THE STONES REMAIN, BUT THE WATER KEEPS ON SHAPING

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1 THE STONES REMAIN, BUT THE WATER KEEPS ON SHAPING Madalina Carstea Business Development Manager, GfK Romania Progresiv Conference I Sinaia, March 21st,

2 Agenda 1 Where do we Stand? 2 The Trends of Today & the Trends of Tomorrow 3 A New Shopper has Emerged 4 Food for Thought 2

3 Where do we stand? 3

4 Consumer Confidence Indicator overall ascending trend, still below the values before the beginning of the crisis Outbreak of news regarding the financial crisis 0 UE X After a few months of relatively optimistic media, the NIS announced technical recession X X End of presidential elections X 25% salary cuts in the public sector X Pre-election (local) - the CCI registers the highest score since crisis begun! Poland Romania Germany -80 ian.-08 mai.-08 sep.-08 ian.-09 mai.-09 sep.-09 ian.-10 mai.-10 sep.-10 jan.-11 mai.-11 sep.-11 ian.-12 mai-12 sep.-12 ian.-13 Source: GfK Omnibus, Consumer Confidence Barometer. Base: National 15+ (Ian 08 Feb 13); ~1000 respondents (all) /wave; % 4

Technical Consumer Goods Market Q4 2012 (+10%) saves the year Photo 12% 13% 2% Telecomm Consumer Electronics IT -43% -15% 2008 2009 2010 2011 2012

5 Technical Consumer Goods Market Q (+10%) saves the year Photo 12% 13% 2% Telecomm Consumer Electronics IT -43% -15% Domestic Appliances TEMAX, value change % 2,5 Bil EUR 1,4 Bil EUR 1,2 Bil EUR 1,4 Bil EUR 1,4 Bil EUR Source: GfK TEMAX. Total Market in MIL EUR,

6 FMCG Value Change up by 2%, volume still down Romania FMCG FMCG Evolution Value Change % vs. Previous Year (RON) Consumer Price Index % 21% 11% 25% 10% 17% 19% 6% -5% 5% 2% Source: GfK Consumer Panel Services, based on monitored FMCG categories I *versus 2011 I INSSE for Consumer Price Index % 6

Key Drivers Change by FMCG Segments Value Change % Frequency Change % Value per Trip Change % Changes by FMCG Segments Jan-Dec 2012 vs. Jan-Dec 2011 FMCG Food Beverages -0.2 2.0 5.9 2.

7 Key Drivers Change by FMCG Segments Value Change % Frequency Change % Value per Trip Change % Changes by FMCG Segments Jan-Dec 2012 vs. Jan-Dec 2011 FMCG Food Beverages Personal Care Home Care Source: GfK Consumer Panel Services I Calculation based upon consumer basket including monitored product categories 7

Modern Trade reaches 49% at total country level Hypermarkets Supermarkets* Discounters** Cash&Carry Small Grocery*** Street Vendors Others 18 19 21 23 23 14 13 13 14 17 6 3 9 2 10 1 10 9 1 1 41 41 40

8 Modern Trade reaches 49% at total country level Hypermarkets Supermarkets* Discounters** Cash&Carry Small Grocery*** Street Vendors Others Source: GfK Consumer Panel Services based on monitored categories I *incl. Profi starting Feb-12 I **incl. Profi before Feb-12 I ***incl. Agro & Food, Boutiques, Kiosks, Mic.ro, Mic.ro Rulota, La Doi Pasi 8

9 The Trends of Today & the Trends of Tomorrow 9

10 The trends of today and the trends of tomorrow A B C Romanian brands Smart shopping D The worlds intertwine - living in the VirtReal land Online shopping

11 What is smart shopping? Smart Shopping Source: GfK Shopping Monitor

Smart shopping is becoming the way to shop Higher income segments are adopting it too Before buying anything I try to think if I need that thing I compare prices between

promotion (how big is the discount, value and usefulness of the gift, etc) I talk with my friends and family in order to find the best offers/ prices I pay more attention to

12 Smart shopping is becoming the way to shop Higher income segments are adopting it too Before buying anything I try to think if I need that thing I compare prices between brands in order to choose the best value for money I go to several stores in order to look for the best price for a certain product I pay more attention to the value of a promotion (how big is the discount, value and usefulness of the gift, etc) I talk with my friends and family in order to find the best offers/ prices I pay more attention to commercials from TV and newspapers/ magazines (N=803) 2011 (N=803) Source: GfK Shopping Monitor 2013 I 5+4 marks = totally agree + agree (%) 12

Variety of Romanian brands available is an important criterion for selecting the shopping channel Shoppers satisfied with variety of Romanian brands available in the store (%) Romanian origin

13 Variety of Romanian brands available is an important criterion for selecting the shopping channel Shoppers satisfied with variety of Romanian brands available in the store (%) Romanian origin ingredients Hypermarket Supermarket Discounter Romanian brands Source: GfK Shopping Monitor % of consumers say that it is important where and how a product is manufactured. Source: *Roper Reports 2012, 15+ y.o. urban population, base 1000 respondents; top2box agreement 1-7 scale (%) 13

14 Source: The Economist - Feb

The use of new technology continues to increase National 15+ y.o. 49%!Up 9pp from 2010 Internet Usage Urban 15+ y.o. 61%!Up 6pp from 2010 Urban 15-45 y.o. 83% 8% of the urban Romanians aged 15+ have a smartphone.

15 The use of new technology continues to increase National 15+ y.o. 49%!Up 9pp from 2010 Internet Usage Urban 15+ y.o. 61%!Up 6pp from 2010 Urban y.o. 83% 8% of the urban Romanians aged 15+ have a smartphone. 10% have an Internet enabled cell phone. Source: GfK Omnibus, 2012 data I Roper Reports 2012, 15+ y.o. urban population, base 1000 respondents 15

16 Role of Internet in the buying decison Very Strong Finances Turism & Entertain ment 29% of the Romanians aged 15+ who use the Internet have shopped online for products or services. How? Consumer Electronics Telecoms 1st Place 2nd place Auto Do It Yourself * as Source of Infomation for Purchases Source: GfK Omnibus,, 15+ y.o. national population, base 1000 respondents, May 2012 I GfK Internet and the Buying Decision Syndicated Report 16

17 The role of social networks and mobile devices in the shopping experience is growing 4 e 41% of smartphone users use their smartphone in stores, in order to search the Internet for information about products. Source: Roper Reports 2012, 15+ y.o. urban population 17

18 A new world is developing Living in the VirtReal Land combines with real experience Checking the weather Using online recipes while cooking or shopping Using online dictionaries while reading offline material Ordering a cab Finding what one needs in the city 18

19 Is online shopping bound to replace physical stores? IN FMCG Brick & Mortar Is Still King! Traditional in-store tactics remain vital, yet online/ mobile touch points importance is growing 19

defining online shopping Speed and Ease are particularly important in an Online shopping environment, along

20 There are different characteristics of the shopping experience Personal Helpful Safe Informative Brick & Mortar are more likely to deliver on emotional engagement Attributes defining in-store shopping Attributes defining online shopping Speed and Ease are particularly important in an Online shopping environment, along with customization. Effortless Customized Fast Informative Easy Source: GfK Futurebuy 2013, 15-45, urban Internet users 20

21 A New Shopper has Emerged 21

22 Shopping nowadays means The process of browsing, comparison shopping, information gathering OR the actual purchase of items. 22

Economy meets technology to give rise to Xtreme

phenomenon, empowered by being proactive and in

Wired Competitive Optimistic With more technology,

new breed of shopper has emerged, determined to stay

23 Economy meets technology to give rise to Xtreme Shopper Xtreme Shoppers are a global and growing phenomenon, empowered by being proactive and in control. Wired Competitive Optimistic With more technology, tools, resources, and information than ever before, a new breed of shopper has emerged, determined to stay in control and win at the game of finding the best value Source: GfK Futurebuy 2013, 15-45, urban Internet users 23

24 Xtreme Shoppers Used smartphone and/or tablet to shop in P6M I Actively using Internet in shopping Target: urban Internet users 27 US 37% Brazil 16% China 53% Source: GfK Futurebuy 2013, 15-45, urban Internet users 24

25 Food for Thought 25

26 Xtreme Shopper Implications Digital technology redefining the paths to purchase Shoppers under tremendous pressure to obtain value Digital will continue to change at the speed of light Retail follows shoppers and delivers unique experiences Challenges & Opportunities: Anticipate and act boldly Source: GfK Futurebuy,

27 Madalina Carstea I madalina.carstea@gfk.com I Business Development Manager I 27

THE WINNER TAKES IT ALL? Same Game, More Players, Different Cards

THE WINNER TAKES IT ALL? Same Game, More Players, Different Cards Diana Scăunașu Client Service Manager, Consumer Panel Services, GfK Romania Progressive Magazine I Re-think Retail I 13th of March 2014