pepkor europe investor pres 15 11 06 v1
TRANSCRIPT
Investor Presentation
November 2015
Pepkor Europe: Pepkor has a strong footprint in Central & Eastern Europe and a
growing presence in Western Europe
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France: 25
Eastern
Europe: 700+
UK: 50
European footprint
Content
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UK
Central & Eastern Europe
Western Europe
Group leverage opportunities
UK market overview: 3 key retail trends driven by long-term structural change
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• The way people shop has changed
• Time-poor, looking for convenience
• Growth of local, smaller formats
Convenience
• Macro improvements in digital
infrastructure
• Sophistication of service
proposition
• Significant channel shift online
Online
• Behaviours learned during recession
now entrenched
• Price is king
• Limited line formats resonate with
budget-conscious shoppers
Discount
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2
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CAGR 2004-14 CAGR 2014-19
CAGR 2004-14 CAGR 2014-19
CAGR 2004-14 CAGR 2014-19
Source: IGD; Verdict
UK discount landscape: 6 sub-sectors of UK discount retail (majority smaller, local
formats)
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Single price variety Multi price variety Grocery
Clothing & home Health & beauty Other
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PEP&CO’s target customer: Mums on a budget shopping for value family apparel
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Value conscious mum with kids
(focus on C1/2DE demographic)
Likes flattering and feminine clothes
Fashion attitude of 25-50
Interested in fashion, but is a follower not a
leader; tempted by broad appeal, multi-
purpose items
She’s practical and on a tight budget, loves a
bargain for herself and her kids
Target customer
PEP&CO store dynamics: Womenswear, childrenswear and babywear for under
£10 in a clean and easy-to-navigate store environment
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• Mix of womenswear,
childrenswear/babywear and
small selection of home and
FMCG/impulse
• 95% of product is <£10 and
prices start at £1
Product & priceStore environment & campaign
PEP&CO location strategy: PEP&CO has national coverage with its first 50 stores
located in secondary towns across the UK
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Strategy
• Avg. store size of 3.5k sq feet of
ground floor selling space
• Located in shopping centres in
secondary towns (shopping
centres anchored by other
discount shops and value
fashion offers)
National coverage
Content
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UK
Central & Eastern Europe
Western Europe
Group leverage opportunities
Current overview of PEPCO: PEPCO operates over 700 stores in Central & Eastern
Europe and the business continues to see strong growth
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• Vision to be the best and
cheapest clothing and
housewares discount
brand in Europe
• As of September 2015,
Pepco operated over 700
stores across 5 countries in
Central & Eastern Europe
• Continued strong
momentum in the region
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Central & Eastern European footprint
Competitor landscape: PEPCO competes with domestic and foreign discount
players and maintains leadership positions in key categories
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Discount clothing & GM retailers
Discount food brands
Adjacent & emerging discount players
Informal market
Not yet in PEPCO markets
PEPCO’s key success factors
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Strength of PEPCO brand – 4th place in Poland
to be known for clothing & household articles
(behind Ikea, H&M, Home & You)
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EDLP price leadership – Target to be equal or
lower than competitors on 95% of basket of
entry and key volume lines
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Assortment of product – ‘Everything under
one roof’
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Availability of product – 93% in stock on
minimum display quantities at store level
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Footprint – Known for convenient locations
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Cost leadership – Focus on efficiency
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Rollout strategy in Eastern Europe: Expansion plans are progressing in all 5 of
PEPCO’s markets
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Rollout strategy
• Significant in-fill
opportunity in all markets
outside of Poland
• Continued opportunity for
growth within Poland
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Central & Eastern European footprint
Content
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UK
Central & Eastern Europe
Western Europe
Group leverage opportunities
Current overview of Mac-Dan: Mac-Dan is well-positioned to build out a discount
variety chain in Western Europe
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• Discount variety chain acquired in
2014 from the founding Roticci
family
• Currently trading 25 stores, 13
owned, 12 franchised
• Of the owned stores, 4 have been
converted to the new Mac-Dan
format
• Geographically well-positioned in
less competed area of Western
European discount market
French footprint
Market overview & strategy: Mac-Dan has moved to the less-competed discount
sector of the non-food market
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Value
Discount
Food Non-Food
Clothing & footwear Non-clothing (“bazar”)
Other country opportunity: Markets in Western Europe present an attractive
opportunity for potential Mac-Dan expansion
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Monthly “Mac-Dan” market value in 000’s EUR**
*Estimated data
** Assuming all expenditure for category offered at Mac-Dan would be spent there
Next steps for Mac-Dan
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Continue store conversion
programme
Continue modernisation of offer
and service
Improve visual merchandising
Explore other market
opportunities
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Content
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UK
Central & Eastern Europe
Western Europe
Group leverage opportunities
Pepkor Europe & group leverage
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• Pepkor GPS
• Product sharing
• Product knowledge sharing
Sourcing
• Logistics partner relationshipsLogistics
Back-Office• IT hosting and shared platforms
• Talent acquisition & HR
• Finance
• Shared UK property teamProperty
Steinhoff group leverage
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• Co-location opportunities
• Property investment & development
Sourcing
Logistics
Back-Office
Property
• Logistics partner relationships
• Shared distribution opportunities
• Product sharing
• Product knowledge sharing
• Shared services (eg, IT, Treasury)
• Market knowledge sharing