In this presentation ADM sketches a general framework of the situation of retail trade market in Italy within the European context. After some references to the macroeconomic context and to the forecasts, the focus is moved to household consumption model, analyzing structural trends and the impact of the crisis. Afterwards, modern retail trade in Italy is analyzed in comparison with European countries and finally the latest trends and the new challenges are briefly illustrated. http://www.istat.it/en/archive/168897 http://www.istat.it/it/archivio/168890

1. Modern Retail in Italy | Main features and latest trends
Workshop Scanner Data - Rome, 1 October 2015
Hélène Hotellier
Responsabile Ufficio studi e Affari europei
Federdistribuzione per ADM
hh@federdistribuzione.it

2. ADM represents the Modern Retail sector in dealing with the agro-food / Fast Moving
Consumer Goods industry. ADM aims at the improvement of the supply chain, boosting and
promoting efficiency in relations between operators.
Members of ADM are the three main representative trade associations of the large Modern
Retail sector - Federdistribuzione, ANCC-Coop, ANCD-Conad - and about 800 retail
companies operating in Italy.
ADM is a forum where the main retail industry associations can discuss to identify possible
common paths on institutional issues.
FederdistribuzioneperADM
2

3. FederdistribuzioneperADM
1. Focus on Italy | Macroeconomic context and forecasts
2. Focus on Italy| Household consumption model:
structural trends & impact of the crisis
3. Modern Retail in Italy | Main features, comparison
with European countries and latest trends
4. Modern Retail in Italy | New challenges
3

4. FederdistribuzioneperADM
5.4
3.9
1.7 1.8 1.7
2.5
2.7
2.5
2.7
2.2
1.9
2.1
1.8
3.3
0.8
1.5
2.8
3.0
1.2
0.2
2.9
1.1
2.0
1.8
1.6
2.9
1.9
0.5
0.0
1.7
0.9
2.2
1.7
-1.2
-5.5
1.7
0.6
-2.4
-1.9
-0.4
2.2
0.8
3.2
2.9
2.3
3.3
1.1
0.2
1.0
0.7 0.6
1.5 1.4
-0.8
-1.6
1.5
-0.3
-4.0
-2.6
0.3
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Consumer prices GDP Consumption
1. Focus on Italy | GDP, Households consumption, Consumer prices
Source: Istat
4

5. FederdistribuzioneperADM
1. Focus on Italy | Macroeconomics forecasts
2014 2015 2016
GDP
(real terms)
-0,4 +0,9 +1,6
Household consumption
(real terms)
+0,3 +0,8 +1,5
Unemployment rate
(%)
12,7 12,3 11,9
Consumer prices
(% Var.)
+0,2 +0,3 +1,0
Deficit
(Deficit/GDP)
-3,0 -2,6 -2,2
Public debt
(Public debt/GDP)
132,1 132,8 131,4
Source: DEF Italian Government (18 september 2015)
5

6. FederdistribuzioneperADM
16.6% 18.5% 18.7% 19.3%
11.0%
12.7% 13.4% 13.5%
1.8%
4.5% 3.6% 3.7%
3.3%
3.8% 3.8% 3.9%9.5%
16.0% 14.0% 13.8%
18.9%
19.6% 24.6% 24.4%
19.2%
12.7%
11.8% 11.5%
19.7%
12.2% 10.1% 9.9%
1991 2003 2013 2014
Source: Istat, GNLC Nielsen, Indicod Ecr-TradaLab
Food & Non Food goods spending 212
Non food 98
Food 114
Housing / allowances spending 455
Housing, power… 242
Transports, communication 137
Health, Education 39
Insurances, Financial services 37
Recreative spending 325
Restaurants & Hotels, Travels 134
Wellness, Sport, Culture, … 191
€ billion429 835 992986
38,9%
24,9% 21,9% 21,4%
33,5%
43,9%
46,0% 45,8%
27,6%
31,2% 32,1% 32,8%
2. Focus on Italy | How has Household spending changed overtime
6

7. FederdistribuzioneperADM
- 8,0% = € 79,9 bn
- 6,4% =
€ 63,4 bn
Household consumption
2. Focus on Italy | Household Consumption hit by a 2-phase crisis
Source: TradeLab on Istat data
7

8. FederdistribuzioneperADM
Total Modern Retail sales 127,3 bn €
Total Retail sales 212,2 bn €
Every week, 60 million people
enter Modern Retail stores
450.000 co-workers
+131% invested in professional training per FTE in 2014 vs 2006
Source: Federdistribuzione, Istat, Nielsen, TradeLab
92% with open-ended contracts
58% women
17% under 30
3. Modern Retail in Italy| Main features - 2014
60%
8

9. FederdistribuzioneperADM
•Incl. Cash & Carry
Source: AC Nielsen, Istat, Indicod Ecr - TradeLab
11.9 12.5 12.6 12.7 12.8
42.1
29.8 28.7 27.9 27.2
46.1
57.7 58.7 59.4 60.0
2000 2011 2012 2013 2014
Modern Retail
Traditional small shops
Market stalls, e-
commerce, …
198,5 215,4220,4 € billion212,2226,3
58.159* stores
696.886 stores
188.274 stores
3. Modern Retail in Italy | Retail formats % market shares - Total retail sales
9

10. FederdistribuzioneperADM
9.8 10.0 10.1 10.1 10.2
27.1
18.2 17.9 17.5 16.9
6.2
10.0 10.5 11.1 11.4
12.0
10.0 9.4 9.0 8.7
37.3
22.5 22.2 22.2 22.4
17.6 18.5 19.0 19.7
7.6 11.7 11.5 11.1 10.7
2000 2011 2012 2013 2014
Hypermarkets > 4.500 sq.m.
Superstores (1.500 - 4.500 sq.m.)
Supermarkets (400 - 1.500 sq.m.)
Convenience stores
Discounts
Small Traditional shops
Market stalls, ecommerce,…
10
100,8 117,3 € billion116,0117,5
Source : AC Nielsen, Istat, Indicod Ecr - TradeLab
114,1
378 stores
6.969 stores
13.872 stores
4.830 stores
191.540 stores
36.196 stores
1.619 stores
3. Modern Retail in Italy | Retail formats % market shares - Food retail sales
63,1%
72,9%
10

11. FederdistribuzioneperADM
100%
96% 96% 95% 92% 91% 91% 89% 86%
82% 81% 80% 78% 78% 78% 76% 74%
69% 69%
57%
46%
0%
4% 4% 5% 8% 9% 9% 11% 14%
18% 19% 20% 22% 22% 22% 24% 26%
31% 31%
43%
64%
Ger Fra Ned Bel Swe Den Aus UK Por Nor Spa Fin Swi Ita Gre Eir Cze Slva Hun Pol Tur
Large Modern Retail (over 400m2) Rem (under 400m²)
Source: Nielsen - Total Store 2012
3. Modern Retail in Italy | Retail formats % market shares - Food retail sales (excl. market stalls)
11

12. FederdistribuzioneperADM
14.0 15.1 15.5 15.7 16.1
57.5
42.4 41.4 40.7 39.2
19.6
30.6 30.9 31.2 32.1
4.7
5.0 5.4 5.7 5.9
4.2 6.9 6.9 6.8 6.6
2000 2011 2012 2013 2014
Hyper+Super
Department Stores
Large Specialized Stores
Small Traditional shops
Market stalls, ecommerce,…
12
100,8 103,1 € billion99,5108,8 98,1
Source: Indicod Ecr - TradeLab
505.837 stores
152.078 stores
8.966 stores
979 stores
29.127 stores
3. Modern Retail in Italy | Retail formats % market shares - Non food retail sales
12

13. FederdistribuzioneperADM
13
•Incl. Cash & Carry
Source: Osservatorio del commercio (MISE) - Nielsen
2010 2014
% Var.
2014 vs. 2010
Var.
Retail stores 776.365 755.045 -2,75 -21.320
Modern Retail 59.508* 58.159* -2,27 -1.349
Small traditional shops 716.857 696.886 -2,79 -19.971
Market stalls 170.845 188.274 10,20 17.429
Total stores 947.210 943.319 -0,41 -3.891
3. Modern Retail in Italy | Number of stores by retail formats (1)
13

14. FederdistribuzioneperADM
14
Source: Osservatorio del commercio (MISE) - Nielsen
2010 2014 Var.
% Var.
2014 vs. 2010
Food Modern Retail stores 29.366 27.668 - 1.698 - 5,8
Hypermarkets > 4500 sq.m. 382 378 - 4 - 1,0
Superstores 1500-4500 sq.m. 1.456 1.619 + 163 + 11,2
Supermarkets 400-1500 sq.m. 7.279 6.969 - 310 - 4,3
Convenience stores 100-400 sq.m. 15.867 13.872 - 1995 -12,6
Discounts 4.382 4.830 + 448 + 10,2
Cash & Carry 396 385 -11 -2,8
Non Food Modern Retail stores 29.746 30.106 360 +1,2
3. Modern Retail in Italy | Number of stores by retail formats (2)
14

15. FederdistribuzioneperADM
3. Modern Retail in Italy | Total sales surface - Grocery market
% Var. new sq.m.sq.m. (‘000)
Source: Nielsen GNLC - January ed.
15

16. FederdistribuzioneperADM
Source: AC Nielsen - January 2015
2.8
3.1
3.4
4.9
6.2
7.2
8.7
9.4
11.7
15.0
Finiper
Gruppo Pam
Sigma
Eurospin
Gruppo Carrefour
Gruppo Auchan
Esselunga
Selex
Conad
Coop Italia
3. Modern Retail in Italy| Top 10 food retailers: % market shares
16

17. FederdistribuzioneperADM
TESCO
ASDA
SAINBURY’S
EDEKA
REWE
ALDI
CARREFOUR
LECLERC
CASINO
COOP
CONAD
SELEX
Source: Nielsen, Kantar - 2014
TESCO
ASDA
J SAINBURY’S
EDEKA
REWE
SCHWARZ Gr.
MERCADONA
CARREFOUR
DIA
CARREFOUR
LECLERC
INTERMARCHE
COOP
CONAD
SELEX
62,5% 61,0% 38,0%56,0% 36,1%
UK Germany Spain France Italy
3. Modern Retail in Italy | A low level of market concentration
% market share of TOP 3 food retailers
17

18. FederdistribuzioneperADM
1 bn € of investments generates
750 mln € of value added &
involves 15.000 persons
100%
118%
104%
77%
96%
83% 81%
74% 76%
0%
20%
40%
60%
80%
100%
120%
140%
2006 2007 2008 2009 2010 2011 2012 2013 2014
€ 4,0 - 4,5 bn
of investments in the
pre-crisis phase
€ 2,5 - 3,0 bn
of investments today
3. Modern Retail in Italy | Investments pre & post-crisis
Source: PwC study for Federdistribuzione - 2014 figures
18

19. FederdistribuzioneperADM
% Var. (2006 = base 100)
100.0%
101.6%
105.4%
106.9%
105.0%
106.5%
107.3%
105.6%
103.8%
100.0%
102.2%
106.5%
107.9%
105.5%
107.7%
109.1%
107.8%
106.4%
94.0%
96.0%
98.0%
100.0%
102.0%
104.0%
106.0%
108.0%
110.0%
2006 2007 2008 2009 2010 2011 2012 2013 2014
Ricavi per FTE - Variazione % da 2006 (base 100) - All
Costi per FTE - Variazione % da 2006 (base 100) - All
3. Modern Retail in Italy| Sales vs. Costs
Sales by FTE
Costs by FTE
19

20. FederdistribuzioneperADM
2,1 1,7 1,1
100 100 100
Source: TradeLab on a representative sample of retailers’ income statement
Net sales = 100
Cost of sales
+ labour costs
+ other expenses
EBIT
Net income
20102006 2013
1.4
0.8
-0.1
3. Modern Retail in Italy | Consumption crisis and costs increase has led to a negative profitability
20

21. FederdistribuzioneperADM
RETAILERS Market shares (%)
Retailers with National capital 80,3%
Retailers with Foreign capital 19,7%
Auchan (FR) 7,2 %
Carrefour (FR) 6,2 %
Lidl (DE) 2,6 %
Despar (Aspiag - AT) 2,2 %
Penny Market (DE) 1,5 %
Metro (Cash & Carry - DE) not taken into account (wholesale format)
3. Modern Retail in Italy| National vs. Foreign-capital retailers
Source: Nielsen
21

22. FederdistribuzioneperADM
17.1
18.4
19.6
20.9 21.6
22.5 23.2 23.1 22.4 22.7
24.3
25.6 26.4
27.4
28.7 29.3
8.4
7.4 7.9
8.9 9.2 9.6 10.3 10.4 10.0 10.0
10.9
11.7 12.2 12.4 12.9 13.4
0
5
10
15
20
25
30
35
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Share of Price promotion on total sales (%) % ref. with price promotion
Source: Nielsen Trade*Mis - Hyper+Super+LS
3. Modern Retail in Italy| Priority to price convenience to sustain purchasing power
22

23. FederdistribuzioneperADM
4. Modern Retail challenges | Omni-channel business model
Online sales trend
Source: Politecnico di Milano
23

24. FederdistribuzioneperADM
Goods
Services
4. Modern Retail challenges | Omni-channel business model
Source: Politecnico di Milano
Online sales trend
24