STRATEGIC REVIEW Ricardo Currás CEO DIA Group
Consumers continue to prefer 2P food retailers: Price & Proximity Rising oil and Ageing energy costs population Less persons per Western Europe Consum umer ers s household & Increase are looking Emerging reduced space of urban population for for storage Proximi ximity ty and Price ce Rise of middle Reduction of class income Higher personnel More women in costs the workforce “Socio -demographic trends should continue to play against the hypermarket format ” “ We expect grocery formats offering convenience and / or discount features to continue to grow rapidly in Europe ” Retail analysts Preference for 2P is here to stay Page 1
Food retail formats are converging towards 2P Price ce Hard Low Disc scount unters 2P 2P Hypermar market kets Superma market kets High Departm tment nt Conve nvenie nience stor ores Distan tance ce Attraction Proximity Retailers (hard discounter, supermarkets, convenience stores) are converging towards 2P Page 2
DIA today 6 6 countri tries 2,991 franch chis ises with 7,328 328 stores 20,18 188 8 employ oyees 45,368 8 employ oyees Iberia 27% 27% France 54% 19 % Emerging Markets € 11.5bn bn sales We have the most densified store network in our core countries/regions with the most flexible operational model Data as of 31.12.2013 Page 3
2010 – 2014: DIA has strengthened its presence in its core markets 2010 France Greece Portugal China Turkey Spain Brazil Argentina Exit from Greece. 7 countries: Spain, Portugal, France, Turkey, Brazil, Argentina, China Page 4
2010 – 2014: DIA has strengthened its presence in its core markets 2012 France Portugal China Turkey Spain Brazil Argentina Spin off from Carrefour, entry in Madrid stock market (July 2011) Entry in Rio Grande do Sul in Brasil in 2011 (10 millions inhabitants). Entry in Salta & Jujuy in Argentina in 2012. All French stores converted to DIA Page 5
2010 – 2014: DIA has strengthened its presence in its core markets (Number of stores) 2014 IGD ranking of emerging food retail markets France (865) # Countries 1 China Portugal China (361) (641) 2 Brazil Spain (4,151)* 10 Argentina Brazil (667) Argentina (643) * Including Schlecker Exit from Turkey & Beijing in 2013 Acquisition of Schlecker and launch of Clarel in Iberia (2013) Entry in Minas Gerais, Brazil, in 2013 (20 millions inhabitants) Entry in Bahia, Brazil, in 2014 (14 millions inhabitants) Page 6
Moving forward, we will continue to grow in our core markets Accelerating expansion in Brazil, Argentina and China, • DIA is in 3 of the where we see great growth opportunities TOP 10 most promising emerging Rolling out our new formats in food and HPC (Clarel) in grocery markets Iberia and internationally (IGD ranking) Continuing to improve and enrich our format portfolio • DIA seems to have through remodeling and format innovation already a high international Analyzing tactical M&A opportunities, specially in Spain, exposure given its where the food retail sector is still relatively fragmented size (“ Global Powers of Retailing”, Deloitte, Assessing opportunities to enter in new geographies, yet 2013) through partnerships with local players or master franchise agreements With its geographical footprint and format portfolio, DIA is well positioned to growth Page 7
Emerging Markets share of Group’s sales keeps growing, bringing diversification and resilience Brazil Net sales Brazilian Real 26% CAGR 4,111 3,398 2,780 2,395 2,053 1,580 1,144 848 640 2010 2011 2005 2006 2007 2008 2009 2012 2013 2014E 2015E 2016E # stores 236 258 300 327 376 408 480 561 667 In Brazil, we have been growing at 26% p.a. and we see a great potential to generate profitable growth in the coming years Page 8
DIA’s answers: a simple and efficient 2P business model Proximity specialist Low cost Lowest operator prices Quality Franchise private label Loyalty program DIA’s business model relies on an attractive 2P value proposition enhanced by a successful franchise formula: the 2P F Page 9
DIA’s answers: 1 - Proximity specialist Proximity specialist Low cost Lowest operator prices Quality Franchise private label Loyalty program Page 10
Proximity is at the heart of DIA concept DIA Maxi DIA Market Schlecker/Clarel • • • 62% stores 22% stores 16% stores • • • Almost 59% total revenues Around 38% total revenues Around 3% total revenues • Surface: 700 -1,000 sq.m • • Surface: 400 - 700 sq.m Surface: ~200 sq.m Key • Located on the outskirts of • • Located in dense areas Located in dense areas cities features • • No parking lot No parking lot • With a parking lot • • • Best prices in catchment area Offer best prices in the market Best prices in catchment area • • • Capture new customers Maximize customer baskets Cross selling with DIA Targets • • • Increase customer visit Offer complete food Offer mainly household, frequency assortment cleaning, beauty products • • • 2,800 SKUs, 3,500 SKUs, 6,200 SKUs, • • • Focus on expanding the offer of Focus on expansion of mass Focus on expansion of mass Assortme perishables market products market products nt • • • Adaptability to local catchment Adaptability to the domestic Adaptability to the domestic area markets markets Our ambition: Be the food, household and personal care discounter closest to the customer Page 11
DIA is continuously improving its formats to generate sales growth Continuo nuous us store remode delling ng to become… 2007/08 2010/11 2014/15 DIA Market I II III DIA Maxi I II III …More specialist in HPC • Enlarged multi brand private label offer …More specialist in Fresh products • Fruits & Vegetables • Bakery • Improved offer, pricing and merchandizing are being tested in …More specialist in new categories • Health • Organic Marketing initiatives to strengthen our brand image and awareness “ Expert@s en ahorro ”, “Demos la vuelta al dia ” DIA aims to become specialist: in food, in fresh, in HPC Page 12
We are testing and investing in a multi channel approach with promising results Market Place On line shopping APP 4,151 Picking points Customer behaviour (Spain) With its 4,151 picking points in Spain, DIA is well positioned to develop an attractive and competitive online offer Page 13
DIA’s answers: 2 - Lowest prices Proximity specialist Low cost Lowest prices operator Quality Franchise private label Loyalty program Page 14
DIA has the best price image in 4 markets Price image Spain 80 70 60 50 40 30 20 10 0 apr-05 sep-05 may-06 apr-07 sep-07 apr-08 sep-08 apr-09 sep-09 apr-10 sep-10 jun-11 abr-12 nov-12 may-13 nov-13 DIA Competitor 1 Competitor 2 The most recommended Nº 1 in price food retailer We continuously invest in prices to improve our competitivity Source: KANTAR Page 15
DIA’s answers: 3 - Quality private label Proximity specialist Low cost Lowest operator prices Quality Franchise private label Loyalty program Page 16
DIA is creating a multi brand Private Label offer From… …To Beauty & Personal Care Pet Care Baby care DIA is enriching its private label offer specially in Health & Personal Care products Page 17
More than 50% of our sales are made through private label: a unique competitive advantage Private label penetration (weight in FMCG sales) DIA Market 9x 9% 1% 7x 37% 5% 5x 38% 7% 57% 32% 62% From 1.4x to 2x 36% 56% 39% DIA well above competitors specially in emerging markets Source: Market research Page 18
DIA’s answers: 4 - Loyalty program Proximity specialist Low cost Lowest operator prices Quality Franchise private label Loyalty program Page 19
Learning from the consumer / customer behaviour is key for DIA 5 countries 16,640,699 active card holders Club DIA customers purchases data mining 12.1 million personalised discount coupons redeemed by Club DIA customers every month Loyalty Card: contribution to price advantage and in-depth customer knowledge enabling customer/area-targeted marketing Data as of 31-12-2013 Page 20
DIA’s answers: 5 - Franchise Proximity specialist Low cost Lowest operator prices Quality Franchise private label Loyalty program Page 21
Franchise is the best operating model for Proximity stores Visit our web: http://franquicia.dia.es/ Page 22
Franchise is the best operating model for Proximity stores Visit our web: http://franquicia.dia.es/ Page 23
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