SVU
#Thank you.
Ginger, we'll take one more question if we could.
Yes <UNK>, I will take that.
That's a big question.
I know that in North America the discount model is significantly less, or at least in the US, developed than it would be in most of Western Europe or in Canada.
I think there's a lot of room for growth in discount.
You have got the entry of legal coming in.
You have got all formidable competitor and retailer.
I think the challenges that we've had are that we kind of limited ourselves to a model that restricts itself to a too small a segment of the population and that were not a broad enough appeal.
Our model has to be an American model and we proved that in Canada.
You can look at a couple discount (inaudible) hugely successful but have sales per square foot that are probably double what we have here with larger footprints both in (inaudible) no-frills concept and now metros food basics concept.
My experience has been very, very successful and some of the same strategies we are employing here.
As opposed to doing private label by category we've purchased the name America's Choice.
It's a fabulous name and we want to morph over three-phase project over the next 18 months to start building real equity in our private labels.
We believe that the cutting in of in just the must-have items of the national brands in each category are significant.
We look very, very closely at our productivity and there are certain things America is different to Europe.
And if you go to the UK where private label penetration is probably in the 60% range, it is probably in the 20% range for most businesses in the US.
So we are definitely missing opportunities in the national brand.
I mentioned before Coke or if you get into the baby section.
People just don't do private label baby food and baby formula.
People don't do private label pets.
So not that we're becoming a national brand store and not the we're straying from the concept of our discount, we are just making it a much better, much more relevant experience.
And the picture that I have in my mind is of a box that successfully does significantly more volume than what it does today through all of these combined initiatives, whether they be private label, national brand, the complete new analytics of our set.
We are putting a lot of effort into reordering processes which previously were based on shelf space as opposed to rate of sale.
Our advertising strategy significantly more strong than what it was before.
So all of these things combined, first of all I think there's a lot of room to grow in the whole space.
We have a lot of room to grow within our existing sweet spots which are the circumferences around our distribution centers since they are not anywhere near full capacity, and my belief and very strong belief is better offer, one that we can all extend our demographic.
And by doing that we can expand in very, very specific markets where we know we've had success in the past.
I think something we don't talk enough about is our real estate strategy, and our real estate strategy is becoming much more precise and the rigor that's going into it is to define exactly where we want our new corporate store growth to go relative to our license store growth.
All of these things I think bode very well for us.
And the last thing, and then I will turn it back to you, is that in the past we haven't talked a lot about the licensed store growth and our license partners have been out in the field every week two days a week since December meeting with these people.
We have some incredibly talented and very committed licensed operators.
And we have the ability to grow with these people at a much more rapid rate perhaps than some other businesses because the capital required by the corporation is relatively small compared to growing just corporate stores.
So I think that two-pronged approach is a very precise approach, bettering our assortment, ensuring that our pricing strategies are really, really strong against our key competitors; and I think the United States just has so much room for growth in discount and even the entry of new players.
There's just a lot of room for everybody and they each have their own strategy, which I think is fine.
I'm extremely, extremely bullish.
I would say this is a business that just has a whole lot of potential for the long term.
This is <UNK>.
Just remember that those segment or channel carve out financials that are in the Form 10, which I think is what you are referencing, those are fully [burdened] fully allocated kind of accounting segment results.
What I would say is that both the corporate channel, the retail channel and our license channel are both great channels.
And I think you've heard from <UNK> in terms of just a tremendous excitement that he has about both of those channels.
Thanks.
Let me just add one thing on the license part of the business.
It's not so much the rate that you're looking at.
I've spent a lot of time with some very, very successful license operators and what excites them is the same thing that excites me.
The possibility that we have within the box to make it so much better and it makes their model a lot fatter.
It's a skinny model for them between us taking our wholesale margin and then staying competitive in retail they've got small margins to work at.
By introducing initiatives that we are introducing which they wholeheartedly support, we had a management advisory group of 24 of our talented license operators that worked on this plan with us.
They are looking at this model makes it ---+ we plan on doing with this model to make it far more attractive which also allows us to continue to grow with successful operators because successful operators will put good money after a good project.
Again, very bullish on that.
So, with that, I hope <UNK>, <UNK>, and I have a dynamic picture for the future of this business.
I appreciate you letting us share that picture with you.
Thank you for participating and we look forward to meeting our investors and analysts.
With that, <UNK>.
