Modern Retail in Italy | Main features and latest trends Workshop Scanner Data - Rome, 1 October 2015 Hélène Hotellier Responsabile Ufficio studi e Affari europei Federdistribuzione per ADM [email protected] Members of ADM are the three main representative trade associations of the large Modern Retail sector - Federdistribuzione, ANCC-Coop, ANCD-Conad - and about 800 retail companies operating in Italy. ADM is a forum where the main retail industry associations can discuss to identify possible common paths on institutional issues. 2 Federdistribuzione per ADM ADM represents the Modern Retail sector in dealing with the agro-food / Fast Moving Consumer Goods industry. ADM aims at the improvement of the supply chain, boosting and promoting efficiency in relations between operators. 1. Focus on Italy | Macroeconomic context and forecasts 2. Focus on Italy| Household consumption model: structural trends & impact of the crisis 4. Modern Retail in Italy | New challenges 3 Federdistribuzione per ADM 3. Modern Retail in Italy | Main features, comparison with European countries and latest trends 1. Focus on Italy | GDP, Households consumption, Consumer prices 6.0 5.4 3.9 4.0 2.0 3.2 3.3 2.9 2.3 2.2 2.9 1.7 0.8 2.0 1.8 1.8 1.7 2.5 2.9 3.3 2.7 2.5 1.1 1.9 1.6 2.8 2.7 2.2 1.0 0.7 1.7 0.2 1.1 0.0 1.9 2.1 1.5 2.2 1.5 1.5 1.8 1.4 0.8 1.7 0.6 3.0 1.2 1.7 0.3 0.2 0.6 0.9 0.5 -0.8 0.0 -0.3 -1.6 -0.4 -1.2 -2.0 -2.6 -1.9 -2.4 -4.0 Source: Istat GDP 2014 2013 2012 2011 2010 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 Consumer prices 2009 -5.5 -6.0 Consumption 4 Federdistribuzione per ADM -4.0 GDP (real terms) Household consumption (real terms) Unemployment rate (%) Consumer prices (% Var.) Deficit (Deficit/GDP) Public debt (Public debt/GDP) Source: DEF Italian Government (18 september 2015) 2014 2015 2016 -0,4 +0,9 +1,6 +0,3 +0,8 +1,5 12,7 12,3 11,9 +0,2 +0,3 +1,0 -3,0 -2,6 -2,2 132,1 132,8 131,4 5 Federdistribuzione per ADM 1. Focus on Italy | Macroeconomics forecasts 2. Focus on Italy | How has Household spending changed overtime 19.7% 38,9% 835 986 992 12.2% 10.1% 9.9% 24,9% 11.8% 12.7% 21,9% € billion 11.5% 21,4% 19.2% 24.4% 24.6% 19.6% 46,0% 33,5% 9.5% 3.3% 1.8% 11.0% 27,6% 16.0% 14.0% 13.8% 3.8% 4.5% 3.8% 3.6% 3.9% 3.7% 12.7% 13.4% 13.5% 16.6% 18.5% 18.7% 19.3% 1991 2003 2013 2014 Source: Istat, GNLC Nielsen, Indicod Ecr-TradaLab Housing / allowances spending 455 Housing, power… 242 Transports, communication 137 Health, Education 39 Insurances, Financial services 37 Recreative spending 32,8% 32,1% 31,2% 212 98 114 45,8% 43,9% 18.9% Food & Non Food goods spending Non food Food 325 Restaurants & Hotels, Travels 134 Wellness, Sport, Culture, … 191 6 Federdistribuzione per ADM 429 2. Focus on Italy | Household Consumption hit by a 2-phase crisis Household consumption - 6,4% = € 63,4 bn Source: TradeLab on Istat data 7 Federdistribuzione per ADM - 8,0% = € 79,9 bn 3. Modern Retail in Italy| Main features - 2014 Total Modern Retail sales Total Retail sales Every week, 60 127,3 bn € 212,2 bn € 60% million people enter Modern Retail stores 92% with open-ended contracts 58% women 17% under 30 +131% invested in professional training per FTE in 2014 vs 2006 Source: Federdistribuzione, Istat, Nielsen, TradeLab 8 Federdistribuzione per ADM 450.000 co-workers 3. Modern Retail in Italy | Retail formats % market shares - Total retail sales 198,5 226,3 220,4 215,4 212,2 € billion Modern Retail 46.1 57.7 58.159* stores 58.7 59.4 60.0 Traditional small shops 696.886 stores 29.8 28.7 27.9 27.2 11.9 12.5 12.6 12.7 12.8 2000 2011 2012 2013 2014 •Incl. Cash & Carry Source: AC Nielsen, Istat, Indicod Ecr - TradeLab Market stalls, ecommerce, … 188.274 stores 9 Federdistribuzione per ADM 42.1 3. Modern Retail in Italy | Retail formats % market shares - Food retail sales 100,8 117,5 117,3 116,0 114,1 7.6 11.7 11.5 11.1 10.7 17.6 18.5 19.0 19.7 63,1% 22.5 27.1 Superstores (1.500 - 4.500 sq.m.) 1.619 stores Supermarkets (400 - 1.500 sq.m.) 22.2 22.2 22.4 12.0 6.2 Hypermarkets > 4.500 sq.m. 378 stores 6.969 stores Convenience stores 10.0 9.4 9.0 8.7 10.0 10.5 11.1 11.4 13.872 stores Discounts 4.830 stores 18.2 17.9 17.5 16.9 9.8 10.0 10.1 10.1 10.2 2000 2011 2012 2013 2014 Source : AC Nielsen, Istat, Indicod Ecr - TradeLab Small Traditional shops 191.540 stores Market stalls, ecommerce,… 36.196 stores Federdistribuzione per ADM 37.3 € billion 72,9% 10 10 3. Modern Retail in Italy | Retail formats % market shares - Food retail sales (excl. market stalls) 0% 4% 4% 5% 8% 9% 9% 11% 14% 18% 19% 20% 22% 22% 22% 24% 26% 31% 31% 43% 64% 100% 96% 96% 95% 92% 91% 91% 89% 86% 82% 81% 80% 78% 78% 78% 76% 74% 69% 69% 57% Ger Fra Ned Bel Swe Den Aus UK Large Modern Retail (over 400m2) Source: Nielsen - Total Store 2012 Por Nor Spa Fin Swi Ita Gre Eir Cze Slva Hun Pol Tur Rem (under 400m²) 11 Federdistribuzione per ADM 46% 3. Modern Retail in Italy | Retail formats % market shares - Non food retail sales 100,8 108,8 103,1 99,5 98,1 4.2 4.7 6.9 5.0 6.9 5.4 6.8 5.7 6.6 5.9 € billion Hyper+Super 8.966 stores 19.6 30.6 30.9 31.2 32.1 Department Stores 979 stores Large Specialized Stores 29.127 stores 42.4 41.4 40.7 39.2 Small Traditional shops 505.837 stores 14.0 15.1 15.5 15.7 16.1 2000 2011 2012 2013 2014 Source: Indicod Ecr - TradeLab Market stalls, ecommerce,… 152.078 stores Federdistribuzione per ADM 57.5 12 12 2010 2014 % Var. 2014 vs. 2010 Var. 776.365 755.045 -2,75 -21.320 Modern Retail 59.508* 58.159* -2,27 -1.349 Small traditional shops 716.857 696.886 -2,79 -19.971 Market stalls 170.845 188.274 10,20 17.429 Total stores 947.210 943.319 -0,41 -3.891 Retail stores •Incl. Cash & Carry Source: Osservatorio del commercio (MISE) - Nielsen Federdistribuzione per ADM 3. Modern Retail in Italy | Number of stores by retail formats (1) 13 13 2010 2014 Var. % Var. 2014 vs. 2010 29.366 27.668 - 1.698 - 5,8 382 378 -4 - 1,0 Superstores 1500-4500 sq.m. 1.456 1.619 + 163 + 11,2 Supermarkets 400-1500 sq.m. 7.279 6.969 - 310 - 4,3 Convenience stores 100-400 sq.m. 15.867 13.872 - 1995 -12,6 Discounts 4.382 4.830 + 448 + 10,2 396 385 -11 -2,8 29.746 30.106 360 +1,2 Food Modern Retail stores Hypermarkets > 4500 sq.m. Cash & Carry Non Food Modern Retail stores Source: Osservatorio del commercio (MISE) - Nielsen Federdistribuzione per ADM 3. Modern Retail in Italy | Number of stores by retail formats (2) 14 14 3. Modern Retail in Italy | Total sales surface - Grocery market % Var. new sq.m. Source: Nielsen GNLC - January ed. 15 Federdistribuzione per ADM sq.m. (‘000) 3. Modern Retail in Italy| Top 10 food retailers: % market shares Coop Italia 15.0 Conad 11.7 Selex 9.4 Esselunga 8.7 Gruppo Auchan 7.2 Gruppo Carrefour 6.2 Eurospin Gruppo Pam Finiper 3.4 3.1 2.8 Source: AC Nielsen - January 2015 16 Federdistribuzione per ADM Sigma 4.9 3. Modern Retail in Italy | A low level of market concentration 62,5% TESCO ASDA J SAINBURY’S TESCO UK ASDA SAINBURY’S 61,0% EDEKA REWE SCHWARZ Gr. EDEKA Germany REWE ALDI 56,0% CARREFOUR LECLERC INTERMARCHE CARREFOUR Spain LECLERC CASINO 38,0% 36,1% MERCADONA CARREFOUR DIA COOP CONAD SELEX France Italy COOP CONAD SELEX Source: Nielsen, Kantar - 2014 17 Federdistribuzione per ADM % market share of TOP 3 food retailers 3. Modern Retail in Italy | Investments pre & post-crisis 140% 118% 120% 100% 104% 100% 96% 83% 77% 80% 81% 74% 76% 60% 40% 20% € 4,0 - 4,5 bn of investments in the pre-crisis phase € 2,5 - 3,0 bn of investments today 2006 2007 2008 2009 2010 2011 2012 2013 2014 1 bn € of investments generates 750 mln € of value added & involves 15.000 persons Source: PwC study for Federdistribuzione - 2014 figures 18 Federdistribuzione per ADM 0% 3. Modern Retail in Italy| Sales vs. Costs % Var. (2006 = base 100) 109.1% 110.0% 107.9% 108.0% 107.8% 107.7% 106.5% 106.0% 106.4% 106.9% 105.4% 104.0% 105.5% 106.5% 107.3% 105.6% 105.0% 102.2% 103.8% 102.0% 100.0% 100.0% 101.6% 100.0% 98.0% 94.0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 Sales per by FTE Ricavi FTE - Variazione % da 2006 (base 100) - All Costi Costsper byFTE FTE- Variazione % da 2006 (base 100) - All 19 Federdistribuzione per ADM 96.0% 3. Modern Retail in Italy | Consumption crisis and costs increase has led to a negative profitability Net sales = 100 2006 2010 2013 100 100 100 2,1 1,7 1,1 EBIT 1.4 0.8 Net income -0.1 Source: TradeLab on a representative sample of retailers’ income statement 20 Federdistribuzione per ADM Cost of sales + labour costs + other expenses 3. Modern Retail in Italy| National vs. Foreign-capital retailers Market shares (%) Retailers with National capital 80,3% Retailers with Foreign capital 19,7% Auchan (FR) 7,2 % Carrefour (FR) 6,2 % Lidl (DE) 2,6 % Despar (Aspiag - AT) 2,2 % Penny Market (DE) 1,5 % Metro (Cash & Carry - DE) not taken into account (wholesale format) Source: Nielsen 21 Federdistribuzione per ADM RETAILERS 3. Modern Retail in Italy| Priority to price convenience to sustain purchasing power 35 30 25 20 17.1 18.4 19.6 22.5 23.2 23.1 22.4 22.7 20.9 21.6 24.3 15 10 8.4 7.4 7.9 8.9 9.2 9.6 10.3 10.4 10.0 10.0 10.9 25.6 26.4 27.4 28.7 29.3 12.9 13.4 12.4 12.2 11.7 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Share of Price promotion on total sales (%) % ref. with price promotion Source: Nielsen Trade*Mis - Hyper+Super+LS 22 Federdistribuzione per ADM 5 4. Modern Retail challenges | Omni-channel business model Source: Politecnico di Milano 23 Federdistribuzione per ADM Online sales trend 4. Modern Retail challenges | Omni-channel business model Online sales trend Services Source: Politecnico di Milano 24 Federdistribuzione per ADM Goods