ecr europe forum ‘08. cee – lessons for growth

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METRO Group‘s Expansion Strategy and Experiences in Central and Eastern Europe

ECR Europe Forum & MarketplaceCEE Special Seminar

Berlin, 27th

May, 2008 Frans

W.H. Muller

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METRO Group

International Retail CompetenceMore than 2,400 locations31 countries in Europe, Africa and Asia270,000 employees Selling space of around 12 million m²

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2006bn

€2007bn

€Change

in %

METRO Group 58.3 64.3 10.4

Germany 24.8 26.3 6.0

Western Europe (excl. Germany) 19.5 20.5 5.7

Eastern Europe 12.6 15.7 24.4

Asia/Africa 1.4 1.8 26.7

Sales 2007 (net) by RegionsSales 2007 (net)

Source: Annual

Report 2007

2007

Germany

41%

Eastern Europe

24%

Western Europe

32%

Asia/Africa

3%

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Eastern Europe Has the Best Economic Growth Rates Worldwide

Eastern Europe

South America

Asia

Africa

Western Europe

North America

13.6

9.0

8.2

6.5

5.2

16.2

13.3

11.1

8.4

6.8

5.2

16.3

Source: FERI, Bad Homburg (Status: May 2008), * nominal growth

PrivateConsumption GDP

Average Economic Growth Rate in % p.a. [2007-2012]*

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Russia and Ukraine Are the Biggest Eastern European Economies with Very Favourable Growth Rates

Source: FERI, Bad Homburg (Status: May 2008), * real growth

Average Economic Growth Rate in % p.a. [2007-2012]*

Russia

Ukraine

9.0

8.0

6.3

6.1

PrivateConsumption GDP

Romania 6.7 5.3

Slovakia 5.9 6.9

Bulgaria 5.1 5.6

Poland 4.7 5.2

Croatia 4.6

Czech Rep. 4.3 5.0

Serbia 4.2

Hungary 2.2

4.8

5.5

2.8

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METRO Group’s Presence in Central & Eastern Europe

Country Stores Since Stores Since Stores SinceHungary 13 1994 20 1997

Poland 26 1994 50 1997 42 1998

Romania 23 1996 14 2006

Czech Rep. 12 1997

Bulgaria 8 1999

Slovakia 5 2000

Croatia 6 2001

Russia 39 2001 10 2005 11 2006

Ukraine 18 2003

Moldova 3 2004

Serbia 5 2005

As of 31st

December, 2007

http://www.flags.net/CROA.htm

http://www.flags.net/CZEC.htm

http://www.flags.net/HUNG.htm

http://www.flags.net/MOLD.htm

http://www.flags.net/POLA.htm

http://www.flags.net/RMNA.htm

http://www.flags.net/RUSS.htm

http://www.flags.net/UKRN.htm

http://www.flags.net/SERB.htm

http://www.flags.net/BULG.htm

http://www.flags.net/SVKA.htm

http://www.media-saturn.com/PressImages/Saturn_Logo.jpg

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Central & Eastern Europe Provided Excellent Sales Growth in Recent Years: Example METRO Cash & Carry

Sales Development [bn

€]

Region Central & Eastern Europe also includes Greece and Turkey in this chart

16,6 17,7 18,3 18,9 19,2 19,3 19,7 20,0

4,5 5,1 5,7 6,2 7,3 8,8 10,2 11,721,0 22,7 24,0 25,1 26,4 28,1 29,9 31,7

15,2%15,0%21,9%16,9%8,5%13,1%13,3%6,0%6,5%6,2%5,4%4,7%5,5%8,1%

2000 2001 2002 2003 2004 2005 2006 2007

Other MCC Countries MCC Eastern Europe

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Our Formats in Central & Eastern Europe

http://www.media-saturn.com/PressImages/Saturn_Logo.jpg

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Market Entry Process

METRO follows a very systematic international market entry process

2 years

Country

Screening

/ Scoring Feasibility

Study EntryManagement

Recruitingqualified

local

staff

http://creative.gettyimages.com/source/Search/48','48','2','

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Key Pillars of METRO Group’s Expansion Strategy

Understanding local customer needs Having a clear, internationally transferable formatReaching high expansion speed and securing highly productive locationsHiring qualified local staffSetting up professional back-end solutionsOpening new sourcing opportunities and building up a strong and reliable supplier portfolioDealing with shorter life cyclesTransferring solutions and best practises across countries

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METRO Group Contributes to the Growing Economies in Central & Eastern Europe: METRO Cash & Carry

MCC makes small local retailers and restaurants more competitiveSourcing from local suppliersCreation of up to 240 jobs per METRO Cash & Carry storeLocal investment in land and constructionMaximum food safety, hygiene and traceabilityTraffic decongestion through one-stop-

shopping, parking area and modern goods receiving facilitiesContribution to the establishment of a modern supply chainReliable and transparent taxpayer, good corporate citizen

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Reaching High Expansion Speed: Example Russia

Expansion Russland, kommt

noch

2

2001

# Stores

2

RUSSIA

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noch

3

2002

3

RUSSIA

# Stores

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14



noch

5

2

2003

7

RUSSIA

# Stores

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15



noch

6

2

2004

14

RUSSIA

# Stores

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noch

7

3

2

2005

223

RUSSIA

# Stores

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noch

8

3

3

2006

3162

RUSSIA

# Stores

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noch

9

3

2

23

2

5

4

2007

401111

RUSSIA

# Stores

2

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Key Learnings in Central & Eastern Europe:

Customers & MarketsDealing with shorter life cyclesDemand for high frequency of innovation (assortment, merchandising techniques, remodelings

etc.)Do not underestimate market size and buying powerOpenness for private labels and imported goods

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PeopleHigh level of educationInvestment in and training of people necessary to understand business modelBringing in expertise from abroadHigh level of fluctuationMaking jobs interesting through challenging tasks, appropriate compensation and national / international perspectives

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OperationsHigh expansion speed importantBuilding up efficient supply chain, quality assurance, and logisticsSupporting partners along the value chain (preparing for audits, re-

engineering production, education etc.)Be transparent and compliant

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Customer

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Contact

Frans

W.H. Muller

METRO AGMember of the Management BoardMetrostrasse

1

40235 Duesseldorf

Tel.: +49 (0) 211 969 3103

Fax: +49 (0) 211 969 490 6216

E-Mail: [email protected]

Internet: www.metrogroup.de

4-Jun-08 Functional Meetings 24

On Shelf Availabilityin Lenta

economy in each purchase. always.

Functional Meetings59 economy in each purchase. always.

1 1 1 2 3 31 1 2 3 4

69 10

13

3

13

1 12

3 31 1

23

46

9

13

26

1

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 г. 2007 г.

Total number of stores in Russia

Number of stores outside SPb

Number of stores in Saint-Petersburg

We work for people in our country live better and wealthier, saving their money every day

Oleg ZherebtsovFounder,

Chairman of the Board, shareholder

First store opened

+2 stores cash&carry

format

Format renovation, first «economy

hypermarket»

opened

Nationwide roll-

out began

Source: Lenta


Lenta is…

Top-10 Hypermarket Food retailers, by annual turnover 2007, $ billion

4,6

3,7

1,6

1,2

0,8

0,8

0,7

0,7

0,5

0,4

Metro C&C

Auchan

Lenta

Okay

Karusel

ALPI

Mosmart

Liniya

Real

Vester

Source: Lenta, desk research, company’s data

40

29

28

26

23

17

17

16

15

15

Metro C&C

Mosmart

ALPI

Lenta

Karusel

Auchan

Liniya

Okay

Vester

Perekriostok

Top-10 Hypermarket Food retailers, by number of stores opened by April 2008

0,442

0,653

1,016

1,559

2004 2005 2006 2007

x 3,5

Lenta’s

annual turnover 2004 -

2007, $ billion


Lenta operates in 6 of 7 Federal Districts, in 11 cities

Source: Lenta

North-Western FDCentral FD

Privolzhsky

FD Ural

FD

Siberian FD

Far Eastern FD

Southern

FD

DC

DC

DC

Functional Meetings62 economy in each purchase. always.Source:

Mintel, RBC, AC Nielsen, AT Kearney

262020

1817

1615

1414

1199

88

77

65

43

2

Number of Hypermarkets per 1 million inhabitants

Finland

Germany

France

GB

Denmark

Switzerland

Czech Republic

SwedenSlovakia

Ireland

Spain

Austria

Italy

Hungary

Norway

Belgium

Portugal

Poland

Greece

Netherland

Russia

9592

828180

7565656363595857

5248

3939

2915

10

Share of Top5 retailers by country, %

DenmarkNorwayFinland

SwedenGermanyHungary

AustriaSwitzerland

UKBelgiumIrelandFrance

NetherlandsPortugal

SpainCzech Republic

ItalyGreecePolandRussia

Russian market seems to be attractive

2,23

hypermarkets per 1 million people321

hypermarkets total (April 2008)

GRDI score, 2007


Annual retail turnover growth rate in Russia –

24% (2007)

Source:

GKS, Mintel

1103 1430 1771 2114 2914 3568 39404870

12711669

20312463

33214062

4750

5888

23743099

38034577

62357630

8690

10758

31%36%

24%22%20%23%14%

2000 2001 2002 2003 2004 2005 2006 2007

Total annual retail trade turnover, billion RUBNonfood annual retail trade turnover, billion RUBFood annual retail trade turnover, billion RUBTotal annual retail trade turnover gross rate, %

14

10

9

8

7

6

5

5

5

4

4

4

3

3

3

2

2

1

1

0,4

Greece

Russia

Hungary

Ireland

Sweden

Czech Republic

Poland

Finland

Portugal

Netherlands

Denmark

Spain

UK

Norway

Austria

France

Italy

Switzerland

Belgium

Germany

Russian retail (food + nonfood) growth, 2000 -

2007

Food retailing growth rate in Europe and Russia, %, 2006 / 2005

$448 billion


Russian retail is young and has a huge potential…

Source: GKS

North-Western FDCentral FD

Privolzhsky

FD Ural

FD

Siberian FD

Far Eastern FD

Southern

FD

26%10%

16%21% 9%

14%

5%

64% of total populationlive on 13% of total square

5000 km

9

000 km, 11 days by train

142 200 000 of people (official data, 2007) 121 500 rub annual income per capita

17 267 300 000 000

rub ($719 billion)

… but there are some peculiarities:


Competition is stronger than official data shows

15% limit of domination (municipal district / region) price control by governmentbureaucracy & corruptionlack of free locations for new hypermarketslack of effective human resources


51 55 51 56 66 70 64

49 45 49 44 34 30 36Покупаюттолько в Ленте

Покупают вЛенте и другихмагазинах

Structure of steady customers

of leading hypermarket nets in SPb(% of customers made main part of purchases in this net)

August-

December’05

N=924

January-

June’06

N=975

July-

December’06

N=966

January-

March’07

N=446

April-June’07

N=455

July-

September’07

N=441

October-

December’07

N=403

52 58 59 5266 67 58

48 43 41 4834 33 42

Покупаюттолько в ТКО'Кей

Покупают в ТКО'Кей и другихмагазинах

48 57 58 61 66 69 65

52 43 42 39 34 31 35Покупаюттолько в ТККарусель

Покупают вКарусели идругих магазинах

In some cities market is oversaturated

% of customers make main part of purchases in this net% of customers make main part of purchases in other nets

Source: Tracking Research by O+K for Lenta


On Shelf Availability is very important today

Young, rapidly increasing marketCompetition is also rapidly increasingHuge territoryDifficult logistics Low level of market saturationRegional expansion era began in 2006-2007

Customers become more and more exactingPrice become less important for people, but are still importantEffective assortment is what people expect to find in hypermarketPeople expect to find items they used to buy

No goods on shelf – no money!


89% 11% 44% 56%

Sometimes customers couldn’t find items they need

Food

Call-center to collect customer’s requests

Trade personnel offers surveys

Assortment research Competitors price and assortment monitoring

NonFood

% of customers buy all goods they need in Lenta

% of customers have to visit other stores to buy some items they

need

Source: Assortment Research by WorkLine

for Lenta, December 2007


Customers should find item they need!

Navigation /

layout is not

perfect

SKU is not in matrix

SKU is not on shelf (Out Of Shelf)

SKU is on shelf, but customer couldn’t find it

Planograms

were changed

Sections resizing SKU is in matrix, is

in store, but not on shelf (Out Of Shelf)

SKU is in matrix, but there is no SKU

in store (Out Of Store)

Underorder Underdelivery

by supplier

Underdelivery

by DC

Customer couldn’t find SKU it needed

Space planning

and ad hoc projects

OSA project +Stocks and orders report

Category management and Assortment analysis

Physical audit


Space planning by Strategix

oftware

Assortment planning

Z-Matrix

SAP based tool

Store space planningFloor Planning

by Intactix

Shelf space planningSpace Planning

by Intactix

Intactix Knowledge Base

Monitoring and analysis of the results

Intactix Knowledge Base

Shelf layout execution

Optimal stock volume for each

SKU in each storeOptimal layout


Assortment report: SKUs, people wanted to buy in Lenta, but didn’t find them

Город ТК СчетТовар Группа Категория

Астрахань 31 1 алкоголь водка-5 озер- Алкогольные напитки Крепкий алкогольАстрахань 31 1 алкоголь водка-5 озер-бутылка 0,5л Алкогольные напитки Крепкий алкогольАстрахань 31 1 алкоголь водка кедровая-зеленая марка-1 л Алкогольные напитки Крепкий алкогольАстрахань 31 1 алкоголь водка-зеленая марка-кедровая 1л Алкогольные напитки Крепкий алкогольАстрахань 31 1 водка- зеленая марка- кедровая 1 л Алкогольные напитки Крепкий алкогольАстрахань 31 1 водка зелёная марка кедровая-главспирттрест-1 л Алкогольные напитки Крепкий алкогольАстрахань 31 1 водка-зелёная марка-1л Алкогольные напитки Крепкий алкогольАстрахань 31 1 водка-зелёная марка-кедровая 1л Алкогольные напитки Крепкий алкогольАстрахань 31 1 алкоголь водка-немирофф-перцовая 0,5, 0,7 л Алкогольные напитки Крепкий алкогольАстрахань 31 1 водка Немиров- Украина- 1 л Алкогольные напитки Крепкий алкогольАстрахань 31 1 водка-немирофф-0,5л 0,7л Алкогольные напитки Крепкий алкогольАстрахань 31 1 коньяк-старый кёнигсберг-0,5л Алкогольные напитки Крепкий алкогольАстрахань 31 1 коньяк-старый кенинсберг-по 0,5 Алкогольные напитки Крепкий алкогольВолгоград 32 1 водка ВВ- отечественная- 0,5, 1 л Алкогольные напитки Крепкий алкогольВолгоград 32 1 водка-в/в-0,5л 0,75л Алкогольные напитки Крепкий алкогольВолгоград 32 1 водка-вв-0,5-0,75л Алкогольные напитки Крепкий алкогольВолгоград 32 1 водка - немиров - 1л Алкогольные напитки Крепкий алкогольВолгоград 32 1 водка Немирофф- отечественная- 0,5, 1 л Алкогольные напитки Крепкий алкогольВолгоград 32 1 водка-немиров-0,5л Алкогольные напитки Крепкий алкогольВолгоград 32 1 водка-Немиров-1л Алкогольные напитки Крепкий алкогольВолгоград 32 1 водка-немиров-1л Алкогольные напитки Крепкий алкогольВолгоград 32 1 водка-Немиров-1л Алкогольные напитки Крепкий алкогольВолгоград 32 1 водка-немирофф-1 л Алкогольные напитки Крепкий алкогольВолгоград 32 1 водка-немирофф-1 л Алкогольные напитки Крепкий алкогольВолгоград 32 1 водка-отеч немирофф-на березовых бруньках Алкогольные напитки Крепкий алкогольВолгоград 32 1 водка-отеч немирофф-с перцем Алкогольные напитки Крепкий алкогольВолгоград 32 1 водка - тещины слезы - 0,5 литра, 1 литр Алкогольные напитки Крепкий алкогольВолгоград 32 1 водка - тещины слезы - 1 литр Алкогольные напитки Крепкий алкоголь

FOOD: позиции, которых покупателям не хватает в ТК Лента, и которые они вынуждены покупать в других магазинах

(таблица содержит только те SKU которые респонденты называли 2 и более раз)


Stocks and orders report

Source: Stocks&Orders

report, May 2008


OSA project

Since 2005Data we supply ECR:

All of Lenta storesOnly some suppliersWeekly update

Full or partial Out Of StoreOut Of Shelf (calculation)Service LevelUndersales losses

Incorrect stocksCause analysisDC covering


OSA project allows us to measure OOS efficiently

OOS analytics outsourcing: 26 stores*1 manager + 40 categories * 1 manager + logistic dept. are free from OOS report preparing

Out Of Shelf calculation: analytical model to reveal OOShelf casesBenchmarksEDI

0%

5%

10%

15%

20%

25%

23-A

pr-0

6

03-M

ay-0

6

14-M

ay-0

6

24-M

ay-0

6

04-J

un-0

6

14-J

un-0

6

25-J

un-0

6

05-J

ul-0

6

Retailer1 Retailer2 Retailer3Retailer4 Retailer5

Source: OSA report, 2006


Results for Lenta: level of OOS is being reduced

Source: OOS report, May 2008

20%20%16%

25%

Janu

ary

2007

Febr

uary

2007

Mar

ch 2

007

Apr

il 20

07

May

200

7

June

200

7

July

200

7

Aug

ust 2

007

Sep

tem

ber

2007

Oct

ober

2007

Nov

embe

r20

07

Dec

embe

r20

07

Janu

ary

2008

Febr

uary

2008

Mar

ch 2

008

Apr

il 20

08


Thank You For Your Attention!

[email protected]

mailto:[email protected]

Shopper-Based Design Category Management Project

Poland : 2007 / 2008

Jerzy Glinka – Tesco Richard Reed – Procter & Gamble

Femcare Reinvention in Tesco

78

Agenda

•

PART 1 : ECR Category Management Vision

•

PART 2 : Market Landscape & Category Challenges

•

PART 3 : Femcare Reinvention Project

•

PART 4 : Key Results & Learnings

79

PART 1

ECR Category Management Vision

80

Shopper understanding and JBP are strategic choices for effective & critical category

development at RetailECREfficient Consumer Response

Europe

Category Management Vision

Effective

day

to day

co-operation

Clarity

on strategic

alignment

Consumer/ Shopper

understanding

Information

sharingFact

based

decision

making

Category Management VisionECREfficient Consumer ResponseEurope

82

Part 2

Market Landscape & Category Challenges

83

Tesco Poland in 2008

• 304

stores (49 hypermarkets, 36

compact hypermarkets

, 219

supermarkets)

• 165

Towns, 5 Distrbution

Centres

• 23 Petrol Stations

• 2 Brands : Tesco and Savia

• 4,500,000 Customers a week

• 230 MM transactions/year

• Appr. 5,4% of

Poland

FMCG

Market Landscape

84

Tesco Strategy : The Best Shopping Trip In Town

• The prices are great

• I can get what I want

• The staff are great

• I don’t queue

• Shopping is easy and enjoyable

• Tesco : For You And Your Family

85

P&G in Femcare Poland• Strong value

and

volume

share

player

in

Poland

(42%, 35%)

• 4 Brands : across Premium and Mid Tiers

• Fastest

share

growth

portfolio across last

2 years

•

Innovation

leader in

all

femcare

sub

categories

(ultra

pads, thin

pantyliners, scented

& soothing

femcare

products)

• Key

category

growth

player across

the

market (avg. price

index. 125%)

Market Landscape

86

Key Femcare Category Challenges

in 2007

• Deliver

category

growth

in-line

with or ahead of

total

business

growth

• Boost category

avg. transaction

value

ahead of key

competition

• Improve

Femcare

category

perception

with Tesco shoppers

and ahead of the market

• Resolve Out

Of Stock

issue (esp. in Pantyliners)

Femcare Reinvention Project

Built on extensive category-tailored /

shopper

researches:

• Shopper

Data I

&

II

• Purchase

Decision Tree

studies

• Segmentation studies

• Adjacency research

• Category

knowledge

/

Focus groups

(FDG) learnings

• Out

Of Stock

shopper behaviours

• Other regular industry sources eg

Nielsen

88

31

Household Panel Data Questionnaire+

Shopper I Shopper II

What shoppers do ! What shoppers think !

Strategic DirectionStrategic Direction = Strategy Strategy & Plan& Plan

BASIC SHOPPER UNDERSTANDINGBASIC SHOPPER UNDERSTANDING

Shopper I – quantitive dataPolish households

Shopper II – qualitative dataPolish shoppers

Shopper Data Analyses

89

Tesco Femcare sSopper vs. Key Competitors Analysis

2006 Index 2006 Index 2006 Index

Tesco 30,4 105 3,0 102 5,4 101

Auchan 26,6 104 2,6 100 6,4 111

Carrefour 30,4 113 3,2 111 5,6 111

Kaufland 24,1 106 3,2 110 4,6 99

Real (Hypermarket) 26,8 80 2,9 86 6,0 100

Average number of visits Average amount spent per visitLoyalty20062005

19,0

40,3

25,5

39,2

55,5

20,5

0

20

40

60

80

100

As % of Total Shoppers As % of Total Turnover

Loyals Hoppers Occasionals Tesco Femcare–

frequent visits but low spendings

16,1

68,125,2

24,9

58,6

7,1

0

20

40

60

80

100

As % of Total Shoppers As % of Total Turnover

Loyals Hoppers Occasionals

90

Tesco Femcare Shoppers Rating

OVERALLRATINGArea of

improvement

VALUE for MONEYRATINGArea of

Improvement

46%51% 52%

26%

48%

61,765,2 64,6

54

62,4

0

10

20

30

40

50

60

70

Tesco Auchan Carrefour Kaufland Real (Hypermarket)

% answers excellent/v.good Average Overall Rating

41%

48% 47%

24%

45%

60,163,7 62,8

53,6

61,5

0

10

20

30

40

50

60

70

Tesco Auchan Carrefour Kaufland Real (Hypermarket)

% answers excellent/v.good Average Value for Money Rating

91

Tesco Femcare Category Perception

Study

# Poland 2007 - Catamenials - Close enough - Normalized Data Carrefo

ur real,- Tesco

2Sklep oferuje duzy wybór rozmairów opakowań różnych marek kobiecych produktów do higieny intymnej

1 1 -2 1

3Sklep oferuje dużą różnorodność kobiecych produktów do higieny intymnej (podpasek, wkładek, tamponów)

2 1 -1 4

4Sklep oferuje wystarczający wybór dobrze znanych marek kobiecych produktów higieny intymnej

3 -2 1 -1

6 Najnowsze produkty do higieny intymnej są szybko dostępne w tym sklepie 4 1 3 0

7 Sklep oferuje szeroki wybór podpasek 5 2 -1 1

8 Sklep oferuje szeroki wybór wkładek 6 2 1 0

9 Sklep oferuje szeroki wybór tamponów 7 3 1 1

15 Łatwo jest znaleźć na półce szukane przeze mnie kobiece produkty do higieny intymnej 8 -3 -1 -4

18 Ceny promocyjne na kobiece produkty do higieny intymnej są dobrze oznakowane 9 2 0 1

19Pólki z produktami kobiecymi do higieny intymnej są dobrze zorganizowane i ładnie wyglądają

10 1 -3 -4

22Kobiece produkty do higieny intymnej w promocji są zawsze dostępne - nie ma braków towaru na promocji

11 -2 1 3

26 Wiem że w tym sklepie mogę zaufać jakości kobiecych produktów do higieny intymnej 12 0 -1 -4

27 Mogę całkowicie zaspokoic własne potrzeby jak również potrzeby mojej rodziny 13 -4 0 -2

28

Zdecydowanie mogę polecić moim znajomym/przyjacielom dokonywanie zakupów kobiecych produktów do higieny intymnej w tym sklepie

14 -1 -5 0

1

1

-2

1

2

2

3

-3

2

1

-2

0

-4

-1

-2

-1

1

3

-1

1

1

-1

0

-3

1

-1

0

-5

1

4

-1

0

1

0

1

-4

1

-4

3

-4

-2

0-5 0 5

Carrefour real,- Tesco

92

35,5

%

2,9

%

7,8%

21,9

%

31,8%

38,4

%

They

buy

another

version/size

of

this

brand

in

this

store

Buy

another

brand

in

this

store Don’t

buy

at

all

Buy

the

brand

in

this

store

at

next

buying

trip

They

buy

the

brand

in

another

store

Loss

for Retailer

Decline in intended

expenditures

34,7

%

Decline in intended

expenditures

Shopper II Study

In case of OOS, Tesco loses more then 1/3 rd of potential shoppers

Shelf OOS shopper reaction study

93

PART 3

Femcare Re-Invention Project

94


Category Definition

Category Role

Category Assessment

Category Strategies

Category Tactics

Plan Implementation

Cat

egor

y R

evie

w

Category Scorecard

Category Definition

Category Role

Category Assessment

Category Strategies

Category Tactics

Plan Implementation

Cat

egor

y R

evie

w

Category Scorecard

Key

challenges

Success

Criteria

Range

Review

Plan

Category

Recommendation

Final

Reinvention

In-store

Implementation

Cat

egor

y R

evie

w

Data analysis

3 Month

Process

95

Key project objectives:

•Build CATEGORY VALUE (converting shoppers to higher tiers)

=> +4% increase of

total

category

in

6M

•Improve SHOPPER SATISFACTION (as defined in shopper study)

=> improve Tesco Fempro Value Share from 5.3%

to 5.8%

Reduce SHELF OUT OF STOCKS via assortment and shopper-based

design shelving)

=> 4% OOS reduction


96

Femcare Category Strategies• Easiness

-

simplify shopper purchase decision at the SHELF

• Trade-In -

convince shoppers to start using Femcare

Care products

which they were not using before via driving awareness

•

Trade-Up -

convince shoppers to buy more and better performing products

• Trade-Across -

convince shoppers to cross-shop

through logical

adjacencies and system usage education on-shelf

97

OOS reduction

– SKU productivity

analysis

sub_catego brand line_up SKU EAN 2007 TotalPANTILINERSBELLA TRIO BELLA PANT ######## 334 218 zł 334 218 zł 8%PANTILINERSBELLA TRIO BELLA PANT ######## 293 897 zł 628 115 zł 14%PANTILINERSBELLA SINGLE BELLA PANT ######## 260 022 zł 888 137 zł 20%PANTILINERSCAREFREE TRIO CAREFREE A ######## 209 789 zł 1 097 926 zł 25%PANTILINERSNATURELLA DUO NATURELLA ######## 202 532 zł 1 300 459 zł 29%PANTILINERSBELLA SINGLE BELLA PANT ######## 182 288 zł 1 482 746 zł 34%PANTILINERSTESCO DUO TESCO PANT ######## 162 365 zł 1 645 111 zł 37%PANTILINERSCAREFREE TRIO CAREFREE PA######## 141 542 zł 1 786 653 zł 41%PANTILINERSLIBRESSE DUO LIBRESSE PA ######## 129 326 zł 1 915 978 zł 43%PANTILINERSCAREFREE TRIO CAREFREE A ######## 128 565 zł 2 044 543 zł 46%PANTILINERSDISCREET DUO ALLDAYS DIS######## 116 844 zł 2 161 387 zł 49%PANTILINERSDISCREET DUO ALLDAYS DIS######## 88 555 zł 2 249 942 zł 51%PANTILINERSCAREFREE SINGLE CAREFREE M ######## 82 081 zł 2 332 023 zł 53%PANTILINERSBELLA SINGLE BELLA PANT ######## 78 930 zł 2 410 953 zł 55%PANTILINERSBELLA SINGLE BELLA SLIM P######## 75 167 zł 2 486 120 zł 56%PANTILINERSLIBRESSE SINGLE LIBRESSE PA ######## 69 333 zł 2 555 453 zł 58%PANTILINERSALWAYS DUO ALWAYS NO ######## 68 275 zł 2 623 728 zł 59%PANTILINERSLIBRESSE SINGLE LIBRESSE PA ######## 65 790 zł 2 689 518 zł 61%PANTILINERSDISCREET SINGLE ALLDAYS DIS######## 62 025 zł 2 751 543 zł 62%PANTILINERSCAREFREE SINGLE CAREFREE M ######## 60 373 zł 2 811 915 zł 64%PANTILINERSDISCREET TRIO ALLDAYS DIS######## 59 686 zł 2 871 602 zł 65%PANTILINERSBELLA SINGLE BELLA PANT ######## 57 625 zł 2 929 227 zł 66%PANTILINERSCAREFREE SINGLE CAREFREE FL######## 57 368 zł 2 986 595 zł 68%PANTILINERSDISCREET DUO ALLDAYS DIS######## 53 448 zł 3 040 042 zł 69%PANTILINERSDISCREET TRIO ALLDAYS DIS######## 52 364 zł 3 092 407 zł 70%PANTILINERSDISCREET TRIO ALLDAYS DIS######## 49 292 zł 3 141 699 zł 71%PANTILINERSBELLA DUO BELLA SLIM B######## 46 325 zł 3 188 024 zł 72%

cumulative sell-out

% of total sell-out

Category Tactics1. Efficient

Assortment: Category

Recommendation

base

on:

98

•Shopper Purchase Decision

Trees

•Shopper Based Design - category principles

•Tesco “golden-shelf merchandising rules”

•Formats design by category / store format to fit space

&

strategy

Category Tactics2. Efficient

Shelving: Layout

Recommendation

based

on:

99

Implementation Plan, Actions & Owners

What Who When

Category Analysis & Vision P&G Innovation/ Tesco Commercial

Jun’07

Range & Space Review Tesco Commercial/P&G CBD

Jul-Aug’07

Initial Reco for Assortment&Space

P&G – Tesco Commercial Sep’07

Final category&planogram Tesco Range&Space Dept Oct’07

Stores Roll-out Tesco Operations/P&G Operations

Oct’07

100

PART 4

Key Results & Learnings

101

Results:

Femcare Reinvention

implemented in 79 Tesco stores

in October

2007

104

Results: Category value growth

Total category value grew by 6% after joint reinvention

Cat value

31 500 000

32 000 000

32 500 000

33 000 000

33 500 000

34 000 000

34 500 000

JAS-OND'06 JAS-OND'07

Cat value

105

Results: OOS Reduction

Source : weekly shelf availability checks by 3rd

party audit agency

82%

84%

86%

88%90%

92%

94%

96%

2007

-06-

08

2007

-06-

22

2007

-07-

06

2007

-07-

20

2007

-08-

03

2007

-08-

17

2007

-08-

31

2007

-09-

14

2007

-09-

28

2007

-10-

12

2007

-10-

26

2007

-11-

09

2007

-11-

23

2007

-12-

07

2007

-12-

21

2008

-01-

04

2008

-01-

18

Avg. shelf

availability

improved

by 4 % points and continues to

improve.

106

Next Steps: Shelf Optimization

To include : overhead category

signage, sub-category

shelf

dividers, on-shelf

navigation/education, testers, “new’’section

etc.

(estimated

additional

Total

Category

growth

:

+4%)

107

Key LearningsShopper-Based Insights = starting point for the work

– „think

like

a Shopper”

approach to highlight

real opportunities

Mutual Collaboration & Data Sharing = success driver

Category Re-Invention = core business process

- not just a range, space and layout project; not a “one off”.

Excellence of Execution = a pre-requisite for success

- a “make-it or break-it”

factor for the category result

109

• Thank you for your attention

• Opportunity for questions

ecr europe forum ‘08. cee – lessons for growth

Business

countries metro ag

importedgoods metro

metro ag 2008hungary2

muller metro ag

stores22 russia metro

stores33 russia metro

stores275 russia metro

metro groups presence