COTTON INCORPORATED

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COTTON INCORPORATED
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THE U.S. CONSUMER
MR. IRA LIVINGSTON SR. VICE PRESIDENT, CONSUMER
MARKETING COTTON INCORPORATED
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THE U.S. CONSUMER CONTROLS MAJOR ASPECTSOF THE
U.S. ECONOMY
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IMPORTANT EQUATION

• CONSUMER SPENDING
• 66 of GDP

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Share of Government Receipts
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THE U.S. CONSUMER

• CONSUMER ECONOMICS
• MANUFACTURING UPDATE
• RETAIL
• CONSUMER SHOPPING
• BRANDING

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CONSUMERECONOMICS
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PERSONAL DISPOSABLE INCOME CHANGE
PERCENTAGE
SourceDept of Comm.
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U.S. PERSONAL SAVINGSBILLIONS OF DOLLARS
SourceDept of Comm.
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APPAREL SPENDING( Billion)
SourceDept of Comm.
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APPAREL SPENDING AS OF DISPOSABLE INCOME
PERCENTAGE
Loss of 180 Billion in 10 Years
SourceDept of Comm.
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U.S. REAL CONSUMER SPENDING
SourceDept of Comm.
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U.S. REAL CONSUMER SPENDING CLOTHING SHOES
SourceDept of Comm.
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MANUFACTURING UPDATE
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Textile Sales Growth Inventory Ratio
SourceDept of Comm.
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WHOLESALE APPARELINV. TO SALES RATIO
SourceDept of Comm.
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RETAIL
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SPECIALTY STORESSALES INVENTORY
SourceDept of Comm.
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DEPT., CHAIN DISCOUNT STORESSALES INVENTORY
SourceDept of Comm.
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CONSUMER SHOPPING
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GENERATION DEFINITION

• GEN Y 15-24
• GEN X 25-35
• BOOMER 36-54
• SILVER 55

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APPAREL SALES BY GROUP
SourceDept of Comm.
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MENS WOMENSAPPAREL CPI CHANGE
SourceDept of Comm.
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WOMENS APPARELEXPENDITURES
SourceLifestyle Monitor
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WOMENS 1st CHOICE FORAPPAREL SHOPPING
2000/2
2001/2
SourceLifestyle Monitor
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FEMALE SHOPPINGATTITUDE LIKE vs. LOVE
SourceLifestyle Monitor
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INFORMATION IMPORTANTTO PURCHASE DECISION
2000/2
2001/2
SourceLifestyle Monitor
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THE FEMALE CONSUMER SPEAKS

• I love to shop for clothes 52
• I feel better about myself when I wear just
• the right look 66
• Difficult time finding clothes for me 55
• Good service hard to find 51
• Lifestyle No time
• Other priorities

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CONSUMERS DEFINITION OF RETAIL STORES

• Discount Stores low prices, self service,
  convenience, easy to shop, fun to shop
• Department Stores elegance, designer brands,
  traditional/classic, variety, knowledgeable help
• National Chains variety, wide range of brands,
  sensible/dependable, convenience
• Specialty Stores fun/upbeat, unique stores
  brands merchandise, trendy, fresh

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INNOVATIVE RETAILERS

• Industry
• Target 76
• Abercrombie Fitch 71
• Kohls 52
• Victorias Secret 50
• Old Navy 48
• Wal-Mart 48
• Banana Republic 45
• Bloomingdales 40
• The Gap 40

• Consumer
• Old Navy 32
• Victorias Secret 28
• Banana Republic 24
• Abercrombie Fitch 23
• The Gap 21
• Limited Express 21
• Wal-Mart 21
• JC Penney 18
• Neiman-Marcus 17

SourceFairchild CEO/2001
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CONSUMER SHOPPINGINTEREST

• HIGH Old Navy, Wal-Mart, Kohls, Target,
  Victorias Secret, The Gap, Limited Express,
  Kmart.
• MEDIUM Macys, JC Penney, Marshalls, Dillards,
  The Limited, Daytons, TJ Maxx, Nordstroms,
  Sears, Lord Taylor.
• LOW Hudsons, Belks, SFA, Marshall Fields,
  Talbots, Banana Republic, A F, Neiman-Marcus,
  Bloomingdales, Ann Taylor.

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CONSUMER SEGMENTATION

• ELITE STYLE, FASHION, SERVICE, BRAND SENSITIVE
• SUPER PASSIONATE, CLOTHES ARE ME, WAYS TO
  SAVE
• PRACTICAL SKEPTICAL, NON-FASHION, SHOPPING IS
  WORK, PRICE CRITICAL
• AMBIVALENT LOW FASHION, LESS DEMANDING, PRICE
  IS DRIVER

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CONSUMER SEGMENTATION4 ATTITUDINAL CLUSTERS

• TYPE INTEREST
  LEVEL
• FASHION ELITE HIGH
• SUPER SHOPPER HIGHEST
• PRACTICAL LOW
• AMBIVALENT LOWEST

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RETAILERS BUSINESS BY SEGEMENT
SourceFairchild CEO/2001
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RETAILER SATISFACTION
SourceFairchild CEO/2001
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RETAILER SATISFACTION
SourceFairchild CEO/2001
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RETAILER SATISFACTION
SourceFairchild CEO/2001
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RETAILER SATISFACTION
SourceFairchild CEO/2001
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RETAIL ROADBLOCKS

• 71 of consumers go into a store with a clear
  idea of what they want
• Only 43 actually purchase the item they set out
  to buy
• -Style or color not available
• -Price was to high
• -Didnt fit
• -Didnt have correct size

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KEYS TO RETAIL SUCCESS

• Deliver the Fundamentals Value, Selection,
  Convenient.
• Deliver the Unexpected Uniqueness,
  Trend-forward, Newness, Service, Exper-iential.
• Innovation Changes Consumer Behavior
• Brands National, Private Label

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BRANDING
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POWER OF THE COTTON SEAL
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COTTON SEAL AWARENESS 2000
Percent
80
70
60
50

More Than 7 Out Of 10
Consumers Are Aware Of
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The Cotton Seal
30
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
00
Source Roper Starch Worldwide
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2000 COTTON SEAL STUDY
MAJOR LOGOS TESTED
Source Roper Starch Worldwide
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80
COTTON INCORPORATEDS TARGET MARKET RECOGNIZED
THE SEAL OF COTTON
Source Roper Starch Worldwide
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COTTON SEAL AWARENESS AND RETAIL SHARE OF MARKET
80
SEAL AWARENESS
70
60
50
COTTONS SHARE
40
30
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
00
Source The NPD Group Roper Starch Worldwide
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THE AFFECT OF THE COTTON SEAL
56 OF CONSUMERS SAY...
THE COTTON SEAL ENHANCES THE MANUFACTURER'S
BRAND.
52 OF CONSUMERS SAY...
THEY WOULD BE INFLUENCED IN THEIR PURCHASE
DECISION BY THE DISPLAY OF THE COTTON SEAL.
Source Mills Consulting, Inc.
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COTTON BRAND

• RETAIL USAGE

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Federated Department StoresCharter Club
Private LabelSpring Season

• Scope
• Over 300 Federated Department Stores Macys,
  Burdines, The Bon Marche, Goldsmith, Lazarus,
  Richs
• Charter Club Brand for Womens, Mens and Home
  Products
• Over 8 million cotton units
• 750,000,000 Sales

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Federated Department Stores Charter Club
Private LabelSpring Season
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Federated Department StoresCharter Club Private
LabelSpring Season
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Wal-Mart

• Scope
• Menswear 17 million cotton units(Farah and
  Catalina Brand)
• Home Products Over 204 million cotton
  units(Common Sense, Jubilee, Cannon, Favorite
  Things and Vintage Home Brands)
• 111 increase from 2000
• 100 million consumers/week

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Belk Stores ServicesJ. Khaki Private Label

• Scope
• J. Khakis Brand for mens, womens and
  childrenswear
• Over 1.9 million products licensed with Seal of
  Cotton trademarks
• 31.1 million in retail sales volume

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IMPORTSQUICK VIEW
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U.S APPAREL IMPORTS27.3 BIL. JAN/JUNE 2001
SourceDept. of Comm.
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MAJOR CHANGES U.S.IMPORTS IN DOLLARS(Jan/June
2001)

• INDONESIA 24.7
• GUATAMALA 23.0
• BNGLDSH 8.0
• THAILAND 6.8
• HONDURAS 5.4
• HONG KONG -9.3
• TAIWAN -10.6

SourceDept. of Comm.
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(No Transcript)
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HOT SPOT INDICATORS
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Consumer Confidence Index
SourceDept of Comm.
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DECONSUMERIZATION
Percentage Change in Consumer Confidence
in the 12 Months Prior to the Last 4 Recessions

0
-4.0
-5
-8.6
-10
-13.8
-15.5
-15
-20
-25
Dec
Nov
Jan
Jul
1969
1973
1980
1990
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ECONOMIC DRIVERS
SourceDept of Comm.
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Indices of Selected SE Asian Currencies to the
U.S. Dollar
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COTTON INCORPORATED