Borders Group Merchandising & DistributionKey PointsSlide 3Career PathsMerchandising MissionMerchandising StrategiesSlide 7Slide 8Title Inventory AverageSlide 10Slide 11InventoryAverage Book Titles Reviewed vs. PurchasedAverage Multimedia Titles Reviewed vs. PurchasedAverage G&S and other Titles Reviewed vs. PurchasedDistribution & LogisticsDistribution / Logistics MissionDistribution / Logistics StrategySlide 19Slide 20Slide 21Slide 22Consumer Measures (Building The Plan)Consumer MeasuresSources of Consumer DataSources (continued)Gap AnalysisBookscan DataBookscan Data (continued)Slide 30Slide 31Slide 32Slide 33Slide 34Slide 35Growth CategoriesGrowth Categories (continued)Internal & External Brand ComparisonsMarketing to Drive SalesSlide 40Slide 41Slide 42Slide 43Slide 44Slide 45Slide 46Slide 47Slide 48Slide 49Slide 50Slide 51Slide 52Slide 53Slide 54Slide 55Slide 56Slide 57Marketing to Drive FootstepsSlide 59Slide 60Executing The PlanTrend AnalysisMerchant Role & ResponsiblityCategory ScorecardSlide 65Slide 66Borders Group Merchandising & DistributionPhil OllilaVice PresidentMerchandisingKey PointsOrganizational structureCareer opportunitiesMerchandising Mission/StrategiesInventory ManagementDistribution & LogisticsConsumer MeasuresSubject/Category AnalysisMarketing Sales StrategiesPlan ExecutionQuestionsPhil OllilaVP of MerchandisingJudy FoxWaldenbooks Director ofMerchandisingBob KuehneDivisonialMerchandise ManagerJay HydeAssociate DirectorJoe HoltzmanAssociate DirectorMike SgricciaAssociate DirectorRegan McBurneyManager ofBusiness StaffTom DwyerBorders Director ofMerchandisingGeorge TattersfieldDivisional MerchandiseManagerLeah BrookDivisional MerchandiseManagerMatthew GildeaAssociate DirectorNancy WermerAssociate DirectorSusan YeagerDivisional MerchandiseManagerBUYERSAssistant BuyersAsst. ManagersVendor LiasionsCareer PathsVendor LiaisonBuyerDivisional Merchandise ManagerMarketing CoordinatorAssistant BuyerMarketing SpecialistVice PresidentDirectorMerchandising MissionTo provide Books, Music, Video and supporting items to the Borders Books and Music and Waldenbooks chains. Merchants will source and distribute the right product to the right place, at the right time, and in the right quantity, to satisfy the customer at the lowest possible cost.Merchandising StrategiesOptimize inventory for sales, margin, profit and customer satisfaction.Dynamically source product based on sophisticated business rules that consider conditions including cost, delivery time, and lost sales.Leverage inventory from all channels with a “ship from anywhere to anywhere” philosophy that minimizes levels of poorly invested inventory.Merchandising StrategiesPursue deal buying and special offers where the cost / benefit is favorable.Buyers and the “expert system” will customize the selection for each store.The “expert forecasting system” will optimize inventory levels on new products.Merchants will source new product lines for enhanced overall sales & profit.Merchandising StrategiesDevelop and implement case packs that provide operational efficiency (i.e. display ready pallets).Title Inventory Average131,668 Average Book Titles per storeBordersBorders22,500 Average Book Titles per storeWaldenbooksWaldenbooksTitle Inventory Average33,628 Average Music Titles per storeBordersBordersTitle Inventory Average5,350 Average DVD & VHS Titles per Borders storeInventoryTotalTotalBooksBooks1,446,000 958,000 558,000 443,000BordersWaldensMultiMulti387,000N/AOtherOther101,000115,000$ at retail in (000)TurnTurn1.551.64Average Book Titles Reviewed vs. PurchasedReviewedReviewedPurchasedPurchasedBordersBordersWaldens225,715 153,082 60,783 41,564Average Multimedia Titles Reviewed vs. PurchasedReviewedReviewedPurchasedPurchasedBorders 66,134 42,927MusicMusicDVD & VHSDVD & VHSReviewedReviewedPurchasedPurchased17,134 13,031BordersAverage G&S and other Titles Reviewed vs. PurchasedReviewedReviewedPurchasedPurchasedBordersBordersWaldens8,707 2,5967,948 2,399Distribution & LogisticsRemainders Processing CellsDistribution / LogisticsMission To provide a global distribution network that maximizes customer service while minimizing supply chain cycle times and distribution related costs.Distribution / LogisticsStrategyMaximize flexibility and response time by efficiently and effectively fulfilling any item to any location upon notification of demand.Maximize each facilities productivity in terms of cost per unit and output per period (the more the better).Strategically locate the minimum number of necessary distribution facilities to reduce inventory and capital investment and improve product flow cycle times.Distribution / LogisticsStrategySupport real time visibility at the SKU level throughout the various stages of the supply chain to:–Customers–Merchants–SuppliersSummarized below are the primary functions of these facilities:Borders Flow-ThruServes as a cross-dock facility for Borders. Also carries 5000-6000 titles of overstock. Uses cell processing.Walden ReplenishmentExisting NetworkExisting NetworkOur current Network is comprised of 10 facilities and over 2 million sq. ft. of space.Distribution FacilitiesServes as replenishment centers for Waldenbooks. 25,000 SKUs are carried (7500 are common to both chains). Uses a sortation system.Reverse LogisticsLaVergne handles book returns for both Walden and Borders stores. Columbus handles multimedia returns for Borders stores Multi-Media(705) Columbus handles distribution for all Borders stores for music and video products Remainders(701) Ann Arbor handles distribution of remainder product to all Borders stores and Outlet stores. This center will close in early 2002 and the function will be absorbed in Mira Loma (west coast stores) and LaVergne (east coast stores) Distribution Facilities701Ann Arbor180,000 sq. ft.705Columbus172,000 sq. ft.AWU211,000 sq.ft.702Harrisburg115,000 sq. ft.RC95,000 sq. ft.709FTC/Calendar299,000 sq. ft.703Mira Loma418,000 sq. ft.704Indy96,100 sq. ft.TNDC/FFC540,000 sq. ft.Borders Domestic Distribution NetworkConsumer Measures(Building The Plan)Consumer Measures Consumer measures are used for both the distributor (retailer) and its suppliers to determine if the consumer related goals and strategies are being achieved by the plan. Examples are:–consumer satisfaction rating.–percentage of target consumer/household. –purchase occasions and dollar