Rohit Talwar Keynote to ICSC Czech and Slovak Retail conference September 13th 2011 presentation and background materials

Shaping the Future
Driving Retail Innovation and New
Thinking in Shopping Centres
ICSC Czech and Slovak
Retail Real Estate
Conference
Prague
September 13th 2011

Rohit Talwar
CEO - Fast Future
rohit@fastfuture.com
www.fastfuture.com

Contents

Presentation p3
About Fast Future p 92
Background Materials p 103
Image Sources p 206

How do we get there from Here?

Customer Continuous New
Insight Innovation Business
Models

…Thinking is Back in Fashion

Transformational Change?
It’s Only Just Begun

10 Key Patterns of Change Shaping the Next Decade
Economic turbulence, a shift in wealth from west to east and political
uncertainty are shaping the landscape

Natural
Society in Resource Demographic
Transition Challenges Destinies

Geo-political Generational
Complexity Economic Crisis Crossroads
and Power Shift

Rethinking
Technology Talent,
and Science Education,
Training
Enterprise 3.0
Global
Internet
Expansion

Source: Designing your Future – Key Trends, Challenges and Choices – Fast Future

Demographic Destinies
2 billion more people in 40 years –
Demographics is Driving Economics

448 739 691 5231
344

1998 4157
729 1030
585

2010 2050 Source : United Nations

Life Redefined –
Lifespans are Increasing
Under 50’s have 90%
chance of living to 100.

Aubrey de Grey suggests
we could live to 500 or 1000

What are the health,
consumption and resource
implications?

What kind of opportunities
will be created?

Natural Resource Challenges

―Companies that are not adequately managing the
consequences of climate change on their business will
not be welcomed as our customers in the future‖
Rick Murray
Chief Claims Strategist
Swiss Re

Competitiveness and
Innovation Rankings
World Economic INSEAD – Global Innovation for
Forum – Global Innovation Index Development
Competitiveness 2011 Rankings Report 2010-2011 –
Report 2011-2012 (out of 125) [2] Innovation
Rankings Capacity Rankings
(out of 142) [1] (out of 130) [3]
Czech Rep. 38 27 32
Estonia 33 23 25
Latvia 64 36 30
Lithuania 44 40 26
Romania 77 50 55
Slovakia 69 37 36

Source: CEE Retail, July 2011 http://www.ceeretail.com/wp_946/Warsaw-and-Prague-lose-ground-against-other-CE-capitals-in-terms-of-
shopping-centre-development-July-2011.shtml

Retail Trends - Czech Republic

Czech Republic Retail Innovation

Ahold – Network Modernization

Kaufland / Penny – Store Refresh

CEE Retail Real Estate Awards 2010

Innovative Design: Edible
Furniture - Lithuania

Tallink Silja Oy –
‘1000’ Experience Programme

The Slide@T3
Changi Airport - Singapore

TMT – Convergence and Immersion

Telephony Connectivity
• Voice • Cellular
• Messaging • Up to 14 bands
• SIM card • WLAN/BT
• Phonebook • GPS
• Ring Tones • NFC
• Security • FM

Data/ Multimedia
Enterprise • Camera 8-16M
• Camcorder
• 100Mbps
• 24M Color Display
• Email
• Memory (160GB)
• IMS
• Multiformat A/V
• Browsing
• HD Video/TV out
• VPN
• Games
• PIM
• Ecommerce
Software (50-100M Tps)
• Protocols • DRM
• Payments
• Middleware
• Applications
• User Interface
• Minimize fragmentation

Mobile Contactless Payments
Trial

Digital Signage – Unirea Romania

Ambient (Embedded) Technologies
(IP in Everything)

Kiosks and Interactive Surfaces

Daily Social Media Offers e.g. Twitter

Augmented Reality at
Copenhagen Airport

3D Printing – True Personalization

Innovation –
Where are the Opportunities?

Integrating Physical and Virtual

Catering and Lounge
Experiences

Partner Tie-ins
Pullman Bangkok King Power Hotel

Booking/Boarding Pass Ads / Offers

Make Time and Space for Change

http://news.nationalgeographic.com/news/bigphotos/images/090305-daylight-saving-time-facts-history_big.jpg

What does the timeline of
developments and challenges
look like for your markets?

Deep Dive on Key Trends / Issues

Conclusions

• Expect
Turbulence

• Understand
Trends and
Scenarios

• Embrace
Innovation

Thank You
Rohit Talwar
CEO
Fast Future
Tel +44 (0)20 8830 0766
Mob +44 (0)7973 405145

Twitter http://twitter.com/fastfuture
LinkedIn http://www.linkedin.com/in/talwar

www.fastfuture.com
www.convention-2020.com
Blog http://widerhorizons.wordpress.com
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Watch a short video of Rohit at http://www.travelmole.tv/watch_vdo.php?id=14300

Download the Hotels 2020: Beyond Segmentation Report at
http://www.amadeus.com/hotelit/beyond-segmentation.html

About Fast Future

92

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Designing Your Future
Key Trends, Challenges and Choices

• 50 key trends
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Macro Statistics - Czech republic,
Slovakia, Romania, Estonia, Latvia &
Lithuania
Growth % Productivity Business Environment
Growth of Real Labour Global Rank Regional
GDP 2011 – Productivity (out of 82) Rank (Out of
2030 % Growth 2011- 16)*
2030 % change 2006- 2011- 2006- 2011-
change Annual
annual av. 2010 2015 2010 2015
av.
Czech Rep. 2.2 2.7 27 29 1 2
Estonia 3.5 4.1 28 30 2 3
Latvia 3.6 3.8 45 47 8 9
Lithuania 3.4 3.6 43 46 7 8
Romania 3.4 3.4 50 50 10 10
Slovakia 3.4 3.6 31 30 4 3
* Azerbaijan, Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Kazakhstan, Latvia, Lithuania, Poland, Romania, Russia, Serbia, Slovakia,
Slovenia and Ukraine
Economist Intelligence Unit, http://www.eiu.com/

Macro Statistics cont.
Growth of GDP per head

Country Growth of Real GDP per head (% change; annual
average
2011 – 2020 2021 - 2030 2011 - 2030
Czech Rep. 2.5 2.6 2.5
Estonia 3.9 3.8 3.9
Latvia 4.4 4.4 4.4
Lithuania 4.7 3.1 3.9
Romania 3.7 3.8 3.7
Slovakia 3.7 3.5 3.6

Economist Intelligence Unit, http://www.eiu.com/

Direct Retail Sales - Czech Republic,
Slovakia, Romania, Estonia, Latvia &
Lithuania
Estimated Retail Workforce
Country Sales, US $ Number of % Women % Part Time
Mn Sellers
Czech Rep. 223.5 223,673 95% 85%
Estonia 17.2 20,960 95% na
Latvia 27.4 24,000 96% na
Lithuania 41.1 31,235 95% na
Slovakia 98.6 98,000 Na na
Romania 204.4 245, 560 84% 31%

WfDSA International Statistics, [no date] http://www.wfdsa.org/statistics/index.cfm?fa=display_stats&number=1

EU and Euro Area Economic
Sentiment Indicator

Statistical Office of the Slovak Republic, 06/11, http://portal.statistics.sk/showdoc.do?docid=36877

European Innovation Scoreboard

10 Assumptions for CEE through
2020
1. CEE in its current form will not exist any more – Europe will
consist of EU and non-EU countries, and the region will be
much more diverse
2. The region will not be among the global emerging markets
but will remain the main European growth region. GDP
growth will plateau at about 2% above WE level
3. Although the CEE countries continue to develop from
"workbenches" to innovation-driven economies, the gap
between Western Europe and CEE will persist
4. Lack of basic requirements (institutions, infrastructure) will
remain CEE's main weakness, whereas efficiency
enhancement is a competitive advantage
5. Human capital issues (demographic development, brain
drain, education) will remain the second bottleneck for
further economic development
CEE in 2020, 11/10, http://www.rolandberger.com/media/pdf/Roland_Berger_CEE_in_2020_20101201.pdf 13/07/11

10 Assumptions for CEE through
2020
6. In 2020, CEE will still be dependent on Western Europe –
Pan-CEE business is developing fast and may become a
potential way out
7. Its unique position as a bridgehead between the emerging
markets of Russia, Turkey, China and the advanced
economies of Western Europe is CEE's future capital
8. Counteracting the scarcity of energy & raw materials, the
consolidation of public finances and the consequences of
technological progress are the main tasks for the next
decade
9. The regional growth industries will be energy & utilities, IT &
telecom and pharma & healthcare – Shift toward future
industries needed
10. The main future growth drivers are thought to be energy-
related (energy efficiency, renewables) and IT solutions
CEE in 2020, 11/10, http://www.rolandberger.com/media/pdf/Roland_Berger_CEE_in_2020_20101201.pdf 13/07/11

Czech Retail Trends
• The Q311 BMI Czech Republic Retail report forecasts that the country's
retail sales will grow by 19% between 2011 and 2015, from a predicted
CZK929.11bn (US$89.13bn) in 2011 to CZK1,101.57bn (US$105.67bn) by
the end of the forecast period.
• Rising disposable incomes, easier access to credit, the increasing number
of large retail outlets and shopping centres and increasing car ownership
are key factors behind retail market expansion.
• EU membership since 2004 and substantial foreign direct investment (FDI)
continue to drive growth, contributing to predicted annual retail sales growth
of 4.0% in local currency terms over the forecast period.

Source: Research and Markets, 2011
http://www.researchandmarkets.com/research/05fe85/czech_republic_retail_report_q3_2011

Czech Retail Trends
• BMI data suggest that over the counter (OTC) pharmaceutical sales will
grow by nearly 28%, from US$0.81bn in 2011 to US$1.04bn by the end of
the forecast period.
• Consumer electronic sales are forecast to expand by nearly 24%, from
US$4.20bn in 2011 to US$5.20bn by 2015, with per capita consumer
electronics spending forecast to grow by at least 19% to US$513 as sales of
digital products increase.
• Vehicle sales are expected to rise by nearly 24%, from 194,602 units in
2011 to 240,910 units in 2015. On the domestic sales front, new car
registrations are estimated to have been flat in 2010 but growth is expected
to recover strongly from 2011 as the economy picks up, credit becomes
more widely available and the effects of government incentives begin to be
felt.

Source: Research and Markets, 2011 http://www.researchandmarkets.com/research/05fe85/czech_republic_retail_report_q3_2011

Czech Retail Trends
• Food sales in the Czech Republic, forecast by BMI to be US$12.85bn in
2011, are predicted to rise by 15.4% to US$14.82bn by 2015. Food
expenditure as a percentage of GDP is expected to decrease slightly, from
5.8% in 2011 to a projected 5.1% in 2015. This reflects the broader
expansion of the economy and the ability of consumers to purchase a wider
range of consumer goods, although price consciousness, as in all Central
and Eastern European (CEE) countries, still characterises consumers‟
purchasing habits.

Source: Research and Markets, 2011 http://www.researchandmarkets.com/research/05fe85/czech_republic_retail_report_q3_2011

Czech Trends
• Chained retailers seek ways on how to maintain consumers
• Czech consumers became used to a high level of special offers and
discounting actions of chained retailers which chose this strategy in an effort
to attract consumers at the end of the review period.
• Nevertheless, this strong emphasis on weekly (or monthly) special offers
increased the frequency of shopping and reduced the loyalty of consumers.
• Moreover, this strategy also had a negative impact on mark-ups and profit of
retailers. With respect to this, retailers started to seek ways on how to not
only attract consumers, but also to retain them.
• These strategies include for example loyalty programmes, a wider offer of
private label brands or improvement of the shopping environment.

Source: Euromonitor, 2011 http://www.euromonitor.com/retailing-in-the-czech-republic/report

Retailers in the Czech Republic
invest in networks modernisation
• Ahold continues modernisation of its network in the Czech Republic. In
2010 the company renewed 17 shops, mostly supermarkets. Furthermore,
this year Ahold wants to remodel at least 25 shops, according to Financni
Noviny.
• The other retailers operating on the Czech market also rejuvenate their
networks. For example Tesco Czech Republic remodels some of its
hypermarkets into Tesco Extra venues characterised by a larger store‟s
space and hosting a pharmacy and other supplementary services.
• Tesco opened three of those shops so far and the next two will be
remodelled later in 2011
• On the other hand, discounter chains Kaufland and Penny decided to
update shops by changing interiors and layout as well as expanding fresh
food sections.

Source: CEE Retail, 2011 http://www.ceeretail.com/?com=one_free&id=103547&hash=ad6d3e39eca93a09bca142f01b5ff30d

CEE Retail Real Estate Awards
2010
• Mixed-use Project of the Year - Eurovea – Slovakia (1)
• Shopping Centre Large: over 40,001 to 75,000 sqm GLA - Eurovea
• EUROVEA is a €450 million investment in Bratislava and Slovakia‟s largest
mixed-use development to date (2). quarter is spread over an area of more
than 230,000 m², and is the largest development in Central Europe.
• EUROVEA retail component, with its 150 shops, brings together
international retailers, such as Marks & Spencer, Next, Debenhams and
H&M. Adjacent to the retail is the Ballymore owned five-star, 209 bedroom
Sheraton Bratislava Hotel. The development also contains 30 restaurants
and bars, and a 9 screen cinema. The residential component consists of
235 apartments and the project offers also 24,500 m² of Class A office
accommodation.
• EUROVEA is expected to bring in excess of 12 million people annually to
this part of Bratislava.

(1) http://www.europaproperty.com/index.php?a=events&b=cee2010&id=final-results
http://www.europe-re.com/system/main.php?pageid=2616&articleid=16048

Slovakia Retail Trends
• „The outlook for consumer spending in Slovakia is currently relatively
positive. We expect the Slovak economy to experience a sustained
recovery into 2011, complete a rebound in consumer spending by 1.5%.
While exports will remain key to growth, we believe that they will begin to
play a less prominent role in driving real GDP growth in 2011. Though the
unemployment rate remains stubbornly high, we expect that the sustained
economic recovery in the country will see this rate come down in the second
half of the year. However, high food inflation and recently increased taxes
on alcoholic drinks will continue to feed through to consumer prices,
negatively impacting volume sales, especially of premium goods. ‟

Source: Market Research 2011 http://www.marketresearch.com/Business-Monitor-International-v304/Slovakia-Food-Drink-Q3-6441118/

• Headline Industry Data (local currency)
• 2011 per capita food consumption = -0.85%; forecast to 2015 = +9.04%
• 2011 alcoholic drinks sales = +3.18%; forecast to 2015 = +15.95%
• 2011 soft drinks sales = +6.12%; forecast to 2015 = +37.45%
• 2011 mass grocery retail = +1.17%; forecast to 2015 = +12.82%

Source: Market Research 2011 http://www.marketresearch.com/Business-Monitor-International-v304/Slovakia-Food-Drink-Q3-6441118/

• A June 2011 study by the real estate consultancy Colliers International (CI)
shows that the Slovak capital city of Bratislava has one of the lowest rents
in retail space compared to other capital cities in the region. The highest
rents are paid in stores in Budapest, namely €65/m² per month. This figure
in Bratislava stands at €38/m² per month.
• The rents in shopping centres and other retail facilities have gone down in
all capital cities in Central Europe over the past year. Owners of shopping
centres continue to lower rents in a move to attract tenants.
• Rent in Bratislava is the lowest in the region, standing at €40/m² per month.
This figures goes up to €86/m² per month in Warsaw, €110/m² per month in
Budapest, and to €200/m² per month in Prague.

Source: CEE Retail, 2011 http://www.ceeretail.com/106522/Bratislava-has-the-lowest-rents-for-shopping-centres-in-the-CEE-region.shtml

Slovak Retail Market Expansion
• A total of 85,000 m² in shopping centre GLA was delivered in Slovakia in
2010, a 50% drop against the previous year, according to data from the real
estate consultancy Colliers International (CI). No shopping centre was
delivered in Slovakia in Q1 2011.
• At the moment, the total area of shopping centres under construction in the
country is 140,000 m², according to CI.
• A major boost to the market will be the construction of the Central shopping
centre in Bratislava. Another major shopping centre project slated for
completion in 2011 is the Bory Mall -expected to bring some 65,000 m² GLA
onto the market.
• 2011‟s expansion of shopping centres in Slovakia is also expected to be
regional, with centres scheduled to open in Humenne, Cadca and Malacky.

Source: CEE Retail, 2010 http://www.ceeretail.com/106009/Drop-in-delivery-of-shopping-centres-last-year-in-Slovakia.shtml

Slovak Retail Act Abolished
• The Retail Act, which was intended to prevent retail chains from abusing
their powerful market positions in their dealings with suppliers, was repealed
on 12 January 2011 by the Slovak government.
• The Act‟s aim was to prevent retail chains from imposing unfair commercial
conditions in their contracts with suppliers.
• The procedure for the repeal of the Act was initiated by the Ministry of
Agriculture, which claimed that it did not achieve its goal of putting an end to
the unfair conditions imposed by retail chains on their suppliers. The
ministry argued that the abolition of the Act lowers the barriers to
entrepreneurship in the field of food supply, improves the business
environment in the retail arena and reduces the regulatory burden.
• According to the ministry, the Act did not fulfill its goal to put an end to unfair
conditions imposed by retail chains on their suppliers.

Source: CEE Retail, 2011 http://www.ceeretail.com/97676/Slovakia8217s-retail-law-repealed-.shtml

Slovak Retail Act Abolished
• Opposition MPs have criticised the move, saying that without such a law,
the practices of foreign retail chains, which forced suppliers to sell their
products to supermarket and hypermarket operators at production prices
will return to the Slovak retail market.
• On the other hand, the Agriculture Ministry says that without this Act more
Slovak products will make it to the market. It argues that once the retail law
was adopted some two years ago, multinational chains started to avoid
Slovak suppliers completely and to buy more produce abroad.

Source: CEE Retail, 2011 http://www.ceeretail.com/97676/Slovakia8217s-retail-law-repealed-.shtml

Tesco My Liberec
Tesco My Liberec, based in the Czech town of Forum Liberec is Tesco‟s first
effort at a department store cum supermarket. This is part of a strategy to
expand beyond the basics of Tesco‟s grocery business.
• The Czech republic was targeted as a trial market for the format as it‟s
consumers have a very different idea as to what Tesco can provide than do
consumers in more established markets.
The finished product is very different from a traditional Tesco store.
• It bears very little Tesco signage
• The grocery area has been given a makeover having more in common with
upmarket food halls
• The department store space (downstairs incidentally; a reversal of the
norm)
• Tesco brands rub shoulders with concessions in a carefully designed space

Retail Week, 19/03/2009, http://www.retail-week.com/my-liberec-a-tesco-store-but-not-as-we-know-it/2013781.article

”1000 Tuotekehittäjää”
Tallink Silja Oy* won the Excellence Finland, Quality Innovation Prize of the
Year award for its product development concept ”1000 Tuotekehittäjää”
• The prize is awarded annually to an innovative product, service or operation
concept. Tallink Silja won the prize in the category of large companies
• The campaign ”1000 Tuotekehittäjää” was realized for the Silja Line brand
in autumn 2009. Consumers were urged to test the cruises and provide
feedback. Oy selected 1000 regular customers and offered them a cruise in
Class A. These customers then provided comprehensive feedback. The
answerers were also able to comment, propose ideas and their own
development suggestions.
• Several development ideas originating with the project, such as interactive
blog Siljan Tuotekehittäjät, have already been implemented and others are
pending.
• executive manager of Tallink Silja Oy, Margus Schults, has said that
Oy ”…intend to develop our products and services in collaboration with our
customers also in future”
• The project has been held up as a role model for user involved service
innovation
Estonia Trade, 01/12/10, http://www.estoniantrade.ee/index.php?Page=EstonianNews&NewsID=379&lang=ENG 12/07/11

Czech Pop-up Store
• Pop-up stores have recently become a phenomenon in the Czech Republic.
• The Boho Pop Up Store opened in a space adjacent to the Czech Inn in
Prague 10-Vršovice and is the brainchild of Patricia Madarova.
• The Boho Pop Up Store is homey, with old used furniture as a backdrop to
the clothing and accessories.
• Suitcases with their original clasp closures are priced from 390 CZK ($22).
• Pop-up stores, and this one included, are only open for a short period. The
Boho pop-up store's closing Bang-Bang party was August 11, 2011.

Source: Prague.tv, 2011 http://prague.tv/articles/shopping/boho-pop-up-store

A First in Slovakia
• This year in Central Europe Tesco has launched the Extra store format. The
new format has introduced to our stores a range of innovations, from self-
service checkouts to retail services, such as pharmacies, opticians, and
financial services. Many of these innovations are firsts for the country.
• Tesco Mobile was launched in 2010 in Slovakia and is now the biggest
alternative Telecoms provider after Orange, T-com and O2.

Source: Tesco PLC, 2011 http://www.tescoplc.com/about-tesco/a-global-business/how-we-compete/

Sales and Operations Planning
• In June 2011 Infor, provider of business application software, announced a
business partnership with UAB Senuku (Senukai) - the biggest DIY retailer
in the Baltics, to deploy Infor S&OP combined with the Infor SCM Demand
Planning and Replenishment Planner.
• The project encompasses the complete sales and operations planning
(S&OP) cycle from demand planning and inventory optimization through to
supply replenishment across their retail and wholesale branches.
• Infor will help Senukai to reduce overall stock levels while avoiding stock-
out situations by improving demand forecast accuracy for every product at
every location and planning replenishment across their international supply
chain. Infor S&OP enables UAB Senukai to get more insight into their
demand and supply plans, perform real-time 'what-if' scenario planning for
different demand-supply conditions and assess their plans in unit and
financial terms.

Source: Retail Technology Review, 28/06/2011,
http://www.retailtechnologyreview.com/absolutenm/templates/retail_supply_chain.aspx?articleid=1720&zoneid=1

Help for Start-Ups
• HumanIPO is an Estonian based online platform seeks to help gather
momentum for startups of any kind from around the world.
• Entrepreneurs can use HumanIPO to build a business by sharing their ideas
in order to find partners, mentors, consultants, foreign sales agents and
investors.
• Toward that end, leaders of startups can upload their business ideas in
“stealth mode” on HumanIPO, including just basic details such as a startup
teaser, pitch and attachments to explain the idea further. From there, they
can invite feedback on their idea from contacts on LinkedIn and elsewhere.
• As on Facebook, visitors can post comments and suggestions on the
startup idea‟s “wall”; they can also follow the concepts they like. Eventually,
when the startup is ready for further visibility, the entrepreneurs involved
can publish the teaser on the HumanIPO directory, opening it up to new
potential partners and funding opportunities.

Source: Springwise, 05/11/2010, http://www.springwise.com/life_hacks/humanipo /

Social Shopping in Estonia
• WhosRich.me is a social shopping platform from Estonia that gives
consumers a way to share their latest purchases and comment on those of
their friends.
• WhosRich.me is a social utility that aims to make it easy for people to track
their friends‟ shopping habits. Users enter their purchases via a simple
interface, including a photo along with the date, time and price; for updates
on the go, a mobile iPhone app is also available. From there, other
members can view and comment on each other‟s purchases. The site‟s
search tool also lets consumers sort results by country or keyword for a look
at trends of interest to them.
• WhosRich.me is free for users. No word yet on its business model, but as
with other such ventures, there‟s clearly the potential not just for advertising
but also for referral fees from vendors whose products get highlighted on
the site.

Source: Springwise, 01/02/2010, http://www.springwise.com/lifestyle_leisure/whoisrichme /

Retail Innovation Lithuania
The Mosaic store, opened in 2008, represented a new retail concept in
Vilnius. The project was a year in development.

• The Mosaic brand went through a fast
track development process which set
out a requirement to visually
differentiate between Men‟s, Women‟s
and Children‟s collections in store.
• The brand is aimed toward office
workers and as such the store
borrows from „office‟ design.
• The lighting was also specially
designed as was the store
architecture.

Fibre2Fashion, 11/11/08, http://www.fibre2fashion.com/news/garment-company-news/newsdetails.aspx?news_id=65754 12/07/11

Edible Furniture
Innovative publicity stunt:
• In February 2011 a store called Adventures in Retail in the Akropolis
shopping mall in Lithuania created an entire chocolate dining room.
• The store transformed 183-square-foot space into a full-blown chocolate
dining room set.
• The entire room weighing in at 661 pounds of chocolate

Source: Trend Hunter, 17/02/2011, http://www.trendhunter.com/trends/lithuania

Estonia - Latvia Programme
2007-2013

Estonia - Latvia Programme
2007-2013
• The Estonia-Latvia Programme 2007-2013, began in 2007 as a cross-border
European Commission initiative to promote mutual sustainable development
and economic competitiveness through achieving an integrated and cross-
border economic, social and environmental development.
• The Programme aims to facilitate collaboration on the development of mutual
ICT and transport infrastructures and co-operation on environmental and retail
issues and the provision of education and other public services. (1)
• 14 new projects were announced in May 2011 including – the reconstruction of
the road between Killingi-Nõmme, in Estonia, and Mazsalaca, in Latvia; the
DELBI initiative to help small and medium enterprises and start-ups access the
cross-border market, as well as facilitate cross-border partnerships in different
fields; and the FoodArt project, which aims at strengthening the ties between
the rural food producers and gourmet restaurants. (2)

Source 1: The Estonia-Latvia Programme, March 2010,
http://www.estlat.eu/files/programme_manual_%2810_03_2010%29_f6dbc.pdf
Source 2: The Estonia-Latvia Programme, May 2011, http://www.estlat.eu/news/programme-news/14-new-projects-approved/

Retail Trends

Retail sales, international comparison - US$bn

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Romania 45.1 59.5 67 54.8 53 55 60.1 66.6 74.7 84.4

Sources: Planet Retail; Economist Intelligence Unit.

Retail Trends
• The Q311 Business Monitor International (BMI) Romania Retail report
forecasts that the country‟s total retail sales will rise by 18% between 2011
and 2015, growing from a predicted RON20.70bn (US$8.26bn) in 2011 to a
forecast RON24.48bn (US$9.77bn) by 2015.

• Continuing wage growth, the consumer lending boom and rising disposable
income following the introduction of a new flat rate of income tax are key
factors behind retail market expansion.

• Romania‟s privatisation process since 1990 and EU membership since in
2007 have allowed retailers to make significant inroads into the market,
contributing to forecast annual retail sales growth of 4.2% in local currency
terms.

Source: Market Research, 27/05/2011, http://www.marketresearch.com/Business-Monitor-International-v304/Romania-Retail-Q3-6398671/

Retail Trends
• Retail sub-sectors that are likely to experience strong sales growth over the
period include over the counter (OTC) pharmaceuticals, which BMI predicts
will total US$0.73bn in 2011 and grow by nearly 37% to US$0.99bn by
2015.

• Vehicle sales are forecast to reach 128,368 units in 2011 and grow by 32%,
to 169,496 units, by 2015.

Source: Market Research, 27/05/2011, http://www.marketresearch.com/Business-Monitor-International-v304/Romania-Retail-Q3-6398671/

Eurozone Scenarios

• Debt spiral

• Default

• Recovery

Supermarket Convenience
Stores

11 Retail Trends for 2011
1. Customers in control
2. Value and values
3. Death of discounting
4. Authenticity (and Fauxthenticity)
5. Vintage retail
6. Store as experience Centres
7. This time it‟s personal
8. The return of Premium
9. Constantly connected
10. All kinds of commerce
11. Considered consumption

Retailit.info, 20/12/10, http://retail-it.info/index.php?option=com_content&view=article&id=5247%3Atop-11-retail-trends-for-2011&Itemid=10

Top Retail Trends - 2011
1. Customers in control
Power is shifting from manufacturers to
retailers, and now to consumers, and now
“shoppers are beating retailers at their own
game”. Technology is driving this trend with
price comparison sites and deal of the day
apps and e-shopping

2. Value and Values
Value has been the megatrend in retail for the past few
years, but customers are starting to demand that retailers
also espouse “values” such as CSR. We‟re developing a
more sophisticated understanding of value. Consumers
traditionally confused “value” with “price”. Consumers are
becoming less price sensitive and more attuned to quality
goods and good service.


3. The Death of Discounting Corollary with trend #2. Percentage-off
promotions are running out of puff and discounting is not proving so
effective. In 2011, the answer will lie in engineering real value into
products and services in the first place, carefully and inventively
adding value during promotional periods, and constructing new, more
creative (and fun) ways to grab a bargain – such as allowing shoppers
to club together to get a better deal.

4. Authenticity (and Fauxthencity) –
cookie cutter retail concepts won‟t
work with consumers who‟ve seen it
all a million times. Consumers in
2011 will increasingly look for
distinctive, “real” retail experiences.
Brands with history will be rewarded
for innovative store and fit out design
and if you don‟t have a narrative –
make one up!

5. Vintage Retail – You can already see this trend
emerging with numerous stores and it will gather
momentum in 2011. In Japan (often ahead of the
curve in fashion terms), Kinji is a major (and cool)
pre-loved clothing chain, and Book Off is a
massive second hand books, manga and CD
retailer with 866 stores across the country.
6. Store as Experience Centres –
Physical retail needs to play to their
strengths versus the online retailers
(who have myriad advantages - fast
and efficient to browse, compare +
purchase) by delivering an experience
to shoppers. These should be high
tech, highly tactile and designed to
create buzz. Apple is a pass master at
this sort of experience design

7. This Time it‟s Personal –
Customisation is a growing trend.
Having something that is „yours‟
not „theirs‟. Nike has been leading
the way in this department selling
a large number of customisable
footwear and apparel lines.

8. Return of Premium – Luxury retail is
coming back. However, retailers can no
longer expect to put a logo on something
and expect to sell. Products will have to
be well-considered, well-crafted,
designed to last, have a story to tell and
are represented in a stunning physical
space in order for consumers to connect

9. Constantly Connected – Smart phones have allowed
people to be constantly connected. The trend is growing
rapidly for shoppers to price check and purchase from
their mobile phones in stores. The Wall Street Journal
reported in November 2009 that shoppers using their
mobiles in stores accounted for a mere 0.1 per cent of
visits to retail websites. In 2010 it was 5.6 per cent, an
increase of 50 times.
10. All Kinds of Commerce – The future is
in allowing the consumer to purchase when
and where they want to. Whether using
traditional (in-store) commerce, e-
commerce, m-commerce (mobile), f-
commerce (Facebook), s-commerce
(social) and v-commerce (video-enabled,
e.g.. YouTube).

11. Considered Consumption – this defines the post financial crisis consumer. The
days of mindless consumption are gone, and with them the promise of endlessly
rising comparable store sales. The consumer in 2011 is more of a rational consumer
weighing choices and seeking value and the best deal. This is a challenge but as
previously stated good products, well marketed will still succeed.


Retail 2020
PwC has set out its vision for retail in 2020
• Environment an important factor – green retailing now a must for the
customer and regulator.
• Individualised service – service and in-store experience are moving away
from one-size-fits all approach. It is now designed with specific target
groups in mind as shopper are a highly differentiated demographic –
working women, baby boomers, singles, teenagers etc. etc. Tesco
Clubcard, Footlocker US‟ „House of Hoops‟
– Service is set to ‗become an even more finely calibrated proposition
between retailer and customer. And service components will evolve
increasingly from reactive to predictive as retailers battle to win the
loyalty of an ever-elusive—and more fragmented—customer base.‘
• Going from Growth – growth in terms of „multiplicity of geographic, online
and format offerings,‟. The needs of the consumer are at the heart of this
trend.
– Tesco again cited with reference to it convenience store strategy in the
US and its meticulous approach to researching its customers
PwC Retail in 2020, [no date], http://www.accenture.com/us-en/Pages/insight-retail-2020.aspx

Global Direct Retail Sales (US
Bn $)

WfDSA, 04/02/11, http://www.wfdsa.org/statistics/index.cfm?fa=display_stats&number=2

Global Salesforce Size 1998 – 2009
Millions of People

WfDSA, Global Sales Force, 04/02/11, http://www.wfdsa.org/statistics/index.cfm?fa=display_stats&number=3

Retail – Czech Republic
The Czech Republic‟s May statistics on the retail trade reveal that:
• sales in retail trade including automotive decreased at constant prices by 0.7%,
month-on-month
• working days adjusted sales increased by 1.4%, year-on-year
• Y-o-y increase of non-adjusted sales by 3.2% was influenced mainly by the
development in “wholesale and retail trade; repair of motor vehicles and
motorcycles” and non-food goods.
• Retail sales via mail order houses or via Internet increased for the nineteenth
straight month (+21.0%).
• Sales growth was recorded for sale of clothing, footwear and leather goods in
specialised stores (+9.8%), retail sale of information and communication
equipment in specialised stores (+9.3%), retail sale of cultural and recreation
goods in specialised stores (+7.8%), dispensing chemist, medical and
orthopaedic goods, cosmetic and toilet articles in specialised stores (+5.1%),
and retail sale of other household equipment in specialised stores (+3.4%).
• Food was sold less both in retail sale of food, beverages and tobacco in
specialised stores (-2.8%) and in retail sale of non-specialised stores with food,
beverages or tobacco predominating (-2.5%).
• Retail sale in non-specialised stores sales decreased by 0.9%.
Czech Statistical Office, 04/07/11, http://www.czso.cz/csu/csu.nsf/enginformace/cmal070411.doc

Retail – Estonia
Retail sales volume index of retail trade enterprises and its trend,
January 2002 – April 2011 (2005 = 100)

Statistics Estonia, 31/05/11, http://www.stat.ee/49472

Retail – Estonia
• In April, the retail sales of goods by retail trade enterprises were 315 million
euros (about 5 billion kroons).
• Sales on manufactured goods increased by 10% on 2009.
• Sales increased across all industries bar pharmaceuticals and cosmetics.
• In April, the retail sales in non-specialized stores increased 18% on 2009
figures.
• Stores selling household goods and appliances, hardware and building
materials and other specialized stores increased retail sales 13% and 12%,
respectively.
• The retail sales in stores selling textiles, clothing, footwear and leather
goods that had been in fall since the beginning of the year, turned to a rise
again in April, growing 6% compared to April of the previous year.

Statistics Estonia, 31/05/11, http://www.stat.ee/49472

Retail - Latvia

Latvia Statistics Office, 28/01/11, http://www.csb.gov.lv/en/notikumi/retail-trade-turnover-2010-31832.html

Retail - Latvia
• Compared to 2009, retail
trade turnover at constant
prices in 2010 has reduced by
2.2%. Retail in food products
declined by 5.3% and non
food items by
• Compared to November, total
retail trade turnover
calculating at constant
prices in December 2010 has
decreased by 1.4%. Retail
trade of food products has
decreased by 1.9%, but retail
trade of non-food products
diminished by 1.2%.


Retail - Latvia
• Compared to December 2009 total retail trade turnover in December 2010
increased by 8.1%, according to working (trade) day adjusted data,
calculating at constant prices. Non-food product group sales increased by
11.9%. Retail trade of food products grew by 1%.
• In comparison with 3rd quarter of 2010, retail trade turnover according to
seasonally adjusted data at constant prices in 4th quarter of 2010 has
reduced by 0.4%. Enterprises selling mainly food products turnover
decreased by 2.4%. Retail trade turnover in companies selling mainly non-
food products grew by 0.7%.
• Compared to the 4th quarter of 2009, retail trade turnover in 4th quarter of
2010 rose by 7.2%, according to working (trade) day adjusted data. Retail
trade turnover in enterprises selling mainly non-food products increased by
10.7%, but in enterprises selling mainly food products – by 0.8%.


Retail - Lithuania
• The turnover of Lithuania‟s
retail trade, wholesale and
retail trade and repair of
motor vehicles and
motorcycles enterprises
(VAT excluded) was 2.7bn
LTL ($1.121bn) in May
2011
• This is a 4.1% increase in
retail sales in same period
2010

Lithuania Statistics Office, 06/11, http://www.stat.gov.lt/en/

Retail – Romania
Adjusted retail sales in Q1 2011 fell by 5.4% on the same period last year.
Consumption fell across all sectors:
• Food sales fell 10.2% on the year in the first quarter
• Fuel sales were down 6%
• Non-food sales down 2.4%
• Compared with March 2010, Romanian adjusted retail sales decreased by
5.8%
However,
• A Romania Retail report from Q1 2011 forecasts that the country‟s total
retail sales will rise 14% between 2011 and 2014, from a predicted
RON20.65bn (US$8.24bn) in 2011 to a forecast RON23.62bn (US$9.43bn)
by 2014.
• The report credits this potential growth to continuing wage growth, a recent
consumer lending boom and rising disposable income following the
introduction of a new flat rate of income.
• Romania‟s privatisation process since 1990 and EU membership since
2007 have allowed retailers to make progress, contributing to forecast
annual retail sales growth of 4.1% in local currency terms.
BMI Romania Retail Report, 11/10, http://www.slideshare.net/ReportLinker/romania-retail-report-q1-2011

Retail - Romania
• Although the population is forecast to decrease slightly, from 21.4mn in
2011 to 21.1mn by 2014, GDP per capita is predicted to grow 42.7% by
2014, reaching US$10,494.
• Consumer spending per capita is expected to increase from a predicted
US$5,005 in 2011 to US$7,411 in 2014.
• The proportion of the population classified by the UN as economically active
was 70.1% in 2005 and an estimated 70.7% in 2010.
• Retail sub-sectors that are likely to experience strong sales growth over the
period include over-the-counter (OTC) pharmaceuticals, which BMI predicts
will total US$0.6bn in 2011 and grow by more than 39% to US$0.84bn by
2014…
– This could be boosted by factors such as EU membership, privatisation
of the pharmaceutical industry and the consolidation and improvement
in operating conditions in retail and wholesale.
• …and automotive sales. The BMI report believes that the Romanian
automotive market has large untapped potential and will grow from an
estimated US$4.68bn in 2011 to US$8.33bn in 2014, a rise of 78%. At that
time sales are expected to reach 290,000
BMI Romania Retail Report, 11/10, http://www.slideshare.net/ReportLinker/romania-retail-report-q1-2011

New Products
The Romanian ‘iPad killer’
• Romanian company Televoice officially launched last week under its Evolio
brand the Neura tablet which it is positioning as a serious competitor for the
Apple iPad.

• “Our tablet is an iPad killer since it offers more at a similar size and for a fair
price. This proves that Romanians too can launch a high technology product
with exceptional performance onto the market,” said Liviu Nistoran, CEO of
Evolio.

Source: Business Review, 01/08/2011, http://business-review.ro/links/neura-producer-you-
can-t-manufacture-this-kind-of-tablet-in-romania/11959/

New Products
• “We estimate sales of 4,000-5,000 Neura units in Romania by the end of the
year. We will reach approximately half of the iPad market share, with the
prospect of exceeding this level in December,” said Nistoran. “We are in
discussions with retail outlets in Bulgaria, Hungary and Poland to distribute
the tablet.”

• The Evolio.ro website has received orders from the United States, United
Kingdom, Germany, South Africa and Venezuela.

• The tablet runs on the Android 2.2 operating system and is now available in
local retail stores around Romania.

Slovakia - Retail

Statistical Office of the Slovak Republic, 06/11, http://portal.statistics.sk/showdoc.do?docid=36877

Retail Slovakia
Turnover in retail trade
Year Turnover in retail trade
(Million Euro)
2000 9224,1
2001 9995,6
2002 10 886,9
2003 10 746.4
2004 11 810,3
2005 12 805,4
2006 14 116.4
2007 15 152.2
2008 16 743.8
2009 17 441.2
2010 17 249.1

Statistical Office of the Slovak Republic, 28/06/11, http://portal.statistics.sk/showdoc.do?docid=6608 11/07/11

Retail Innovation Slovakia
UniCredit will be distributing MasterCard branded cards to enable contactless
payment to their customers for use at more than 3000 contactless card
acceptance point throughout Slovakia.(1)
• UniCredit is the first to implement such a service in Slovakia
• Payments over 20 euro will require an authorisation PIN.
• The system will be in place in fast food restaurants, supermarkets, cinemas
and other retail outlets across Slovakia

(1) Near field Communications World, 11/07/11, http://www.nearfieldcommunicationsworld.com/2011/07/11/38502/unicredit-launches-mobile-
contactless-payments-service-in-slovakia/ 12/07/11

Retail Innovation Romania
German discount grocer Rewe Group obviously believes that Romania is a
robust potential market for discount retail. Rewe plans to open an additional 20
„Penny‟ stores in the country on top of the 100 it already operates after 2010
results showed a 4.3% Increase in turnover. (1)

An indigenous success story are Romania‟s wine makers who scooped over 40
prizes in the Decanter, International Wine challenge (IWC) and the International
Wine and Spirit Competition (IWSC), a record level of express.(2)

The success comes on the back of the creation of the La Umbra wine brand
launched by Halewood Romania. The launch follows significant investment, the
use of International varieties and the implementation of international
winemaking techniques. (3)

(1) Just-food, 24/03/11, http://www.just-food.com/news/rewe-group-plans-new-penny-stores_id114723.aspx?d=1 12/07/11
(2) Talking Retail, 04/07/11, http://www.talkingretail.com/products/product-news/romanian-wine-celebrates-winning-streak 12/07/11
(3) Talking Retail, 08/12/10, http://www.talkingretail.com/products/product-news/romanian-wine-celebrates-winning-streak 12/07/11

The Eurozone crisis - 3 Scenarios
• Baseline – the situation in 2011 so far…
• The initial issue of the European Financial Stability Facility (EFSF) was well
received and the emergency meeting of Eurozone heads of government grudgingly
agreed to increase the size of the EFSF/ESM both as measures to reassure
investors
• After what amounted to the failure of its debt auction in early April, Portugal
realised that the future costs were unsustainable.
• The new European Banking Authority has started the 2011 round of bank stress
tests, but stated that banks do not need to make provisions against Eurozone
government bonds held in their „banking book‟.
• will investors be able to add back their own assumptions of losses and test the
capital strength of the banking system?
• Will this reveal the fatal flaw in the process?
• Eurozone governments have committed to preparing contingency plans for the
results of the formal tests, but they are unsure whether these will convince
investors of sovereign and bank solvency.
• There is also the problem of banks that face a failure of a major counter-party in
the inter-bank or derivatives market.
http://www.europesworld.org/NewFrancais/Accueil/Article/tabid/190/ArticleType/articleview/ArticleID/21831/language/en-US/Default.aspx

Scenario 1 – Inflationary Debt
Spiral
• Finance ministers gut the Commission‟s already weak economic
governance proposals, and so make it clear to investors that collectively the
Eurozone's governments are unwilling or unable to enforce serious fiscal
discipline. This weakness may become all too apparent from the probable
stand-off with the European Parliament and the ECB.
• Capital flees the Eurozone and short and long-term interest rates rise
significantly in an attempt to prevent the import of rising inflation as the euro
weakens. Extra interest costs add extra strain onto budget deficits and
locks in the debt spiral.


Scenario 2 - Default
• Finance ministers and the European Parliament agree tough governance
package
• But at an risk state rejects the harsh measures called for and baulks
investors leading to default . Steadier states fear a domino effect in other
weakened states
• Potential losses are vast as demonstrated by the stress tests and we see a
spate of bank nationalisations.
• Some Eurozone members leave the EU and revert to their past currencies,
based on large and overly competitive devaluations
• Fury in other Eurozone states quickly leads to the breakdown of the
political and economic union.
• The EU ceases to operate as an organised political system


Scenario 3 – Federal Eurozone
Emerges
• A strong, federal „Eurozone‟ emerges.
• Eurozone members conclude that it is in their best interest to avoid a collapse of the
euro and decide that anything and everything must be done to save it
• They agree an economic governance package that goes well beyond the
Commission proposals and helps steady the bond markets.
• Tougher regulation ensures that the banking system will not become over-exposed
again.
• Members agree a vastly engorged EU rescue fund
• At risk states will be encouraged to take assistance at an early stage rather than
when disaster is at door
• Collective guarantees ensure recovery in the bonds market
• Europe becomes a little insular in this period, focusing on getting its house in order,
enlargement is put on hold and relations with non-Eurozone members are cooled.
• After a couple of years members finances have improved sharply and the Euro
strengthens, reducing the risk of importing inflation and improved regulations reduce
the risk of a repeat o f the crisis

Supermarket ‘Convenience’
Stores
• It‟s well over 10 years since Tesco Express and Sainsbury‟s Local first
opened their doors, and Waitrose have just opened their first „little
Waitrose‟.
• Critical to understand how shoppers needs differ in this new retail
environment.
• These convenience stores are changing the ways on which people are
shopping
– 45% of food brought in a supermarket convenience store is consumed
immediately
– 15% of shoppers are in store to buy something they need urgently as
they have run out
– bread shoppers for example will spend less than 25 seconds at fixture in
a convenience store so POS needs to be extra simple and impactful.
Associated products need to be in reach as few shoppers will look
round the whole store.
Source: him! Research and consulting, 2011, http://www.him.uk.com/webfiles/Documents/Supermarket%20convenience%20stores.pdf

Supermarket ‘Convenience’
Stores
• The art of convenience stores is getting people in and out as quickly as
possible having bought everything they came for.
• It is also very important to get shoppers to buy „just one more item‟ as this
often represents a „30-50%‟ increase in basket size.
• A convenience store shopper is not price sensitive. Fewer than 50% of
supermarket convenience shoppers check the price of an item before
buying and 2/3 shoppers will pay more in convenience stores that they
would in the supermarket
• 62% of customers walk to the store so bumper pack offers and volume
promotions are less relevant.
• Staff upselling can have a greater impact in the convenience store. Him!
Say that promotional penetration can triple when a staff member tells the
shopper about a promotion

Source: him! Research and consulting, 2011, http://www.him.uk.com/webfiles/Documents/Supermarket%20convenience%20stores.pdf

Race to the Middle
• The UK high street (and elsewhere in the developed world) is facing hugely
challenging trading conditions at present.
• Debenhams is one retailer which might have been expected to find the
going tough. However it‟s recently released result suggest otherwise and
this is not merely down to their clever management team and product mix
research
• Debenhams is often bracketed with Marks & Spencer and Next in the mass
market end of the middle market. At present this seems to be the place to
be in the market. The squeeze on incomes that is hurting the retail market is
being felt most keenly by the value end of the market. Those in the middle
are holding up ok.
• The hardest hit are those on the lowest incomes and much of their spend
goes on consumables (food, petrol etc.) leaving little discretionary spend. As
a result value supermarkets are doing well.

Retail week, 04/07/11 http://www.retail-week.com/blogs/retail-day/middle-of-somewhere/5026886.blog

Race to the Middle
• Spend on fashion is largely discretionary however and the market has not
seen the movement toward the value end as they have in the grocery
sector. When people do spend they want quality at a good price and as a
result the middle of the market is prospering

Retail week, 04/07/11 http://www.retail-week.com/blogs/retail-day/middle-of-somewhere/5026886.blog

Luxury Retail Europe
Europe‟s share of the global $238.9bn market in
luxury goods rose to 37% in 2010 from 35% in
2004(1)
• The growth in the market is largely based on
Asian influences, based on soaring numbers
of high spending visitor, particularly from
China.
• Many high end retailers are reinvesting in
Europe with boutiques springing up in Paris,
Italy
Consultancy Bain & Co raised its 2011 growth
forecast for luxury sales to 8% after recent sales
data from groups such as LVMH and Burberry (2)
• Bain estimates that luxury sales will grow 5-
6% in 2012 and 2013.
– This growth is expected to be driven by
buyers in emerging markets, Europe and
the US
(1) WSJ, 23/03/11, http://online.wsj.com/article/SB10001424052748703726904576192600105705670.html 12/07/11
(2) The Guardian, 03/05/11, http://www.guardian.co.uk/business/2011/may/03/luxury-goods-market-back-on-track 12/07/11

Luxury Retail Eastern Europe
2010 luxury goods sales figures continued a downward trend in Eastern
Europe.
Sales in the first half of 2010 dropped by as much as 30% in some sectors.(1)
• Automotive sales were hardest hit with sales drops of approx. 30% in
Romania, Bulgaria, Serbia, Hungary and Ukraine. The Czech Republic
suffered a smaller decline
• Jewellery and watch sales also suffered, seeing declines up to 15% in all
markets
• Luxury fashion declined by up to 10%

(1) CPP-Luxury, 03/10/10, http://www.cpp-luxury.com/en/most-luxury-markets-in-central-and-eastern-europe-continue-downtrend_939.html
12/07/11

Innovation – Czech Republic
• Classed among the moderate innovators with innovation performance below
the EU27 average
• Rate of improvement above that of the EU27.
• Relative strengths in Firm investments, Innovators and Economic effects
• Relative weakness is in Throughputs.
• Over the past 5 years Firm Investments and Throughputs have been the
main drivers of improvement. In particular from strong growth in:
– S&E and SSH graduates (18.1%)
– Venture capital (26.6%)
– Private credit (13.6%)
– Broadband access by firms (20.1%)
– Community designs (24.5%)
– Technology Balance of Payments flows (14.5%).”

European Innovation Scoreboard, 2009, http://www.proinno-europe.eu/page/european-innovation-scoreboard-2009

Estonia - Innovation


Estonia - Innovation
• Estonia classed as an innovation „follower‟ just below EU average
• Rate of improvement above EU average
• Relative strengths in Finance and Support, Firm Investments, Linkages &
Entrepreneurship and Innovators
• Relative weakness in Throughputs
• Over the past 5 years Firm Investments and Throughputs have been the
– Business R&D spend (20%)
– Non R&D innovation spend (29.3)
– Community Trademarks (14.5%)
– Technology Balance of Payment flow (16.9%)


Latvia – Innovation


Latvia – Innovation
• Classed as a catching-up country with performance well below the EU
average
• Relative strengths in Human resources and Finance and support
• Relative weaknesses in Linkages & entrepreneurship, Throughputs and
Innovators
• Over the past 5 years Finance support and Throughputs have been the
– Public R&D spend (12.5%)
– Private credit (15.4&)
– EPO patents (17.8%)
– Community trademarks (35.9%)
– Community designs (21%)


Lithuania – Innovation


Lithuania – Innovation
• Classed as a moderate innovator with performance well below the EU
average
• Relative strengths in Human resources, finance and support and Linkages
and entrepreneurship
• Relative weaknesses in Firm investments, Throughputs and Innovators
• Over the past 5 years Human resources, Finance and support and
Throughputs have been the main drivers of improvement. In particular from
strong growth in:
– S&E and SSH doctorate graduates (14.8%)
– Private credit (21.5%)
– EPO patents (15.5)


Romania - Innovation


Romania - Innovation
• Classed as a growth leader among the catching-up countries with performance
well below the EU average. But…
• Rate of improvement that is one of the highest of all countries
• Relative strengths in Innovators and Economic effects
• Relative weaknesses in Finance and support and Throughputs.
• Over the past 5 years Finance and support and Throughputs have been the
– Public R&D spend (18%)
– Private credit 25.8%)
• Performance in Firm investments, Linkages & entrepreneurship, Innovators and
Economic effects has increased at a slower pace


Slovakia - Innovation
• Classed as one of the catching up countries with performance well below
the EU average
• Relative strengths in Firm investments and
• Economic effects
• Relative weaknesses in Finance and support,
• Linkages & entrepreneurship, Throughputs and Innovators.
• Over the past 5 years Finance and support and notably Throughputs have
been the main drivers of improvement. In particular from strong growth in:


Online Retail Growth Forecast
Online retail in EU and US expected to achieve double digit growth to 2015
• At a 10% Compound Annual Growth Rate (CAGR) to 2015 the US online
retail market will would grow to $279bn.
• In Western Europe a 10% CAGR would see the market reach a value of
134bn euro
• By 2015, 68%of online adults in Western Europe will have made a
purchase online; the figures for Northern and Southern Europe are 80% and
50% respectively

BizCloud, 12/07/11, http://bizcloudnetwork.com/2011/online-retail-in-us-and-western-europe-to-experience-double-digit-
growth/ 12/07/11

NFC in Czech Republic
• Telefonica Czech Republic, Komercni banka, Citibank Europe, Globus CR
and VISA Europe have launched a pilot project to trial contactless mobile
payments with real customers in the Globus hypermarket in Prague.
• The new technology carries over the functions of a classical payment card
to a mobile telephone SIM card. The modern trend further improving the
payment safety and comfort is coming to the Czech Republic. The payment
card application on a SIM card should become part of the standard offering
in 2012.
• The six-month project was launched July 22nd 2011, it will collect information
about the actual use of the contactless mobile payments and prepare the
commercial launch of this service. Two hundred customers of Telefonica
and Citibank and two hundred customers of Telefonica and Komercni banka
will participate in the project, they can use the new technology at the tills of
selected Globus hypermarkets - in Chotikov u Plzne and in three Globus
hypermarkets in Prague (Cerny Most, Cakovice and Zlicin).

Source: TMC Net, 2011 http://iphone.tmcnet.com/news/2011/07/22/5654938.htm

NFC in Czech Republic
• The payment application recorded on Telefonica SIM cards was provided by
the card association VISA Europe.
• Over 260 million terminals are expected to be available for the NFC
payments globally in 2014. The advantage of the NFC enabled handsets
lies in particular in improving the comfort and intuitive use of payments. The
payments are simple and safer and the same time, as users have
permanent control over their devices.

Source: TMC Net, 2011 http://iphone.tmcnet.com/news/2011/07/22/5654938.htm

Distance Selling
• 88% of Czech retailers that were selling their products or services in other
EU countries said they also actively advertised their products or services to
consumers in other EU countries.

Source: Europa, 2011 http://ec.europa.eu/public_opinion/flash/fl_300_en.pdf

Digital Signage in Romania
• Cisco has announced the deployment of Cisco Digital Signs at Unirea
Shopping Centre, one of the largest retail complexes in Bucharest.
• At Unirea, Cisco Digital Signs, part of the Cisco Digital Media Suite (DMS),
are used to provide a centralised streaming of graphics and video over the
Internet Protocol (IP) network to 85 wide-screen displays located across the
mall.
• The Cisco Digital Signs solution is used to run in-mall advertising for
tenants. It helps the mall operator create a differentiated offer, retain a rental
premium, and generate new revenue streams.
• Carmen Adamescu, president and chief executive officer, Unirea Shopping
Centre, said: "Unirea stores are keen to advertise their products, and in-mall
advertising is probably the best way to reach customers in a targeted way. “

Source: Retail Technology Review, 14/07/2011,
http://www.retailtechnologyreview.com/absolutenm/templates/retail_supply_chain.aspx?articleid=1201&zoneid=1 g

‘Scan It’
Scan it is a product from Motorola. Its is used by the Dutch grocer Ahold in a
selection of their stores in Sweden, Belgium, the US and the Czech
Republic.(1)
• The system allows shoppers to scan and bag their groceries as they go
using a handheld device.
• While increasing throughput the device also allows retailers to advertise to
the shopper through the handset. The device commonly shows shoppers
what‟s on sale, enticing greater spend per shopper.
– Ahold says that shoppers using scan it spend approximately 10% over
the average
Ahold has now created a smartphone app version of Scan It. it is trialling in the
states and shows the evolution of the product from launch in the US in 2007(2)

(1) Kezi News, 27/06/11, http://kezi.com/news/local/216280 12/07/11
(2) Ahold, [no date], http://www.ahold.com/node/3872, 12/07/11

Mobile Contactless Payments Trial
In mid 2011 Komerční banka, Citibank Europe, Globus ČR, VISA Europe and
Telefónica O2 Czech Republic are due to launch a project trialling mobile
contactless transactions (1)
• The project hopes to learn about how people actually use contactless
payment
• The CR is thought to have wide potential for such technology
• Consumers are expected to use the technology to pay for inexpensive items
in particular. If the cost of the good exceeds a predetermined limit then the
customer is asked to enter a verification code.
Contactless payment is increasing in popularity in the CR. On the back of the
Globus trial McDonalds is considering installing the technology in its stores –
they are waiting for their provider UniCredit bank to introduce the system in
stores. (2)

(1) KB, 24/03/11, http://www.kb.cz/en/about-the-bank/press-room/press-releases/mobile-contactless-payments-in-the-czech-republic-pilot-
project-to-take-off-in-mid-2011-1191.shtml 12/07/11
(2) CzechTrade, 02/06/11, http://www.czechtrade-china.cn/en/news/detail-19389/ 12/07/11

Fits.Me
Fits.Me is a virtual fitting room for online retailers. The technology has been
developed at two Tallinn based universities and a German company providing
anthropometrical data.(1)
• “Lack of a fitting room is the biggest problem for apparel eCommerce.
Fits.me is helping clothing retailers increase the sales, and decrease costs
associated with returns”

• Fits.Me has designed a robotic
mannequin that exactly replicates the
buyers dimensions and allows the
buyer a far better preview of how the
items will look when delivered. It is
hoped the technology will help to
increase sales and minimise returns

(1) Fits.Me, [no date] http://fits.me/content/about-us 12/07/11

Fits.Me
This has come to the market on a backdrop of surging online sales. A report
from Forrester Research noted that online sales of apparel, accessories and
footwear reached $27bn in 2009 on 17% year-on-year growth. Double digit
grow this forecast for online apparel sales over the next several years.

―Online apparel sales to date have been exceptionally challenging due to the
lack of a fitting room. However, it is also the fastest growing e-commerce
category and will produce an estimated annual revenue of $31 billion dollars in
the US in 201. Only 8% of clothing is currently sold online, and Fits.me Virtual
Fitting Room is the disruptive technology that will enable online apparel
retailers to successfully compete with traditional brick-and-mortar clothing
shops.‖
- Heikki Haldre, CEO and co-founder of Fits.me

Fits.Me, 22/12/10, http://fits.me/news/fitsme-virtual-fitting-room-closes-%E2%82%AC13-million-second-round-funding 12/07/11

Image Sources p.1
Page
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3. Clockwise
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2. http://www.nanotechnologyinvesting.us/images/nanotechnology-480.jpg
3. http://teamaltman.com/wp-content/uploads/2010/10/industry-and-data.jpg
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12. Left to Right.
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2. http://www.operationnoah.org/images/uploads/Burning_planet_411x220.jpg
14. Http://www.proinno-europe.eu/page/european-innovation-scoreboard-2009
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20. Left to Right
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2. http://www.dailymail.co.uk/news/article-530131/M-S-shopper-slipped-grape-sues-300-000.html
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Image Sources p.2
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2. http://www.logoblog.org/images/apple-logo-aqua.png
22. Left to Right
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2. http://www.theshinywave.com/wp-content/gallery/post-images/google-dr-evil-free-ideas.jpg
23. Left to Right
1. http://images.apple.com/retail/images/store_photos/photo_fifthavenue.jpg
2. http://a1.l3-images.myspacecdn.com/images02/8/ad8f2cda1d88483882e268f9b0bcc7c7/l.jpg
24. http://www.happytellus.com/shopping/prague/czech-republic
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27. Left to Right
1. http://www.praguepost.com/pictures/1-20110309-7809-5061-pic.jpg
2. http://www.goldendrum.com/tempgal/2010/W/imgs/W063.jpg
28. Clockwise
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2. https://www.theimagefile.com/v/tp/202/183/5851050202_4_kaufland-prague-alcohol.jpg
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Rohit Talwar Keynote to ICSC Czech and Slovak Retail conference September 13th 2011 presentation and background materials

Rohit Talwar Keynote to ICSC Czech and Slovak Retail conference September 13th 2011 presentation and background materials

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Rohit Talwar Keynote to ICSC Czech and Slovak Retail conference September 13th 2011 presentation and background materials