on the same time in 2010. The decline has stabilised in the last two years following greater reductions in store numbers from around 2005 onwards. A fall in the number of forecourts (-1.6%) and non-affiliated independents (-3.4%) was behind this decline, although the latter underwent its smallest reduction for many years (717 fewer stores compared to a drop of 1,090 the year before). The sector remains dominated by independent retailers; nearly threequarters of all stores in the sector are operated by unaffiliated operators or those affiliated to a symbol group fascia. The sector may be approaching a watershed where many weaker operators have either left the market or been absorbed into a different segment - meaning contraction in the sector may be slower in coming years.

Figure 1.3 Convenience segments summary

Note: Joint Ventures refer to sites which are operated jointly between an oil company and a retailer and 2 are petrol filling station based. An adjustment to the total is made to account for these stores . UK convenience stores generated total sales of 30.9bn in the 12 months to April 2011, a 6.3% increase on the previous year. The value of the market continued to grow despite a 1.6% fall in store numbers, and represents 20.5% of the total UK food and grocery market. The UK food and grocery market is valued at 147.5bn over the same period and growing at a rate of 4.1% on a sales basis for the year. Many of the factors which have fuelled growth in the sector in recent years are set to continue. These include the rise of single person households, a growing population, an increase in the number of women in work and longer working hours. Improved operational standards and the roll-out of more modern, tailored convenience solutions are additional factors underpinning the growth in convenience. The sector as a whole is showing better awareness of shopper trends, both those unique to the small store sector as well as those impacting development in larger store formats. Figure 1.4 on next page illustrates the convenience market value breakdown by type as of June 2011.
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IGD Research and William Reed Business Media, 2011

2nd Tier Retailer Profiles December 2011

Figure 1.4: UK convenience market sales by type:

In the last year, symbols groups were the fastest growing segment (+9.2%), followed by convenience multiples and co-operatives. In spite of a modest fall in sales value, non-affiliated independents still accounted for some 20% of total sector sales.
Source: IGD Research, December 2011

Figure 1.5: UK convenience store numbers, 2010 - 2011

* Total store number restated from 48,410 to 48,361 **Joint Ventures are petrol filling stations operated jointly by an oil company and a retailer. An adjustment to the total is made to account for these stores

IGD Research and William Reed Business Media, 2011

2nd Tier Retailer Profiles December 2011

1.3 Market Segmentation Co-operative Convenience Stores The convenience channel is the main focus for The Co-operative's store estate expansion Programme. Many of The Co-operative's planned 300+ store openings between 2011 and 2013 will be convenience stores in urban areas, extending the retailer's reach in areas where it lacks representation. The Co-operative currently operates 1,911 convenience stores in the UK. These stores make up 51.48% of The Co-operatives store portfolio. In 2011 the convenience sector generated sales of 2,750m for The Co-operative, this accounted for 20.78% of total group sales for the year. Key categories for these stores are produce, meat and fish, ambient and BWS. The Co-operative's flagship convenience store opened in the Strand, central London in March 2010. The store sets new standards for energy efficiency and is believed to be the first UK convenience store to be 100% illuminated by low energy LED lighting. With the opening of this store, The Co-operative operates a food store in every UK postal area. The Co-operative tends to locate its convenience stores in community-orientated suburban areas with typically small catchments. Somerfield store conversions have been completed and new product development (NPD) is now a priority for The Co-operative Food. Forecourts Forecourt operators face a challenging time, particularly as a result of increases in petrol costs throughout the year. The long term decline in forecourt numbers persists as the estate continues to shrink. In 2011 the number of sites with convenience stores contracted further, down to 8,329 (-1.6% versus 2010). In spite of this, segment sales increased by 1.4%, demonstrating that those remaining in the market are responding to the pressures they face relatively well. With fuel volumes continuing to decline, forecourt operators are adapting their offers and developing skills in areas such as fresh and hot food in order to capture spend beyond their traditional areas of strength. Suppliers that can help forecourt operators expand on existing capabilities will be key partners. While impulse is critical, reaching beyond such categories must be the long term objective for those operating in this segment of convenience. The challenge for this segment going forward is to demonstrate that its convenience offer is a key component, rather than a supplement, to fuel.The ownership and branding of forecourt stores is complex but broadly speaking fall into three areas Dealer-owned, Dealer Operated (DODO) - The forecourt is owned by an independent business, acting as a distributor for an oil company, which supplies fuel and usually a branding package. Company-Owned, Dealer-Operated (CODO) - The forecourt is owned by an oil company which also supplies the fuel but the site and store are operated by an independent business. Company Owned Company Operated (COCO) The forecourt is owned by an oil company and operated by its employees according to instructions from Head Office, as with any other multiple retail business.

2nd Tier Retailer Profiles December 2011


Company Owned Group Operated (COGOP) - This is a similar model to CODO, with the key difference being that a group of stores are run by another independent company (rather than an independent dealer).

Figure 1.6: Convenience UK: Key players (forecourt store numbers)

Source: IGD Research, June 2011

Figure 1.6 above gives a breakdown of store numbers between 2000 and 2011. Convenience forecourt store numbers fell by 1.6% to 8,329 in 2011, a slight improvement on the -2.1% contraction in 2010. In the last ten years however, the estate has shrunk by nearly 15%. Convenience Multiples Convenience Multiples can be defined as retailers operating 10 or more convenience stores which have no symbol group affiliation displayed at retail level. Major retailers like Tesco and Sainsburys are significant operators in this sector and have considerable coverage. In terms of store numbers, convenience multiples grew faster than any other segment in 2011; a 6.4% increase in store numbers taking the total store count to 2,835. Sales from convenience multiples grew by 8.1% to 5.1bn but they still accounted for less than 16% of total sector sales. Efficiency and consistency of operations helped the segment achieve a greater share of sales than its share of stores (16% of sector sales versus 6% of stores). While new entrants such as Waitrose and Morrisons are expected to contribute to estate growth in the future, Tesco Express and Sainsburys Local remain the major contributors to segment growth at present. Development of this segment will intensify competition in the wider convenience sector, but will also drive further improvements in range, promotions and in-store operations across the market. Tesco: Tesco have been very successful in penetrating the convenience sector with their two formats, Tesco Express, and Tesco Metro. As detailed later in this report, Tesco also operates the One Stop convenience format, which they acquired in 2003. The Express format started out as Tescos forecourt offering and has since been developed into a standalone convenience format. As of June 2011 Tesco Express stores numbered 1,271 with One Stop stores numbered 521.The stores typically have 2,500 SKUs (stock keeping units) attracting, on average, 10,000 customers per week. Tesco has upweighted its focus on Express expansion in recent years, with approximately 200 new stores opened over 2010 and 2011. Sainsburys: Local is Sainsburys convenience format aiming to cater for the needs of shoppers on the move and stocks around 2,500 lines, including a wide range of fresh and ambient products, focused on both eat-now and eat-later occasions. Sainsburys has a strong emphasis on health and well-being, premium and indulgence in its convenience stores. Around 40% of store space is dedicated to fresh and chilled ranges, with a comprehensive range of fresh produce, chilled ready meals and in-store produced bakery items.These stores are located in busy town centres and on forecourts and have experienced the most growth in floor space over the past number of years. Sainsburys

2nd Tier Retailer Profiles December 2011


also operate Sainsburys at Jacksons stores and Sainsburys at Bells stores. Sainsbury's convenience store estate was expanded by 47 new stores over 2011. In total Sainsbury operate 452 convenience stores, an increase of 6.2% on 2010. In 2011 Sainsburys convenience stores had sales of 1,131.07m, which represented 5.11% of Sainsburys total sales. Marks & Spencer: Simply Food is M&S' standalone food-only format store. The first Simply Food stores opened in Twickenham and Surbiton in July 2001. Since then there has been a rapid roll-out of the format, including company owned stores and a range of franchise developments as part of the retailer's strategic focus on the convenience and top-up shopping markets. In 2011 Marks and Spencer was operating 373 Simply Food outlets with two formats: high street and transit, this is an increase of 3.3% on 2010. In 2011 convenience stores accounted for 2,389.50m in sales. High Street stores are around 5,000 sq. ft. and stock over 2,000 lines. Transit stores, which are typically franchised, range in size from 1,500 to 3,000 sq. ft. and stock 1,000 product lines, with a further 116 located at BP Connect fuel stations. M&S Simply Food stores are also operated through a variety of franchise schemes, such as those opened in partnership with SSP at railway and airport locations, in conjunction with Moto at motorway service areas and on forecourt sites with BP Connect. The railway station stores range from 1,500 to 3,000 sq ft, and achieve the highest sales density of any stores in the company. Waitrose: Waitrose opened its first convenience store in London in late 2009, marking the beginning of the supermarkets plans to dramatically increase its presence in this sector. In 2011 Waitrose was operating 40 convenience stores in the UK, this accounted for a 207 per cent increase in store number compared with 2010. These stores generated 102.27m in sales in 2011; this was an increase of 221 per cent on 2010. Convenience will play an ongoing role for Waitrose going forward as it expands its store estate. Indeed, the first half of 2011 was a key period of development, with the development of the Little Waitrose format a key highlight. The retailer has ambitious plans to open 300 convenience stores by 2020. Aligned with this, Waitrose is increasingly developing its proposition to meet the needs of convenience shoppers, for instance with the launch of a new 'Good To Go' private label range. The Co-operative: This is the key segment for The Co-operative Group representing over 1,900stores, making up the largest proportion of the portfolio. The small stores are typically located in suburban areas, often in parades of local shops, serving relatively small catchments. Since the late 1990s the key Co-operative Group format for its small stores has been targeted at providing a fully-fledged convenience concept, through which this fast growing market segment can be exploited. Aiming to be the leading convenience retailer in the UK market, the society plans to continue adding to its small store portfolio both through acquisition and new developments, with the 2009 acquisition of Somerfield providing a significant boost to store numbers. The retailer completed its conversion of all of the former Somerfield stores to The Co-operative fascia by the end of 2010. Key categories include produce, bakery, meat & fish, ambient and BWS.

Symbol Groups The symbol group segment was the fastest growing convenience segment over 2011, and while the net increase in new stores was down YOY, the rate of growth remained healthy (+2.9% YOY, equivalent to nearly 500 new stores). Total sales amounted to 12.6bn over 2011 which was an increase of 9.2% on 2010. In 2011 there were 16,288 convenience stores in the UK that were part of symbol groups, and these stores accounted for 38.2% of total sales in the convenience sector. Strong levels of recruitment and ongoing improvements in overall proposition contributed to the increase in total segment sales. The symbol group segment of the UK convenience market remains both highly competitive and highly attractive for independent retailers and shoppers alike. Tobacco retains a large overtrade in this segment of convenience although growth convenience, in chilled food and sandwiches is testament to the evolution of a more diverse offer from the leading symbol groups.

2nd Tier Retailer Profiles December 2011

Figure 1.7: Convenience UK: Symbol Group turnover (M) 2000 2011

Source: IGD Research, June 2011

There was another very strong performance from symbol groups in 2011. Sales rose by 9.2% following similar growth in each of the previous years. Estate growth is a key driver, but so too is the combination of improving store standards, strong buying power and local ownership that this segment enjoys. Non-Affiliated Independents NonAffiliated Independent convenience stores are defined as groups of fewer than 10 stores under the same ownership, with single premises the most common. They are not affiliated to any symbol or fascia group; instead their owners control all operational decisionmaking. Store sales come from at least seven of the core convenience categories outlined earlier. The number of non-affiliated independents continues to fall, with the total number of stores in this segment declining from 20,860 in 2010 to 20,143 in 2011, a decline of 3.4 per cent. Although store numbers in this segment are in long-term decline, the non-affiliated independent store segment still accounts for 40.2% of all UK convenience stores, and so remains an important route to market for many businesses. While sales within this segment face continued pressure, many retailers have been able to deliver strong sales growth by responding to local shoppers needs and positioning their stores at the heart of the communities in which they operate. Independent Supermarkets: Booths is the only independent supermarket profiled in this report, classed as such because each store in the chain is owned and operated by Booths, a privately owned company. The average size of each store is 11,000 sq. ft. These characteristics mean that Booths cannot be classified as a symbol group, nor as a convenience multiple. Booths has 27 stores across Lancashire, Cheshire, Yorkshire and Cumbria. One key part of this is sourcing products from the localities it serves. At least 25% of all of the products in Booths at any one time are locally produced. 100% of the companys fresh meat comes from the region and the company is also strong in local fresh fruit and vegetables. Discounters: Discounters offer a limited assortment of products with a reduced number of lines based on the 80:20 principle (80% of profit is generated from 20% of goods). Discounters offer a very basic shopping environment; products are generally sold directly from pallets and out of product casing making retail-ready-packaging a key issue for suppliers. Discounters have experienced double digit levels of growth during 2011 as more consumers are trading down. As of December 2011, Aldi now has a 3.5 per cent share of the total UK grocery retail market and Lidl has a 2.5 per cent share of the market. Farmfoods,

2nd Tier Retailer Profiles December 2011


frozen discounter, has also experienced growth in 2011 and now accounts for 0.6 per cent of the total UK grocery market. 1.4 Logistics within the Convenience Sector The convenience sector has always been notoriously segmented logistically. Nisa-Today is unique amongst UK buying groups in having developed its own central distribution structure and facilities. Costcutter is the single biggest user of Nisa-Todays central distribution services, receiving 90% of all their goods through the service. In April 2011 Proposals to demerge the Today's Group's wholesale operation from Nisa's retail to form a standalone business were announced. The logistics of the Nisa-Todays network as well as those of the Spar network of wholesalers are dealt with in more detail in the retailer profiles. 1.5 Consumer Demographics & Trends In 2010 the UK population increased to over 62.3 million people. The current rate of population growth is +0.6%. The UK population is projected by the Office of National Statistics (ONS) to increase to 67.2 million by 2020 and 73.2 million by 2035. The ONS has said that just over two-thirds of the projected increase from 2010 to 2035 is either directly or indirectly 4 due to migration. The primary driver of this growth has been immigration, with a steady influx of migrants from Central and Eastern Europe. In April 2011 the government introduced an immigration cap to help reduce net immigration. Under the overhaul, employers in the UK are limited to bringing in 20,700 migrants from outside the EU to work in skilled professions under Tier 2 of the system. In 2011 there were 26.3 million households in the UK. Between 1971 and 2006, the average household size fell from 2.9 to 2.4 people as a result of more lone-parent families, smaller family sizes and an increase in one-person households. Looking forward the growth of one 5 person households is set to continue, increasing to 7.9m by 2013. The declining average household size should provide further opportunity for convenience store retailers to prosper, with smaller, particularly single, households more likely to consume pre-prepared or partprepared food ranges rather than cook a meal from scratch. Time scarcity is another factor which is influencing the convenience sector positively. Average UK working hours are longer than anywhere else in Europe, resulting in a decline in the time dedicated to food preparation at home. Convenience food and quick trips to smaller shops are seen as the solution for many consumers. The ageing nature of the population is another point to note. The government estimates that by 2014, the number of people aged 65 and over is expected to exceed those aged under 16 for the first time. This trend is set to continue with 17% of the population estimated to be under 16 and 32% over 65 by 2031. The changing population structure has clear implications for the convenience sector in terms of store design and layout, while pack sizes, product formats and packaging design will also need to be considered. The difficult economic backdrop has led to a challenging trading environment for much of 2011, yet the grocery market has demonstrated resilience, aided by its fundamental nondiscretionary nature and an ability to respond swiftly to changing shopper requirements. This, together with continuing inflation in the first part of the year, has helped the market grow by 6 4.2% in 2011 to reach a value of 145.76bn. The recessionary period has dented consumer confidence and has altered consumers awareness and sensitivity to both price changes and promotional offers. However, some of these developments can be viewed in a somewhat positive light as the convenience sector benefitted from consumers turning to The Big Night In trend. In an effort to curb spending consumers have been cutting back on eating out, choosing instead to buy premium ready meals at local convenience stores as a treat on a night in.

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ONS release, 26.10.11 www.igd.com, retrieved 10.12.10, UK Country profile 6 IGD, NPD Foodservice 2010

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There are three primary convenience shopper missions: Impulse: These occur where the shopper unintentionally purchases products, generally treats. Forecourt retailers are growing areas for impulse purchases. Top Up: Small basket shops between major supermarket visits. Distress: Last minute shopping, such as evening meals or a late gift.

There are five key in-store criteria for the consumer: Service: Staff friendliness is very important to shoppers. Speed: This is becoming more important and is cited as one of the main advantages of shopping in convenience stores over supermarkets. Availability: Symbol groups are at the forefront of availability. Acceptable Prices: Customers must feel happy with the prices they are paying and must not feel ripped off because they are shopping in a convenience store. The customer no longer feels it is acceptable to pay higher prices in order to shop in a convenience outlet, although prices are still comparably higher in the convenience sector. In the recent year, value has come to the fore on consumers agenda. Range: Chilled products and hot food offerings are two of the largest growth areas in second tier retailing along with food-to-go.

Convenience has become a more dominant factor in deciding where to shop. For example, in November 2011 46% of people claimed that a convenient location is an extremely important 7 driver of store choice, up from 41% in August 2011. Convenience remains a key factor when shoppers are deciding where to shop. According to ShopperTrack, convenience is the second most important factor after price in determining store choice, with eight in ten (80%) shoppers rating it as extremely or very important. Tobacco continues to account for the greatest proportion of sales. Not only is tobacco important in terms of sales, but it is also a key footfall driver, guaranteeing high levels of traffic for many stores. However, while the government has previously been actively pursuing policies to reduce the number of smokers in the UK for a number of years, in 2008 it announced proposals for a ban on the display of tobacco products, coming into effect in larger stores in 2011 and in smaller stores in 2013. Building value perception: Operators are communicating their value credentials more purposefully and loudly. Their aim is to demonstrate to shoppers that they offer the same price and promotions as large format retailers and overhaul the perception of poor value within the sector. The convenience sector is becoming more competitive and shoppers are more aware of the offers available to them in the wider grocery market. Private label growth: Private label participation is growing across the convenience sector. While ranges are traditionally more developed among multiples and co-operatives, the proposition of the symbol groups continues to broaden and gain credibility. Retailer branded ranges provide an excellent route to differentiation, vital at a time when convenience retailing is attracting more attention from the major multiples whose offers in this area are very strong. Moreover, they enable the wider sector to highlight both value and values at a time when many shoppers are changing their habits. Private label expansion will continue across the convenience sector and create many opportunities for manufacturers to develop new business. Developing categories: As competition within convenience intensifies and new entrants bring different skill-sets to the sector, existing operators are evolving and extending their offer. This is resulting in better choice for shoppers and a general up-weighting of the offer traditionally provided within small stores. Convenience multiples and co-operatives are particularly strong in areas such as chilled food and fruit and vegetables, and their growing presence in the c-store market is having a broadly positive effect in terms of quality across the sector. Operators have found they must develop new competencies in the current environment. Reliance on traditional convenience categories is risky, if not unwise, given
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IGD ShopperTrack 2011, retrieved 06.12.11

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many shoppers growing desire to shop more frequently and more locally. Suppliers should be clear on their retail customers existing strengths and then work with them to define those for development. Being best-in-class across numerous categories may be impractical in the short term, but a phased plan with buy-in from both parties can deliver strong results. Fresh food: The increased presence of the multiples within convenience has driven up standards and penetration in fresh categories, helping to deliver a broader offer and demonstrate credibility across a wider spectrum of products. Retailers new to these categories will need supplier support to build the skill-set that they need to stock, handle and present fresh food in a way that adds value to their overall operation. A strong fresh offer, featuring good quality fruit and vegetable in particular, will tend to increase trip frequency into a convenience store by providing shoppers with a compelling reason to visit more often. Food-to-go: Another key area for development that plays to the changing face of meal consumption in the UK, as more people are tending to skip meals in the home and seek good quality hot food solutions when theyre on the move. While the potential for incremental sales through a good food-to-go offer is considerable, quality and availability are the watchwords. Shoppers expectations are rising all the time, so the offer must be a good one. In 2011 Sainsburys upped the ante in food-to-go by opening its first store dedicated to serving freshly prepared salads, sandwiches and hot meals. The Fresh Kitchen concept store provides good quality food-on-the-move throughout the day in a highly transient location. 1.6 Ranging Figure 1.8: Average Sales Contribution by Category (%): Total Convenience Sector, 2010

Source: Convenience Retailing, May 2011

Product diversification and the improvement of retail propositions across the sector have led to an increasingly diverse sales mix within convenience. 1.7 The future of convenience: five watch-outs 1. The channel will remain a major growth area and attract more attention from new entrants. 2. The number and variety of shopper missions served by convenience stores will increase, generating additional sales, but also creating greater operational complexity. 3. Range, promotions and customer communications will become more sophisticated as shoppers expectations of the channel rise. 4. Space allocation in-store will alter significantly in order to accommodate new ranges and reflect a more shopper-centric approach to merchandising. 5. Driving out cost to improve efficiency will be a key future focus for retailers and suppliers those who achieve this effectively will be well placed in the convenience sector going forward. 1.8 Outlook for 2012

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Although 2011 has proven to be a challenging year, the convenience sector remains ahead of the game and operators are looking forward with a sense of buoyancy. As the effects of austerity begin to take hold, shopper confidence in the UK continues to be a concern in the wider economy, with purchases being delayed, offset or simply not made at all. Even in the grocery sector, there are signs of uncertainty, as IGDs ShopperTrack research has shown that 29% of people believe food prices will get much more expensive in the twelve months to October 2012 compared to 19% who felt this way a year ago. The percentage of shoppers stating that saving money will be a greater focus for them in the coming year has also risen, from 26% in October 2010 to 38% in October 2011. Earlier in 2011, IGDs ShopperTrack research found this new focus was beginning to affect the way people shopped for their groceries. More than two thirds of shoppers told IGD that they were sticking to a set budget when they went out for groceries and even that they were economising on food at the end of the month until payday. While these trends are of concern in the longer term, they do tend to favour convenience retailing. To help with household budgeting, increasing numbers of shoppers are turning to the convenience sector and in the process following more of a little and often approach to their grocery shopping. Shoppers have adopted this approach as a way to cut back on food waste as well as enabling them to reduce their car usage at a time when petrol prices keep on rising. As a result of these changes in UK shopper behaviour in the twelve months to October 2011 the convenience sector has achieved further growth ahead of the total UK grocery market, taking the value of the convenience sector as 33.6bn, up 4.6% on 2010. More than a fifth (21.4%) of all sales in the grocery sector now come through convenience stores and by 2016 IGD predicts that the share will rise to close to 23 per cent. However, shopper demand alone is not enough to achieve this increase in the market, and operators and suppliers across the sector have been working hard to deliver a better offer and a more appealing experience for shoppers. The value message in c-stores is now much more consistent and coherent than it once was, with value leaflets, wow deals and price comparison all common features from the sectors leading operators. Added to this, fresh food penetration continues to grow and the sector is now a viable option for many when it comes to categories such as fruit and vegetables.

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Nisa-Todays, Park Farm Road, Foxhills Industrial Estate, Scunthorpe, North Lincolnshire, DN15 8QP Tel: 0044 (0) 1724 282028 Fax: 0044 (0) 1724 864835 www.nisa-todays.com

Nisa-Today's (Holdings) Ltd


Nisa Ltd (retail) Today's Group Ltd (Wholesale)
Booker Dhamecha Musgrave wholesale Service Nisachill

Central Distribution Services

Costcutter NIsa Symbol Fascias

Nisafreeze

Ambient

Note: These are the key retail and wholesale members; there are other smaller member companies with Nisa-Todays.

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Activity

Nisa-Today's is a retail and wholesale buying consortium and does not operate a portfolio of outlets itself, it does however operate several warehouses which it uses to distribute goods to its member retailers. 950 Nisa retail members operating over 3,500 stores and 228 Todays wholesale companies with 255 depots. Total turnover for the year (to 28th March 2011) rose to 1,500m, an increase of 5.56% on the previous year.

Coverage

Turnover

Company Overview
Nisa-Todays (Holdings) Ltd

Nisa Ltd (Retail)

Todays Group Ltd (Wholesale)

Central Distribution Services Ltd

Nisa-Todays is the UKs largest independent buying consortium. The National Independent Supermarket Association (NISA) started as a delivered wholesaler to independents. Nisa-Today's is the leading member-owned organisation providing benefits to independent retailers and wholesalers in food and drink markets. Established in 1977, the fundamental aim of the group has remained the same for over 30 years - to channel the combined buying power of independent retailers and wholesalers in a way that provides effective competition to the constantly expanding major multiple grocery retailers and to provide marketing and distribution services to meet customer needs. Nisa-Todays has grown in stature and expertise in both the retail and wholesale sectors. Members pay an annual subscription to cover operating costs and receive income back from the group in the form of rebates. Member companies each purchase a shareholding in the companys equity, and membership has increased considerably, with almost 1,000 businesses benefiting from a range of products and services offered by the group. The consortium's aim is enable its members to compete with the major multiples. To achieve this Nisa-Today's provides its members with a three tier private label range from premium-end to mid-range and valueoffering customers and its members an extensive choice to compete effectively. The consortium now seeks to promote the Nisa-Todays brand across all areas of the business, in order to raise its profile as a consumer brand in both wholesale and retail channels. Both the Nisa (retail) and Todays Group (wholesale) comprise highly varied memberships. Numerically membership is dominated by small scale operators such as small convenience/supermarket chains and single depot wholesalers. However, membership has always encompassed some multi -site operators (both retailers and wholesalers) as well as retailers with larger stores (even superstores), such as Tuffins

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in Shropshire and Jempsons of Peasmarsh. Entry into membership is subject to meeting certain criteria. Nisa - Stores should carry a broad grocery/convenience offering, be of an appropriate size and show considerable further potential for growth. Membership requires the purchase of shares in Nisa-Today's. Each member holds up to 100 shares in the company. No member has more than 100 shares regardless of their size, and therefore each member has equal voting rights. The Todays Group - Wholesalers must have a meaningful turnover volume and also pay a base annual subscription which again varies according to a companys position in the membership structure and income levels received from the group. All Nisa-Todays member companies must be in a secure financial position. Central Distribution Services distribute both ambient and temperature controlled goods as well as licensed and tobacco to retail members, worth c. 900m. There are two elements to the service: 1) Nisaway: centralised distribution of ambient goods and 2) Nisachill/Nisafreeze: centralised distribution of temperature controlled goods. In September 2010 Nisa unveiled a new corporate branding including the 'Making a Difference Locally' strap-line, to help build the links with its inhouse community charity initiative. In October 2010 the Today's Group launched a new brand strategy, aimed at realising the fuller potential in the Today's brand and to create a clearer sense of mission. In November 2010 Nisa Central Distribution opened a new 195,000 sq ft multitemperature depot at Livingston, Scotland to provide additional capacity to service members in Scotland, the north of England and Ireland. In December 2010 Nisa launched its first ever TV campaign in a bid to raise brand awareness with consumers and recruit new members. The 1.3m campaign ran until February. In October 2011 members of Nisa-Today's agreed to separate its wholesale and retail arms in a move which is set to be completed in the first quarter of 2012. In a statement, Nisa-Today's said: The transaction was first proposed as the marketplace in which both Nisa and Today's operate has developed somewhat since the Today's Group was first formed in 1987 and it became clear that Todays wholesale has very different future needs to those of Nisa retail. The separation will allow both companies to tailor their individual strategies and change their resources and direction for the future success of both companies. However, this agreed transaction does not mean the end of all existing relationships between Nisa and Todays as this separate company would continue to trade with central distribution and joint buying or distribution opportunities would still be pursued Convenience Format As mentioned Nisa-Todays does not operate stores on its own behalf, but it has however developed and continues to control a number of symbol and fascia packages for provision to independent retailers as part of the support it provides to members. These packages are primarily targeted at retailers in the convenience sector. The Nisa Symbol Package has been developed for the use of the consortiums retail members. The full retail package encompasses the whole store offer and is designed to enable Nisa to adopt the role of a

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retailer without stores. Nisa-Todays Innovation concept seeks to provide a package of the highest quality, matching store fits of the multiple sector. To this Nisa is also able to add additional features such as the recently developed Caf Nisa coffee bar facility. Retailers wishing to adopt the Nisa fascia have to be willing to show considerable commitment to the development and maintenance of store standards and to make significant investment in modernisation. A number of retail sub-formats have been created to provide a more flexible fascia package targeted at a range of size and location criteria: Nisa Extra Nisa Metro >3,000 sq. ft 2,000-3,000 sq. ft. 1,500-2,000 sq. ft <1,500 sq. ft A fuller offer with extended trading hours. City centre, high traffic locations. Range focused on food-to-go and chilled ready meals. Neighbourhood stores. A lower cost option for the smaller independent retailer. Tailored for petrol forecourt locations. A convenience range focused on essential items.

Nisa Local

Nisa Express

Three Todays Group Symbol Packages have been developed; these are available to customers of a committed Todays Group wholesale member. The packages have been designed to help build the bond of loyalty between Todays wholesalers and their customers, establishing fully disciplined store groups enabling the implementation of successful consumer focused strategies: 1. Today's Express/Local/Extra - provides a high quality modern shop-fit and image built around a focused convenience offer embodying core ranging disciplines. The Express version is designed specifically for forecourt locations. There are now 55 stores employing this package serviced by seven delivered wholesalers who comprise Group 1 - Symbol level of membership. These variants are targeted at forecourt sites (Express), CTN/convenience (Local) and Extra (grocery/convenience). 2. Day 1 - has been developed exclusively in partnership with London-based Dhamecha Cash & Carry, the consortium's largest cash & carry member. This is the first time Nisa-Today's has sought to provide a store package for customers of cash & carry members. This package seeks to build upon the PCC retail promotion club also operated through Dhamecha. The key requirement of membership is for retailers to source at least 65% of all goods from Dhamecha, seeking to tie in significant customer spend.

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3. The Day Today package is available to retail customers recommended through Todays delivered wholesale members, but not cash & carry operators. The package has been designed to ensure a broad appeal amongst independent retailers to create a national consumer image. Retailers agreeing to implementation receive a full imagery kit including: The fascia A full promotional PoS and merchandising package every three weeks Window graphics Perimeter freeze kit with logos High impact shelf edge strips Bold internal hanging signs for product group identification

Superstores/Supermarkets While the convenience sector is the core sector with which Nisa-Today's is concerned, it also has relevance for the supermarket sector. To bring appropriate focus to the requirements of larger stores Nisa-Today's distinguishes a cluster of 25 'large' members operating stores over 3,000 sq ft. The flexibility of the Nisa symbol group package and the breadth of the range carried by central distribution means that it has even been able to support store developments of up to 15,000 sq ft, branded with the Nisa Extra fascia. Though the numbers of such large stores are few.

Wholesale The wholesale members of Nisa-Todays are made up of a mixture of cash & carry and delivered operations, with some companies operating in both formats. Prominent members of the Todays Group include Musgrave Wholesale Services and Makro. The Today's Group has a wholesale membership of over 240 companies operating a total of 270 depots. These are made up of a mixture of cash & carry and delivered operations, with some companies operating in both formats. There are 45 wholesalers in the most disciplined level of membership, Group 1; comprising 22 delivered operators (with 25 depots) and 30 cash & carry operators (with 39 depots).

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Range Nisa-Today's private label ranges are estimated to be worth 130m annually at retail prices. Under the corporate strategy to 'drive down the cost of living', private label was streamlined so that products for wholesale and retail feature under a single name, reducing costs and increasing product ranges at the same time. However, the consortium does offer a limited, specific wholesale private label grocery range under the separate 'Right Choice' label, in order to provide members with a price-marked value option specifically targeted to the wholesale channel. At the core of the private label ranges are those specifically branded under the Nisa-Today's label, the key element of which is the Heritage range. Nisa-Today's Heritage - is the primary food and grocery private label range, comprising: Ambient - 475 lines Chilled 371 lines Frozen 62 lines Fresh produce 229 lines

This is the flagship own label range and is the focus of significant ongoing development, especially in the chilled and fresh produce categories. Recent years have seen the significant extension of the private label offer in these areas, building a credible range in ready meals and adding more premium products such as fresh herbs.

Within heritage three sub segments have been developed: Heritage Select and Heritage, providing premium and mid-price ranges respectively. To help increase value-awareness, the consortium uses onpack promotions to boost sales; including many core products and providing an instant promotional impact on shelf.

Heritage Value - This is the key value private label range, based around well established everyday items such as baked beans and carbonates, but now also being extended to include chilled and frozen food products. As well as the key Nisa-Today's branded ranges the consortium also maintains a number of exclusive label ranges in specific areas, which do not carry the Nisa-Today's label on front of pack: Fun Factory confectionery and soft drinks range with 46 product lines Cellars International - licensed range. This extensive range comprises beers, wines and spirits developed with their own individual identities to provide appropriate product credibility. This range includes attractively designed outers to encourage case sales in the retail channel and to provide better in depot impact in the cash & carry environment. Marketing & Promotions The key value message in Nisa-Today's strategy has been developed primarily through its promotional programmes. Since 2005 these have proved significant drivers of business for its membership with the development of programmes becoming a key focus of the consortium's activities (both on the retail and wholesale side), producing progressively keener deals encompassing a wider range of categories, using a wider range of mechanics and achieving greater levels of discipline. Central to the strategy has been the use of door drop leaflets provided to retailers for distribution. The core programme carried by Nisa retail members using the consortium's central distribution service is now delivered to

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some 5 million homes in every three-week promotional period. As a membership based trade organisation Nisa-Today's is required to undertake marketing at two levels, at: Consumer level - to communicate the product offer and build the brand. This is primarily undertaken through consumer leaflets and PoS to support promotional programmes. Member level - to communicate the service offer to existing and would-be members, in order to maintain/build the scale of the group.

Therefore, as well as the trading and distribution services it offers NisaToday's has also developed a wide range of additional support services for member companies, designed to reduce costs and enhance the operational efficiency and effectiveness of small businesses such as: Group negotiated terms for energy and other necessary facilities as well as business equipment and goods, and staff benefits (such as health schemes). Tailored IT solutions and IT support for retailers and wholesalers Training schemes to help businesses develop best in store practice. Merchandising and category management support Store and fascia packages, backed by full store fitting and redevelopment services. Drop shipment schemes, providing delivery from third party suppliers for products not included in the Nisa Today's range, facilitated by central ordering and invoicing.

Nisa Retail While, as a consortium Nisa is unable to do more than recommend pricing to its retailer members, it has succeeded in creating extensive adherence to these recommendations. As part of its 'New Era' trading terms Nisa operates a number of tiered price files, providing targeted recommendations to stores according to their classification as: Convenience High street Supermarket

This seeks to provide the optimum pricing for these varying locations and formats. At the lowest level the supermarket pricing tier will give direct price competitiveness with the superstore sector across a significant core range, building on the existing 'Price Check' EDLP range already established. In contrast the convenience pricing tier gives retailers the opportunity to select a higher pricing level to maximise the potential of city centre and high traffic sites, while the high street provides a median price positioning for neighbourhood stores. In the 2010 fiscal year the division of Nisa central distribution sales between the stores in the three classifications was: Convenience - 21% High Street - 63% Supermarket - 17%

The 'Price Check' initiative seeks to provide an EDLP element to the Nisa offer through 'permanent' promotions, guaranteeing shoppers low prices across a key range of hundreds of goods, including significant branded products such as Muller and Stella Artois, as well as own label essentials. This element of the offer comprises a mixture of low prices and permanent multi-save deals. There are over 400 products included

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in the scheme. This initiative has been developed alongside established promotional strategies with products being designated EDLP or promotional status as deemed appropriate according to Nisa's developing category plans. Todays Wholesale The Today's Group negotiates programmes of both wholesale and retail deals, aimed at wholesale member customers and consumers respectively. Wholesale deals are marketed primarily under the banner of 'Business Builders'. The core of Todays consumer promotional activity is its own national Hot Spot programme of 17 three-week periods running throughout the year.

The Hot Spots are essentially ambient offers, with emphasis on the impulse and licensed categories, typically consisting of between eight to ten products in any three-week period, plus additional feature promotions. The precise make up and mechanics of the programmes varies according to the classification of wholesaler as either delivered or cash & carry. In addition the Today's Group has developed specific consumer promotional programmes exclusive to its 'retail clubs', which are aimed at providing effective and reliable implementation of promotional deals at retail level.

Supply Chain & Distribution System

Nisa-Today's is unique amongst UK buying groups in having developed its own central distribution structure and facilities. The service is able to provide a full one-stop shop to members covering all categories: ambient, temperature-controlled and licensed. All Nisa retail stores are owned by independent retailers and, as the majority lack the resources to develop their own distribution services, being a member of NisaToday's allows them to benefit from the group's buying power and its large and efficient central distribution operation. Today's Group is the wholesale division of Nisa-Today's. By operating as a 'multiple' the Group is able to deliver the benefits of scale for independent wholesalers. It also aims to improve long-term pricing, promotion activity and trading standards. Nisa-Today's Ltd is: 'Passionate about Independent Retailing and Wholesaling: Committed to Creating Benefits for Members'. Through its central distribution structure, Nisa-Todays is able to provide a full one-stop shop to members covering all categories: ambient, temperature control and licensed. Retail members who may lack the resources to develop their own distribution services benefit from the improved buying terms and efficiencies that such an operation brings. Costcutter is the single biggest user of Nisas central distribution system and receive most of their goods through the service. Only a few wholesale members avail of the distribution service, with most receiving deliveries direct from suppliers.

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There are three national distribution centres: 1. Scunthorpe, North Lincolnshire (ambient grocery & licensed) 2. Stoke, Staffordshire (temperature controlled) 3. Harlow, Essex (temperature controlled) These warehouses supply a network of regional transhipment points which service the more remote points of the country. The network is run on behalf of Nisa-Todays by two third party operators: the Bibby Line Group looks after the ambient and licensed operation while Exel handles the temperature controlled function. As part of their efforts to boost the fresh offer to retailers, Nisa-Todays offers its Premier six-day a week delivery service for all temperature controlled products including milk and sandwiches. The Premier service is available to all members. Over the past number of years Nisa-Todays has invested significantly in revamping both its temperature controlled and ambient supply chain structures with the opening of the new temperature controlled facility at Harlow and the consolidation of its existing depots with one, single consolidated ambient facility at Scunthorpe. The efficiencies delivered by these new facilities allow Nisa-Todays to further enhance its ability to wield its scale effectively and to improve buying terms on behalf of its members. All own label requirements of the group are sourced and developed by central distribution trading. As well as own labels under the Nisa-Todays brands, Nisa is also responsible for developing the private label range for Costcutter. The most recent addition to the Nisa-Today's distribution network was the multi-temperature facility at Livingston which opened in November 2010. The site is a 195,000 sq. ft ambient, chill and frozen composite distribution centre adding extra network capacity and enabled further growth especially in Scotland, Northern England and Ireland. To help drive the temperature controlled offer Nisa provides a 6 -day-aweek delivery service on chilled, fresh and frozen lines, covering almost 3,000 lines including fresh milk and sandwiches. The aim of the offer is to help the independent sector to compete against the multiples in these key categories, by reducing store stockholding, improving shelf-life and reducing out-of-stocks. The table below summarises the scale of the Nisa-Today's distribution operations in the UK over the last few years, highlighting the case volumes flowing through the network, the share of volume that is delivered through centralised distribution and via direct to store, the number of warehouses operated and their total area, and the role of third party logistics companies in managing the Nisa-Today's supply chain in transport and warehousing.

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Nisa-Today's outsources the management of the whole network through dedicated third party logistics provider (3PL) contracts. Previously split between DHL-Exel and Bibby on temperature controlled and ambient respectively, in 2009 the decision was taken to unify the contracts, with DHL-Exel taking on the whole operation as of 2011. On April 2 2011 DHL took control of Nisas ambient operation from Bibby, meaning it now handles delivery of the entire supply chain from the Scunthorpe depot. Nisa-Todays said the full changeover would occur over several months, but DHL is essentially now running the operation. DHL has brought in a 100-strong fleet of fuel-efficient lorries, which are able to transport all three categories chilled, frozen and ambient. The three-category service will be operational in the near future.

Buying Contacts

Executive Directors

Nisa-Today's Operational Directors David Cullen - Corporate Events Director John Heagney - Group Symbol Director John Haigh - Company Secretary Raj Krishan - Todays Group Retail Development Director Andrew Mouse - Group Sales Director Jonathan Stowe - Distribution Director Wayne Swallow - IT Director Nisa-Today's Key Executives Deborah Broddle - Human Resources Manager Becky Campbell - Head of Communications & Corporate Affairs David Morris - Head of IT Mark Plaskitt, Head of Marketing Andrew Mouse - Group Sales Director James Roberts - Head of Commercial Operations & Member Service Mike Russell - Head of Quality Assurance Simon Webster - Senior Financial Controller Nisa-Today's Trading contacts Paul Batchelor - Edible grocery & tobacco Nigel Ashton - Non-edible foods in grocery David Stokes - Frozen, confectionery, crisps & snacks Nick Slater - Chilled and fresh foods Asa Chamberlain - Licensed and soft drinks Adrian Page - Direct to Store In the first instance suppliers should decide which area of the business to target i.e. Nisa Retail Ltd or the Todays Group.

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For suppliers approaching Nisa Todays for the first time, it is advised that a member of Nisa be chosen with which to secure a listing and prove good sales. Then the supplier will have a good basis on which to approach talks with Nisa Todays. If a supplier has success with Nisa, they can then approach any other members and tell them they can buy from Nisa. It is important to be able to show your products have been successful with other members. Central Distribution sources and develops all own label requirements for the group. It is the first point of contact for any supplier wishing to quote for ambient retail own label business with Nisa retail members. As long as products are required by a significant number of members, Nisa is able to aggregate volumes to produce more favourable terms and progress the project. Suppliers are advised to contact the relevant category buyer directly at the above address. Advice to new suppliers Suppliers should contact the correct buyer from the above list directly by phone or by email.

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2nd Tier Retailer Profiles December 2011

Spar UK Limited Hygeia, 66-68 College Road, Harrow, Middlesex, HA1 1BE. Tel: 0044 (0) 20 8426 3700 Fax: 0044 (0) 20 8426 3701 www.spar.co.uk

Spar UK Ltd

5 Wholesale members: Own franchise to operate Spar in the UK. Operate 17% of Spar stores in the UK.

Retail Outlets

Spar Central Office

Appleby Westward

A.F. Blakemore

CJ Lang & Son Ltd

Henderson Group

James Hall & Co. Ltd.

Also a member of the Landmark Cash & Carry Group

Also operates the VG Symbol Group in Scotland

Also operates Vivo & Vivoextra Stores in Northern Ireland

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Activity Coverage Turnover Company Overview

Wholesaler buying group. 2,634 stores across the UK In excess of 2.882bn, an increase of 5.4% Y-O-Y. SPAR (UK) is a network of symbol retailers and is the UK branch of the international SPAR organisation which spans 33 countries and 12,680 stores. The franchise to operate SPAR in the UK is owned by five wholesale members. The objective of the organisation is to benefit both the wholesalers that own it and the retailers who are affiliated to it. The wholesalers are able to achieve more favourable terms from suppliers by combining their buying power and are able to maximise their volumes by supporting the small retailers that buy from them. The retailers benefit by obtaining stock at competitive prices, from the support offered by the wholesalers and from association with the SPAR brand. This is the essence of symbol group operation and SPAR was in fact the first symbol group to operate in the UK SPARs stated mission is to be: the biggest and best convenience retailer in the UK by providing the most profitable retail solution for independent retailers, suppliers and shareholders, by putting the convenience customer first. Ownership of SPAR is split into three: the five wholesalers, Central Office and retail outlets. 17% of all SPAR stores are operated by the wholesale members. Each wholesaler operates in a particular region called a guild. All SPAR retailers within the territory are automatically members of the local guild The different guilds are divided up as follows; Wholesaler Appleby Westward Region Covered South West and South Coast North Wales, Midlands, East Anglia, South Wales, South West Midlands & Home Counties Northern England Northern Ireland Scotland Guild name Wessex

A.F. Blakemore

Central Meridian

James Hall John Henderson CJ Lang

Northern Ulster Scottish

Guild members have the ability to scrutinise and influence the activities of both the wholesalers and the national SPAR organisation.

Wholesalers gain favourable buying terms, which enables retailers operating under the SPAR fascia to purchase stock at competitive prices. There is the added benefit of consumer awareness of the SPAR brand; it is currently the most successful brand outside the multiple sector. SPAR offers retailers a complete retail package, with profitable solutions which enables stores to compete effectively in the convenience store market.

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In March 2011, wholesale group, A.F. Blakemore & Son Ltd, announced the acquisition of wholesaler Capper & Co Ltd, which created the largest SPAR wholesaler in the UK. The combined businesses will now service over 1,096 SPAR stores in the UK and will take the turnover of the new business to 1.1bn. The key engine of growth for SPAR is the ongoing recruitment of new retailer members and stores. The recruitment strategy is driven jointly by Central Office and the Wholesalers, though the actual process of recruitment is handled by the wholesalers. The wholesalers are the key point of contact for retailers and they are responsible for field support and providing retailers with shop fitting services etc. Core to recruiting new members is the provision of a compelling retail package to provide retailers with profitable solutions that can allow them to compete effectively in the changing marketplace. Central Office is also able to play a role in recruitment through the negotiation of national agreements to act as preferred fascia providers to larger retail organisations, or with oil companies such as Esso. As well as recruiting retailers with existing stores some of the wholesalers have also promoted membership by developing stores themselves which can then be sold or licensed to independent retailers as going concerns. Some 880 SPAR stores (34% of the total network) are now multiples (i.e. 10 or more stores under central ownership), either directly managed by the wholesalers or stores or standalone companies. SPAR is unique in the UK in terms of the proportion of stores operated by multiples. SPAR UK performed well in 2011, with retail sales increasing by 5.24% (on a euro basis). Over the past year, SPAR UK focused on developing a number of flagship stores as part of its Stores of the Future programme. The objective of the programme is to create stores that are driven by the customer, through store specific consumer research. It is envisaged that its customer focus will encourage greater spend and loyalty in spite of the economic downturn. A campaign aimed at convenience shoppers was launched by SPAR in the UK n 2010. The Sorted campaign is based on the concept that SPAR has the exact item that the customer needs, for example, posters prompting suggestions for tonights dinner. In March 2011 it was announced that Debbie Robinson had been appointed the new Managing Director of SPAR UK. Also in March 2011 SPAR expanded its contract with ISS Facility Services to supply a further 17 stores at 15 RAF bases across the UK. The deal, in conjunction with ISS Defence division, is expected to create an estimated turnover of 10m per year. As ISS has already traded with five Capper & Co. stores for the past several years, the combined group has now increased to represent 22 SPAR sites. All 17 SPAR stores will be refurbished and developed into the companys Stores of the Future design within the first year of the contract. The sites will all be fitted with the latest SPAR PoS systems and some stores will offer a combined convenience and seated foodto-go /coffee concept. Format

Convenience The SPAR store package is fundamentally targeted at the convenience sector. SPAR was one of the first retail organisations in the UK to identify the existence of the convenience opportunity for small retailers and the first to target store development specifically to exploit it. SPAR stores operate under

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one undifferentiated fascia, in order to enforce and underline the integrity of the brand. However, SPAR store formats are far from rigid. The need to provide ever more accurately targeted solutions to best meet the needs of each store location has lead SPAR to adopt a highly flexible approach to format development. Over the years SPAR has produced a range of broad solutions to the general classification of convenience store location types. But while these can provide templates for store development, individual executions are flexed as appropriate to suit the local catchment. To meet the changing needs of convenience shoppers, in 2008 Spar launched its 'Stores of the Future' programme. Under this programme SPAR developed five variant store concepts within the broader package: Neighbourhood Affluent Community Supermarket Neighbourhood Value Urban Lifestyle In Transit

SPAR plans to establish flagship examples of all these concepts across the UK to provide examples of best practise and to boost take up by independent retailers. Development of these solutions is ongoing and the current focus is on stores with a high level of transient trade as well as solutions for both the smallest stores (requiring enhanced CTN offer) and the largest stores (requiring full basket offer). The small store format has been developed in association with the growing numbers of CTN retailers (and chains) who have joined the group. Some of SPARs in store services include: Internal and external ATMs. Lotto tickets SPAR is the 2nd biggest group of retailers offering the national lottery. Electronic mobile top-up cards. Newsgroup over 750 SPAR stores are affiliated to the newsgroup initiative. The initiative is designed to maximise sales and profitability of both newspapers and magazines. The focus includes advice on best practice, guaranteed copy of new magazine and newspaper launches, full sale or return, merchandising advice combined with store plan-o-grams and tailored promotions to help increase sales. Multiple retail group an initiative where SPAR retailers can enjoy payments of up to 5000 a year in return for agreeing to stock particular lines and promotional compliance. SPAR has a regular customer base with 73% of SPAR customers visiting more than once a week. Food-to-go In April 2008, SPAR launched its innovative Kitsu noodle bar and Censa coffee offer into the UK. The concept behind Kitsu noodles originally came from SPAR Japan, and caters for consumers looking for a premium-led alternative to sandwiches and salads. The Censa coffee offer, which is SPAR's own brand proposition, provides retailers with a 100% Fairtrade premium coffee offer, enabling them to capitalise on the growing shopper demand for coffee on-the-go. SPAR also offers a tailored packaging and uniform range to compliment the food-to-go offer. Food-to-go will be a key element of SPARs strategy going forward, with a number of offerings developed in partnership with the Compass group, Country Choice Food, Pizza Hut and Subway. It intends to grow food-to-go sales to 400m over the next few years.

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Forecourt Activity SPAR currently supplies over 436 forecourt stores of which 27 are owned by SPAR wholesalers.

Supermarket/Superstores In January 2009, SPAR announced that it had acquired 11 stores from Somerfield. A number of these were converted to the Eurospar format. This was the first time that Eurospar made an appearance in the UK mainland, and the first stores opened in June 2009 in Nottingham and Sheffield. Two additional stores were opened in Wales in September 2009. Blaenau Ffestiniog is home to a 5,000sq ft store and the retailer has opened a 7,000sq ft unit in Dolgellau. They were both formerly run by Somerfield and were part of the package bought by Spar wholesaler AF Blakemore. Eurospar is the most prevalent Spar fascia within the retailer's international portfolio. The Ulster based Henderson Group was the first to adopt the format. Space allocation is biased towards fresh and chilled foods with a fresh participation of at least 40%. Pricing policy is benchmarked against the multiples. The Eurospar stores are around three times the size of the average Spar store and stock c. 6,000 products versus the average of 3,000 SKUs. In October 2009 Appleby Westward announced the acquisition of three former Somerfield stores which have been developed to the Eurospar format. These are the first stores which the wholesaler has operated and is aiming to open 20 new sites in the West Country over the next ten years.

Online In March 2010 SPAR revealed a consumer website designed to enhance the convenience groups food and drink credentials, and champion its ongoing commitment to athletics sponsorship. The website is used to bring SPARs long-term link with UK and European Athletics to life in the run up to the 2012 Olympics, providing information and advice to active athletes. Online information includes fitness tips, healthy eating information, and a guide to athletics and athletics-inspired resources for schools to download including certificates for local sports days. To enhance SPARs food and drink credentials, the website has been re-

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developed with a major focus on recipes. Over 50 recipes are currently on the site and a new recipe is added every week, with visitors to the site being able to print off a list of all the required ingredients for each recipe. The SPAR website is also an important element in the recruitment of new members to the symbol group. The site features some of the benefits of becoming a SPAR retailer including access to promotions, national advertising and its range of private label products. SPAR retailers also benefit from nationallynegotiated deals which assist in reducing business costs. In December 2010, SPAR UK announced it was embarking on a new initiate to launch its first-ever digital magazine for its shoppers. The innovative move by the retailer means that it can interact even more closely with its customers online. This latest initiative from the retailer builds on its existing digital strategy by driving traffic through its site and engaging even further with consumers and its shoppers. The publication will include recipes, tips and advice on food and cooking in addition to competitions to drive its appeal further. The magazine is sent to SPARs online database which includes over 27,000 consumers. In October 2011 SPAR was found to be the best performing website in the sector, according to a new survey of 250 of the worlds top retail organisations. The research, from independent web testing and benchmarking consultancy Sitemorse, looked at quality, user experience, accessibility, performance and search engine optimisation. SPAR came top of the rankings with a score of nearly 9 out of 10. It is the goal of the SPAR organisation to develop the most efficient trading processes possible, and thus progressively it is seeking to centralise and unify trading functions at the highest level by identifying, as far as possible, all opportunities for group buying. However, the complexity of meeting the often divergent requirements of the various national SPAR organisations means that currently trading at the international level is limited to a range of 900 standardised own label products. Overall SPAR provides retailers with access to a range totalling some 5,000 lines, though some of the wholesalers may carry more than this. Individually SPAR stores will carry significantly less.

Range

The own brand range is seen as a key part of the SPAR offer and it is therefore managed carefully as part of the overall marketing strategy. For retailers, the own brand range is a strong incentive to join and stay with SPAR. Quality control is the central own brand issue, and all products are expected to match or exceed the standards set by the own brand ranges of the leading supermarkets. As the own brand range develops it is intended to increase participation to around 30% of sales. SPAR has been particularly active in the development of ready meals for c-stores, and the development of fresh foods generally, as a response to the increasing presence of supermarket operators in the convenience market. SPAR stores stock ranges in five categories: a) SPAR Extra Value for price conscious consumers, b) SPAR Standard which is the backbone of the SPAR brand, c) SPAR Treat Yourself emphasizing freshness and excellence with high quality, d) SPAR Goodsense for health conscious consumers and e) SPAR Discoveries which is a specialist wine range. The work of the central buying function is supervised and co-ordinated with that of the wholesalers through the Group Buying Consortium (GBC) a body comprising the trading directors of all six wholesalers under the chairmanship of the central Group Trading Director. Key projects being handled by the

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central trading function in conjunction with the GBC are core ranging and the re-engineering of the SPAR own label range. Core ranging involves the establishment of a significant range of specific products that will have guaranteed distribution throughout the SPAR organisation. These agreed core ranges are being created at both wholesale and retail level within the network with the intention of minimising unnecessary range duplication, maximising volumes with its key suppliers in order to achieve the best possible cost prices and improved discounts for SPAR. The ranges will comprise of around 2,000 lines in the wholesalers and 1,200 lines in SPAR stores. In 2010 SPAR launched the Summer Eating campaign, with a range of promotional offers on private label products such as sausages, barbecue chicken and burgers. The revamped ranges were launched on promotion in September 2010, when new packaging was rolled out across the full ready meal range. In August 2011 SPAR launched a new own label economy range in the UK. The S Budget range was launched following its success in other countries across Europe. In October 2011 SPAR introduced a new approachable and fresh range, Falcon Valley, to its wine offering. With a usual selling price of at least 3.99 per bottle, the range was on promotion throughout October and November at a special offer of three for 10. The exclusive brand has been especially designed for SPAR in collaboration with their suppliers in Spain. Promotions for SPAR are arranged as follow: Central office has responsibility for promotions for own brand products and those branded products which are sourced centrally. The wholesalers are responsible for promotions on products they buy. Marketing & Promotions SPAR is unique amongst UK symbol groups in the level of awareness the brand has amongst UK shoppers. The SPAR brand is recognised by 96% of the UK population. This owes much to the high level of media exposure the brand receives both at national and international level. SPAR seeks to use its advertising to target specific elements of its customer base, with adverts addressing specific shopping mission requirements and featuring a combination of product and price, as well as corporate, messages. Internationally SPAR is able to benefit at European level through the sponsorship of major sporting events such as the European Athletics Championships. SPAR International has sponsored these events for the last eight years. In May 2009, SPAR UK announced a four year extension to its deal with UK Athletics, with it now running to 2013. In August 2010, SPAR UK announced that it was embarking on a marketing campaign to sponsor a cookery series called Meals in Moments on Channel Five. The programme, which aired in September, was presented by chef Simon Rimmer, and a selection of celebrities cooking their favourite dishes. ` Following an overhaul of many of its private label ranges in June 2010, SPAR UK announced the relaunch of its private label Evening Meal Solutions range for late 2010.

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2nd Tier Retailer Profiles December 2011

The key SPAR value message is provided by promotional activity. At the core of this activity is the centrally coordinated Real Deal programme structured into 17 three-week periods running throughout the year. The basis of the programmes is a raft of 35 national deals in each period, covering both branded and own label lines across all temperature categories. The mechanics used vary during the year, providing a mix of BOGOFs, extra fills and two for x. The national deals are augmented by regional activity negotiated by the individual wholesalers. The Real Deals programme is supported centrally by targeted POS for each period and also locally by leafleting under the responsibility of the wholesalers. SPARs key targets for the development of the Real Deals programme are: Improving deals from suppliers. Improving implementation in stores. Improving POS to include product photographs for extra impact.

Demonstrating stronger value for money credentials has been a key focus for SPAR through 2010 and 2011, and in line with its private label strategy, the retailer has responded to the economic conditions with a renewed focus on pricing and value.

Supply Chain & Distribution System

The role of store distribution for the SPAR network is fulfilled by the five regional wholesalers (referred to within the organisation as RDCs). Each Spar store belongs to a specific Regional Distribution Centre, depending on where it is located. All goods are ordered by the SPAR wholesalers for onward delivery to the stores within their guild regions. Each wholesaler operates at least one distribution depot, handling the delivery of all goods of all temperature categories (other than the limited ranges that are delivered direct to store). In addition, AF Blakemore operates cash & carry depots affiliated to the Landmark buying group. Wholesalers actively recruit on their own behalf through events such as regional road shows and also provide a range of initiatives to provide ready access to funds for retailers to redevelop their stores. Wholesalers have also promoted membership by developing stores themselves which can then be sold or licensed to independent retailers as going concerns. National Consolidation Centre In the past all supplier deliveries were made direct to the individual SPAR RDCs, however in 2005 the organisation established a national consolidation centre at Trafford Park in Manchester to which approximately 50 suppliers now deliver the entirety of their volumes for the mainland SPAR wholesalers

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(but not John Henderson). The consolidation of five deliveries into single loads provides considerable efficiency and cost benefits to suppliers and SPAR. The consolidation centre is run on behalf of SPAR by Exel Logistics, which also handles onward deliveries to the RDCs. Buying responsibilities are split between 1) Buying International Group Spar responsible for sourcing standardised international brands, 2) UK Central Office responsible for own label purchasing and product development and 3) Individual Wholesalers responsible for sourcing some products for direct deliveries to retailers. In addition SPAR launched an alliance with the Co-op buying group CRTG to source a limited range of commodity private label products together. A key development that continues to benefit retailers, consumers and suppliers UK-wide is SPARs Consolidation Centre in Redditch. In addition to cost savings, SPAR and their suppliers have enjoyed many benefits, including: Improved availability of these suppliers products to SPARs Regional Distribution Companies. Reduced stock-holding and congestion at the depots. Improved sales due to improved availability on the shelf.

Buying Contacts

UK Central Office Debbie Robinson Allan Maxted Mark Keely Managing Director debbie.robinson@spar.co.uk Head of Fresh & Frozen Foods allan.maxted@spar.co.uk Grocery Trading Director mark.keely@spar.co.uk

Advice to new suppliers

All the Spar wholesalers aim to provide a credible alternative to the multiples in terms of quality, innovation and price. Most buying decisions are made at Spar head office, but products are often sourced regionally by Spar wholesalers. The key priority of any SPAR buyer, whether working for Central Office or a local wholesaler, is to source products at the lowest possible cost. In addition, suppliers should also work towards providing the following: Full promotional support: a chance to match the major retailers for depth and frequency of promotion. In particular, promotions should help to boost the size of each transaction.

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Profit opportunities: due to the economics of small store operation, SPAR retailers must aim to make a reasonable profit to cover proportionately higher costs Understanding: a knowledge of how SPAR operates and a tailored sales pitch Proactiveness: SPAR has a small buying team and relies on suppliers to help keep up to date on developments in the market place Willingness to experiment: SPAR attempts to differentiate itself from other retailers through unique promotions and improved product range

In return for this, SPAR offers to suppliers: Volumes: SPAR UK has an annual turnover of 2.2bn International reach: for suppliers with sufficient logistical capability, SPARs international own label is a major opportunity Expertise: SPAR has developed considerable expertise in operating small convenience stores Promotional compliance: various incentive schemes have delivered high levels of promotional compliance without a need for rigid store discipline Responsiveness: SPAR buyers and GBC are empowered to make quick decisions; there is a minimum of bureaucracy Suppliers can contact head office directly or contact one of the six regional distribution centres. The latter option is best for smaller suppliers. Once critical mass is built they will be directed to the UK central buying office. A key priority for any Spar buyer is to source products at the lowest possible cost.

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2nd Tier Retailer Profiles December 2011

Booker Group plc, Equity House, Irthlingborough Road, Wellingborough, Northamptonshire, NN8 1LT Tel: 0044 (0) 1933 371 000 Fax: 0044 (0) 1933 271 010 www.booker.co.uk
Activity Coverage Cash and carry wholesaler for independent retailers and caterers. Wholesale: 174 branches across the UK. Retail: Nearly 2,200 members They supply approximately 326,000 catering businesses and 78,000 independent retailers 3.763bn Booker Cash & Carry is the UK market leader in cash & carry wholesale. It serves independent retailers and caterers through 174 branches nationwide. Booker also operates the "Premier" fascia, one of the UKs largest symbol groups which now has nearly 2,200 member stores. Booker Cash & Carry was formerly part of the Big Food Group. Following the acquisition of the Group by the Baugur-lead consortium Giant BidCo in February 2005 Booker was established as an independent, standalone business. Then in May 2007 it was announced that the business was acquiring, by reverse takeover, the delivered wholesaler Blueheath thereby returning to the Stock Market. The new company was called Booker Group Plc. During 2011, a further twenty-two branches were converted to the Extra format (taking the total to 126) with these stores offering a broader range and better shopping environment for customers, with payback on this investment within around a year. Internet sales are a further source of growth with sales up by 22.6% to 300m in 2011. In 2011 Booker also reported that Ritter Courivaud and Classic, the two businesses it acquired in 2010, have fitted neatly into its Direct business with payback on the latter, an on-trade wholesale specialist, achieved in just six weeks. Despite the challenges of the consumer climate in 2011 Booker has successfully grown significant numbers of new customers especially in the catering sector, both through the acquisition of new businesses in the channel, as well as winning new business through a strong focus both on value and a continually improving product offer. In 2011 like-for-like sales to retailers were 4.6% up while sales to caterers continued to grow more quickly on 6.3%. Range & Private Label Booker lists an extensive product range to help it meet the various requirements of its diverse customer base. The overall range now runs to some 20,000 SKUs, comprising a fully comprehensive range covering branded and own-label grocery, fresh and frozen food, BWS, tobacco and non-food items. Within the food range, Booker has a key focus on impulse categories such as confectionery, snacks and soft drinks.

Turnover Company Overview

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2nd Tier Retailer Profiles December 2011


Booker has a wide portfolio of private label ranges targeted to the different key sections of its customer base. Overall these account for around 14% of sales (c 400m). Though low when compared to the retail sector, this is much higher than the UK wholesale trade in general, which averages only 7% private label participation. This is partly explained by the greater preponderance of caterers in the Booker customer base, for whom private label is a more prominent part of the offer unlike retailers for whom branded goods are more important. To help fulfil the various functions as products for resale, Booker private label does not feature the Booker name, but rather is branded with proprietary names exclusive to Booker. The Group owns a number of "own label" brands including: Chefs Larder - this is Booker's catering range. It offers nearly 1,300 products encompassing a wide range of core grocery, chilled, frozen and non-food designed specifically for the needs of caterers. All products have a money back guarantee. Chef's Larder is now the largest private label wholesale brand in the UK worth over 120m a year. and Happy Shopper - a core grocery retail offering providing over 650 different products, spanning chilled, grocery, frozen, non-food and fresh produce, with sales of over 50m. Euro Shopper - a value range of 38 products designed to give retailers an entry price lower than many mainstream operators. The range is syndicated from the AMS European buying group. In May 2009, Booker announced it was expanding this range by five items and moving into chilled categories. .Booker Basics - this is a value catering offer, comprising a limited range (c25 lines) of basic core catering products aimed at providing cheapest in market entry price option to foodservice customers. Tuck Shop - a confectionery brand including loose and pre-packaged sweets, ice cream and kids fizzy drinks. Malt House Vintners - this is Booker's Beers, Wines & Spirits private label, offering some 300 lines. All wines and spirits are offered on a sale or return basis. The range has won over 70 international wine awards. MHV's Chekhov vodka is now included amongst the 100 top selling UK drinks brands. Selling right across the Booker customer portfolio it is worth some 125m. Gold Mark / Red Band / Silver Strand - the private label tobacco offering. Booker reported a period of strong growth for the second quarter of 2011 with sales up 7.6% in the 12 weeks to 9 September. On a like-for-like basis, sales at its 174 cash & carry branches rose by 5.6%. The group said its fresh departments performed particularly well with fruit and vegetable sales jumping 34%. Marketing & Promotions The purpose of the cash & carry business model, with its low cost, self service operation, is to provide a cheaper source of goods to independent traders than delivered wholesalers. Therefore price is a key feature of the cash & carry offer. As with other wholesalers Booker has no overall control over the ultimate price at which the goods it sells are resold at retail. However, the company publishes comprehensive recommendations on retail prices on all its retail ranges, aimed at maintaining a broadly competitive position against the wider convenience sector as well as securing a reasonable margin for the retailer. A limited range of basic own label grocery products (including some of Booker's own Happy Shopper as well as the Euro Shopper range) are price-marked to provide retailers with a means of underlining the consumer value on core elements of range. Booker's promotional activity is primarily wholesale i.e. it is targeted at its trade customers in order to drive sales with retailers and caterers rather than with end

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users as such. Typically the attraction of such activity for traders is to allow them to buy for less, enhancing their margin on resale. At the core of Booker's promotional activity is the year-round 'Specials' programme of 13 four-week periods, each offering up to 100 deals each for both retail and catering customers. Deals appropriate to the two customer segments are communicated through separate dedicated brochures, available both in depot and on the internet. In addition to this longer term activity Booker is now also seeking to provide a greater range of shorter term promotions, comprising a limited number of strong deals running for only a week or even less. The Blockbuster 7-Day Specials provide around six deals for the period of a week only. Such shorter term activity is a notable feature of cash & carry trading, and plays a key role in helping to drive regular traffic to depots, and can be effectively communicated through email alerts and text message. In June 2007, the Group re-launched the improved booker.co.uk site having made the site easier to use with a more efficient search capability. Customer satisfaction with the new site has been excellent. Sales on the site have increased from 44m per annum in the year ended 30 March 2007 to 526 million for the year ended 25 March 2011. In 2008 the Group was awarded Online Retailer of the Year at the Retail Industry Awards. Supply Chain & Distribution System Booker operates an extensive central distribution operation making it unique in the UK cash & carry sector. The Group operates three regional distribution centres, located at Hatfield and Haydock in England and Livingston in Scotland, and has a national distribution centre in Wellingborough. These distribution centres supply the cash and carry branches and two of them also handle retail deliveries. These distribution centres handle around 90% of Bookers total volume. As well as servicing its own cash & carry depots Booker is now also seeking to use surplus capacity in its central distribution network to develop its capability to provide a full -scale logistics support service to larger (multi-site) customers such as those currently service under contract by the Blueheath operation. Buying Contact Andrew Thompson Steve Fox Ron Hickey Commercial Director andrew.thompson@booker.co.uk Director of Trading for Retail Grocery steve.fox@booker.co.uk Director of Trading for Catering ron.hickey@booker.co.uk

Advice to New Suppliers

Suppliers wishing to approach Booker should contact the relevant trading director via email, giving information on the product and company.

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2nd Tier Retailer Profiles December 2011

Costco Wholesale UK Ltd, UK Home Office, Hartspring Lane, Watford, Herts, WD25 8JS Tel: 0044 (0) 1923 213 113 Fax: 0044 (0) 1923 240 325 www.costco.co.uk
Activity Coverage Turnover International wholesaler. 23 warehouses throughout the UK (a total of 577 worldwide). 1.781bn in the UK $83.478bn Globally UK accounts for 3.5% of sales Costco's Mission Statement underpins all its operations: "To continually provide our members with quality goods and services at the lowest possible prices" Costco Wholesale Corporation operates an international chain of membership warehouses, under the "Costco Wholesale" fascia. Costco Wholesale Corporation initially entered the UK through a joint venture in 1993 with Littlewoods. The group operates a chain of cash and carry membership warehouses that sell high quality, nationally branded and selected private label merchandise. The success of the warehouse club format is centred on offering a wide selection of wellknown, high quality products at very low prices, for which Costco receives an annual membership fee. Costcos unique concept is proving very successful in the UK market, however difficulty in obtaining planning permission for new sites means it will be some time before the company can reach this number. Costco operates only one store format giving greater management focus and increased economies of scale. In the 52 weeks to August 28 2011, net sales rose by 14.2% and comparable store sales increased by 6%, excluding the effects of inflation in fuel prices and strengthening foreign currencies. The retailer had a strong end to the year, with net sales up 16.9%, and comp sales up 7% (excluding the impact of fuel prices and currency). International continues to drive the strongest performance. Over the year, net income increased by 12.2% and by 10.6% over the quarter. Over the course of 2011, Costco opened one new store and it intends to open another store in 2012.

Company Overview

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2nd Tier Retailer Profiles December 2011


Range Costco concentrates on carrying only those products on which it can offer substantial cost savings to its members. Items which members may request but which cannot be purchased at prices low enough to pass on meaningful cost savings are not carried. As a wholesale club, Costco has a much wider (although shallower) product offer than a traditional grocery retailer. Dry, fresh and frozen food accounts for approximately 30% of turnover. Sundries candy, snack foods, health & beauty aids, and tobacco, alcohol, soft drinks and cleaning products account for a further 24%. The remainder of turnover is non-food related. Costco has a global private label, Kirkland Signature, which is positioned as equal or better quality than national brands. The range includes fresh and frozen foods and coffee. Own label currently accounts for at least 15% of sales and is forecast to grow, however, Costco is to remain primarily a retailer of branded goods as that is where it feels it can demonstrate most value to its members. Costco believes that in the next five years own label will grow to account for 20-22% of sales, although it will remain primarily a retailer of branded goods as that is where it feels it can demonstrate the most value to its members. Sourcing Costco primarily sources branded products directly from suppliers. Suppliers can be listed on seasonal or short-term contracts. Costco's primary focus is to provide unbeatable value for its members. As such, it offers a limited promotional programme with an EDLP pricing strategy. It uses two mechanics to enhance the shopping experience and avoid the sterile environment EDLP can create: 'Treasure Hunt' - Costco aims to create a 'treasure hunt' environment, through a merchandising strategy that features products stocked for limited time periods, and high ticket items. Both trends occur mainly in the non-food range, where products offered can include diamond rings, plasma-screen TVs and exercise equipment. Retail Theatre - Costco makes extensive use of retail theatre, predominantly in the form of product tastings and sampling. Costco positions product tasting tables in the centre of its stores, which feature a regularly changing range of products to try. Costco employees prepare the products at the tasting tables, including heating hot foods. The aromas of hot food cooking add to the theatre. Each week (typically on a Monday) Costco features a new range of promotional offers through a coupon based leaflet which is distributed to members when they enter a warehouse. Bulk displays of these products are built in-store, usually at the store entrance, with the coupon price clearly highlighted. Costcos entire UK network is serviced by a single cross-docking depot in Lutterworth. The depot operates a just in time ordering system. Temperature controlled vehicles are used that can transport both ambient and chilled products. Otherwise Costco rarely undertakes any external marketing activities of promotions and other initiatives beyond advertising new store openings and the targeting of new members. The strategy of the company is to grow membership and drive incremental sales from its existing members through in-store advertising and direct marketing via the Costco Connection, a bi-monthly magazine that is mailed to all of its members.

Marketing & Promotions

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2nd Tier Retailer Profiles December 2011


Supply Chain & Distribution System Costco buys nearly all of its merchandise directly from manufacturers for shipment either directly to Costco's selling warehouses or to a consolidation point ("depot") where various shipments are combined so as to minimise freight and handling costs. As a result, Costco eliminates many of the costs associated with multiple step distribution channels, which include purchasing from distributors as opposed to manufacturers, use of central receiving, storing and distributing warehouses, and storage of merchandise in locations off the sales floor.

Buying Contacts

Steve Pappas - Managing Director spappas@costco.co.uk Sue Knowles - Marketing & Admin Director sknowles@costco.co.uk Steve Barnett - Trading Director sbarnett@costco.co.uk Peter Kelly - Regional Operations Manager pkelly@costco.co.uk Gerard Rafferty - Regional Operations Manager grafferty@costco.co.uk Garth Morris - GMM Food & Sundries gmorris@costco.co.uk John McCarthy - GMM Fresh Food/Import/Export/Ancillary jmccarthy@costco.co.uk Noel Cockle - GMM Hardlines ncockle@costco.co.uk Mervin Hotz - GMM Softlines mhotz@costco.co.uk Alison Causier Chilled Buyer acausier@costco.co.uk Mandie Collingbourne Tobacco and Confectionery Buyer MCollingbourne@costco.co.uk

Advice for New suppliers

Costco needs to be able to source any product at a price that will allow it to retail at the lowest price in the market. Therefore if Costco cannot purchase the product at a sufficiently low cost, then it simply will not list the product.

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2nd Tier Retailer Profiles December 2011

Landmark Central Office, 1st Floor West, Norfolk House, 433 Silbury Boulevard, Central Milton Keynes, MK9 2AH Tel: 0044 (0) 1908 255 300 Fax: 0044 (0) 1908 255 329 www.landmarkcashandcarry.co.uk
Activity UK wholesale organisation comprising cash & carries, delivered wholesalers, convenience stores and foodservice operators. 27 wholesaler members operating 66 depots. 2.2 billion (combined turnover of all members). Landmark Wholesale operates as a trading and marketing group for cash and carry, traditional and foodservice wholesalers, utilising the groups buying strength and disciplines to negotiate group buying terms, national promotional activity and overriding discounts. Landmark's presence across the UK is second only to Booker in depot numbers. The group operates from a central office in Milton Keynes. The membership also includes depots in the Republic of Ireland through wholesale group Stonehouse. The majority of Landmarks registered customers are in the retail sector. The continuing core agenda for the Landmark business is an all-embracing plan to secure a dynamic and prosperous future for the independent trade, the wholesale sector and the supplier base. Neither Landmark nor its members operate stores on their own behalf, but Landmark has developed a number of retailer packages in conjunction with individual members, aimed primarily at small store and convenience retailers. These packages operate under a variety of fascias including Lifestyle Express and Drinks Express. In September 2011 Landmark Wholesale announced that sales from its depots were had increased by 10.8% for the year-to-date. Licensed goods performed particularly well rising by 17.7% and Cigarettes were up 7.6%. Own brand sales remained well ahead with year-to-date sales into depots up by 25%. In November 2011 Landmark announced the recruitment of two new members, taking the total of new recruits to nine in 2012. The two new recruits are Turners Fine Foods and Brook Street Foods, both regional wholesalers, based in Kent and Suffolk respectively, and specialising in supply to customers in the catering and restaurant sectors. Together these businesses bring over 35m of additional scale to the buying group, and in particular to Landmark's growing body of foodservice membership.

Coverage Turnover Company Overview

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2nd Tier Retailer Profiles December 2011


Medina Dairy, one of the largest independent dairy businesses in the UK, which specialises in supplying retailers and caterers, and is the company behind the Watsons dairy brand, will join the Landmark buying group as of January 2012.

Range

Landmark's private label offering has a variety of streams aimed at addressing the differing needs of its members' retailing and catering/foodservice customers. The group continues to develop these ranges to ensure maximum relevance to the customer bases of its member wholesalers. Caterers Kitchen currently has almost 400 products included within the range with added value to the caterers in the form of extra fill packs and added value pack sizes. Caterers Kitchen currently has almost 400 products included within the range with added value to the caterers in the form of extra fill packs and added value pack sizes. . In addition to its general ranges Landmark has also developed a significant number of exclusive brands in the licensed categories such as No.3 cigarettes and as well as a considerable portfolio BWS products. These include; White Storm and Eridge Vale (Cider) Prince Consort (Spirits) Scandia (Lager) Vintners Collection (Wine)

Marketing & Promotions

'Counter Attack' is the main promotional vehicle for retail customers. Promotions run in three-weekly cycles and they are communicated through a 20-page leaflet, trade press advertising, in-depot point of sale and rack end displays. The objective of these deals is to offer retail customers branded products at competitive deal prices with healthy retail margins. These promotions are supported with up-weighted activity as follows: Easter - additional confectionery deals Christmas - additional confectionery and beers, wines & spirits deals 4 times per year - 'Winners, All-Star Brands at Unbeatable Prices'. Leading brands at deeper discounts with the objective of competing more effectively with the supermarket groups.

Supply Chain and Distribution System

Wholesale members have access to an ambient and chilled central distribution operation provided by DBC Foodservice in Liverpool, and an ambient only facility managed by another member, DCS, in Stratford. However, Landmark has expressed a clear desire to increase its central distribution capabilities where appropriate as a service to its membership. Central distribution can be of benefit to suppliers that receive smaller volume orders from individual depots.

Buying Contacts

Martin Williams John Searle Jim Brown,

Jon Burton

Managing Director Martin.williams@lmkcc.co.uk Trading Director John.seare@lmkcc.co.uk Senior Trading Controller Beer, Cider, Crisps & Snacks Jim.brown@lmkcc.co.uk Senior Trading Controller Jon.burton@lmkcc.co.uk

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2nd Tier Retailer Profiles December 2011


Gordon White Darren Pugh John Ferguson Cooper Max Right Peter Saunders Sheryl Peachey Trading Controller Chilled & Frozen Foods Gordon.white@lmkcc.co.uk Trading Controller Grocery Darren.pugh@lmkcc.co.uk Trading Controller Wines & Sprits John.fergusoncooper@lmkcc.co.uk Senior Trading Controller Foodservice Max.right@lmkcc.co.uk Trading Controller Foodservice Peter.saunders@lmkcc.co.uk Trading Controller Non-Food Sheryl.peachy@lmkcc.co.uk

Advice for new suppliers

Landmark has a wide product range in comparison to other wholesalers. Suppliers interested in approaching Landmark are advised to contact the relevant trading controller by email.

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2nd Tier Retailer Profiles December 2011

Liverpool Road, Barton Moss, Eccles, Manchester. M30 7RT Tel: 0044 (0) 870 166 2576 Fax: 0044 (0) 870 264 2576 www.makro.co.uk
Activity Coverage Turnover Company Overview Self-service wholesalers. 30 Cash & Carry outlets throughout the UK. 839.34m Makro is a division of the internationally active Metro Group. It offers registered customers a broad and high quality assortment of up to 25,000 products. Makro is currently revamping its stores as part of a multi-million pound refurbishment programme with a new look that includes new fixtures, new signage, more than 1,000 extra lines and a particular focus on fresh produce. Makro believes its unique selling point to be its ability to offer customers all they need under one roof, another advantage is the buying power it can leverage from its German parent company Metro Group, which operates in 29 countries. Makro UK is keen to utilise the groups network of 10,000 buyers whose expertise spreads far beyond national boundaries. In April 2010 wholesaler Makro joined forces with Palmer & Harvey to form PalMak, a new buying group. PalMak consists of a team of category specialists drawn from both companies aimed at negotiating the best terms for their respective customers. It is designed to give independent retailers and catering businesses access to scale benefits only enjoyed by multiple groups. Range Makro has a very broad product range with over 25,000 products in every store, including attractive entry-level products as well as top quality private labels and established branded products. Fresh Food departments include specialities from all over the world in the following categories: bakery, fruit and vegetables, frozen food, delicatessen, dairy, fresh fish and butchery. Makro also has a significant dry food range including canned foods, grocery, soft drinks, crisps & snacks, confectionery and beers, wines and spirits.

Marketing & Promotions

Makro offers over 400 promotions every fortnight as well as monthly retailer events in store. Numerous promotional opportunities are available to suppliers to enhance sales and reinforce brand awareness including direct mailing, advertising on mail pack wrappings, increasing brand presence in-store through tower-ends, branded fixtures, in-store concessions and in-store demonstrations, making use of Makros online advertising and Makro FM radio advertising.

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2nd Tier Retailer Profiles December 2011


Makro has teamed up with an independent agency to offer pubs tips as part of its Love the Pub campaign. The wholesaler will visit pubs to offer advice compiled by the Integrated Marketing and Advertising (IMA) Group, which will collate information from major companies such as Cadbury, Walkers, Diageo, Britvic and Heineken to support optimum merchandising. Makro Cash & Carry UK is working on a new website which will include a function to allow its members to make purchases online for the first time. Supply Chain & Distribution System Daily deliveries from suppliers and strict controls guarantee absolute freshness in all Makro departments. Metro Group Logistics (MGL) is responsible for providing logistic services to all of Metros sales divisions. MGL has offices in Germany, Turkey, Poland and Austria and organises the transport of goods from manufacturers to the individual warehouses via MGL assigned logistics service providers.

Buying Contacts

Hannes Fioto Managing Director hannes.fioto@makro.co.uk Allard Sjollema Food Buying Director allard.sjollema@makro.co.uk A supplier wishing to introduce their product to Makro should send a sample product along with a letter of introduction, followed by an email to the relevant contact listed above.

Advice for New Suppliers

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2nd Tier Retailer Profiles December 2011

SPAR in the South West


Appleby Westward
Callington Road, Saltash, PL12 6LT United Kingdom Tel: 0044 (0) 1752 854 000 Fax: 0044 (0) 1752 854 067 www.swSPAR.com/ApplebyWestward
Activity Coverage Sales Company Overview SPAR wholesaler covering South West England. 2 distribution depots, supplying approximately 400 SPAR stores. 2.2bn Appleby Westward is the SPAR wholesaler covering the South West of England with a mission to make SPAR the first choice for independent retailers in the South and West by providing the best retail solution and exceptional customer service. Appleby Westward has a long established local distribution service with a strict policy of 24-hour leadtimes. Their focus is on range development to cater for larger stores and customer recruitment that will strengthen SPAR presence in the east of its region, and along the south coast. Currently its most easterly customer is based in Chichester (West Sussex). Appleby Westward will upgrade customer stores to SPAR Millennium concept format and recruit forecourt operators for SPAR Express format stores. They work closely with stores to increase sales and profitability through a variety of measures including retail funding for store modernisation. Over 10m has been invested in store development over the past five years. In 2009 Appleby Westward acquired 3 former Somerfield supermarkets. On convertion these will be the first EuroSPAR branded stores in the southwest region. The company plans to be operating up to 20 EuroSPAR stores in its territory over the next ten years. Appleby Westward was the only SPAR wholesaler not to previously own stores. In October 2010 Appleby Westward, SPARs regional distribution company in the south west of England, agreed a new five-year contract with third-party logistics provider Gregory Distribution for the delivery of a full range of chilled and frozen goods to SPAR stores throughout the region from its distribution centre in Cullompton, Devon. Range Like all SPAR wholesalers Appleby Westward has access to over 5,000 lines. Own label accounts for roughly 20% of sales, with this figure likely to grow. All Appleby Westward promotional and marketing activity is carried out in association with SPAR, namely the 3-weekly Real Deal promotions, multimedia advertising and athletics sponsorship. The extensive range of SPAR marketing and advertising options is offered to Appleby Westward retail customers.

Marketing & Promotions

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2nd Tier Retailer Profiles December 2011


Supply Chain & Distribution System Appleby Westward has two main distribution centres: Saltash, Plymouth Cullompton, Devon 99,000 sq. ft. 20,000 sq. ft. Ambient distribution Chilled & Frozen distribution

Buying Contacts

Nigel Taylor Rob Clapham Ronnie James Donna Forward Anders Tornstrand Paul Garner

Trading Director Nigel.taylor@applebywestwood.co.uk Alcohol & Tobacco Rob.clpaham@applebywestwood.co.uk Category Manager Chilled Foods Ronnie.james@applebywestwood.co.uk Category Manager Fresh & Frozen Donna.forward@applebywestwood.co.uk Produce/Meat/Fish Buyer Anders.tornstrand@applebywestwood.co.uk Category Manager Convenience & Grocery Paul.garner@applebywestwood.co.uk

Advice for new suppliers

Suppliers are advised to make initial contact with the relevant trading controller in writing at the address above. New product listings are being considered as Appleby Westward are expanding their range. Particular focus is being given to food to go and healthy options. Suppliers are reminded, as mentioned in the section on SPAR, that SPAR UK central office is responsible for own label purchasing and product development while individual wholesalers such as Appleby Westward are responsible for sourcing some products for direct delivery to retailers. Smaller suppliers are advised to contact Appleby Westward rather than SPAR directly. Once critical mass is built, a supplier will then be directed to the SPAR UK central office.

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2nd Tier Retailer Profiles December 2011

Unit 4N, Coxwell Avenue, Wolverhampton Science Park, Wolverhampton, West Midlands, WV10 9RT Tel: 0044 (0) 1902 366 066 Fax: 0044 (0) 1902 371 516 www.afblakemore.com

Activity

SPAR Wholesaler for North Wales, Midlands & East Anglia; Blakemore Cash & Carry; Blakemore Foodservice; Complete Shopfitting Ltd; Tate Ltd SPAR Stores. 8 distribution depots, services and Spar stores In excess of 700m In March 2011, A.F. Blakemore & Son, announced the acquisition of wholesaler Capper & Co Ltd, which will create the largest SPAR wholesaler in the UK. The combined businesses, trading under Blakemore Retail, will now service over 1,096 SPAR stores in the UK and will take the turnover of the new business to 1.1bn. It will become the largest SPAR wholesaler in the UK. Given the locations of both businesses, the merger will enhance best practice and result in a number of trading and distribution benefits. Merging of the two businesses has been taking place throughout the year, and Blakemore Retail aims to add at least 75 new stores to its estate to take it past the 400 mark by the end of 2014, according to managing director Geoff Hallam. Blakemore Retail, is focused on growth for the next three years, and 11 new stores in Wales and central England are already in the pipeline for opening during 2012. The origins of A.F. Blakemore & Son Ltd date back to 1917, when Arthur Blakemore opened a 350sq ft counter service store in Wolverhampton. A.F. Blakemore has grown considerably over the past century and now employs around 5,500 people. Despite this expansion, the company remains a family run business and is now in its third generation of ownership. In 1975 the company became a key player in the world-wide SPAR symbol group and currently supplies over 700 stores across England and Wales. Following the acquisition of Tates Ltd in 1994, A.F. Blakemore also has a strong own-stores division encompassing more than 200 SPAR shops. New headquarters and distribution facilities were opened in Willenhall, West Midlands during the 1980s. These have since been extended several times to meet the growing demands of the companys expanding retail operation. There are eight Blakemore Wholesale depots scattered across England and Wales along with an ever-expanding foodservice operation, based in Darlaston, Walsall. The company also runs highly successful fresh foods and shop-fitting divisions. Blakemore Wholesale also offers its retail members a choice of two business concepts: Lifestyle Local Express and Stores Group. In return for an agreed level of spend, Lifestyle Local Express members receive

Coverage Turnover Company Overview

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2nd Tier Retailer Profiles December 2011


fascias, window vinyls, in-store signage and a full merchandising service free of charge. The Stores Group format is aimed at retailers who may not wish to make a full commitment or who want to trial Blakemores wholesale service before joining Lifestyle Local Express. In 2009 AF Blakemore and Son poised itself to become a fully fledged national wholesaler by buying and renovating a new 83,000sq ft depot for nationwide deliveries to customers. The depot forms part of Blakemores ambitious plans to make its wholesale arm a major player on the national stage. It wants to increase the delivered sales from 40m to 100m in the next five years. In August 2010 Wholesale group AF Blakemore & Son saw its foodservice arm pick up 4m worth of new business when the group won an order to deliver food to the Las Iguanas restaurant chain, as well as to the Sandwell Local Education Authority. Range Blakemore Wholesale stocks a complete range of groceries, fresh and chilled foods, catering products, licensed products, cigarettes, tobacco and hampers. The company owned Tate Stores stock a wide range of fresh and chilled products, many of which are locally sourced. Almost half of all Tate stores offer hot and cold food freshly prepared in-store. Own label accounts for roughly 20% of sales. Blakemore Retail help members implement SPAR initiatives by distributing the Blakemore Trading Post magazine, offering customer leaflets and developing planograms and also supporting in-store POS merchandising. The Lifestyle Local Express package includes ongoing 4 weekly promotions supported by window posters, shelf cards and consumer leaflets. Blakemore Retail supplies stores in the SPAR zone known as the Central Meridian Guild covering North Wales, the Midlands and East Anglia. The group owns seven depots nationwide in Wolverhampton, Birmingham, Walsall, Barnsley, Grimsby, Bangor and Newport. Product ranges, facilities and services vary between each depot to meet local requirements however, all offer exclusive products from the Landmark Group. A 48-hour lead-time operates for frozen and ambient goods with scheduled delivery days, while chilled food deliveries operate on a 24-hour lead-time. Russell Grant Jeremy Giles Jeanette Richens Cheryl Davison Steve Hadley Trading Director Russel.grant@afblakemore.com Trading Controller Grocery & Confectionery Jeremy.giles@afblakemore.com Trading Controller Beers, Wines & Spirits Jeanette.richens@afblakemore.com Trading Controller Frozen Cherryl.davison@afblakemore.com Trading Controller Soft Drinks & Snacks Steve.hadley@afblakemore.com

Marketing & Promotions

Supply Chain & Distribution System

Buying Contacts

Advice to new suppliers

Suppliers are advised to make initial contact with the relevant trading controller in writing at the address at the top of this profile. Suppliers are reminded, as mentioned in the section on SPAR, that SPAR UK central office is responsible for own label purchasing and product development while individual wholesalers such as Blakemore are responsible for sourcing some products for direct delivery to retailers. Smaller suppliers are advised to contact A.F. Blakemore rather than SPAR directly. Once critical mass is built, a supplier will then be directed to the SPAR UK central office.

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2nd Tier Retailer Profiles December 2011

Capper & Co See BLAKEMORE RETAIL ABOVE

Note Activity

Capper & Co now part of Blakemore Retail SPAR Wholesaler South Wales, South West Midlands & Home Counties. 2 distribution depots, supplying over 500 SPAR stores. In excess of 200m. Capper & Co has been a member of SPAR for 45 years and its customer base is dominated by convenience stores. In March 2011, A.F. Blakemore & Son, announced the acquisition of wholesaler Capper & Co Ltd, which will create the largest SPAR wholesaler in the UK. The combined businesses, trading under Blakemore Retail, will now service over 1,096 SPAR stores in the UK and will take the turnover of the new business to 1.1bn. It will become the largest SPAR wholesaler in the UK. Given the locations of both businesses, the merger will enhance best practice and result in a number of trading and distribution benefits. Merging of the two businesses has been taking place throughout the year, and Blakemore Retail aims to add at least 75 new stores to its estate to take it past the 400 mark by the end of 2014, according to managing director Geoff Hallam. Blakemore Retail, is focused on growth for the next three years, and 11 new stores in Wales and central England are already in the pipeline for opening during 2012.

Coverage Turnover Company Overview

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2nd Tier Retailer Profiles December 2011

Longtown Distribution Centre, 78 Longtown Road, Dundee, DD4 8JU Tel: 0044 (0) 1382 512 000 Fax: 0044 (0) 1382 508 222 www.cjlang.co.uk

Activity

SPAR wholesaler (Scotland), VG Symbol Group, Martex Cash & Carry, Foodservice. 80 VG stores and 3 Martex Cash & Carry depots. 257mn CJ Lang is Scotlands largest independent retailing and distribution company, supplying over 400 supermarkets in the region and covering 45% of the Scottish retail market. Since 1993, CJ Lang has been the SPAR wholesaler in Scotland. VG is CJ Langs entry level retailing solution allowing independents to develop their business into a disciplined Symbol Group retailing format. It is one of Scotlands fastest growing symbol groups offering an alternative choice with practical low cost retail solutions. The Martex Cash & Carry depots are operated by CJ Lang as part of the Landmark Group. The depots provide a comprehensive and competitive quality offer, with the focus very much on customer service, to 7,500 trade customers per week. In 2009 the company completed a 6.4m extension to a distribution centre in Dundee after nearly two years of work. The development has created an additional 30,000 sq ft of warehouse area, allowing chilled and frozen distribution operations and staff to be transferred from another site. In 2010 CJ Lang & Son has boosted its frozen foodservice offering as hard-pressed caterers look for cheaper options. The wholesaler is adding 200 new lines and has "invested heavily" in freezers capable of storing an extra 50 pallets at its Perth and Aberdeen depots. Significant expansion was achieved through National Partnerships with NAAFI supermarkets. In February 2011, CJ Lang & Son, reported profits despite a fall in turnover as the recession hit trading. Latest Accounts filed at Companies House showed that the company posted an operating profit of 5.5m in the year to 30 April, up from 5.4m in the previous 12 months. However, turnover fell by 1.8% to 257m amid a "challenging" year caused by the "depressed economic climate". Margins also came under pressure but CJ Lang combated the downturn by making its distribution arm more efficient and cutting its administration costs by 1.5%.

Coverage Turnover Company Overview

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2nd Tier Retailer Profiles December 2011


Range SPAR Scotland has a broad portfolio of own label products including over 500 grocery, confectionery and soft drink items and almost 400 chilled and frozen items. Within the cash and carry sector, Martexs main strengths are in BWS, cigarettes, confectionery and grocery. The range contains 21,000 lines and is under constant review. Most depots have specialised butchery departments and all have frozen and chilled ranges. Membership of the Landmark Group, backed by the strength of CJ Lang gives an outstanding competitive offer. As a SPAR wholesaler CJ Lang offers SPAR stores an extensive range of marketing and promotional options. Promotional programmes aim to provide a competitive price and value offering to retailers, exemplified by the "Monday Madness" schemes. Additional services offered include a retail club to help develop promotional discipline through its retail customer base, which provides a variety of rewards and benefits to members in return. SPAR Scotland services the whole of Scotland; a modern specialist fleet facilitates efficient delivery even in the most remote locations. They are uniquely placed to offer up to 3 free deliveries per week with no minimum drop. The three Martex Cash & Carry depots are in Aberdeen, Dundee and Perth. Initiated in 2007 CJ Lang is currently investing 5m in extending it Longtown Road depot, adding both 30,000 sq ft to the ambient space as well as providing another 30,000 sq ft of temperature controlled space to enable operations from Clepington Road to be incorporated on the same site. David Lamb Claire Smith Stuart Ferguson Trading Director David.lamb@cjlang.co.uk Sales and Marketing Director Claire.smith@cjlang.co.uk Grocery Buyer Stuart.ferguson@cjlang.co.uk

Marketing & Promotions

Supply Chain & Distribution System

Buying Contacts

Advice for new suppliers

A supplier wishing to approach SPAR Scotland, the VG symbol group or Martex cash & Carry should contact the Grocery Buyer Stuart Ferguson. Suppliers are reminded, as mentioned in the section on SPAR, that SPAR UK central office is responsible for own label purchasing and product development while individual wholesalers such as CJ Lang are responsible for sourcing some products for direct delivery to retailers. Smaller suppliers are advised to contact CJ Lang rather than SPAR directly. Once critical mass is built, a supplier will then be directed to the SPAR UK central office.

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2nd Tier Retailer Profiles December 2011

Henderson Group, Box 49 Hightown Avenue, Newtownabbey, Co. Antrim. BT36 4RT Tel: 0044 (0) 28 9034 2733 Fax: 0044 (0) 28 9034 2484 www.henderson-group.com
Activity SPAR wholesaler in Northern Ireland; Henderson Retail owns and operates SPAR, EuroSPAR, Vivo and Vivoxtra stores. Over 70 SPAR stores in Northern Ireland. 422 convenience stores across Northern Ireland. In excess of 500m Henderson Group consists of four indigenous companies - Henderson Wholesale (which incorporates Henderson Print), Henderson Retail, Henderson Group Property and Henderson Foodservice. Henderson Group introduced symbol group trading to Northern Ireland in the 1960s and is now the largest operator of its kind in the country, supplying over 400 stores. Henderson Retail owns and operates over 70 SPAR, EUROSPAR and VIVO stores in Northern Ireland. EuroSPAR and Vivoxtra are Hendersons two large store formats, aimed to cater for the weekly family shop. This is a large area of growth for the Henderson Group. Henderson Wholesale boasts 230,000 sq feet of ambient, fresh and frozen warehousing, situated outside Belfast at Mallusk. The company employs over 2,000 people through its network of company-owned stores and at its headquarters in Mallusk. The family-owned company operates and supplies 422 convenience stores and supermarkets across Northern Ireland including the SPAR, Eurospar, Vivo and Vivo Extra chains. Ron Whitten, the groups Financial Director, said the improved performance reflected the impact of significant investment in its retail business. "Due to the current challenging economic conditions, our key priorities of continuing to provide first-class customer service, operational efficiency and managing our cost base will be of vital importance," he said. The Henderson Group invested 33m in 2011 in expansion and refurbishment plans to drive future growth. Of this 33m, independent retailers will be supported by a 3m investment in local marketing, with an additional 6m spent by SPAR UK nationally, to market the chain.

Coverage

Turnover Company Overview

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2nd Tier Retailer Profiles December 2011


Another 14m will be invested in new warehousing and office accommodation for Henderson Foodservice at its Mallusk site.

Range

The Henderson Group offers over 5,000 ambient lines, 1,200 fresh food lines and 500 frozen food lines to the retailer. Similar to other SPAR wholesalers, own label accounts for approximately 20% of sales. EuroSPAR has a focus on fresh foods and foodservice, and is constantly extending its range. They carry a wide and deep assortment of branded products as well as SPAR own brand and SPAR value range products. Vivos range consists of fruit and vegetables, dairy, grocery and fresh and frozen foods. Similar to EuroSPAR, the Vivoxtra range also focuses on fresh foods and foodservice with a wide range of branded products. Henderson wholesale offers marketing support for all its retail partners helping to plan and implement local media schedules and distributing promotional leaflets. Henderson SPAR stores carry out the usual SPAR promotional activities i.e. Real Deals and consumer leaflets. EuroSPAR, Vivo and Vivoxtra also run promotions in-store which are advertised by leaflets distributed to every home in Northern Ireland. The Henderson Group has Northern Irelands largest distribution network and so leads the way in terms of frequency of store deliveries and lead-times required for orders. An innovative voice directed order picking technology has been introduced that eliminates barcode scanning and paper-handling giving a speedy and efficient order picking system. Glen Howe Trading Controller Email: glen.howe@henderson-group.com Neal Kelly Fresh Food Director Email: neal.kelly@henderson-group.com

Marketing & Promotions

Supply Chain & Distribution System

Buying Contacts

Advice for new suppliers

A supplier wishing to approach SPAR and EuroSPAR Northern Ireland, Vivo and Vivoxtra should contact Glen Howe at the address at the top of the profile. Suppliers are reminded, as mentioned in the section on SPAR, that SPAR UK central office is responsible for own label purchasing and product development while individual wholesalers such as the Henderson Group are responsible for sourcing some products for direct delivery to retailers. Smaller suppliers are advised to contact the Henderson Group rather than SPAR directly. Once critical mass is built, a supplier will then be directed to the SPAR UK central office.

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2nd Tier Retailer Profiles December 2011

James Hall & Co Ltd, SPAR Distribution Centre, 89-91 Blackpool Road, Ribbleton, Preston, PR2 6DY Tel: 0044 (0) 1772 706 666 Fax: 0044 (0) 1772 706 667 www.jameshall.uk.com
Activity Coverage Turnover Company Overview SPAR wholesaler and distributor for the North of England. 450 SPAR stores 351million (2008) Focused on revamping their SPAR lunchtime range in 2011. Sandwich and wrap sales have reached more than 8 million since launch a little over two years ago. James Hall & Co. traces its roots back to 1863 when founder James Hall opened a bacon cutting business and retail shop in Southport, Lancashire. The business prospered, James Hall began to supply other shops with his products and so began the wholesale business, which was the precursor of todays modern company. By the 1950s, the third generation of family directors Stuart, Stanley and Philip Hall had assumed control and the company was operating from two warehouses, one in Southport and another in Preston. In 1966 the two operational bases were consolidated into a single new warehouse on Blackpool Road, Preston. In 1956, the company was among the first of five distributors to be instrumental in introducing SPAR to the UK. In 1997 SPAR UK and NAAFI entered into a trading partnership to supply goods to British Service personnel in the United Kingdom. Its main aim today is to build lasting partnerships with its SPAR members, to provide quality products and give excellent service at reasonable prices. Among the services that James Hall & Co offers its retailers are retailing advice, buying power, marketing support, training and distribution. Further store acquisitions and the development of greenfield sites are ongoing priorities for James Hall & Co. T Hallam & Sons Ltd is a subsidiary of James Hall & Co. and is dedicated to the supply of greeting cards, stationary, toys, home items and sundries to members of the Northern SPAR Guild. As well as being a wholesaler, the company leases property to third party retailers and trades through its own outlets. Range James Hall & Co. distributes a range of 8,000 grocery, fresh and frozen products to its stores. Own label accounts for approximately 23% of the entire range. The company operates a high tech fresh food production department and has substantially increased the size of its chilled food operation. It claims to offer the widest range of fresh food products available to the independent retailer with ongoing innovations and new

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2nd Tier Retailer Profiles December 2011


concepts such as in-store bakeries, hot and cold food-to-go and meal deals. Marketing & Promotions In line with SPAR UK, James Hall & Co. offer retailers a range of marketing and promotional options i.e. Real Deal promotions which are run on a three weekly basis. James Hall & Co. also provide promotional support including themed promotions for key trading periods, ongoing leaflet activity, specialised point of sale material and in-store theatre. They also offer retailers new store launch packages including consumer leaflets and media support. James Hall & Co.s Preston distribution centre has over 237,000 sq ft of warehouse space combining fresh, frozen and ambient storage. The distribution chain is fully computerised from the buying department to final delivery. Goods are distributed on a fleet of temperature controlled vehicles. In 2008 James Hall began a project to transfer its operations to a new purpose-built distribution facility in Preston, to provide a total of 485,000 sq ft of warehouse space across all temperature categories, this transfer was completed in 2009. The distribution chain is fully computerised from the buying department to final delivery at store. James Hall & Co. offer SPAR member an extensive range of grocery, fresh and frozen products via central distribution: Buying Contacts Over 8,000 items are stocked in the Preston distribution centre, which has over 19,500 square metres of warehouse space combining fresh, frozen and ambient storage. Lead time of 24 to 48 hours between customers order and store delivery. Goods are distributed on a dedicated fleet of vehicles, all of which are controlled. Trading Director Andrew.barnes@jameshall.uk.com Chilled Buyer Andrew.owen@jameshall.uk.com Frozen, Ambient, BWS Buyer Paul.huartson@jameshall.uk.com

Supply Chain & Distribution System

Andrew Barnes Andrew Owen Paul Huartson

Advice for New Suppliers

Suppliers are reminded, as mentioned in the section on SPAR, that SPAR UK central office is responsible for own label purchasing and product development while individual wholesalers such as James Hall & Co are responsible for sourcing some products for direct delivery to retailers. Smaller suppliers are advised to contact James Hall & Co rather than SPAR directly. Once critical mass is built, a supplier will then be directed to the SPAR UK central office.

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2nd Tier Retailer Profiles December 2011

Costcutter Supermarkets Ltd, Harvest Mills, Common Road, Dunnington, York YO19 5RY Tel: 0044 (0) 1904 488663 Fax: 0044 (0) 1904 488540 www.costcutter.com

Activity Coverage Turnover Company Overview

Symbol Retail Chain. 1,645 stores throughout the UK and Ireland. 1.584bn Costcutter is a national symbol group which aims to support members in every aspect of their operations, however unlike other leading UK symbol operators, it has no wholesale operation. The majority of Costcutters goods are bought and distributed via Nisa Today's, although some are also sourced through Head Office. The trading team at head office is responsible for, amongst other things: Negotiations for products not bought via Nisa (c 10% of range) Promotional planning Range reviews Merchandising

Membership consists mainly of independent retailers, convenience stores and small supermarkets. Additionally some forecourt stores are also run in association with the Murco Oil Company. One of the groups primary objectives is to continue to recruit new members to drive brand awareness and further buying strength. To this end, Costcutter has a sales/development team of 62 field-based personnel who work with the Costcutter members to develop their businesses. Whilst encouraging member autonomy, Costcutter also operates a sub-group within the chain known as Five Star Supergroup, which allows selected retailers to benefit from better buying terms in return for improved retail disciplines and adherence to strict conditions. Stores range in size from 500 to 5,000 sq. ft. as follows: Format Convenience Convenience Forecourt Fascia Costcutter Costcutter Express Costcutter Murco Av. store size < 1,000 sq. ft 1,000-5,000 sq. ft 400-1,800 sq. ft

Costcutter is a privately owned company and members pay an annual membership fee, and retailers also pay a fee for associated membership of Nisa Today's. The company positions itself as a chain of small supermarkets, offering a wider range than most convenience stores. In August 2007 a 51% stake in the business was purchased by Bibby Line Group, the distribution operator. Bibby had an indirect connection with Costcutter as the logistics provider for the ambient division of Nisa-

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2nd Tier Retailer Profiles December 2011


Today's central distribution operation, through which Costcutter stores are serviced.

Throughout 2011 Costcutter opened a total of 29 new stores in the UK, they aim to open a further 40 stores over the course of 2012. Costcutter reported a 4% rise in sales to 640m for the year to 30 April 2011. The company said the results indicated another solid performance despite difficult trading conditions. Pre-tax profit jumped 57% to 4.4m. In September 2011 it was announced that Costcutter was preparing to introduce a new non-branded store fascia aimed at competing at the lower end of the convenience market as part of its strategy to elevate perceptions of the core brand. The as yet unnamed brand will be the third tier in Costcutters new approach to segmenting the convenience market and offer separate propositions to target the upper, core and lower end of the market. Costcutter reportedly plans to convert 300 of its existing stores to the non-Costcutter brand from 2012. Meanwhile, 100 will become MyCostcutter branded stores with the remaining 1,200 stores retaining the core Costcutter brand and white fascia. The value chain will compete with the likes of Netto, the core Costcutter brand takes on Nisa Todays and Londis, while the MyCostcutter brand has been developed to compete with chains such as M&S Simply Food and Waitrose. In November 2011 Bibby Line Group acquired the remaining 49% of the business to become the outright owner of the symbol group franchise. Existing Costcutter management will remain in place to take the business forward. Range Retailers have access to a range of over 12,000 branded and own-label products stocked by Costcutter. The Costcutter private label range now consists of roughly 200 lines and is developed by Nisa-Todays. Being a member of Nisa Todays Group, Costcutter also has access to over 9,000 lines of ambient, licensed and tobacco products through Nisaway, and 2,000 chilled lines and 1,000 frozen lines, including fresh fruit and vegetables, flowers and sandwiches through Nisachill. In order to drive improved in-store availability and consistency Costcutter introduced a number of category focused initiatives: New Product Launch Initiative: retailers are given incentives via additional promotions to stock new lines in their stores, helping extend the distribution of products at launch. Core Range Initiative: retailers agree to stock a specified range of products in exchange for additional financial benefits across the range. Currently 500 Costcutter retailers are participating in this scheme.

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2nd Tier Retailer Profiles December 2011


Category Implementation Initiative: a category plan for beers, lagers & ciders implemented in 150 stores using store specific planograms in order to improve core product availability. Multiple Category Implementation Initiative: plans across beer, lager & cider, crisps & snacks, biscuits and chilled were implemented via store specific planograms in 600 stores. This initiative was in partnership with BCP Field Marketing, which provided field personnel to audit stores and help retailers put the planograms into practice.

Marketing & Promotions

A heavyweight marketing programme is in place to raise awareness of the Costcutter brand. As with all independent retailers price remains a key marketing tool, although only the Five Star group of stores is expected to adhere to a set price list. Other members are free to set their own prices, but benchmark price information-based on Tesco and Sainsburys is available to all members. Most major Costcutter price promotions are executed under the "Beat This" slogan. Costcutter has a variety of branded products on promotion using price savings and multi-buys as the main mechanics, with promotions offered across grocery, chilled, frozen and BWS. Leaflets are used as a key tool to support the promotional programme. In addition to a three weekly promotional programme run throughout the year, Costcutter runs a barrage of half price promotions four times a year. Promotional activity is supported by local and national marketing. Costcutter was the first convenience store chain to operate its own instore digital radio channel, although other operators have now followed this initiative. The channel plays a combination of music and marketing messages and is a key means of driving sales and promoting the Costcutter brand.

For the year to 30 April 2011 Costcutter doubled its television exposure and made its consumer loyalty scheme free to retailers using its electronic point of sale system. In 2011 it also began trialing a Costcutter diploma in convenience retailing, taking in the management of retail operations, finance, managing people and business development, which will be available later this year, and has introduced a Proud to be Local strap-line. Supply Chain & Distribution System Costcutter is a key member of Nisa-Todays who operate a central distribution service for member retailers. The Nisa-Today's distribution network services 5,000 stores with up to 12,900 SKU's, of which approximately 13% are private label lines. However, upon acquiring full ownership of Costcutter in November 2011 the Bibby Group announced plans to make changes to the current supply chain. One of Biddy Groups clear goals of the ownership of Costcutter is to create synergies with its own retail logistics business. Costcutters deal with Nisa is in place until 2014 but Bibby has made it clear that it will investigate other sources of supply for the future, including the possibility of taking buying and distribution in-house or of seeking an alternative partner. Either option would represent a major challenge, as few organisations are able to replicate Nisa's capabilities and Costcutter has only limited supply chain infrastructure of its own.

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2nd Tier Retailer Profiles December 2011

Buying Contacts

Nick Ivel Angela Barbour David Thompson Ian Cameron Adam Walker Robin Hemmingway Bev Loughran Peter Lightfood Steve McCann Jonathan Verner

Managing Director Nick.ivel@costcutter.com Trading & Marketing Director Angela.barbour@costcutter.com Sales & Development Director David.thompson@costcutter.com Trading Director Ian.cameron@costcutter.com Trading Manager for Regional Suppliers Adam.walker@costcutter.com Trading Manager Robin.hemmingway@costcutter.com Trading Manager bev.loughran@costcutter.com Trading Manager Peter.lightfoot@costcutter.com Trading Manager Steve.mccann@costcutter.com Trading Manager NI Jonathan.verner@costcutter.com

Advice to new suppliers

Being a member of Nisa-Todays means that the Costcutter central office has a limited buying function. The Costcutter trading team is responsible for negotiations on products not bought through Nisa (approximately 10% of the Costcutter range), promotional planning, range reviews and merchandising. New suppliers should contact the relevant trading manager directly. The Costcutter buying team and the Nisa Todays Group decide jointly if a new supplier qualifies as a suitable listing. For suppliers, direct contact with the Costcutter trading team will become increasingly important in order to take full advantage of the opportunities provided by in-store radio, leafleting, merchandising and promotional compliance schemes.

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2nd Tier Retailer Profiles December 2011

Musgrave Retail Partners GB, Musgrave House, Widewater Place, Moorhall Road, Harefield, Middlesex, UB9 6PE Tel: 0044 (0) 870 050 0158 Fax: 0044 (0) 870 050 0159 www.musgrave.co.uk/www.londis.co.uk
Activity Symbol Group: Convenience Multiple & Delivered Wholesaler owned by the Musgrave Group. 1,784 stores in the UK 1.3bn Londis, owned by the Musgrave Group, is the UKs third largest symbol retailer after Spar and Premier. Londis was formed in 1959 by a group of independent retailers belonging to the LONdon DIStrict Council of the National Council of Grocers. The objective of the group was to create and control a source of supply for members by developing a wholly-owned wholesaling company, removing one layer of profit in order to acquire stock at better terms.

Coverage Turnover Company Overview

In 2004 the Musgrave Group acquired Londis GB as part of its strategy to expand overseas. The Musgrave Group aims to offer communities the advantage of large scale shopping in a local context and to be the number one supporter of independent retailers in all the markets in which they operate. The group serves more than 3,400 outlets across Ireland, the UK and Spain. Up until October 2007 this part of the business was known as Musgrave Budgens Londis UK (MBL). It is now known as Musgrave Retail Partners GB (MRP GB) and is one of the Musgrave Groups five core business divisions. MRP GBs strategy is to operate in the UK as one franchise business with two fascias used by its independent retailers. Budgens and Londis have been combined into one operating division, with a single management team located in new offices at Harefield in Middlesex. MRP GB is committed to making investments in the supply chain to drive efficiencies and improve its service to retailers. This will include the development of a new chill facility.

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2nd Tier Retailer Profiles December 2011


Each Londis store is independently owned. The prime objective is to offer excellent marketing, purchasing, store development, IT and supply chain support to allow these independents to grow their businesses in a rapidly expanding convenience market. The main focus is on convenience retailing, but the group is increasingly targeting retailers in related retail activities such as newsagents, forecourt dealerships, pharmacies and post offices. According to the Musgrave Group, Londis sites are predominately located in East Midlands, West Midlands and Yorkshire borders, with a number located in the South of England as well. The stores vary in size from 400 sq ft up to 1,500 sq ft. In June 2010 the Musgrave Group announced that had signed a three year supply agreement with MPK Garages to supply up to 28 of its forecourt sites with the Londis convenience fascia in the UK. According to Musgrave Group, the sites are predominately located in East Midlands, West Midlands and Yorkshire borders, with a number located in the South of England as well. The stores vary in size from 400 sq ft up to 1,500 sq ft. In 2010 Londis recruited more than 200 retailers to new stores. One third of these numbers represent retailers who switched from other symbol groups to join Londis and others include multiple account retailers, plus a broad range of store sizes and locations, including neighbourhood, convenience and forecourt formats. As of November 2011 store numbers in the UK stood at 141 Budgens/ Supervalue supermarkets stores and 2,345 Budgens, Centra, Londis stores and 2 Musgrave cash & carrys. In November 2011 Londis announced that its pre-Christmas sales exceeded 1m for the first time. The sales accounted for Christmas orders placed by Londis retailers with Musgrave GB for confectionery and grocery ranges and included orders received for the Halloween period. Londis said that the inclusion of Halloween sales made a significant difference, in that Halloween is now classified as the third biggest retail event after Christmas and Easter (outselling both Valentines Day and Mothers Day). In the UK, Halloween total sales (all categories) in 2010 were worth around 300m and had recorded a year-on-year growth of 28%. Confectionary alone was worth 24.6m with a 13% year-on-year growth. In terms of impulse purchases Londis said that Point of Sale (POS) and front of store locations have been most successful. Over 2011 Londis recruited more than 200 retailers, and significantly, one-third of those had switched from other symbol groups. There were a number of range and portfolio enhancements instigated at Londis in 2010. These included the relaunch of its own label range, covering around 400 lines, together with the expansion of fresh and chilled ranges as Musgrave has worked with Londis retailers to strengthen the Londis proposition. In December 2010 Londis launched a new range of private label convenience lines, expanding their private label offering. According to the Musgrave Group, these private label launches form part of an extensive range review on sharing and multipacks to drive sales of savoury snacking products in-store. The range management process focuses on core lines and improved availability, building ranges that

Range

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are customer focused and challenge the slowest moving lines. In 2011 Londis continued to develop its own brand range, since the beginning of the year they have added bread, crisps and pasties to their ever expanding range.

In 2011 Londis also announced that it was investing 1m on lowering the prices of key brands. In November 2011 The Musgrave Group announced that it plans to introduce its SuperValu own-label range into Londis and Budgens stores in the first quarter of 2012. Marketing & Promotions Londis runs price promotions in retail and wholesale on a three-weekly basis. There are two promotional schemes, one for convenience stores covering about 15 lines and another for neighbourhood stores covering about 70 lines. Londis operates its own distribution network, giving it independence and greater control over the supply chain. There are three regional distribution centres: Thamesmead, Andover and South Elmsall. Londis operate a fully integrated POS system with the distribution depots and head office. In 2008 Londis upgraded its supply chain. The supply chain improvement package included: Replacement of supply chain systems. IT systems were upgraded and a base level EPoS system provided for retailers which has 'full product, promotion and ordering capability.' Rollout of chilled vehicles to the fleet, instead of using ice-packed containers for chilled foods. Re-equipping the network with new roll cages. Introduction of afternoon, evening and six-day deliveries to improve lead times and availability. Introduction of more backhaul deliveries. Rollout of recycling initiatives. These will collect cardboard and plastic from retailers and return it to retailer services centres for recycling. In November 2011 Musgraves announced that it was making a 4m investment in Londis fresh range. A major component of this investment is in the supply chain. For the first time the entire Londis fleet will have full chilled capacity, enabling the group to supply all Londis retailers with a full fresh range. This bigger fresh range includes BBQ products, fresh meat, poultry, fish and bagged salads. Musgrave Retail Partners GB Buying Contacts Willie Hamilton Trading Director Willie.hamilton@musgrave.co.uk Category Head Beverages, Food and Non-Food services Steve.uglow@musgrave.co.uk Trading Manager Frozen Nick.hartwwell@musgrave.co.uk Trading Manager Desserts Jodie.hyland@musgrave.co.uk

Supply Chain & Distribution System

Steve Uglow

Nick Hartwell

Jodie Hyland

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Steve Normington Trading Manager Fresh Fruit & Londis Fresh Produce Buyer Steve.normington@musgrave.co.uk Trading Manager Fresh Vegetabes, Salad & Horticulture Joanne.ellis@musgrave.co.uk Category Head of Poultry & Meat Neill.gibson@musgrave.co.uk Trading Manager Seafood Ryan.Paul@musgrave.co.uk

Joanne Ellis Advice to new suppliers Neill Gibson

Ryan Paul

Companies who wish to target Londis or Budgens retailers should contact the relevant category buyer above by email to introduce the company and offer samples when possible or relevant. The buyer will then follow-up on the email. Musgrave Retail Partners GB is interested in new products that will add value to a category.

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Palmer & Harvey Retail Services Ltd P&H House, 106-112 Davigdor Road, Hove, East Sussex. BN3 1RE Tel: 0044 (0) 1273 222100 Fax: 0044 (0)1273 222101 www.palmerharvey.co.uk
Activity Coverage Turnover Company Overview Symbol group, delivered distribution and wholesaler. 760 symbol stores and 15 depots across the UK. 4.38 billion The Palmer and Harvey McLane (P&H) mission is; "To be the leading provider of innovative solutions to our partners in the retail market." Palmer and Harvey (P&H) was founded in 1925 as confectionery wholesaler and has evolved to become the UKs largest delivered wholesale business. The business is increasingly viewed as an addedvalue logistics service provider as well as a delivered wholesale specialist. It is the only nationwide multi-drop shared user distributor in the UK, with a speciality in tobacco and impulse products. More recently, through a relationship with the forecourt sector, the business has expanded into the supply of grocery, household, frozen and chilled products. P&H have 63,600 customers including multiple retail groups, independents, forecourts and symbol retailers. In 2008 P&H acquired delivered wholesaler WH & HM Young, a member of the Key Lekkerland Groupe and announced the launch of 'Partnership Plus' a key initiative to help drive business with its independent and symbol group customers. P&H invested in structural changes during 2010, dividing the business into four areas: distribution, multiples, independents and wholesale. Managing director of commercial, Peter Austen, added "The strength of P&H is that we can take broad, diverse changes without any bottom line hiccups. It shows just how resilient we are." The recession has also affected the wholesaler, with the forecourt and off-licence sectors being particularly impacted, especially following First Quench Retail and Wine Cellar's entry into administration in 2009. P&H McLane (Holdings) plc comprises 3 major divisions: Palmer and Harvey McLane - the UK's largest delivered wholesaler and distributor supplying ambient, grocery, chilled and frozen foods, health and home products. Customers include a wide range of retailer types including supermarkets and multiple forecourt and convenience store operators. P&H Retail Services - providing value added services to retailers including the portfolio of four symbol group packages

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(Mace, Mace Express, Your Store and Supershop), the ACE drop shipment scheme providing directto-store access for a range of 60,000 lines, as well as YP Electronics providing IT solutions and EPoS systems to retailers. P&H Direct Ltd - door to door snacks delivery service to customers in retailing and hospitality through P&H Snacksdirect

P&H do not operate any company owned stores but through P&H retail services they provide symbol fascias offering retailers a full support package; Mace, Mace Express, Your Store and Supershop brands all fall under P&H. In 2010 Palmer & Harvey formed a buying alliance with cash & carry operator Makro under the title 'PalMak'. In July 2011 Palmer & Harvey announced Martyn Wards appointment as its new Sales and Commercial Director. In 2011 Palmer & Harvey revealed that alcohol sales to independent retailers were up 22% in the six months to 31 October with customers increasingly looking for a 6 to 8 bottle of wine - a price point that used to be met by off-licence chains. Sales were also being driven by P&H's advice to retailers on how to merchandise the category. Range Palmer & Harvey remains strongly committed to a core range of ambient lines, however it has considerably expanded its range of chilled and frozen products to meet the needs of its diverse customer base (typically delivered twice weekly). The P&H product portfolio now contains the following: 4,500 ambient lines (confectionery, crisps, snacks, soft drinks, tobacco, grocery) 1,450 chilled and frozen lines 1,600 beers, wines and spirits lines 60,000 products via ACE drop shipment 300 products under the Mace own label, branded "M".

The P&H McLane division controls all product ranges and has direct responsibility for beers, wines and spirits through Winerite. Through a network of 18 depots and a vehicle fleet of 600, the division controls all purchasing, warehousing and distribution activities to 38,000 retail outlets. Through a network of 18 depots and a vehicle fleet of 600, the division controls all purchasing, warehousing and distribution activities to 38,000 retail outlets. A buying team based in Brighton purchases an inventory of up to 9,000 product lines (seasonally based). The majority of P&H retail customers stock between 2,000 - 2,500 SKUs. Goods are delivered by suppliers to the appropriate regional depots for both ambient and chilled and frozen ranges. Following the acquisition of Booker Wholesale Foods and Mace Marketing Services, a significant increase in volume reduced the need for a central depot operation to handle slow moving lines. Consequently, all incoming goods are now dealt with on a regional basis, cutting vehicle mileage considerably.

As a wholesaler P&H has no overall control over ultimate retail pricing,

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Marketing & Promotions however, it seeks to establish a clear value proposition through its retail customers through a raft of ongoing promotional programmes. This activity seeks to target two areas: Providing trade value to its retail customers, to help reduce their costs and boost their margins Providing value to consumers to help drive its retail customers' businesses

P&H's primary vehicle for providing consumer promotions for sellthrough is its ProRetailer programme giving retailers access to over 300 consumer deals on major branded products in periods of three weeks running throughout the year. Key categories promoted are: confectionery, snacks, BWS, grocery, household, chilled, fresh and frozen. The programmes are tailored for each key customer types (CTNS, convenience, forecourts etc) and for each symbol group across all nontobacco product categories, supporting mostly branded products. For symbol retailers this national programme is communicated via each fascias specific magazine. Price led deals are supported with 10 colour window posters, 100 shelf barkers, in-store music and 500 colour consumer leaflets. The promotional calendar takes into account the differences in each fascia. For example; Supershop - primarily focused on tobacco and impulse promotions. Mace - primarily focused on alcohol, chilled and frozen promotions.

Mace own label is also supported with a promotional programme. 2009 saw P&H establish a new marketing and support programme, entitled 'Great New Deal'. The wholesaler recognised the need to support its customer base at a time when traditional independents are being increasingly squeezed, and now has 3,450 accounts nationwide signed up to the deal. Supply Chain & Distribution System P&H's supply chain strategy is formed from its customer and supplier strategies: Customer strategy - With total focus and understanding we will deliver irresistible solutions which drive profitability and create real interdependency. Supplier Strategy - To develop profitable trading partnerships which establish P&H as the chosen route to market.

P&H services a wide range of customers including CTN (Confectionary, Tobacco and News) retailers. Convenience store retailers, Forecourt retailers and a range of multiples including Esso, Shell, One-stop, Tesco, Sainsbury's and Aldi. P&H also provides distribution services for manufacturers including Nestle, Mars, Coca-Cola and McVities. P&H has a country wide network of depots with 11 ambient depots, 4 temperature controlled facilities, 11 trans-shipment centres and 1 beer, wines & spirits distribution centre (Winerite). The network is considered robust and well-developed allowing P&H to offer customers flexibility and reduced costs through lower mileage.

During 2008 Palmer & Harvey launched a wider chilled and fresh foods

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offer and integrated its BWS offer across its national network of distribution depots. This enhanced service is part of P&H's drive to maximise potential sales, up-weight customer spend and provide a stronger platform with which to attract new retailers. In May 2008 P&H secured a c.25m/year to supply medium and longlife chilled products to the Tesco-owned convenience store chain One Stop. When the deal was signed P&H already supplied One Stop with frozen products. Managing Director Sales Paul.hagon@palmerharvey.co.uk Marketing Director Clive.bacon@palmerharvey.co.uk Director of Multiple Sales Martin.janes@palmerharvey.co.uk Category Director Commercial Trading Peter.austen@palmerharvey.co.uk Grocery Buyer Mark.dallrnson@palmerharvey.co.uk Soft Drinks, Crisps, Snacks Buyer Laith.makhtar@palmerharvey.co.uk Confectionery Reem.khill@palmerharvey.co.uk Non Food Buyer Jonathan.fairclough@palmerharvey.co.uk

Paul Hagon Buying contacts Clive Bacon Martin Janes Peter Austen Mark Dallrnson Laith Makhtar Reem Khill Jonathan Fairclough

Advice to new suppliers

New suppliers should contact the relevant buyer directly. The key criteria for new product listings are product innovation, availability and a requirement for support of brands. P&H will consider new listings if the product has strong brand recognition and offers value to the existing ranges.

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Musgrave Retail Partners GB, Musgrave House, Widewater Place, Moorhall Road, Harefield, MiddlesexUB9 6PE Tel: 0044 (0) 870 050 0158 Fax: 0044 (0) 870 050 0159 www.musgrave.co.uk www.budgens.co.uk
Activity Coverage Turnover Company Overview Convenience Multiple owned by the Musgrave Group. 216 stores across the UK 579.48m (Great Britain) Since it was founded in 1876, the Musgrave Group has become Irelands largest grocery distributor. The Musgrave group aims to offer communities the advantage of large scale shopping in a local context and to be the number one supporter of independent retailers in all the markets in which they operate. The group serves more than 3,400 outlets across Ireland, the UK and Spain. The Musgrave Group is a private, family-controlled company with 80% of the shares held by the extended Musgrave family and 20% by employees. The company has no immediate plans to go public. Budgens became a wholly owned subsidiary of the Musgrave Group on 31st July 2002. Within Great Britain, the principle business belonging to the Musgrave Group is referred to as Musgrave Retail Partners GB (MRP GB), having previously been known as Musgrave-BudgensLondis (MBL). This also includes the Londis operation, which came into the group in 2004, adding around 2,000 convenience stores to the UK estate. Budgens is firmly established as a community food retailer and is recognised for its support of local producers and great local deals. In recent years Budgens has undergone significant change in its structure. In January 2008 the business completed its conversion from an operation in which stores were largely company-owned to one in which stores are owned independently and supplied by Budgens on a franchise basis. This new structure, which mirrors The Musgrave Groups operations in Ireland, provides individual store owners with considerable flexibility in product offer and range development. This allows owners to tailor their proposition to meet the needs of the local catchment area. The 216 Budgens stores range in size from 2,000 to 10,000 sq. ft and are in four different formats: 1) Neighbourhood Supermarkets, 2) Budgens Express, 3) Budgens Forecourt and 4) Budgens Quickstop.

Range

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Budgens has a long track record of having significant local product instore and this has been developed further over recent years. Crucially, consumers are increasingly valuing locally produced ranges and Budgens, with its distinct ownership structure, is well placed to benefit from this. Budgens' trading strategy is highly focused on fresh foods. A key feature of the retailers strategy is to identify and quickly respond to lifestyle trends and the growth potential that exists within the fresh food channel. In 2011 fresh foods, fruit and vegetables accounted for over 10% of turnover in MRP GB stores. Private label is an ongoing area of development at Budgens. In 2007 and 2008 a notable development in the Budgens range was the introduction of a differentiated range of premium own label products under the Our Kitchen brand. Under the "Our Kitchen" sub brand, Budgens introduced a range of products that cuts across fresh, frozen and ambient categories. However, premium is just one element of the broader Budgens private label offer, which covers a range of product categories across the store, including fresh, chilled and frozen products. In January 2009 Budgens introduced 'Good Value', an entry level range comprising 17 fresh products. By July 2009, this had been expanded to nearly 50 SKUs across both fresh and ambient categories In December 2010 Budgens and Londis launched a new range of private label convenience lines, expanding their private label offering. In November 2011 Musgrave announced that it plans to introduce lines from its core Irish SuperValu private label offer into its British-based operations, Budgens and Londis, in Q1 2012. The SuperValu range offers a ready-made catalogue which will provide a low cost opportunity to significantly upscale Musgrave's private label participation and provide its affiliated retailers with a stronger value proposition going forward. Bringing the SuperValu range to Britain will substantially increase the scale of the range, adding significantly to the existing volumes it generates in both The Republic of Ireland and Northern Ireland. This will offer clear opportunities for Musgrave to benefit from improved supplier terms as well as creating cost saving synergies in terms of packaging and marketing. . Marketing & Promotions

Promotions are an important element of the Budgens offer. Budgens' promotional strategy is centred around 'Great Local Value' which offers

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deals on over 200 products each week, featuring multi-buys, and money-off promotions across both branded and own-label products. The promotional programme is changed every three weeks, and covers products from across the product spectrum. Budgens is increasingly aiming to segment its stores by food shopping missions, and aims to incorporate offers across each of the key segments of the store, for instance with promotions across food-for-now, food-for-later and the "top-up corner" for store cupboard ambient lines. The rotating range of offers is supplemented by a selection of volumeoriented, long term offers. Flyers, and the website and emails, are used to support this promotional programme.

In 2011, the chain launched a revamped consumer website (www.budgens.co.uk), offering shoppers a range of additional benefits. Budgens said the website was re-designed with a new look to make it easier for shoppers to find out more about Budgens stores. But potentially the most significant move of 2011 at the chain came when it announced that it would match prices with Tesco on key brands. Budgens said it was investing 13m to help it lower prices on 1,000s of products and also price match 300 favourite brands against Tesco. The price match initiative is being advertised in local press and through doordrop leaflets, with in-store promotional signage being ramped up, with shelf-edge labels and wobblers next to the products. The Budgens distribution centre is at based at Wellingborough. This distribution centre has the ability to deliver all product groups, including fresh and chilled products daily to stores. It is also the point of difference between Budgens and its competition. The outsourcing of management of the distribution fleet and warehouse to Gist (BOC Distribution Services) has allowed Budgens to focus more on developing the core business. Budgens operates subsidiary manufacturing plants which provide stores with a range of fresh bread and meat products. The Budgens website (www.budgenstechnical.com) gives improved communication with suppliers. It also reduces administration and eases the launch of new lines. In September 2007, the MRP GB Board approved a 50m investment in the Groups retail supply chain. Over a 5-year period the plan will focus on integration, consolidation and supporting chilled distribution to the

Supply Chain & Distribution System

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Londis estate. The retailer has developed a Supply Chain Roadmap which will cover the integration of the Budgens and Londis networks and a review of the retailer's IT systems. During 2008 and into 2009 MRP GB focused on maximising the availability of products. Buying Contacts Musgrave Retail Partners GB Managing Director, Budgens and Londis - Donal Horgan donal.horgan@musgrave.co.uk Managing Director, Musgrave Wholesale Partners - Noel Keeley noel.keeley@musgrave.co.uk Trading Director - Willie Hamilton willie.hamilton@musgrave.co.uk Category Head Beverages, Food and Non-Food - Steve Uglow steve.uglow@musgrave.co.uk Head of Buying - Kenton Burchell kenton.Burchell@musgrave.co.uk Buyer chilled goods - David Caswell david.caswell@musgrave.co.uk Trading Manager - Deli - Amy Culshaw amy.culshaw@musgrave.co.uk Confectionary buyer - Andrew. Scurrah Andrew.scurrah@musgrave.co.uk Trading Manager - Dairy - Andrew Fox andrew.fox@musgrave.co.uk Advice to new suppliers

Companies who wish to target Musgraves should contact the relevant category buyer above by email to introduce the company and offer samples when possible or relevant. The buyer will then follow-up on the email. Musgrave Retail Partners GB is interested in new products that will add value to a category.

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2nd Tier Retailer Profiles December 2011

Martin McColl House, Ashwells Road, Brentwood, Essex, CM15 9ST Tel: 0044 (0) 1277 372 916 Fax: 0044 (0) 1277 372 151 www.martinmccoll.co.uk
Activity Coverage National Convenience Multiple 1,271 stores across the UK. Approximately 500 of these are convenience stores and over 400 of the estate have a Post Office. The remainder are divided between high street stores and newsagents. 771.3m Martin McColl is the countrys largest chain of newsagents. Over 400 of the chains stores have post offices. The group positions itself at the heart of neighbourhood retailing. Martin McColl is owned by TM Retail In 1999, TM Retail launched McColls, its new convenience concept. McColls has been rolled out into neighbourhood, metro, high street, travel and hospital locations. Following a management buy-out in 2005, the company changed its name to Martin McColl Limited. The group operates under six different fascias; Dillons, Forbuoys, Martins, McColls, More and RS McColl (Scotland). In 2008 McColls purchased 27 convenience stores from Sainsburys C-store are McColls main focus but tobacco and news are a important part of the business. In 2009/2010 Martin McColl Limited underwent a multi-million pound EPOS refit within their stores, replacing their existing EPOS system with a new multi-screen touch screen system. With the aim of speeding up the transaction process by incorporating Credit/Debit card systems within the EPOS. The multi-screen system allows advertising POS to be electronically displayed to customers during the time that they are at the till. Future expansion for the new system is currently in development, with the addition of built-in PayPoint terminals reducing the risk of operator error by 99%. In April 2010 The Western Union Company announced that it had signed an agreement with the convenience retail chain Martin McColl. By September 2010, Western Union national and international money transfer services will be offered at 700 Martin McColl stores throughout the country. In July 2011 Martin McColl appointed SPAR executive Peter Miller as its New Buying Director, following the departure of Tony Start. In 2011 the number of convenience stores within the overall group rose from 508 to 548, in keeping with the groups strategy to concentrate on its grocery shops.

Turnover Company Overview

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Range The chain has a fairly limited stock-listing. Martin McColl does not stock an own-brand range and most products are mainstream branded products. Martin McColl expects above and below the line marketing support from suppliers. Occasional promotional activities are run throughout the year, particularly at Christmas and Easter. McColls operates an instore radio campaign and an extensive range of branded promotions which are supported through leaflets and POS material. TM Retail has supply contracts with Palmer & Harvey and Kerry Foods Direct, and all distribution is carried out by these two distributors.

Marketing & Promotions

Supply Chain & Distribution System

Buying Contacts

Steve Wilkinson Peter Miller Brian Johnson Paul Taylor Matthew Jenkins

Managing Director swilkinson@tmretail.co.uk Buying Director pmiller@tmretail.co.uk Facilities Manager Bjohnson@tmretail.co.uk Sales & Marketing Manager Ptaylor@tmretail.co.uk General Category Buyer mjenkins@tmretail.co.uk

Advice to new suppliers

Martin McColl recommends that a new supplier contacts Matthew Jenkins in writing at the above address. Suppliers should note that Martin McColl only seek to take on established brands.

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2nd Tier Retailer Profiles December 2011

One-Stop, Apex Road, Brownhills, Walsall, West Midlands. WS8 7TS. Tel: 0044 (0) 1543 363 000 Fax: 0044 (0) 1543 363 101 www.one-stop-stores.com
Activity Coverage Turnover Company Overview Convenience multiple owned by Tesco 598 stores 648m One Stop is a convenience store fascia inherited by Tesco from T&S Stores, a business it acquired in 2003. Although many of these stores have been converted to the Express format, over 500 were retained as a semi-independent business, with its own Head Office in Brownhills, West Midlands. Tesco continues to open One Stop stores on a selective basis where the opportunity arises. The One Stop fascia is positioned part-way between that of a confectionery, tobacco and news retailer (CTN) and a full Tesco Express. One Stop stores are similar to other multiple convenience stores, though the offer has benefited from Tesco's additional buying power and expertise. In December 2010, Tesco purchased 77 convenience stores from the Mills Group as an addition to its One Stop convenience chain in the UK. In March 2011 The Office of Fair Trading cleared Tescos acquisition of the Mills Group. Range One-Stop stocks a wide range of branded products including general groceries, chilled foods, soft drinks, snacks and confectionery, with an increased focus on chilled foods, alcohol and impulse purchases. A range of own-label products is also stocked. One-Stop is focused on providing quality combined with exceptional value for money, aiming to be Everyones favourite everyday shop. A range of promotions are run during the year, many of which are seasonal. These promotions are price focused. Store locations are spread across England and Wales. Ambient products are distributed through two depots, one located in Southampton and the other in Brownhills. Chilled products are delivered directly to stores either by suppliers or Kerry Foods Direct, and frozen products are delivered by Palmer & Harvey.

Marketing & Promotions

Supply Chain & Distribution System

Buying Contacts

Pete Gallagher Neil Bytheway Mark Ranking

Buying Director Pete.gallagher@onestop.co.uk Retail director Neil.bytheway@onestop.co.uk Senior Category Manager for Fresh, Grocery, Chilled & Frozen Produce

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Trevor Ludlow Richard Ward Advice for new suppliers Mark.ranking@onestop.co.uk Senior Category Manager Grocery Trevor.ludlow@onestop.co.uk Senior Category Manager Confectionary Richard.ward@onestop.co.uk

Suppliers wishing to approach One-Stop should contact one of the members of the trading team directly.

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2nd Tier Retailer Profiles December 2011

Booths Central Office, Longridge Road, Ribbleton, Preston, PR2 5BX. Tel: 0044 (0) 1772 693 800 Fax: 0044 (0) 1772 204 316 www.booths-supermarkets.co.uk
Activity Coverage Turnover Company Overview Regional independent chain of premium supermarkets. 28 stores across Lancashire, Cheshire, Yorkshire and Cumbria. 278.622m Booths has delivered a sales increase of 0.6% in the year ending 2 April 2011, with operating profits similar to that of the previous year. In October 2011, Booths, opened its first urban store concept at the Media City UK complex, in Salford. The two storey outlet is the retailer's first store to open since Hesketh Bank (near Southport) in November 2010. The store Booths operating for the first time in an urban location. Key features of the offer will continue to be in high quality, fresh and often locally sourced produce, with counters remaining key features of the store. This store aims to combine the best features of a food hall with the convenience of a supermarket. In addition another store opened in Penrith in November, bringing the total number of stores in the Booths estate to 28. E. H. Booths is a leading regional premium supermarket chain whose mission is To sell the best goods available in attractive stores staffed with first class assistants. At the heart of Booths success is a fresh approach to retailing that has earned the company its position as the UKs leading regional supermarket. Economic conditions remain challenging for the upmarket northern retailer but the performance is solid. In the last year Booths have been developing a value range under the label 'Booths Everyday' as well as working to enhance the entire private label range. It has also been focusing on improving the 'feel of the shop floor' and piloting a loyalty card scheme in its store in Settle, North Yorkshire. Booths is committed to building its offer around 'food with provenance'. One key part of this is sourcing products from the localities it serves. At least 25% of all of the products in Booths at any one time are locally produced. 100% of the companys fresh meat comes from the region and the company is also strong in local fresh fruit and vegetables - in season all of its strawberries, cauliflower and lettuce come from Lancashire, and 98% of its tomatoes are grown in the north. However, the issue of provenance has wider dimensions than local sourcing alone, and equally important is Booths' focus on food with personality, whatever locality it originates from. Alongside provenance Booths' other key competitive point of difference is the quality of service it seeks to provide, aiming to be the best supermarket for product knowledge and in-store customer focus in the UK supermarket sector. By

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Range retaining a more traditional approach to retailing while supporting local communities, Booths is able to offer its customers greater quality and greater choice, while reinforcing its local identity. In 2007 E.H. Booths was voted the second best food retailer in the world in a poll organized by The Grocer magazine. In early 2009 Booths entered into a buying alliance with Waitrose. The two retailers now share cost prices and deal structures on a range of branded products. In 2009 Edwin Booth has stated that he intends to grow the current Booths business by eight stores within the next 10 years, through expanding into areas where it currently has little or no presence. Booths delivered on their expansion strategy with the opening of two new stores in 2011, at Penrith, Cumbria and at Salford Quays new Media City development. This move brings the Booths offer closer to more urban consumers, and also capitalises on the awareness of Booths following their Booths Country TV advertising campaign this year. E.H. Booths carry as many as 22,000 products. Individual stores will stock a proportion of these depending on their size and demographics. E.H. Booths focus on premium and specialist products with priority categories being wine, bottled beers & ciders, tea, coffee, cheese, preserves, fruit & vegetables and biscuits. The chain also retains a significant focus on the wider elements of its range helping it to convert the secondary shoppers into more valuable primary shoppers. Their own label remains more limited than in many of their large competitors, this creates greater opportunities for branded suppliers. In November 2008 Booths launched approximately 170 SKUs across several tertiary brands, with the aim of making Booths more accessible. The range has been particularly successful in non -food where it accounts for a 7% share of total sales. Booths have also been investing on their Slow Lane (considered purchases) and fast lane (store cupboard staples) layout. In addition, Booths is currently undergoing a review of its private label offer and wishes to introduce a revamped and more coherent tiering to its private label range in 2012.

Marketing & Promotions

Owing to its scale and quality focus Booths' emphasis is not on trading with a strong price message, nevertheless it continues to develop mechanisms to underpin the value of its offer in order to ensure that it maintains a competitive position. Promotions are the key focus for the companys ongoing price activity. Booths runs a programme of 17 three week periods throughout the year with deals structured into two tiers according to location in store and the value of consumer saving rate on offer: On-shelf promotions - minimum 5% saving Gondola ends - minimum 25% saving "Don't Miss Out!" - 33% saving Booths' marketing department has the day to day responsibility for all aspects of the company's marketing activities, which comprises above

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the line communications, in-store campaigns including POS and theatre, shorter term tactical price promotions, consumer events, PR and tastings. Previously the marketing activity has predominantly focused on in-store campaigns and activity, together with brochure door drops to support and limited above the line activity. Last year however, marked the introduction of new initiatives such as increased above the line activity including the introduction of Booths first Christmas TV campaign, a redesign of the website, a new quarterly customer magazine, recipe cards and the launch of a price focused campaign to support tertiary lines into the business. Booths has recently removed the shelves from some gondola ends in each store creating space for full and half pallets. These spaces are devoted to the best case volume selling lines in each promotional period. Booths seeks to balance a mix of promotional mechanics according to the category strategy. However recent trading conditions have seen a switch away from multi-buys towards price cuts as a way of demonstrating cash savings, on the total basket spend, to customer. Value-added and price-marked packs are less preferable, though may still be used where suitable. In-store compliance continues to be driven by the Retail Operations function, which is tasked with ensuring the reliable and disciplined implementation of supplier-agreed activities across the whole portfolio.

Supply Chain & Distribution System

Booths operates its own well established central distribution function through a modern purpose-built multi-temperature depot at Bluebell Way, located near Junction 31a on the M6, just outside Preston. Since 2005, all products previously sourced via Nisachill have been delivered to store via Bluebell Way and this facility, which opened in 2003, now handles most of the goods delivered to store, including ambient, and chilled and frozen goods. Direct deliveries remain for a limited range of delicate short shelf life goods, such as milk, bread and cakes. The supply of fresh produce to Booths stores is largely in the hands of Preston-based company Sharrocks Fresh Produce, which provides both a buying agency and distribution service for approximately 50% of lines in the category. Booths own involvement in its supply chain also extends beyond distribution in some categories. For instance, the company operates its own meat cutting facility, providing dedicated supply to its own stores, operating from the same site as its DC. In addition, their specialist coffees ranges are produced by its own in-house roasting operation, while the company also packs its own private label dried fruit and nuts as well as some pasta, snacks and cereals. The Booths Buying Department now includes a stock control function to help manage availability within stores.

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Buying Contacts

David Smith Jon Gill Sally Holloway Peter Newton Leigh Anne Carr

Grocery Licensed Buyer dsmith@booths-supermarkets.co.uk Grocery Buyer jgill@booths-supermarkets.co.uk Wine Buyer sholloway@booths-supermarkets.co.uk Spirits/Kiosk Buyer pnewton@booths-supermarkets.co.uk Bakery Buyer lcarr@booths-supermarkets.co.uk Fruit & Specialties Buyer ctreble@booths-supermarkets.co.uk Vegetable & Salads Buyer gjordan@booths-supermarkets.co.uk Floristry & Prepared Fruit/Salad/Vegetable Buyer hwareing@booths-supermarkets.co.uk Chilled Savoury Buyer pgoodwin@booths-supermarkets.co.uk Chilled Dairy & Frozen Buyer akirby@booths-supermarkets.co.uk Raw Buyer ncokell@booths-supermarkets.co.uk Ambient & Own Label Buyer pread@booths-supermarkets.co.uk Buying Administrator dcassidy@booths-supermarkets.co.uk

Chris Treble Gail Jordan Hannah Wareing Phil Goodwin Alan Kirby Nigel Cokell Peter Read Dawn Cassidy

Advice to new suppliers

Some key elements of fresh food fall under the role of the Fresh Food Director, Simon Booth. Simon also has responsibility for the in-house processing operations, such as the meat cutting facility for which there is dedicated buying resource. The Booths buyers have sole responsibility for sourcing the bulk of its ranges and have particular expertise in the unique and premium products for which the company is so well known. E.H. Booths aim for suppliers to understand 1. that E.H. Booths is a growing multiple supermarket and has different requirements to the convenience/multiple sector 2. that E.H. Booths target demographic is towards more affluent and senior groups, suppliers need premium products and a unique consumer proposition to meet these needs 3. that new product innovation is and will remain important to the development of the E.H. Booths offer. New suppliers should approach E.H. Booths in writing via their Buying Administrator, Dawn Cassidy at the above address.

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2nd Tier Retailer Profiles December 2011

Aldi Stores Ltd, Holly Lane, Atherstone, CV9 2SQ Tel: 0044 (0) 1827 711800 Fax: 0044 (0) 1827 710866 www.aldi.co.uk
Activity Coverage Turnover Company Overview Discount retailer. 528 outlets in the UK. 2.14bn Aldi is a German-based discount retailer with operations in 12 countries worldwide. Aldi is the world's largest discount store operator and has two discount divisions which are operationally separate, Aldi Nord and Aldi Sud. It also operates the supermarket format Trader Joe's in the USA. Aldi entered the UK market in 1990. In recent years Aldi has focused on repositioning themselves as a more quality retailer through their products, advertising and store locations allowing them to differentiate themselves from their competitors in the discount sector. Aldi has increased the choice available in store, in order to encourage customers to make Aldi their primary shopping destination. In 2011 Aldi experienced high levels of growth with its market share increasing to 3.5%. Key to the sales growth has been the attraction of more ABC1 customers, which Aldi now claims to make up almost 50% of its UK customer base. Range Aldi carries a limited product range of between 600 and 1000 lines and this consists almost entirely of exclusive own label products (98%), of which only one variety and size is usually stocked. Aldi are risk averse and strongly seek only products that have a proven track record in multiple retail in the UK. Aldi private label items tend not to carry the Aldi logo and are therefore described as 'exclusive', rather than 'private' labels. Aldis main focus is on ambient products but fresh food ranges are being increased particularly on the back of success with products like speciality cheeses, fresh juices and premium yoghurts. Aldis Specially Selected private label range was introduced to compete directly with the premium private label ranges of the leading multiples, including Tesco Finest and Sainsbury's Taste the Difference. In 2011 Aldi launched its first permanent range of Fairtrade products in the UK under its own label, offering organic bananas, coffee, tea and a

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dark and a milk Belgian chocolate. The group priced the products at a premium compared to other Aldi lines, but at less than Fairtrade equivalents sold at competing supermarkets. Marketing & Promotions As a result of increased price competition, Aldi has focused on changing customers' perceptions. It aims to portray high quality products with affordable prices through national and in store advertising in a bid to compete on product range and increase footfall in store. Aldi's promotional activities are based around bi-weekly leaflets and adverts in the local press, which feature key non-food and selected food promotions. In November 2011 PR agency McMann Manchester won the top prize in the hotly contested TV and Cinema Campaign category at the Grocer Magazines Advertising, Marketing and PR Awards for its highly successful Aldi Like Brands campaign. Communication of low prices is one of Aldi's most important promotional features in-store. Aldi uses in-stores banners to highlight prices of specific products or price reductions. Aldi also uses television advertising in the UK. In all advertising emphasis is placed on highlighting aspirational products such as olive oil, smoked salmon and wine in an attempt to portray a more upmarket image and attract more affluent customers. Supply Chain & Distribution System Aldis supply chain is characterised by the following: a) The capability to handle large volumes. b) A highly reliable and consistent delivery structure. c) A very low cost base across the supply chain. d) Commitment to Retail Ready Packaging. e) The use of EuroPallets. f) Tight delivery windows. Virtually all suppliers deliver into Aldis central warehouses for crossdocking to stores. There are very few deliveries made direct to stores. Aldis operations are managed through six regional divisions across the UK at Atherstone, Chelmsford, Darlington, Middleton, Swindon and Bathgate. Purchasing is centralised at the Atherstone office, although more recently efforts have been made to devolve some responsibility to the regional offices to allow for more localised ranging decisions. New items must achieve pre-determined high sales volume targets in order to maintain listings or achieve additional distribution.

Buying Contacts

Anthony Baines Paul Stainton Sarah Butler

Managing Director Buying Anthony.baines@aldi.co.uk Group Buying Director Paul.stainton@aldi.co.uk Buying Director Meat Sarah.butler@aldi.co.uk Buying Director Spirits Julia.ashfield@aldi.co.uk Buying Director Frozen & Cereals Danny.gibson@aldi.co.uk

Julia Ashfield Danny Gibson

Advice to new suppliers

Aldi is increasingly interested in sourcing product in mixed cases or half pallets in order to enhance its store offer. Suppliers that can

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provide this along with retail ready packaging and that have the facility to automate product packaging in the manufacturing plant are therefore at an advantage. Proven success in the UK retail market is a key strength when approaching buyers. Aldi frequently use an online tender notice when sourcing new products. Aldi are not interested in branded items, apart from some short term promotional opportunities and seek to work with suppliers who have similar low cost operations to their own. It is common Aldi practice to use two suppliers for the same own label brand in order to reduce dependency and identify savings. All supplier contracts are annual and are reviewed in the autumn.

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2nd Tier Retailer Profiles December 2011

Lidl UK, 19 Worple Road, London. SW19 4JS Tel: 0044 (0) 208 971 1100 Fax: 0044 (0) 208 971 1139 www.lidl.co.uk
Activity Coverage Turnover Company Overview Discount retailer 610 stores in the UK 1,936m (UK) Lidl is part of the German retailer Lidl & Schwartz Gruppe which operates in 21 European countries. Lidl entered the UK in 1994; after Aldi and Netto. UK operations are 100% discount format. The chain is currently widening its appeal to attract middle class shoppers in search of a bargain as well as the traditional low-income customers. Lidl has been finding new store sites difficult to secure, due to increased demand for retail space among the main UK grocery retailers, as it seeks to develop operations in southern England. As a result, it is becoming more flexible in its site selection and is increasing the size of existing store units in addition to building new stores. In addition Lidl has announced plans to grow its store network by between 8% and 15% a year for the next 15 years. Lidl is classed as a hard discounter with a focus on essential product lines, and an aim to provide quality products at the lowest possible price. Their product range consists mainly of dry grocery with limited fresh, frozen and chilled items and most of the product ranges are produced under exclusive own labels. Lidls store environment is basic and functional and all processes aim to ensure that costs remain at the lowest possible level; this is reflected in store fit out, staffing levels, merchandising practices and the level of technology used in store. The underlying philosophy is to provide simplicity to its customers by offering top quality products at low prices. In 2011 Lidl experienced high levels of growth. Over the course of the year the retailer grew its market share by 10.5% to 2.5% of the total UK grocery market. The gap between inflation and growth has become a major feature of the grocery market as shoppers trade down to cheaper products and retailers strive to convince consumers they are combating inflation. As a result, those retailers with a value message are the driving force in the market. Range Approximately 85% of Lidls products are private or exclusive labels, the remaining 15% of the range are branded goods. The range in each store varies according to store size but is on

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average 1,400 SKUs. In smaller stores, rather than reduce the amount of space per article, the range is reduced so that product volumes can still be handled and stocked in pallets. Yet while Lidl is well-known for its discount model, it has also made moves to develop other areas of its offer. Branded products play a larger role in the Lidl product range than at Aldi, while the retailer has also begun to source more local and UK produce, especially within meat and poultry. This has been supported in store through advertising and customer communication, combining the Lidl value message with one of values. Lidl makes prominent use of the Red Tractor logo on its meat offering to highlight British origin to customers in-store. Marketing & Promotions The principal marketing tools used by Lidl are flyers and local press advertising. The promotional flyers tend to feature limited availability, non-food products, rather than grocery lines and the number of promotions per week can vary according to the operating market. Promotions change twice weekly, in the UK on Thursdays and Mondays, although these may all be advertised on the same flyer or distributed together. Lidls promotional activity is clearly oriented towards non-food, although particular regional divisions may hold specific grocery promotions, which offer substantial discounts (up to 40%) on private label lines and are available for a six to ten week period. In the UK, Lidl is increasingly using the internet to market its weekly promotional programmes, with details of both current and future key non-food promotions listed on its website. In addition, users can sign up for a weekly e-mail newsletter detailing the key promotions. Supply Chain & Distribution System Lidl serves its UK stores from the following distribution centres: Livingston, Belvedere, Bridgend, Weston Super Mare, Enfield, Lutterworth, Runcorn, Newton Aycliffe and Crumlin Co. Antrim.

Buying Contacts Marcel Oosterwijk Euan Leask Scott Davey Philip Bencini Bjorn Nierhaus Ian Young Tim Walsh Advice to new suppliers Managing Director Purchasing Director Buying Director Food Assortment Buying Manager Purchasing Manager Purchasing Manager Meat Buying Manager

Lidl buyers can only be contacted by either post or fax (contact details at top of profile).

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2nd Tier Retailer Profiles December 2011

7 Greens Road, Blairlinn, Cumbernauld, North Lanarkshire, Scotland G67 2TU Tel: 0044 (0) 1236 456 789 Fax: 0044 (0) 1236 724 427

www.farmfoods.co.uk
Activity Coverage Frozen food discounter Over 300 stores mainly in Scotland and the north of England. The majority of stores are between 6,000 sq ft and 9,000 ft and are located in local district centres. 557.9mn Farmfoods originated in Aberdeen in 1955. Eric Herd, 53, and his brother Gordon, 51, inherited the chain from their father and have built it from 31 stores in 1988 to more than 300 shops throughout Great Britain. Farmfoods is the UK's second-biggest frozen food specialist after Iceland. The Cumbernauld-based group, which employs almost 3,000 staff at stores across the UK, said overall turnover rose to 557.9mn million in the 12 months to 31 December 2010, from 484.007 in 2009. After-tax profits jumped from 8.971mn to 11.765mn. With profits up last year by 24%, the group is thought to be worth well over 130m. Eric Herd has grown the Cumbernauld business by two-thirds in the last two years alone, while increasing profits, newly-published accounts show. Farmfoods has 170 specialist freezer centres throughout Britain and Scotland. Each one is supplied daily from the Blairlinn Distribution Complex, which has developed from a single factory unit into a facility spreading over six acres, with over 100,000 sq ft of specialist cold storage and dry warehousing space. Farmfoods has pushed south in the past decade and now has stores in Portsmouth, Southampton and Plymouth. Range Over the past number of years, Farmfoods has changed its range proposition moving from a business which traded in mainly private-label to one where over 90% of the customer offer is now branded. Whilst the majority of the offer is frozen, it also offers a substantial branded offer across the majority of grocery categories as well as a limited chilled offer. Approximately 80% of in-store space is dedicated to frozen food, with grocery products stocked on shelves above low-level freezer units. A chilled offer is available in many stores through branded units from suppliers, although this is currently restricted to cooked meats and milk. National brands represent approximately 70% of the available range, with the remainder made up by tertiary brands and private label, which extends to soft drinks and the majority of frozen categories including vegetables, desserts, pizzas and potato products.

Turnover Company Overview

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2nd Tier Retailer Profiles December 2011


Farmfoods stocks seasonal lines during key trading periods such as Easter and Christmas, across both grocery and frozen ranges. A large proportion of space is devoted to soft drinks and in particular Farmfoods' private label ranges. Bulk stacks are also used throughout the store to display soft drinks and other bulk items such as kitchen roll. Marketing & Promotions Farmfoods uses a weekly flyer to highlight its key offers, which is distributed on a local basis within some newspapers. Supplier branded POS is also used heavily in-store, and includes hanging pictorial POS and freezer unit POS. The retailer also runs television advertisements and more recently has joined up with actor Ricky Tomlinson to front its ads. Farmfoods has overhauled its in-store environment in an attempt to attract a more affluent customer base, revamping its marketing boards and shop signage. Farmfoods changed its fascia and logo from blue to black featuring images of country-sides in a bid to change consumer perceptions about its stores. The group has also added two new straplines to its marketing material: 'Freezing in the Goodness' and 'Great Food at Amazing Prices'.

Supply Chain & Distribution System Buying Contacts

Farmfoods originally started off as a distributor/wholesaler and therefore has a long established distribution network to its stores.

Eric FG Herd Bob Davis Lynsey Green Becky Cooper Advice for new suppliers

Managing Director and Board Director eherd@farmfoods.co.uk Buyer Manager Frozen Meat, Ready Meals bdavies@farmfoods.co.uk Grocery Buyer lgreen@farmfoods.co.uk Frozen Buyer rcooper@farmfoods.co.uk

Potential suppliers are recommended to contact the relevant buyer directly by email or the buying department at 0121 700 7160.

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2nd Tier Retailer Profiles December 2011

Wellmans Road, Willenhall, West Midlands. WV13 2QT Tel: 0044 (0) 121 568 7000 Fax: 0044 (0) 121 568 7007 www.poundland.co.uk
Activity Coverage Turnover Company Overview Discounter 387 750.72mn Poundland was established in April 1990, with funds provided by the multi-million pound sale of an international wholesaling business and its first store was opened in Burton-on-Trent in December that year. Poundland is a UK food and non-food fixed price retailer that operates with a single 1 price point. A standard high street Poundland store offers around 3,000 products. It typically carries the following categories: food and drink, household, stationery, health & beauty, baby, celebrations, pet, batteries, toys, DIY, gardening, homewares, entertainment, clothing and seasonal events. While the retailer ensures a constant coverage of its core categories in-store, there is flexibility in many of the products themselves, with a constant focus on delivering newness and excitement in-store. Poundland is the largest single price discount retailer in Europe. In 2002 it was purchased by US private equity firm Advent International and in May 2010 it was sold to private equity firm Warburg Pincus. Company mission statement: "At Poundland we deliver amazing value to our customers every day. We will be famous for our wide range of great products and top brands, offering many exciting new lines every week. Poundland will always be fun and friendly with something for everyone." Poundland has a heritage of trading in less affluent areas, and historically its customer base has had a bias towards DE demographics; its single low price point has had much appeal to those on limited budgets. However, the retailer has spoken of the increasing numbers of AB consumers that have started to incorporate Poundland into their weekly shop. Poundland stores are located on a variety of different calibre high streets across a wide variety of catchments, with different store sizes. Many, and in particular older, stores are located on secondary high street locations throughout the country. More recently however there has been a preference for more primary high street locations along with shopping centres and retail parks. Therefore, it has stores in prosperous as well as less affluent areas and shoppers that stretch across much of the socio-demographic spectrum.

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In October 2009, Poundland opened its first store in Northern Ireland, and expansion has continued, with the retailer operating 20 stores by 2011. This region provides a strong opportunity for the retailer, and it is expected to continue with a programme of openings. On Tuesday 4 May 2010, it was announced that Poundland had been sold to US private equity firm Warburg Pincus for 200 million. On 2nd August 2011, Poundland announced that it is going to expand into Europe, under the name DALZ. The first 6 new stores have opened in Republic of Ireland, creating 120 jobs. A store in the Isle of Man opened in December 2011. Over the course of 2011 Poundland opened 50 new stores, they plan to open a further 51 stores in 2012. Poundland plans to have 500 stores in its portfolio by the end of 2013. Range Poundlands proposition covers 3,000 lines across both food and nonfood, and indeed the retailer's food offer is growing at a rapid pace. Poundland categorises its total offer as follows: food and drink, household, stationery, health & beauty, baby, celebrations, pet, batteries, toys, DIY, gardening, homewares, entertainment, clothing and seasonal events. Whilst the majority of the retailer's SKUs are in non-food lines, food is the most significant single sales category for the retailer, accounting for c.28% of total sales. Though Poundland has a core range of permanent lines, there is much flexibility in the product range. These core items are key products that can be seen across categories. Brands play a key part in Poundland's operations, with 1,000 'top brand' products. Chief Executive Jim McCarthy has stated that brands have a halo effect across the store, and serve to give consumers confidence in the private label products. While Poundland offers some products that can be found elsewhere, it also offers unique items with limited availability. Additionally, the retailer is keen to work with suppliers to offer specially developed pack sizes to fit the single price point and will also accept end-of-line items. Poundland aims to develop its retail offer through the addition of new lines, and often carries products that suppliers are trialling in its stores. Under its food offering Poundland carries a wide range of products covering confectionery, snacking, soft cold and hot drinks along with a wide range of everyday essential products and one-off promotional offers throughout the stores. The range is split into core grocery and impulse products including snacks, crisps and drinks. Brands carried include Walkers, Cadbury's, Nestl, Tetley, Weightwatchers, and many more. The range has recently been extended with the trial of sandwiches and other chilled food-to-go items, with the intention of rolling these out where appropriate across the estate. The majority of stores now feature chiller cabinets selling a variety of products including 2 litre bottles of milk, chilled spreads, bacon and cheese. Marketing & Promotions Promotions are a feature in the food category, including a meal deal offer for a sandwich and two products from the '3 for 1' range.

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Supply Chain & Distribution System Buying Contacts Poundland operates a highly efficient centralised distribution centre from its West Midlands hub and has a lean operating culture running through the business. Jim McCarty David Coxon Chris Wall Chief Executive Jim.mccarthy@poundland.co.uk Trading Director David.coxon@poundland.co.uk Trading Controller for Food, Drink, Health & Beauty, Household, Baby, Batteries and Pet Chris.wall@poundland.co.uk Senior Buyer FMCG, Food & Drink Jo.wrate@poundland.co.uk

Jo Wrate

Advice for new suppliers

Suppliers should contact Jo Wrate at the above email address.

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2nd Tier Retailer Profiles December 2011

Samuel Ryder House, Townsend Drive, Attleborough Fields, Nuneaton, Warwickshire CV11 6XW Tel: 0044 (0) 247 621 5400 Fax: 0044 (0) 28 9034 2484 www.hollandandbarrett.com
Activity Coverage Turnover Company Overview Health food and snacks In excess of 600 stores exist under the Holland and Barrett fascia. 275.5m Holland and Barrett is the UK's leading retailer of vitamins, minerals and herbal supplements. Holland and Barrett was established by Samuel Ryder in 1920. Natures Bounty, Inc, now called NBTY, Inc, acquired Holland & Barrett in 1997. Before they were bought out by The Carlyle Group, NBTY owned many well known brands including: Solgar, Natures Bounty and Ester-C. In 2003 Holland and Barrett bought the UK chain of stores, General Nutrition Centers (GNC), which they still own, adding 43 stores to its portfolio. In September 2008 Holland & Barrett bought rival 'Julian Graves' health food stores from Icelandic retail investor Baugur. The acquisition of Julian Graves added a store network of more than 345 outlets nationwide specialising in natural food and health products. January 2010 saw Holland and Barrett become the first major retailer to ban plastic bags as part of a drive to cut down waste. In 2010 the group also branched out into fresh fruit. In July 2010 NBTY, the US-based manufacturer and marketer of nutritional supplements and owner of Holland & Barrett, Julian Graves and GNC in the UK confirmed that it was to be sold to global investment firm Carlyle Group for US$3.8bn. In December 2010 Holland & Barrett announced that it was planning to expand its international franchise portfolio further in the coming months after adding Cyprus to the list of countries it operates in. The health products retailer expansion to the Mediterranean island has been achieved through a partnership with C.A. Papaellinas Group, which currently runs the AlphaMega Hypermarkets and Beauty Line retail stores. In 2011 operating profit at the Holland & Barrett rose from 41m to 47.5m during the 12 months to September. Profit after tax increased from 32.1m to 34.5m.

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2nd Tier Retailer Profiles December 2011


In April 2011 Holland & Barrett launched a customer loyalty scheme. The Rewards for Life scheme was piloted across 40 stores in the Midlands, Yorkshire and Lancashire with the aim of retaining existing customers as well as encouraging new shoppers to its stores. Customers can sign up to the pilot scheme for free and for every 1 spent in store, online or via direct mail they are given four reward points. The points are then turned into coupons which customers can use to buy products of their choice in store. Holland and Barrett sell a range of own brand vitamin and mineral supplements made internally by the company itself. Although they mainly sell vitamins, minerals and food supplements, they also stock health bars, smoothies, chilled snacks, herbal teas and toiletries. Holland & Barrett is well known for its buy one, get one half price sales, although they are currently looking to move towards an everyday low price strategy. They also produce their own magazine, Healthy, to support brands, highlight promotional campaigns and communicate the benefits of the companys various products. The retailer recently launched a 7m add campaign featuring the fictional characters Mr. Holland and Mr. Barrett with one representing the chains value credentials and the other its advice credentials.

Range

Marketing & Promotions

Supply Chain & Distribution System Holland and Barrett currently operates out of three distribution centres in the UK. Two centres, located at Atherstone and Burton-on-Trent, operate with the ability to deliver ambient chilled and frozen products regularly to stores.

Buying Contacts

Peter Aldis Michelle Ingleby Advice for new suppliers Mr Martin Moran Douglas Thomas

Chief Executive Officer Peteraldis@hollandandbarrett.com Category Buyer for Food michelleingleby@hollandandbarrett.com Operations Director Martinmoran@hollandandbarrett.com Soft Drinks Buyer (covers Energy Drinks) douglasthomas@hollandandbarrett.com

Holland and Barrett use a preferred supplier technique which recognises in particular suppliers who adapt an ethical policy when sourcing raw materials. Potential suppliers are recommended to contact either the distribution centres mentioned above or by contacting the relevant buyer directly by email.

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