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mc 3 : Formula for Retail Growth MIX Conference May 2006

mc 3 : Formula for Retail Growth MIX Conference May 2006. Contact: Mr. Love Goel, Chairman & CEO  415.637.3637  lgoel@growthventuresgroup.com 13033 Ridgedale Drive, Suite 126, Minnetonka, MN 55305  www.growthventuresgroup.com. Can You Solve This Puzzle?. $50. $169. $119.

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mc 3 : Formula for Retail Growth MIX Conference May 2006

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  1. mc3: Formula for Retail Growth MIX Conference May 2006 Contact: Mr. Love Goel, Chairman & CEO  415.637.3637  lgoel@growthventuresgroup.com 13033 Ridgedale Drive, Suite 126, Minnetonka, MN 55305 www.growthventuresgroup.com

  2. Can You Solve This Puzzle? $50 $169 $119

  3. Shopping – Winning the Prize?

  4. “Albertson’s, $40 billion No.2 grocer, sells business to avoid bankruptcy” “Netflix crushes Blockbuster in ’05; takes over Wal-Mart’s business” “Sports Authority, nation’s leading sports retailer, sold to Leonard Green” “Musicland, largest chain in 90’s for music, movies and games, bankrupt” “1,000s of stores to be shuttered in ‘06 by OfficeMax, Toys”R”Us, Mervyn’s” Source: mc3 White Paper, Love Goel (Various newspaper Jan. 1-31, 2006) January 2006: Typical Month in Retail? Typical Week in Retail?: Nov. 12-19 2004 “Online Travel Sales rise to $54 billion, 25% of total travel market share.” “Blockbuster makes $1 billion offer for its rival.” “ Firms launch wave of new spending to restore aging brands.” “Sears and Kmart agree to merge to create third largest retailer.” Source: Surviving Wal-Mart White Paper, Love Goel (Financial Times, New York Times Nov. 12 - 19, 2004) Retail Headlines: Something’s Wrong?

  5. Retail Landscape • Operating Experience • Investor • Executive • Consultant/Analyst • 250+ Top Retail CEO’s, Investors and Analysts 3 Year Retail Study

  6. Retail Sell-Outs, Bankruptcies: $250 Billion

  7. HUGE OPPORTUNITY • Changing consumer behavior • Changing consumer expectations • Changing retail landscape The New World of Retail • Retailers resistant to change • Margin, market share erosion • Product commoditization • Brand substitution

  8. Industry Trends Retailer Symptoms • Declining top-line growth • Shrinking profits • Eroding customer loyalty • Rising turnover (low employee morale) • Price pressure from large scale players • Market share pressure from innovators • Product com- moditization • Brand substitution Retail Malaise

  9. Shut down or sold underperforming and non-core stores, catalogs • Drove efficiency through supply chain, technology and operations • Improved merchandise mix and productivity e.g. private label • Freshened up brand • Optimized advertising, circulation and sales promotion • Up sold credit cards and warranties • Re-vamped in-store customer experience • Enhanced customer service, cancels/returns handling • Benchmarked and reduced operating costs; cleaned up balance sheet Retailers – Out of Options!

  10. Key Macro Trends Formula Variables • Changing consumer behavior • Multi-channel commerce • Globalization • Social networking Revisit Retail Formula • Price • Personalization • Service and convenience • Product selection (breadth, uniqueness)

  11. mc3: Multi-Channel, Customer Centric

  12. #1 or #2 in online and direct sales in category? • > 25% of total revenues from direct and internet channel? • Reduced core operating costs >20% because of multi-channel initiatives? • Spend >25% of customer acquisition budget online? • Expand globally via direct and internet channel inexpensively? • Grow revenue and profits with significantly fewer physical stores/catalogs? mc3 Test: Multi-Channel?

  13. Can customers customize and bundle products and solutions based on personal preferences, lifestyle and life-stage needs? • Accept PayPal as a form of payment? Accept PayByTouch? • Have email addresses of >50% of your customers? Opt-in? • Can customers ask each other for help on how to use products and services? • Can customers order, pick up products, check inventory or order status interchangeably across channels? • Can customers rate products and services? Is that rating visible to all other customers? mc3 Test: Customer Centric?

  14. mc3 Metrics

  15. Multi-Channel Commerce 2-3X EBITDA Growth in 3-4 years 2-3X Internet Revenues in 12 months Marketing and Advertising Expense Inventory Hide-and-Seek Globalization Social Networking Customer Profiling Name Dropping mc3: Formula for Retail Growth

  16. mc3: Formula for Retail Growth MIX Conference May 2006 Contact: Mr. Love Goel, Chairman & CEO  415.637.3637  lgoel@growthventuresgroup.com 13033 Ridgedale Drive, Suite 126, Minnetonka, MN 55305 www.growthventuresgroup.com

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