GfK- Desk Research FMCG Distribution Channels - Romania

GfK Romania

GfK Growth from Knowledge GfK RomaniaCustom Research

FMCG Distribution Channels - Romania

June 2007

1

FMCG Distribution Channels Romania

GfK Romania

Custom Research


June 2007

Content2

1.

ROMANIAN ECONOMY IN GENERAL- Basic information about Romania - Selected economic indicators of Romanian economy 17 - Purchasing power comparison in Europe - Personal consumption structure evolution 2003-2005 - Household structure family life cycle - Average net wages evolution 2000 2005 - Average net wages and employment by selected sectors 25 - Romania map Incomes per capita 26 - Macroeconomic situation an overview 27 19 21 22 24 15 - Comparison of selected economic indicators: Romania vs. EU 25; EU 15; in 2005 9

2.

RETAILERS DISTRIBUTION IN ROMANIA- Population distribution vs. Retailers distribution by regions and main counties 30 - Purchasing Power Index by counties 31 - Top 10 valuable companies in Romania 2005

GfK Romania

Custom Research


June 2007

Content PART 33

RETAIL TRADE MARKET 3.1. MAJOR PLAYERS ON THE SCENE- Retail sales by type of outlets - Market share by type of outlets - Evolution of number of stores - Main players market share - Carrefour (SWOT, mission and developments) - Rewe (SWOT, mission and developments) - Delhaize Group (SWOT, mission and developments) 3.1.1. CASH & CARRY - MAJOR PLAYERS ON THE SCENE - Sales Structure - Evolution of Number of Stores - Retail Structure by Sales Area 3.1.2. HYPERMARKETS - MAJOR PLAYERS ON THE SCENE - Sales Structure - Evolution of Number of Stores - Retail Structure by Sales Area 3.1.3. SUPERMARKETS - MAJOR PLAYERS ON THE SCENE - Sales Structure - Evolution of Number of Stores - Retail Structure by Sales Area 3.1.4. DISCOUNT STORES - MAJOR PLAYERS ON THE SCENE - Sales Structure - Evolution of Number of Stores - Retail Structure by Sales Area 37 38 39 40 42 43 44 49 50 51 54 55 56 59 60 61 64 65 66

GfK Romania

Custom Research


June 2007

Content PART 343.1.5. FORECOURT STORES - MAJOR PLAYERS ON THE SCENE - Sales Structure - Evolution of Number of Stores - Retail Structure by Sales Area

69 70 71

3.2. A GENERAL OUTLOOK ON ROMANIAN SHOPPING HABITSConsumerTracking)- Outlet types market shares - Outlet types distribution by regions - Outlet types distribution by community size - Outlet types distribution by product baskets - Count of promoted products by retailers food and beverages - Count of promoted products by retailers personal care

(source: GfK75 76 77 78 79 80 81 82 83 84

- Count of promoted products by retailers clothing, footwear, mercery - Purchasing structure by outlet type - Purchasing behavior in Romania value of average spending by community size - Retail trade market summary

GfK Romania

Custom Research


June 2007

Content PART 35

2.

RETAIL TRADE MARKET 3.3. A CLOSER LOOK INTO PRIVATE LABELS- Private Labels shares within FMCG baskets - Private Labels by retailers leaflets activity - The importance of Private Labels across CEE markets - Selected categories with high Private Labels shares - Closer look into private labels summary 87 88 89 90 91

4.

ROMANIAN RETAIL TRADE MARKET OVERVIEW

92

GfK Romania

Custom Research


June 2007

1 Romanian ECONOMY IN GENERAL

GfK Romania

Custom Research


June 2007

Romania BASIC INFORMATION2005Population(in thsd.*)

7 21.681 287.2 13.282 4.1 20130.4 2.0 68.3 8.6 113.4 968 746 7.2

GDP, billion RON (current prices) GDP per capita, RON GDP real growth, % Gross external debt, mld. Euro Industrial production, growth rate in% Coverage of imports by exports, % Consumer price index 2005/2004, % Investment Indices (Volume) % Average monthly gross earning, RON Average monthly net earning, RON Unemployment, %

Source: National Institute of Statistics - Romania

GfK Romania

Custom Research


June 2007

POPULATION STRUCTURE (2004 census)8Romania Population Structure by Sex N= 21,623,849 N= 11,879,897 N= 9,743,952 Romania Population Structure by Age N= 21,623,8499,3 9,6 48,8 47,9 49,8 12,8 12,8

N= 11,879,8977,4 8,1 13,8

N= 9,743,95212,6 11,2 11,4

14,8

10,4 14,9

16,0 51,2 52,1 50,2 15,8

16,7

17,1

14,1

Total country

Urban environment Men

Rural environment

13,6 10,0

13,4 8,7

13,8 11,6

Women

Total country0-9 y.o. 30-39 y.o. 60-69 y.o.

Urban environment10-19 y.o. 40-49 y.o. 70 y.o. and over

Rural environment20-29 y.o. 50-59 y.o.

Source: National Institute of Statistics - Romania;

GfK Romania

Custom Research


June 2007

POPULATION STRUCTURE (2004 census)9

ROMANIA COUNTIES

Number of countiesAbsolute figures 42 6 10 9 6 4 4 3 % from total 100,0 14,3 23,8 21,4 14,3 9,5 9,5 7,2

Number of inhabitantsAbsolute figures 21,623,849 1,584,292 3,494,146 4,097,876 3,397,661 2,620,168 2,863,292 3,566,414 % from total 100,0 7,3 16,2 19,0 15,7 12,1 13,2 16,5

Total Less than 300,000 inh. 300,000 399,999 inh. 400,000 499,999 inh. 500,000 599,999 inh. 600,000 699,999 inh. 700,000 799,999 inh. 800,000 inh. and over


GfK Romania

Custom Research


June 2007

POPULATION STRUCTURE (2004 census)10

Number of municipalities/ communesAbsolute figures % from total

Number of inhabitantsAbsolute figures % from total

Total Less than 3,000 inh. 3,000 4,999 inh. 5,000 9,999 inh. 10,000 19,999 inh. 20,000 49,999 inh. 50,000 99,999 inh. 100,000 199,999 inh. 200,000 999,999 inh. 1,000,000 and more inh. Total Less than 1,000 1,000 1,999 2,000 4,999 5,000 9,999 10,000 and moreSource: National Institute of Statistics - Romania;

Municipalities314 5 15 96 93 59 21 14 10 1 100,0 1,6 4,8 30,6 29,6 18,8 6,7 4,4 3,2 0,3 11,879,897 12,848 63,392 709,031 1,252,321 1,789,788 1,490,022 1,870,262 2,767,274 1,924,959 100,0 0,1 0,5 6,0 10,5 15,1 12,6 15,7 23,3 16,2

Communes2,850 66 554 1766 443 21 100,0 2,3 19,4 62,0 15,6 0,7 9,743,952 48,908 877,763 5,725,172 2,852,876 239,233 100,0 0,5 9,0 58,7 29,3 2,5

GfK Romania

Custom Research


June 2007

POPULATION STRUCTURE (2004 census) Romania Population by counties

Population (inh.)11

Citiesmore than 200 th. inh. between 100 and 200 th. inh. between 50 and 100 th. inh.

Source: National Institute of Statistics - Romania; Source: GfK RegioGraph

GfK Romania

Custom Research


June 2007

SELECTED ECONOMIC INDICATORSGDP, real growth rate in %

12 8,4

5,7

5,1

5,2 4,1

2,1

2000

2001

2002

2003

2004

2005

GDP, billion RON

246,4 197,6 80,4 116,8 151,5

287,2

2000

2001

2002

2003

2004

2005


GfK Romania

Custom Research


June 2007

SELECTED ECONOMIC INDICATORSInflation rate %

13

40,7 30,3 17,8

14,1 9,3 8,6

2000

2001

2002

2003

2004

2005

Unemployment rate %

8,4 6,4 7,0

6,9

8,0

7,2

2000

2001

2002

2003

2004

2005


GfK Romania

Custom Research


June 2007

SELECTED ECONOMIC INDICATORS

Comparison vs. EU and other countries 200514GDP, real growth rate in % GDP per capita in PPS*Romania

Romania

4,1

35

EU 25

1,7

EU 25

100

EU 15

1,5

EU 15

108

Bulgaria

5,5

Bulgaria

32

Croatia

4,3

Croatia

49

Turkey

5,8

Turkey

31

* The volume index of GDP per capita in Purchasing Power Standards (PPS) is expressed in relation to the European Union (EU 25) average set to equal 100. PPS is a common currency that eliminates the differences in price levels between countries. Source: National Institute of Statistics; WIIW

GfK Romania

Custom Research


June 2007

SELECTED ECONOMIC INDICATORS

Comparison vs. EU and other countries 200515Consumer prices inflation rate Unemployment rate

Romania

8,6

Romania

7,2

EU 25

2,2

EU 25

8,8

EU 15

2,1

EU 15

7,9

Bulgaria

5,0

Bulgaria

10,1

Croatia

3,3

Croatia

17,9

Turkey

8,2

Turkey

10,0

Source: National Institute of Statistics; WIIW;

GfK Romania

Custom Research


June 2007

Purchasing power comparison in Europe Year 200616

Parity of purchasing power (Austria=100%)100 88 89 80 69 67 66 58 62 50 47 50 44 42 40 41 32 29 27 26

Austria = 100

22

22

21

22

A

EU 15

G

E

CY

GR

SLO

P

CZ

H

SK

EST

LT

PL

HR

LV

RUS

RO

BG

TR

UA

BA

MAC SER*

Source: WIIW, February 2006 *Without Montenegro

GfK Romania

Custom Research


June 2007

Purchasing power comparison in Europe Year 200617

Parity of purchasing power (Germany=100%)112 98 100 90 77 75 74 65

Germany = 100

70 57 52 56 49 47 45 46 36 33 30 29

24

25

24

25

A

EU 15

G

SP

CY

GR

SLO

P

CZ

H

SK

EST

LT

PL

HR

LV

RUS

RO

BG

TR

BA

UA

MAC SER*

Source: WIIW, February 2006 *Without

GfK Romania

Custom Research


June 2007

PERSONAL CONSUMPTION18Average annual personal consumption per household, %Food and beverages Alcoholic drinks and tobacco

49

46

44

Clothing and footwear Housing and energy *

6 6 15 4 3 9 5 1 32003

6 6 15 4 4 11 5 1 32004

6 6 16 4 4 11 5 1 32005

Furniture, equipement and maintenance Health services Transport and communication Education; Recreation and culture Hotels and restaurants Other goods and services

Source: National Institute of Statistics

GfK Romania

Custom Research


June 2007

PERSONAL CONSUMPTION2005/2004 real growth rate-4,7Food and beverages

19

-4,7 -1,7 -1,6 6,1

personal consumption structure is slightly improving; financing essential needs still takes most of the budget; food and beverages expenses are in decline, but still cover more than 40% of the household budget; basic existential expenses for Housing and energy increased; consumption of luxuries slightly decreased (Alcohol and tobacco); stable expenses for Furniture, equipment and maintenance, as well as for Hotels and restaurants; positive trends for quality of life items (Health services 5,6% increase; Education, recreation and culture 6,3% increase);

Alcoholic drinks and tobacco -1,7 Clothing and footwear -1,6 Housing and energy6,1 * Furniture, equipement and maintenance Health services5,6

5,6 7,5 6,3

Transport and communication 7,5 Education; Recreation and culture 6,3 Hotels and restaurants Other goods and services 7,1

7,1


GfK Romania

Custom Research


June 2007

HOUSEHOLD STRUCTURE Family Life Cycle20Household structure according to HH members, % members,

10 8 5 9 6 16 7 8

10 9 5 9 6 15 6 8

10 9 10 8 5 12 4 10

Young, still studying Young singles Young couples without children Small families with small children Large families with small children Small families with school children Large families with school children

31

31

33

Older employed without children Older unemployed without children

2004

2005

2006

Source: GfK Romania - Omnibus

GfK Romania

Custom Research


June 2007

AVERAGE NET WAGESAverage net wages, in RON

21

746 599 484 302 214 379

2000

2001

2002

2003

2004

2005

Average net wages real growth rate, in %; Growth rate trendline

40,5

41,2

25,5

27,7 23,7

24,5

2000

2001

2002

2003

2004

2005


GfK Romania

Custom Research


June 2007

AVERAGE NET WAGES BY SELECTED SECTORSAverage monthly net earnings (RON)

22746 735 575

National Economy Agriculture Industry Commerce

599 484 378 487 364 483

600 531 439

2003

2004

2005

Employment average number of employees, by activity of national economyAgriculture Industry Construction Commerce Transport, communication Health, social assistance Education Other activities of national economySource: National Institute of Statistics

8,5 6,8 7,5

2003 3,3 13,7

200414,7 3,2

15,3 39,0 8,4 7,0 7,0

2005

3,2

40,3

8,5 6,8 7,1

36,7

12,8

7,1

13,4

7,2

14,8

7,6

GfK Romania

Custom Research


June 2007

Romania Incomes per AVERAGE NET WAGES BY SELECTED SECTORS capita

Counties/ Avg. incomeEuro per capita/ yearly

23

Citiesmore than 200,000 inh. between 100 and 200 th. inh.

Source: GfK RegioGraph

between 50 and 100 th. inh.

GfK Romania

Custom Research


June 2007

MACROECONOMIC SITUATION IN ROMANIA AN OVERVIEW24 despite positive trends in other fields, Romania has faced a high inflation rate level, decreasing though, comparing to 2004; the inflation target proposed by the Government and the National Bank for 2007 is 5% (+/- 1), considered as hard to achieve by the FMI representatives; in 2005 GDP increased with a slower pace (4,1%) compared to 2004 (8,4%); compared to Slovenia, Czech Republic and Hungary, Romania records considerable gaps, but the analysts are optimistic, estimating that these gaps can be diminished , considering that Romania recorded the fastest growth in GDP among UE members between 2000-2006; compared to EU average level, Romania has a good position regarding unemployment rate; in 2005 industrial production growth rate was 2%, while the exports covered 68% of the imports; comparing the purchasing power in Europe by taking Austria as reference (100%), Romanian level reaches 29%, behind Russia (32%), but ahead of Bulgaria (27%) and Turkey (26%);

GfK Romania

Custom Research


June 2007

MACROECONOMIC SITUATION IN ROMANIA AN OVERVIEW25

analyzing household structure by family life cycle, we can notice that older families without children (employed or unemployed) are dominant (43% in 2006) with an upward trend compared to 2005 (39%); from one year to another, the percentage of families with school children decreased (from 23% in 2004 to 16% in 2006); fortunately, young couples with children recorded a significant increase in 2006; overall net wages have risen continuously, but beginning with 2002 the growth rhythm has slowed down; the average number of employees in industry sector decreased compared to previous years, while for commerce the percentage slightly increased.

GfK Romania

Custom Research


June 2007

2 RETAILERS DISTRIBUTION IN Romania

GfK Romania

Custom Research


June 2007

RETAILERS DISTRIBUTION IN ROMANIA BY REGIONS% of Households(Census 2002)

27number of outlets * 352 100 63 21 47 73 48 % of number of outlets * 100,0 28.4 17.9 6.0 13.4 20.7 13.6

TOTAL ROMANIA Bucharest Muntenia, Dobrogea Oltenia Banat, Crisana, Maramures Transilvania Moldova

100,0 9.9 25.0 10.6 13.6 19.8 21.1

Main Counties by retailers presence 3.8 3.3 2.9 4.1 3.3 2.3 3.5 3.7 2.0 1.7 2.4 1.5 2.3 3.1 2.1 17 16 15 15 14 11 10 9 9 7 7 7 7 7 7 4.8 4.5 4.3 4.3 4.0 3.1 2.8 2.6 2.6 2.0 2.0 2.0 2.0 2.0 2.0

Prahova Timis Brasov Cluj Constanta Hunedoara Bacau Iasi Sibiu Alba Arad Caras-Severin Dambovita Galati Maramures

Source: own calculation according to Census 2002; National Institute of Statistics; GfK Desk Research March 2007* Carrefour, Cora, Trident, Pic, Real, Interex, Spar, Kaufland, Metro C&C, Selgros C&C, Profi, Plus, Penny Market, MiniMax Discount, Hard-Discount, Billa, Gima, Artima, Angst, Primavara, Cris-Tim, Fidelio, Mega Image, Albinuta, La Fourmi

GfK Romania

Custom Research


June 2007

28

GfK Romania

Custom Research


June 2007

THE MOST VALUABLE COMPANIES29

10 MOST VALUABLE COMPANIES IN 2005Company 1. PETROM 2. BCR 3. ORANGE 4. VODAFONE 5. BRD 6. HIDROELECTRICA 7. ROMTELECOM 8. ROMGAZ 9. ELECTRICA MUNTENIA SUD 10. RAIFFEISEN BANK Economic Activity Energy Financial Services IT & Communications IT & Communications Financial Services Energy IT & Communications Energy Energy Financial Services Value (million Euro) 8.977 6.070 4.813 4.337 3.570 2.700 2.455 2.295 1.250 1.242

Source: Ziarul Financiar Newspaper 15 November 2006

GfK Romania

Custom Research


June 2007

THE MOST VALUABLE FMCG COMPANIES & RETAILERS30 THE MOST VALUABLE FMCG COMPANIES & RETAILERS - 2005TOP 10 FMCG COMPANIES1. COCA COLA HBC mil. Euro) 2. PROCTER & GAMBLE mi. Euro) 3. BRITISH AMERICAN TOBACCO Euro) 4. BRAU UNION mil. Euro) 5. PHILIP MORRIS ROMANIA mil. Euro) 6. URSUS BREWERIES mil. Euro) 7. INTERBREW ROMANIA mil. Euro) 8. EUROPEAN DRINKS mil. Euro) 9. JTI ROMANIA mil. Euro) 10. DANONE mil. Euro) (659 (445 (409 mil. (325 (309 (295 (249 (186 (168 (144

TOP 5 RETAILERS1.METRO CASH & CARRY mil Euro) 2.SELGROS CASH & CARRY mil Euro) 3. CARREFOUR mil Euro) 4. BILLA ROMANIA mil. Euro) 5. CORA mil. Euro) (1.191 ( 365 ( 312 ( 147 ( 124

Source: Ziarul Financiar Newspaper 15 November 2006

GfK Romania

Custom Research


June 2007

RETAILERS DISTRIBUTION IN ROMANIA SUMMARY31 Bucharest concentrates more than a quarter of the total number of major accounts* in Romania, operating for the 9,9% households living here;

for Muntenia, Dobrogea; Oltenia and Moldova the number of outlets is low, compared to the percentage of households living in each area;

retailers are well represented in counties like Prahova, Timis, Brasov, Constanta and Hunedoara, according to the households distribution by areas;

the most valuable companies in 2005 come from areas of economic activities like Energy, Financial Services and IT & Communication;

Petrom is on top, evaluated in 2005 at 8.977 million Euro, followed by BCR, Orange, Vodafone and BRD;

among FMCG companies, the most valuable in 2005 were Coca-Cola HBC, Procter & Gamble, British American Tabacao, Brau Union and Philip Morris, while among retailers, Metro Cash & Carry was the leader, by far. * Carrefour, Cora, Trident, Pic, Real, Interex, Spar, Kaufland, Metro C&C, Selgros C&C, Profi, Plus, Penny Market, MiniMax Discount, Hard-Discount, Billa, Gima, Artima,Angst, Primavara, Cris-Tim, Fidelio, Mega Image, Albinuta, La Fourmi

GfK Romania

Custom Research


June 2007

3 RETAIL TRADE MARKET

GfK Romania

Custom Research


June 2007

3.1

RETAIL TRADE MARKET

MAJOR PLAYERS ON THE SCENE

GfK Romania

Custom Research


June 2007

RETAIL SALES BY TYPE OF OUTLETS (EUR MN)34Source: Planet Retail

Retail sales by type of outlets (EUR mn) Cash & carries Discount stores Forecourt stores Hypermarkets Supermarkets Other stores Total

2002 908 41 35 100 137 8.990 10.211

2003 1.149 65 48 153 208 9.151 10.774

2004 1.542 94 97 365 325 10.718 13.141

2005 1.880 175 107 620 866 11.925 15.573

2006 2.313 540 113 1.201 923 12.945 18.035

2007 2.590 779 126 2.273 1.039 15.249 22.056

2008 2.928 1.100 138 3.480 1.241 15.837 24.724

2009 3.198 1.445 141 4.636 1.452 16.180 27.052

2010 3.505 1.742 146 5.724 1.627 16.585 29.329

2011 3.851 2.038 149 6.856 1.808 16.058 30.760

PLANET RETAIL DEFINITIONS: Cash & Carry: membership-based wholesale format intended for resellers and commercial customers. In the food retail sector, usually a source for independent shop operators. Customers serve themselves as in a supermarket and pay for their merchandise at the checkout (unlike delivered wholesale, where merchandise is brought to the customer). In some countries, cash & carry outlets also sell to private consumers, e.g. in some Eastern European states. Discount Store: large format (2,500 square metres-plus) general merchandise superstore that carries a wide assortment of non-foods, general merchandise, health & beauty products and groceries. Stores typically have a strong focus on low prices. Grocery accounts for around 30-40% of the range. Forecourt Store: convenience outlet located at a petrol station. Occasionally operated in a joint venture between an oil company and a grocery retailer. Hypermarket: self-service store with a sales area of more than 5,000 square metres and generating high turnover, offering both a comprehensive food range and a wide choice of non-food items. Depending on the individual operation, the non-food offer can be as deep and wide as in a department store. Supermarket: self-service store with a grocery product offer, ranging from 400 to 2,500 square metres. Depending on individual store sizes, there are also non-food items available.

GfK Romania

Custom Research


June 2007

MARKET SHARE BY TYPE OF OUTLETS %35Source: Planet Retail

Other stores 52 Supermarkets

88

85

82

77

72

69

64

60

57

Hypermarkets 6 5 5 5 2 3 3 12 2004 6 4 12 2005 7 3 13 2006 5 10 4 12 2007 14 4 12 2008 17 5 12 2009 20 6 22 Discount stores 6 12 2010 7 13 2011 Cash & carries Forecourt stores

9 2002

11 2003

GfK Romania

Custom Research


June 2007

EVOLUTION OF NUMBER OF STORES36Source: Planet Retail

Evolution of number of stores (modern retail) Cash & carries Discount stores Hypermarkets Supermarkets Forecourt stores

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

20 12 1 191 293

25 19 3 310 534

29 31 5 447 1.139

34 71 10 510 1.063

36 121 37 507 996

42 146 64 552 1.138

45 197 88 605 1.143

48 246 110 648 1.147

52 289 132 691 1.152

56 337 154 734 1.156

The distance between modern retail and the traditional one could widen in the following years in favor of the large stores due to the extension plans of the international commerce networks as well as to the consumers behavior changing habits. The transformations of the modern retail foreseen for the following 4-5 years represent the greatest opportunity for the distribution companies. The first years after the integration in EU will bring a growth of the FMCG consumption and of the dealers businesses based on the emergence of new brands and stores networks but also on the living standards. In Bucharest can be noticed that the market tends to become impenetrable due to the fact that the proper spaces for a retail activity are hard to find and, if in case of the large surfaces they have already been secured, the neighborhood stores and the supermarkets have low chances to enter on the market. A solution for this problem can be represented by the purchasing of the competitors and it will surely be used more and more often from now on. Faster or slower, all the international traders extend by opening new stores using Greenfield investments. A real competition in Romania will exist in the moment when it will be possible to extend or to enter on a market by making an acquisition.

GfK Romania

Custom Research


June 2007

MAIN PLAYERS MARKET SHARE %37Source: Planet Retail

Market Share Retail Banner Sales % Auchan Caprabo Carrefour CBA Delhaize Group Gima ITM (Intermarch) Louis Delhaize Lukoil Maxima Metro Group MOL OMV Rewe Schwarz Group Shell Tengelmann Univers'all Others

2002 0,0 0,0 1,0 0,0 0,4 0,2 0,1 0,1 0,1 0,0 7,3 0,0 0,1 2,5 0,0 0,1 0,0 0,1 88,0

2003 0,0 0,0 1,2 0,0 0,5 0,2 0,1 0,8 0,2 0,0 8,4 0,0 0,2 3,6 0,0 0,1 0,0 0,2 84,9

2004 0,0 0,0 2,0 0,0 0,4 0,3 0,1 1,1 0,2 0,0 9,4 0,1 0,4 4,0 0,0 0,0 0,0 0,2 81,6

2005 0,0 0,0 2,8 3,1 0,4 0,2 0,2 1,4 0,2 0,0 9,5 0,1 0,4 4,6 0,1 0,0 0,2 0,2 76,6

2006 0,1 0,0 3,4 2,9 0,5 0,0 0,2 1,6 0,2 0,1 9,9 0,1 0,4 6,9 1,4 0,0 0,5 0,1 71,8

2007 0,3 0,0 4,0 2,6 0,5 0,0 0,2 2,3 0,2 0,1 9,6 0,1 0,3 7,1 2,6 0,0 0,9 0,0 69,1

2008 0,6 0,0 5,3 2,6 0,6 0,0 0,3 3,1 0,1 0,0 10,0 0,0 0,3 8,3 3,5 0,0 1,2 0,0 64,1

2009 0,7 0,0 6,5 2,5 0,6 0,0 0,3 3,8 0,1 0,0 10,4 0,0 0,3 9,0 4,2 0,0 1,6 0,0 59,8

2010 0,8 0,0 7,3 2,5 0,7 0,0 0,3 4,3 0,1 0,0 10,9 0,0 0,3 9,4 4,8 0,0 1,9 0,0 56,6

2011 0,9 0,0 8,1 2,6 0,7 0,0 0,3 4,9 0,1 0,0 11,7 0,0 0,3 10,2 5,5 0,0 2,2 0,0 52,2

GfK Romania

Custom Research


June 2007

SWOT CARREFOURStrengths Weaknesses38

Number 3 on the market but without competition Given the potential of the market, opening 20 in hypermarkets hypermarkets doesnt seem to be overtly ambitious The 1st hypermarket in Romania exceed 3 times the No intention to introduce discount stores original sales projection Due to the increasing sales is the biggest hypermarket Introducing Carrefour's global multi-banner operator on the Romanian market strategy seems out of reach Pioneer with hypermarkets in Romania The Romanian market is characterized by A network of up to 40 stores within a couple of years in modest profit margins and tightening competition capital and all cities >200000 inhabitants Has brought modern retailing to Romania Excellent local sourcing Has built a network of reliable suppliers from zero Romanias GDP has been growing by between 4 to 5%Tightening competition can cut down Carrefours profit. annually since 2001 After Poland, Romania is the second largest market Carrefours current monopoly is threatened by new and aggressive hypermarket competition in Central Europe (Cora and Kaufland) Hyparlo and Carrefour share their investments 50:50. Revenues from the sale of Hyparlos Italian supermarkets Substantial investments can be reinvested in Romania. UDS 25 to 30 million for a hypermarket in the capital Following its divestment of Italy, Hyparlo can fully USD 20 million outside concentrate on Romania, now its only foreign investment.

Opportunities

Threats

GfK Romania

Custom Research


June 2007

CARREFOURCorporate mission 20007 Planning to open at least three shops per year, Carrefour has as final goal to operate at least one

39

store in every town exceeding 150,000 inhabitants. On the background of an increasing competition at the country level, the retailer tries to be the first to arrive on the hypermarket segment in major cities outside Bucharest. Carrefour investments in the country in 2007 will exceed EUR280 million(USD371 million) while the

predicted sales reach EUR 700 million(USD892.2 million) backed by network expansion. In 2007, Carrefour will continue its strategy of securing the best quality-price ratio along with the discount policy. Developments Carrefour is accelerating its expansion in the country with an extra EURO60 million (USD 79.1 million) to its budget to support the extension of the hypermarket network in 2008. The five outlets intended to built and to become operative by the end of 2008 are to be located in the Romanian cities of Bucharest, Oradea, Arad, Suceava and Pitesti. In 2007 are planned to be opened 4 hypermarkets : 1 in Bucharest( Unirea Square) and 3 in the country (1 in Cluj-Napoca and 2 in Iasi). There are approximately 55,000 products listed in the Carrefour hypermarkets (with 70% to 90% of local origin) and after the countrys integration in EU this number will reach 60,000 products, mainly due to the imported products.

GfK Romania

Custom Research


June 2007

REWEOwnership & Concept SC Billa and SC Rewe in Romania are owned by Rewe Group via its Austrian Eurobilla subsidiary. Rewe is present in Romania by Billa Supermarkets, by its Penny (including XXL) discounters and by Selgros cash&carries. Billa is a modern-style supermarket with large sections for fresh food. Extensive selections are provided on customer service counters for meat and cheese. There are about 7,500 articles. Penny is a discounter with about 1,200 label products, selected branded products and a fresh meat/ vegetable self-service area.There is a good range of non-food articles including household appliances. Renamed in January 2007 Penny Market XXL, the discounter has 2500 articles on sale and is based on a price competitive philosophy but with extensive fresh food sections. Selgros is a cash & carry with a large food and non-food store design. Articles range in the economy to premium price range. The stores are officially accessible only to business wholesales customers but in fact are used by private shoppers as well. It is likely that these form the main client base so Selgros does compete with hypermarkets in Romania. The cash & carries mainly sell domestically produced food, simply for supply chain reasons and because they need to be price competitive.40

GfK Romania

Custom Research


June 2007

REWEDevelopments Rewe intends to open further stores, both under its Billa and Selgros banners. In 2007 Rewes cash & carry chain Selgros will open three stores located in the Eastern part of the country (in Suceava, Iasi and Galati). Rewes local supermarket operation Billa plans to open between 8 and 10 new stores this year in cities from northwestern Romania and southern Romania and expand its network in the country to 30 units by the end of 2007. Rewes Penny discount store banner will see significant investments and a fast extension after the first Penny outlets were opened in 2005 and its XXL Mega Discount were rebranded under Penny XXL stores in early 2007. Rewe intends to build 30 Penny stores in Romania by the end of the year. The Billa supermarket chain is to accelerate expansion in the country where it plans to establish a network of between 150 and 200 stores over the next 10 to 15 years.41

GfK Romania

Custom Research


June 2007

SWOT REWEStrengths Second largest retailer in the market, with three different formats established

Weaknesses Even though the XXL Mega Discount stores have an attractive low cost concept, their size limits their locations to the periphery of towns.

42

Substantial lead ahead of its international rivals. Billa supermarkets are confined to more affluent city area, of which there are not many Billa supermarkets have a good position in their at the present time. city centre location, leaving them plenty of opportunities to expand once the economy Slow growth in cash & carry sector develops further compared to Metro.

Further expansion of the three banners, increasing the lead on this potentially lucrative market. All three formats have a specific and valuable customer base. Introduction of Penny discount stores to fill in the gaps in residential areas where XXL Mega Discount stores are too large to open.

Kaufland stores represent a direct and serious competition to XXL Mega Discount stores. The Romanian market will experience a surge in interest as the economy develops and after the EU integration

Opportunities

Threats

GfK Romania

Custom Research


June 2007

DELHAIZE GROUPOwnership & Concept Delhaize is present in Romania through its fully-owned Mega Image operation, which is started buying in May 2000. Supermarkets heavily based in the Bucharest area (although there are also one store each in Ploiesti and Constanta), with a strong focus on fresh produce. In terms of pricing, Mega Image benefits from the fact that it is the market leader in the capital. Some recently-opened stores have been much larger than the older units, featuring roughly 2,000 square meters per outlet. In these larger outlets, the non-food offer is playing a more prominent role than previously , including items such as cosmetics ranges and childrens products. Developments The Mega Image plans to expand to a total of 24 stores by the end of 2007 through investments worth around EUR1 million for each newly opened store. The company is planning to open 6 supermarkets this year, including three or four in Bucharest. The retailer stated its strategy of starting on an investment drive to open stores outside the capital. Mega Image remains well placed to maintain a market-leading position in the supermarket43

GfK Romania

Custom Research


June 2007

SWOT DELHAIZE GROUP44

Strengths Market leader in Bucharest; expansion into further cities under way.

Weaknesses

Currently limited growth potential as local incomes are low. There are few competing modern groceries chains. Small network = limited buying power. Good reputation for quality and store design Increasing presence of the Western European appealing to the wealthy. retailers. Dual format strategy to appeal to different Slow progress in expansion of its networks. customer types. Better price competitiveness through private label.

EU membership from 2007 will see economy pick up. Company can benefit from rising middle class. Increased centralization of buying will bring improved quality control.

Romania now on radar of many Western grocers competition due to increase.

Opportunities

Threats

GfK Romania

Custom Research


June 2007

3.1.1

CASH & CARRY


GfK Romania

Custom Research


June 2007

CASH & CARRY SALES STRUCTURE %46Source: Planet Retail

18

21

20

21

26

30

32

31

31

32 Selgros

82

79

80

79

74

70

68

69

69

68

Metro

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

mn

908

1,149

1,542

1,880

2,313

2,590

2,928

3,198

3,505

3,851

GfK Romania

Custom Research


June 2007

EVOLUTION OF NUMBER OF STORES CASH & CARRY47Source: Planet Retail

35

33 31 29 27 25 23 21 19 17 15 13 11 23 21 18 19 23

30

25

20

15

10

7 4 5

5

0

2002

2003

2004 Metro

2005

2006

2007

2008

2009 Selgros

2010

2011

GfK Romania

Custom Research


June 2007

CASH & CARRY - RETAIL STRUCTURE BY SALES AREA (sq.m.)48Source: Planet Retail

27

26

31

40

44

48

48

47

48

49

Selgros

72

73

68

60

56

52

52

53

52

51 Metro

Total sales area (sq.m.)

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

165,850 208,850 246,850 305,000 327,000 387,000 414,000 441,000 479,000 517,000

GfK Romania

Custom Research


June 2007

ROMANIAN RETAIL MARKET MAJOR PLAYERS*49www.metro.ropart of German Metro Group opened the first distribution center in Romania, located in Bucharest, in 1996 has 23 outlets more than 20.000 food brands and almost 30.000 non-food brands. 8.382 employees in 2006 private labels: Aro, Metro Quality turnover increased in 2006 with 15% compared to 2005. interest for opening a new cash & carry store in Valea Jiului

www.selgros.ro

part of Germanys Rewe Group; present on Romanian market since 2001 the network counts 15 cash & carry stores has more than 5.250 employees about 37.000 food and non-food products recently opened two new stores in Iasi and Suceava posted a turnover of around 616 millions Euro in 2006, up by 34% against 2005 plans to develop 5 new cash & carry stores

* Top 10 retailers in 2006, by value shares

GfK Romania

Custom Research


June 2007

3.1.2

HYPERMARKETS


GfK Romania

Custom Research


June 2007

HYPERMARKETS SALES STRUCTURE %51Source: Planet Retail

16 27 28

21

25 3 14

25 4 14

24 4 14

25 4 14

25 4 14

Kaufland

8 19 100 84 73 70 50

Auchan

19

20

20

20

20

Real

Cora 39 38 38 37 37

Carrefour 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

mn

100

153

365

620

1,201

2,273

3,480

4,636

5,724

6,856

GfK Romania

Custom Research


June 2007

EVOLUTION OF NUMBER OF STORES HYPERMARKETS52Source: Planet Retail

30

ACTUAL FIGURES

80

FORECAST70 60

70 25 60 20

50 1850

4040

15

3030 10

33 28 23 18 15 8 7 2008 Auchan 18 10 9 2009 12 11 21 24 14 13

7 4 1 2 1 2003 1 2004 5 2 3 10

8 3

20

5

10

13 10 6 5 2007

0

2002

2005 Cora

2006 Real

2010 Kaufland

2011

Carrefour

I will now show you some cards with diseases and I will ask you to order them by how serious you think they are. One answer only, prompted.

GfK Romania

Custom Research


June 2007

HYPERMARKETS - RETAIL STRUCTURE BY SALES AREA (sq.m.)Source: Planet Retail

53

19 31 46 34 100 26 23 23 24 24 24 34 31 31 31 31 31

Kaufland

Real

Cora 69 54 47 20 5 14 13 13 13 13 Auchan 17 16 15 17 17 16 16 16 Carrefour

16

16

15

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Total 972,74 1,168,86 1,364,99 sales 8,700 34,900 51,539 93,538 310,156 573,080 776,620 area 4 8 2 (sq.m.)

GfK Romania

Custom Research


June 2007

ROMANIAN RETAIL MARKET MAJOR PLAYERS*54www.carrefour.ropart of Hyproma Group, entered the Romanian retail market in 2001 present with 8 hypermarkets in Bucharest, Brasov, Constanta, Ploiesti 4,200 employees private labels: No. 1 the biggest hypermarket network in terms of sales, with a turnover of 608.9 millions Euro in 2006 this year intends to open 4 new stores in Bucharest, Iasi and Cluj-Napoca, while for 2008 another 5 are planned.

www.cora.ro part of Delhaize Group, entered the Romanian retail market in 2003 3 hypermarkets: 2 in Bucharest and 1 in Cluj - Napoca private labels: Winny, Cora fidelity card turnover in 2005: around 158 millions Euro a new hypermarket will be located in Sun Plaza Bucharest in 2008

www.kaufland.ro part of Germanys Lidl & Schwarz Group; present in Romanian market since 2005 has 23 hypermarkets in present, after an investment of 30 million Euro employed about 4.700 people intend to have 50 hypermarkets on local market until 2008 private labels: Soft Maximo, Grand Maximo, Clean Maximo, Aile, Amelia, Vitae DOro, Stilla, Benita, Mammita, Katy, Classic Caterine, Classic Grande, Vita Star.

GfK Romania

Custom Research


June 2007

3.1.3

SUPERMARKETS


GfK Romania

Custom Research


June 2007

HYPERMARKETS SALES STRUCTURE %56Source: Planet Retail

17 7 5

11 9 4

14 9 5 18 5 12 6 12 6 13 56 57 56 51 44

CBA Super Gamma Delvita City Gima Superstore Univers'all InterEx 32 36 37 38 Mega-Image Billa

47

46

25 26

3 4 4 44 51 54 8

2 4 9

1 5 10

5 11

25

27

28

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

mn

137

208

325

866

923

1,039

1,241

1,452

1,627

1,808

GfK Romania

Custom Research


June 2007

EVOLUTION OF NUMBER OF STORES SUPERMARKETS57Source: Planet Retail

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Billa Mega-Image InterEx Univers'all Gima Superstore Delvita City Gamma CBA Super

11 12 1 3 2 0 1 161

ACTUAL FIGURES 12 15 15 15 1 2 9 9 2 4 0 1 1 1 270 400

23 16 6 13 2 450

24 18 8 4 0 0 0 453

27 24 10 1 0 0 0 490

FORECAST 44 50 29 34 12 14 0 0 0 0 0 0 0 0 520 550

56 39 16 0 0 0 0 580

62 44 18 0 0 0 0 610

SUPERMARKETS - RETAIL STRUCTURE BY SALES AREA (sq.m.)Source: Planet Retail

GfK Romania

Custom Research


June 2007

58

CBA Super Univers'all62 60

65

72

76

72

73

71

65

63

Billa InterEx Gima Superstore

4 17 3 8 2002 5 13 6 2003 4 11 3 4 2004 5 14 5 4 2005 15 7 5 2006 15 7 6 2007 22 22 23 24

Delvita City MegaImage Gamma

8 6 2008

8 6 2009

9 7 2010

9 7 2011

Total 187,65 264,00 313,00 434,72 470,42 506,12 sales 123,963 312,164 342,976 399,020 area 0 0 8 0 0 0 (sq.m.)

GfK Romania

Custom Research


June 2007

ROMANIAN RETAIL MARKET MAJOR PLAYERS*www.artima.ro

59

opened first supermarket in Romania in 2001 in present operates 19 supermarkets in Transilvania and Banat has more than 1190 employees in 2006 the turnover was 274 mil. RON all stores promote special offers by low price products every week (e.g. permanent low prices, the lowest price and the big discounts) in 2007 are planned new stores openings in the following cities: Slatina, Timisoara, Sf. Gheorghe, Deva, Campina

www.billa.ro part of Germanys Rewe Group is the first international retail network that entered the local market in 1999 has 22 supermarkets in all country almost 2.000 employees more than 80% of Billa products are coming from the local market private label: Clever ranked as one of the top companies in the Romanian trade sector with a turnover of 250.4 mil Euro in 2005 8-10 new stores will be opened this year, starting with Medias, Giurgiu, Bucharest Henri Coanda Airport

Mega Image is a well-known retail company, part of Delhaize Group 19 supermarkets present in Bucharest, Constanta and Ploiesti private label: 365, Delhaize no. of employees: about 1100 people easy shopping system for the future expansion plans: new 7 stores in Bucharest this year* Top 10 retailers in 2006, by value shares

GfK Romania

Custom Research


June 2007

3.1.4

DISCOUNT STORES


GfK Romania

Custom Research


June 2007

DISCOUNT STORES SALES STRUCTURE %61Source: Planet Retail

0 27

0

2

3 24

3 9

2 8

0 8

0 7

0 6 21

0 6 Albinuta 19

37

39 31

26

24

22

Profi 35 17 73 63 59 20 40 17 Penny 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 40 41 42 41 41 Plus 28 32 34 Penny XXL

24

mn

41

65

94

175

540

779

1,100

1,445

1,742

2,038

GfK Romania

Custom Research


June 2007

EVOLUTION OF NUMBER OF STORES DISCOUNT STORES62Source: Planet Retail70

180

180

6460 160

150140 50 120 40

120

34 24 18 16 30 26 26

40 35100

9080

80 62 70 65

30

2120

60

50 48 9 54 10 58 11

15 10 2 2002 2003

40

10

4

4 6

5 8

5

7

20

12

0

0

2004 Penny

2005

2006 Plus

2007 Penny XXL

2008

2009 Profi

2010 Albinuta

2011

GfK Romania

Custom Research


June 2007

DISCOUNT STORES - RETAIL STRUCTURE BY SALES AREA (sq.m.)Source: Planet Retail

63

35 47 50

27

Plus 34 49 51 55 58 59 Penny XXL

21 15 17 9 50 50 27

12 16 Penny 13 11 18 11 17 10 16 Albinuta

13

53

21

17

18

17

21

18

16

15

14

Profi

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Total sales area 15,000 24,000 33,900 72,306 121,600156,050210,900263,700311,900364,000 (sq.m.)

GfK Romania

Custom Research


June 2007

ROMANIAN RETAIL MARKET MAJOR PLAYERS*64www.pennyromania.ro part of Germanys Rewe Group; opened in Romania first discount store in 2005 counts 39 outlets: 34 Penny Market and 5 XXL Mega Discount starting with January 2007 - XXL Mega Discount became Penny Market XXL the discounter have 2 format stores: classic one - 750 m area with more than 1,200 products and the big size one of around 2500 m and with around 3500 food/non food products private labels: Boni, Top Floris

www.plus-discount.ropart of Tengelmann Group; 38 discount stores; almost 1000 employees turnover 35.4 million Euro for May 2005 April 2006. plans to open 26 new discount stores by the end of 2007 in all towns with more than 20.000 inhabitants private labels: Filia, New Pack, Carat, Bravour, Intuition, Ahorn, Bright&Shiny, Touching, Feeling, Serving, Alphorn, Alpa, Famili, Morning Sun, Spagat, Gold Cake, Siembra

GfK Romania

Custom Research


June 2007

3.1.5

FORECOURT STORES


GfK Romania

Custom Research


June 2007

FORECOURT STORES SALES STRUCTURE %66Source: Planet Retail

13 23 4 10 9 14 35

5 7

3 10

3 11

3 10

3 9

3 9

3 9

3 9 Select

27

27

27

27

26

27

27

28 Ciao Agip

MOL 29 59 38 26 Viva Shop 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 60 59 60 62 62 60 60 Lukoil

mn

35

48

97

107

113

126

138

141

146

149

GfK Romania

Custom Research


June 2007

EVOLUTION OF NUMBER OF STORES FORECOURT STORES67Source: Planet Retail

680 592600

665 530

660

655

650

645

500

400

300300

310

320

330

340

350

360

370

200

191 91 81 50 48 23 2002 187 81 52 23 2003 77 58 24 2004 2005 Lukoil 2006 MOL 2007 2008 2009 2010 Select 24 26 28 30 32 34 137 120 115 113 110 108 105 36 2011

100

0

Viva Shop

Ciao Agip

I will now show you some cards with diseases and I will ask you to order them by how serious you think they are. One answer only, prompted.

FORECOURT STORES - RETAIL STRUCTURE BY SALES AREA (sq.m.)Source: Planet Retail

GfK Romania

Custom Research


June 2007

68

13 24

4 Select

19

36

57 60

53

59

58

57

56

56

Viva Shop

14

8 11 5 10 8 8 8 8 7

MOL

36

40 29 32

35

31

32

33

34

35

Lukoil

7

4

2

2

2

2 2007

2 2008

2 2009

2 2010

3 2011

Ciao Agip

2002 2003 2004 2005 2006 Total sales 13,49 25,904 56,560 51,820 49,620 area 4 (sq.m.)

56,790 57,080 57,330 57,620

57,780

GfK Romania

Custom Research


June 2007

MAJOR ACCOUNTS SUMMARY major players cover almost 20% of the home consumption expenses; the percentage doubled in 2006 compared to 2004 (from 9,4% in 2004 raised up to 18,9% in 2006); Billa, Carrefour, Penny Market/XXL Mega Discount, Cora and Kaufland improved their value shares, while the other accounts were stable; with 19% value share for major accounts, Romania is placed as a still young market in terms of concentration, together with countries like Bulgaria (15%), Serbia (28%), Bosnia & Herzegovina (29%); most concetrated markets are Slovakia (71%), Czech Republic (62%), Croatia (61%) and Hungary (60%); at the opposite side are countries like Russia (7% ) and Ukraine (9%); among the most important retailers, Metro and Selgros have the most dynamic activity in FMCG promotion leaflets; with 23 outlets at the end of March 2007, Kaufland plans the next opening on April 19th in Constanta, followed by another new outlet in Roman on April 26th; Carrefour plans to open 4 new outlets in 2007 (1 in Bucharest Piata Unirii, 2 in Iasi, 1 in Cluj-Napoca) , having by the end of the year a total of 11 outlets and intends 5 new openings in 2008 (Pitesti,

69

GfK Romania

Custom Research


June 2007

3.2

RETAIL TRADE MARKET

A GENERAL OUTLOOK OF ROMANIANSSHOPPING HABITS

GfK Romania

Custom Research


June 2007

GfK Consumer Tracking Romania Outlet Types definitionsGeneral Store: Supermarket:a big shop with food and non-food products or a group of shops with a different assortments same building. For example: Big, Complex, etc. store with food and non-food products, mainly self-service and minimum two check-outs. Accounts Supermarkets (La Fourmi, Mega Image, Billa, G Market, Angst, Amtima, and supermarkets which are not part of a chain. Carrefour, Cora, Interex, Kaufland, Pic, Real, Spar, Trident, Auchan. modern shops with small prices for food and non food products: XXL Mega Discount, Profi, Plus, Discount and Penny Market. include Metro C&C, Selgros C&C and Gamma C&C. include traditional en-gross shops with mixed assortments. traditional shops, which you can enter and find food and non-food products. Generally these shops that you can very easily find on theground floor of the blocks in urban area the rural area as well where people dedicate one room of their house to a small theyselldifferent assortments of food and non-food stuff. small shops which you can not enter, but you can find a variety of products. The service is small window, specific for this type of store. traditional over-the-counter shops for food, but you can buy also products for These are basically the old Alimentara stores.

71

situated in the

Include Key Universall, Spar, etc.)

Hypermarket: Discounters: Cash & Carry: Wholesalers: Boutique:

MiniMax

are rather small and are very popular in shop where

Kiosks: Agro & Food Store: Street Vendors: Other Shops

done through the

personal and household care.

include also market hall and open market vendors (open spaces for trade, especially for food specialized stores: cosmetics shops, beverages shops; gas stations; drugstores; Economat bought from abroad etc.

products).

stores;

GfK Romania

Custom Research


June 2007

OUTLET TYPES MARKET SHARES & PURCHASING STRUCTURE72Supermarkets Hypermarkets Discounters Cash&Carry/ Wholesalers Agro&Food Boutiques Kiosks General Stores Street vendors Others Share of outlet types, value %

8 7 13

11 1 1 7 12

13 2 1 7 12

16 4 2 7 11

16 8 4 6 10

44

43

43 2 6 6 82004

43 2 5 5 52005

41 1 4 4 62006

3 6 9 102002

3 6 7 92003

Period: 2006 Total Romania Hypermarkets Cash&Carry Supermarkets Discounters

value share, % 100,0 7.8 4.2 16.1 3.9

penetration % 100 37.9 27.1 61.6 32.8

frequency of purchase 209.6 14.6 6.9 31.3 14.3

value per purchase act, RON 7.0 20.1 31.5 11.9 11.5

Source: GfK Consumer Tracking, based on measured FMCG basket

GfK Romania

Custom Research


June 2007

OUTLET TYPES Regions73Share of outlet types, value %

20

23

23 30 2 4 5 28 23 3 1 6 82005

12 3 2 5 8

11 7 5 4 7

20 2 1 11 8

19 5 4 8 8

14 7 13

18 4 3 6 12

17 1 1 10 19

15 6 4 7 21

17 1 6 12

18 1 3 7 9

2 5 4

56

54

38

47 41 2 6 8 32005

42

42 38 34 2 7 8 52005

44

1 1 6 52006

2 5 3 42005

1 5 2 42006

1 9 4 62005

7 3 52006

1 4 6 62006

4 3 72005

4 2 72006

1 5 5 72006

BUCHAREST* BUCHAREST*

MUNTENIA, DOBROGEA

OLTENIA

BANAT-CRISANAMARAMURESDiscounters Kiosks

TRANSILVANIA

MOLDOVA

Supermarkets Agro & food Street Vendors

Hypermarkets Boutiques Others

Cash&Carry/Wholesalers General Stores

Source: GfK Consumer Tracking * Without SAI

GfK Romania

Custom Research


June 2007

OUTLET TYPES Size of Community74Share of outlet types, value %

20

23

28 2 3 11 12 25

28 7 6 10 12

23 3 2 7 15

28 9 7 4 9

13 1 1 6 19

13 3 5 7 20

6 1 1 5 7

6 3 2 4 8

23 30 2 4 5 28 23 3 1 6 82005

2 5 4

63 43 38

62

31 23 30 1 7 6 52005

1 1 6 52006

3 2 7 72005

2 2 4 62006

4 4 52006

2 6 3 62005

1 5 3 52006

6 4 72005

6 3 62006

BUCHAREST* BUCHAREST*

150-350 thsd. inh

50-150 thsd. inh.

Up to 50 thsd. inh.

Rural Community



Discounters Kiosks

Cash&Carry/Wholesalers General Stores


GfK Romania

Custom Research


June 2007

OUTLET TYPES FMCG SEGMENTS75Share of outlet types, Value %

16 8 4 6 10

19 8 5 6 12

15 6 3 5 11

17 11 4 7 8

16 11 5 10 7

41

35

48

34 1 4 4 11Personal Care Basket

35

1 4 4 6Total FMCG

1 4 5 6Food Basket

1 4 3 5Beverages Basket

1 5 4 5Home Care Basket



Discounters Kiosks

Cash&Carry/ Wholesalers General Stores

Source: GfK Consumer Tracking Fact: value share (%) Period: 2006

GfK Romania

Custom Research


June 2007

FOOD & BEVERAGES by RETAILERS Leaflets Activity7614000 12647 12000

MetroC&C SelgrosC&C Carrefour Gmarket7563

Count of Promoted Products

10000

Cora6842

8000

Kaufland5267 4591

6000

Real XXLMegaDiscount3807 3638 2801 2137 2035 1968 1899

4000

Billa1689 1258

2000

Universall1219

LaFourmi MegaImage

0

1record=1promotedproduct

Profi Angst PennyMarket

Source: GfK Leaflet Monitor Period: 2006

GfK Romania

Custom Research


June 2007

PERSONAL CARE by RETAILERS Leaflets Activity771200

MetroC&C10 10

SelgrosC&C Carrefour


1000

867 809800

Cora Gmarket6 39 639

Real53 8 4 33

600

Universall377

400

Kaufland328 2 84 269 256 1 80 14 3 1 37

MegaImage LaFourmi Billa

200

0

XXLMegaDiscount 1record=1promotedproduct Profi Angst Artima


GfK Romania

Custom Research


June 2007

CLOTHING FOOTWEAR - MERCERY by RETAILERS Leaflets Activity783500

32 57

MetroC&C SelgrosC&C Carrefour


3000

2500

247 9

Cora Real

2000

1 861 1659

Gmarket Kaufland XXLMegaDiscount953 80 6 4 37

1500

1000

PlusDiscount PennyMarket332 235 1 41 119 118 47 45 35

500

BricoStore MiniMAXDiscount Billa Profi Praktiker

0

1record=1promotedproduct


GfK Romania

Custom Research


June 2007

PURCHASING STRUCTURE BY OUTLET TYPES2006Total ROMANIA purchases Small shopping Big shopping Value share, % 100,0 78.4 21.6 HYPERMARKETS Total purchases Small shopping Big shopping 100,0 22.3 77.7 SUPERMARKETS Total purchases Small shopping Big shopping 100,0 47.8 52.2 DISCOUNTERS Total purchases Small shopping Big shopping 100,0 50.1 49.9 CASH & CARRY Total purchases Small shopping Big shopping 100 6.1 93.9 6.9 4.1 8.0 14.3 15.3 11.6 31.3 30.4 31.9 14.6 13.7 15.1 purchasing frequency 209.6 216.5 127.5

Small shopping < 14.51 RON/purchase act Big shopping >= 14.51 RON/purchase act

value per purchase act, RON 7.0 6.0 21.4

79

20.1 9.9 29.0

11.9 8.1 22.7

11.5 8.0 21.5

31.5 10.5 37.2

SMALL GROCERY SHOPS (Boutiques, Kiosks, Agro& Food Stores) Total purchases Small shopping Big shopping 100,0 77.3 22.7 95.9 95.5 80.0 7.8 6.7 20.4

VALUE OF AVERAGE SPENDING, FREQUENCY OF PURCHASE BY COMMUNITY SIZE80

GfK Romania

Custom Research


June 2007

Frequency of purchase (every x-th day) Average number of purchasing occasions per month Average purchase (RON) Average monthly FMCG spending per household (RON)

2004 0.69 20.9 4.18 87.49

2005 0.64 19.5 5.73 111.61

2006 0.57 17.5 7.01 122.44

Frequency of purchase (every x-th day) Average number of purchasing occasions per month Average purchase (RON) Average monthly FMCG spending / hh (RON)

Bucharest* 0.42 12.8 12.04 154.60

150-350 thsd.inh. 0.53 16.0 8.55 136.60

50-150 thsd. inh. 0.51 15.5 8.59 133.34

Up to 50 thsd. inh. 0.61 18.5 7.44 137.40

Rural 0.63 19.2 5.30 101.89


GfK Romania

Custom Research


June 2007

RETAIL TRADE MARKET SUMMARY traditional trade still holds almost 70% of the expenses, but continues to lose ground in favor of modern trade; hypermarkets doubled their value share in 2006 (8%) compared to 2005 (4%), as well as discounters that raised from 2% in 2005 to 4% in 2006; in Cash & Carry and Hypermarkets, people tend to spend more, but less frequently, while in supermarkets they are going more often, spending less; looking over the value shares of different types of outlets by regions, it is obvious the increasing importance of hypermarkets in Bucharest; Muntenia-Dobrogea and Transilvania also recorded significant share increase for hypermarkets; in rural community and small urban, traditional trade is still dominant, but perspectives are optimistic for the modern trade in the future; Cash & Carry and wholesalers have significant importance for big cities (150-350 thsd. inhabitants); when shopping for food, buyers tend to prefer supermarkets, as well as agro & food stores, while for beverages they prefer proximity stores (boutiques); the situation is different when shopping for personal care and home care products, for which modern trade is preferred due to large range of offered products and brands from which buyers can

81

GfK Romania

Custom Research


June 2007

RETAIL TRADE MARKET SUMMARY82 analyzing the purchase structure by outlet type - considering small shopping to be less than 14.51 RON per purchase act and big shopping, the purchase acts that exceed this amount - we can conclude that: -> 78% of the 2006 FMCG expenses were made in frequent shopping occasions (small shopping trips) hypermarkets act). with an average amount spent per purchase act of 6 RON; (78%), but also in supermarkets (52%) and discounters (50%); -> high expenses per purchase act are made, as expected, in cash & carry (94%) and -> small shopping is typical for traditional trade (an average of almost 7 RON/purchase

the average monthly FMCG spending per household increased by 40% in 2006 compared to 2004, when the expenses per month were of only 87.49 RON (for the measured FMCG products); while Bucharest inhabitants are spending 12.04 RON per purchase act, rural inhabitants are spending only 5.3 RON; in rural, though, the low expenses per purchase act are compensated by a higher number of purchasing acts per month of 19 occasions, compared to 13 occasions in Bucharest; this trend finds explanation in the importance of modern trade for Bucharest buyers, who prefer to spend more at one purchase occasion and go shopping less frequently.

GfK Romania

Custom Research


June 2007

3.3

RETAIL TRADE MARKET

A CLOSER LOOK INTO PRIVATE LABELS

GfK Romania

Custom Research


June 2007

PRIVATE LABELS HOW BIG IS THEIR PIECE OF THE PIE?84Total FMCG Market

1% 99%

Private Labels Branded

12%

1%

Private Labels Segments

9% 78%

F ood Beverages Personal Care Home Care

Source: GfK Consumer Tracking Measure: value share (%); Period: 2006

GfK Romania

Custom Research


June 2007

RETAILERS LEAFLETS with PRIVATE LABELSPL BILLA PL CARREFOUR PL CORA PL G`MARKET PL KAUFLAND PL MEGA IMAGE PL METRO PL MINIMAX PL PLUS PL PROFI PL REAL PL REWE-DISCOUNTERI PL SELGROS PL XXL

27 37 35 5 54 23 168 14 51 27 32 12 47 4N of Leaflets with PL in 2006 o.

85


GfK Romania

Custom Research


June 2007

PRIVATE LABELS PIECE OF THE PIE VARIES ACROSS THE REGION86Private Labels Branded99%

Romania1%

Slovakia23% 77%

Poland16% 84%

Russia0%

Czech Republic83% 17%

100%

Ukraine0% 100%

Hungary78% 22%

Croatia93% 7%

Bosnia & Herzegovina0% 100%

Serbia0% 100%

Bulgaria3% 97%

Source: GfK Consumer Tracking; Calculation based upon consumer basket including monitored product categories; Measure: value share (%); Period: 1HY

GfK Romania

Custom Research


June 2007

PRIVATE LABELS SELECTED CATEGORIES WITH HIGH PL SHARES87Edible Oil Napkins

11

9 12

11

Handkerchief

10 89 91 88volume % value % volume % value % volume %

9

89 90 91

value %

Liver & Vegetable Pate

Private Labels Branded

4

3

Breakfast Cereals

96

97

6Tinned Vegetable

3

4volume % value %

4

94

97

96

96volume % value %

volume %

value %

Source: GfK Consumer Tracking Period: 2006

GfK Romania

Custom Research


June 2007

CLOSER LOOK INTO PRIVATE LABELS SUMMARY88compared to other CEE markets, with a value share of 1% in Romania, private labels are still in an incipient stage and have enough space to develop in the next years; countries where private labels are well represented are Slovakia (23%), Hungary (22%), Czech Republic (17%) and Poland (16%); some selected categories for which the development of private labels is noticeable in Romania are Edible Oil, Breakfast Cereals, Paper products (Napkins and Handkerchiefs); continued private label growth in neighboring countries and the beginning of such development in Romania, could lead to the progressive consumer attention towards products belonging to both segments low end and premium , at the cost of the middle segment.

GfK Romania

Custom Research


June 2007

4ROMANIAN RETAIL TRADE MARKET OVERVIEW

GfK Romania

Custom Research


June 2007

ROMANIAN RETAIL TRADE OVERVIEW90 The year 2006 ended a phase for both Romanian history and retail industry, since 2007 places our country in a European context and starts a new development phase for what we call retail and FMCG. The past three years showed that we are more and more a society with changing needs, for which the consumption begins to receive a different dimension.

After the 2005 explosive growth, the rising trend of consumption continued last year with a lower growth rate. The beginning of the year was the most promising time, continuing somehow the 2005 euphoria, while the following quarters brought significantly lower growth. Most products showed a rising trend, based on less spending for bulk and home-made products and more on brand/industrialized goods. Modern retail development, one of the main factors that encouraged consumption growth in 2005, continues to play an important role on the Romanian market. Nevertheless, in 2006 the story took a different turn, therefore hypermarkets and discounters played the major part. Supermarkets, the most dominant retail form in the country, consolidate their position, reaching a market share of 23%. Attracting a larger number of consumers was the determining factor, influencing evolution of modern retail in 2006, with hypermarkets and discounters almost doubling customer traffic. However, the number of such clients is significantly lower than supermarket customers, which benefit from a better geographic spread, with more than 60% of Romanian families shopping at supermarkets for their FMCG.

GfK Romania

Custom Research


June 2007

ROMANIAN RETAIL TRADE OVERVIEW91

Besides an almost double figure of hypermarkets and discounters consumers, another trend of Romanian retail is that both shopping frequency in modern retail and the money spent during one shopping trip rose significantly, unlike traditional trade, where both factors declined.

If the main conclusions for 2006 were the development of modern retail and changing shopping habits due to increased income, 2007 marks the beginning of a period which will outline several strong trends. EU accession brings a new context for retail evolution, therefore, dissolving the borders between Romania and EU will change the familiar notion of import/export into a new form of transfer/exchange of goods among the EU members states. European experience shows that only the strongest brands will appear on shelves, the others being replaced by private label items. Based on the above scenario and even more, we can definitely say that growth has been recorded on every level, which together with the neighboring countries experiences, made us estimate a 50% market share for modern trade in year 2010.

GfK- Desk Research FMCG Distribution Channels - Romania

Documents

Transcript of GfK- Desk Research FMCG Distribution Channels - Romania