1. Retail Recession Realities Coping in a Challenging Retail Environment March 11, 2009 Ken Cassar Vice President, Industry Insights [email_address]

4. Declining Consumer Confidence: Current expectations at record lows – February plummets Source: The Conference Board – Nine census regions, 5,000 US households 80 2001 2002 2003 2004 2005 2006 2007 2008 Recession 9/11 Corp Scandals War Gas Prices Decline 20 40 60 100 120 140 Apr-01 Jul-01 Oct-01 Jan-02 Apr-02 Jul-02 Oct-02 Jan-03 Apr-03 Jul-03 Oct-03 Jan-04 Apr-04 Jul-04 Oct-04 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Housing Energy Credit Economy War Rebound Huge Job Gains Katrina Spike in Gas Prices

5. Retailers in Discretionary Categories were Pounded in January Source; Jan ‘09 results (excl fuel) for all but Kroger, Safeway, SuperValu, Dollar General, Family Dollar, Dollar Tree, CVS, Whole Food, Home Depot – latest report Targe t Nordstrom JCPenney Home Depot Kohls Stock Up & Save Discretionary Spending Value & Convenience Same Store Sales Growth SuperValu Macys Whole Foods

6. The Discretionary Nature of Online Categories Led to a Plateau of Sales as the Recession Hit Source: U.S. Census Bureau. Excludes services, such as travel, ticketing, financial services Dollars (Millions)

7. Holiday 2008 Traffic was much more volatile than in years past – particular weakness during period historically the strongest Source: Nielsen Online NetView. Daily UVs indexed to the Monday before Thanksgiving through December 27, 2005-2008 Black Friday Cyber Monday Weekend Weekend Weekend Christmas Indexed Daily Unique Visitors Peak sales period historically

10. There is Significant Value in Looking at How Your Competitors are Attracting Customers to their Sites Source: Nielsen Online Referral Effectiveness Analysis, May 2008 Source of Visits 65% 1% 13% 21% Source of Transactions (session) Source of Transactions (week) 71% 1% 11% 15% 81% 2% 19% 0% 20% 40% 60% 80% 25% 0% 50% 100%

11. The Averages Do Not Tell the Whole Story Direct-to-site visits as percentage of total visits Source: Nielsen Online Referral Effectiveness Analysis. May 2008 Individual Retailer Observations Total Retail Universe = 65% QVC – 82% Nieman Marcus – 20% Direct-to-Site Visits as Percentage of all Visits

12. The Averages Do Not Tell the Whole Story Search visits as percentage of total visits Source: Nielsen Online Referral Effectiveness Analysis, May 2008 Search Driven Visits as Percentage of all Visits Total Retail Universe = 13% Dick’s Sporting Goods – 45% Shutterfly – 4% Individual Retailer Observations Sports Authority – 38%

13. Even Two Large Retailers with Comparable Product Mixes Drive their Businesses Differently Source: Nielsen Online Referral Effectiveness Analysis, May 2008 64% 1% 15% 20% 47% 2% 25% 25% Direct-to-site Adv & Partners Comparison Search

15. Newspaper circulation has been on the decline for the past two decades Source: Newspaper Association of America

16. While the national newspapers have held up comparatively well, regional newspapers have struggled Source: eMarketer, January 2009

17. As Newspaper Circulation Declines – Visitation to Online Coupon Sites has Grown Source: Nielsen Online NetView. US only. Nov 2007 to Dec 2009. Home & Work Combined.

18. Traffic to Circulars Has Been Growing Department and big box stores see large increases near the holidays Source: Nielsen Online NetView, US only. Nov 2007 to Dec 2009. Home & Work Combined. Discount DS Department Stores Electronic Stores Drugstores Grocery Stores 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 Nov-07 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Unique Audience (000) Nov 07-Nov 08 Circular Traffic 26%

19. Newspaper Circulars are Read 27 Times More Often than Online Circulars Source: Newspaper Association of America; Nielsen NetView October 2008

21. Opportunities Abound for Retailers to More Effectively Use Search to Drive Circular Traffic Staples has not purchased sponsored link ads and has been crowded out of staples searches

22. Best Buy has not purchased sponsored links for the term ‘best buy circular’ Opportunities Abound for Retailers to More Effectively Use Search to Drive Circular Traffic

23. Walgreens buys sponsored links promoting store coupons and circulars Opportunities Abound for Retailers to More Effectively Use Search to Drive Circular Traffic

24. Stop and Shop is a rare example of a retailer that links directly to its weekly circular in searches that do not include the word ‘circular’ Opportunities Abound for Retailers to More Effectively Use Search to Drive Circular Traffic

25. Some Retailers are Decomposing their Weekly Circulars and Disseminating Through Search Target bought a sponsored link on Yahoo! referring prospective shoppers to its weekly circular, where the item is on sale

26. However, Retailers are not Pushing Items in Their Weekly Circulars into Search Macy’s has not bought Lancome keywords despite the fact that it is promoting a Lancome gift with purchase in its circular

27. Display Advertising is a Closer Proxy for Newspaper Circulation than Web Site Visitation However, the reach pales by comparison to print Key Statistics: 2008 Impressions: 47m Rank: 2 Key Statistics: 2008 Impressions: 101m Rank: 5 Key Statistics: 2008 Impressions: 30m Rank: 3 Source: Nielsen Online AdRelevance Jan 2008 – Dec 2008

29. Display Advertising Currently Accounts for 20 Percent of Online Advertising Source: eMarketer, Nov. 2008 & IAB-PWC

30. The Most Commonly Used Search Terms Reflect Clear Consumer Propensity to Sites mapquest hotmail aol myspace.com amazon aol.com target msn best buy bank of america you tube myspace youtube ebay facebook yahoo google craigslist yahoo mail walmart gmail yahoo.com white pages pogo google.com weather youtube.com hotmail.com gmail.com facebook.com amazon.com porn sears free porn espn redtube msn.com youporn facebook login my space toys r us sex webkinz red tube

31. Investing During a Recession Helps You Emerge in a Stronger Position Source: McGraw-Hill Research Companies that maintained sales and marketing spend during the early 1980’s recession experienced substantially higher growth in the five years following the recession Revenue growth in 5 years following recession

33. Analysis Timeline Analysis/Campaign Start Campaign End Analysis End Purchase History (Matching Period) Campaign Period Extended Purchase Cycle 7/16/06 7/15/07 7/16/07 10/28/07 10/29/07 11/3/07 Test Period

35. Incremental Sales Generated by the Campaign Came Largely at the Expense of Retailer B Test Period vs. Prior Year Period (Jul 07 – Oct 07 vs. Jul 06 – Oct 06) Difference in share exposed vs. unexposed Source: Yahoo! Consumer Direct. Jul – Nov 2007

36. Percent of Panel Reached 5% 1 Total Yahoo! Households x 68,286,182 2 Estimated Campaign Reach 3,322,191 hhlds Per Household Incremental $ $2.22 3 Total Incremental Sales from campaign $7,377,986 1 Percent of Panel Reached = Total Exposed Households ÷ Total Yahoo!/ACNielsen matched Panel 2 Total Yahoo! Households = Total Projected US households x Yahoo! Estimated Reach 3 Per Exposed Household Incremental $ = Total incremental $ ÷ Total Exposed Households How many were exposed X II Times how much each was worth (incremental) Equals total incremental sales Retailer X - “Short-Term” Incremental Dollar Sales July 16, 2007 – November 3, 2007 Source: Yahoo! Consumer Direct. Jul – Nov 2007

38. Causal or Not, Multi-Channel Shoppers are the Most Valuable Source: Nielsen Online, Homescan Online * Total dollars spent per year in the brick and mortar store Total Spend Index* 100 100 100 100 100 112 115 113 104 97 138 137 161 161 157 0 100 200 Wal*Mart Sam's Costco Walgreen's CVS Average of Multi- Channel Shoppers Average of Online Shoppers Average of ALL offline shoppers

39. Even Among In-Store Buyers, the Internet is Considered the Most Valuable Source of Information Source: Nielsen Online MegaPanel survey. May 2008. n=659 All CE buyers Store buyers only Consumer Electronics The Internet Visits to local stores Reviews in newspapers/magazines Friends and family Other 8% 8% 25% 58% 0% 11% 8% 32% 49% 1% 0% 25% 50% 75% 100% Question: If you were only able to use one source of information to support your next CE purchase, which would you choose? Among those that indicated that they had made a CE purchase within the past 60 days

40. Bottom Line Supporting Research Online is Table Stakes for Brick-and-Mortar Retailers Thinking about your most recent consumer electronics purchase…. Source: Nielsen Online MegaPanel survey. May 2008. n=659 Question: Did you buy from the local store of the retailer where you had spent the MOST TIME doing online research? No 47% Yes 53% No 20% Yes 80% Question: Did you buy from a local store whose Web site you had visited as you were doing online research?