The Fresh Winner in Discount Retail March 2019
We are the fastest growing grocery retailer in Turkey 1,000 TL12.1bn 6,364 New Stores Turnover (1) Stores (2) opened (1) 35% 17% TL630m Revenue LFL sales EBITDA (1) Growth (1) growth (3) 1,500 25 Warehouses (1) SKUs Source: Management information. (1) As of FY2018A. inc. 264 Şok Mini Stores (2) Şok stores only. Like-for-like sales for FY2018 calculated on the basis of daily net sales generated in 2018 by stores operating on 31 Dec 2016 and that were still open on 31 Dec 2018. (3) 2
We have come a long way . . . Phase IV:2018- … Post IPO Period Phase III: 2015 ▪ Organic growth Transformation & Organic Growth ▪ Debt free & Strong Equity ▪ c.2,700 stores transformed Phase II: 2015 ▪ Increasing profitability in 2016 and 2017 New Format Design ▪ White Space Opportunity Phase I: 2011-2014 ▪ Strong store opening of ▪ New management Acquisitions & Integration c.1,000 stores p.a. ▪ New discount format ▪ Şok became fastest growing ▪ Acquisition of DiaSA & enhancing shopping retailer in the market Onurex experience ▪ Refined SKU & product mix ▪ Introduced Fresh & ▪ Introduced strong Private Personal Care Label brands Stores Sales (TLm) 12.06 6.364 Acquisition of 1 4.6x 8.1x 5.100 Şok from 8.713 Migros -2011 2.301 3.584 1.144 1.325 3 2012A 2014A 2017A 2018A 2012A 2014A 2017A 2018A
Our business proposition is exciting Most Attractive Grocery Market in Europe Winning Proposition with a Differentiated Format Excellent Operational Execution Superior Growth and Cash Flow Generation Significant Profitable Growth Opportunity
One of Europe’s Fastest Growing Markets, where Discount Outperforms Grocery Market Growth in Turkey Modern channel is taking share 39% 33% Discount is the winning format with highest share gains 20% 16% 14% Discount satisfying consumer demands of proximity and price Şok Total Traditional Modern Discount (incl. Şok) Source: 2016- 18A Nielsen for Traditional, Modern & Discount growth rate (CAGR), Management information for Şok growth rate. 5
Increasing Modern Penetration with Continued Momentum Wave of Change in Turkey Turkey Behind Other European Markets Evolution of Store # by Channel (‘000) Share of Grocery Market (value) 172 Forecast 15% 19% 33 34% 55% 57% 58% 60% 167 165 30 85% 81% 28 66% 45% 42% 43% 40% 2016 2017 2018 2023P Russia Poland Germany 2016 2017 2018 2016 2017 2018 Modern Retail Traditional Retail Turkey 2018 Modern Traditional Modern penetration significantly lower than Large base of traditional stores still exists other markets 6 Source: Nielsen Data & MK Novo Analysis.
Fragmented Market - Major Market Share Opportunity Modern Channel Traditional Channel Supermarket Supermarket Mom & Pop’s / Others Discounters (As of 2018) National Players Local Players Number of Players (1) 2 c.400 3 c.164,994 Number of 2,394 9,496 21,250 c.164,994 Stores (1) Total Selling Area 2,388 6,448 5,053 7,068 (‘000 sqm) (1) Average Store Size c.1,000 c.680 c.240 c.45 (sqm) (1)(2) L4 Revenue Growth 24% 2% 33% 14% 2016-2018 8% 16% 19% 57% Market Share (1) Market Share (3.1%) 1.6% 4.3% (2.9%) Change 2016-2018 Source: Nielsen (1) Data as of 2018. (2) Average Store Size figures represents an average selling area for each retail model consisting of multiple formats with different store sizes. National supermarket have multiple retail formats that include hypermarkets and large supermarkets (>1000 sqm), supermarkets (>400sqm) and small store formats 7 (<400 sqm). Local supermarkets and mom & pop also include a wide range of different store formats.
Şok is Already Best-in-Class Market Evolution Şok’s Market Share Revenue Growth # of Stores Growth ’1 6- ’1 8A (1) ’1 6- ’1 8A (CAGR) ’1 6- ’1 8A (CAGR) 39% 27,9% 26% 25,3% 30% 13% 13% 5,2% 3,6% 0,4% Şok Şok Other Supermarkets Other Supermarkets 2016 2018 Discounters Discounters Total Grocery Market Share Discount Market Share Source: Management information, Nielsen 8
We created the most relevant consumer offering Exclusive Shopping Proximity Price Choice & branded experience products Most relevant Carefully Competitive product choice, Unrivalled choice engineered, Experts in everyday low differentiated by of national brands enjoyable convenient prices and strong fresh, and heritage atmosphere, easy small-box format effective tobacco & exclusive brands shopping promotions personal care among discounters experience offering 9
Convenient neighborhood locations in every city National store footprint conveniently located in your neighbourhood NUMBER OF STORES Kırklareli 28 Bartın Sinop Between 101 - 1.000 32 Kastamonu Artvin Edirne Tekirdağ 27 Ardahan Zonguldak 25 22 27 İst.Avrupa Karabük Samsun Rize 9 113 İst.Anadolu 64 761 21 111 Trabzon 25 474 Kocaeli Between 51 - 100 6,364 (1) Düzce Ordu 67 Kars 136 Giresun 26 Amasya 34 Sakarya Çankırı Yalova Bolu Gümüşhane 37 26 54 97 Çorum 25 19 14 Bayburt 11 Between 21 - 50 Tokat Iğdır 30 9 Çanakkale Erzurum Bilecik 35 9 stores Bursa 41 22 Ağrı Ankara 69 229 Kırıkkale Erzincan Balıkesir Eskişehir 367 22 Between 1 - 20 Yozgat Sivas 24 207 17 72 23 Kütahya 33 Kırşehir Tunceli across every 41 Bingöl Muş 1 16 2 15 Manisa Nevşehir Afyon 105 Uşak Bitlis Van Elazığ 39 25 Malatya Kayseri 6 Proximity 16 24 İzmir 27 city in 19 134 Aksaray Diyarbakır 458 Siirt 15 54 Konya 4 Aydın Batman Hakkari Niğde Kahramanmaraş Denizli 12 Şırnak 2 118 50 Adıyaman 14 39 65 Isparta Turkey 22 3 Mardin Burdur 42 18 16 Muğla Şanlıurfa Osmaniye Karaman Gaziantep 40 121 Antalya Adana 25 9 61 366 129 Kilis 6 Mersin 189 Hatay 109 11 - 20 arası 1 - 10 arası Small-box format maximizing options for site locations Small-box format maximizing options for site locations Avg. store Avg. size: Experts in size: 223sqm (2) convenient small- 218sqm (1) box format (1) (1) As of 2018 10 (2) (2) Only for Şok Stores
Everyday low prices supported by powerful promotion Everyday Low Price Model vs. vs. Supermarket Discount competitors: competitors: Price match or Price match on below on all Price all comparable national branded products products Discount Supermarket Competitor Competitor Greater Variety of Highly Effective, Regular Promotions, Determined on a Network-Wide Basis Discount Discount Competitor 1 Competitive Competitor 2 Promotion type Description everyday low ✓ ✓ 50% off Buy 1 product, second product 50% off prices and ✓ effective Check-out offers Cashier offers product at check-out promotions ✓ 25 TL basket Discount on specific product if basket > TL 25 ✓ ✓ ✓ In&Out Offers on selected non-food products 11
Most relevant product choice National or Exclusive Brand Choice Broad Portfolio of SKUs Covering More for Almost Every Customer Need Customer Needs # of core SKUs (December 2018) 95% 76% 1.500 Choice c.700 Şok Discount Competitor 1 % of customer needs covered Fresh, Personal Care, Non-Food and Tobacco Differentiate and Drive Traffic % of FY2018A Şok Store sales Most relevant ▪ 70% Grocery product choice, ▪ 13% Tobacco differentiated by ▪ 6% Non-food spot items ▪ strong fresh, 7% Fruit & Vegetables (Fresh) ▪ tobacco & personal 3% Personal care ▪ care offering 1% Other Fresh Personal Care Tobacco 12
Unrivalled Choice of National Brands and Heritage Exclusive Brands National Brands Exclusive Brands % 44% (vs. 27% for Discount Competitor 1) 29% sales # Exclusive 240 46 brands & branded # 884 (vs. 194 for Discount Competitor 1) 466 products SKUs Food Beverage Heritage Brands Other Brands Since 1970s Since 1980s Examples Personal care Home Care Since 1920s Since 1970s Unrivalled choice of national brands and Since 1970s heritage exclusive brands among discounters selling #1 brand for almost every category We price our well-known heritage brands at same level as competitors’ own brands available Source: Management information. 13
Easy Shopping Experience 55 Mid-high modules section Shopping experience On-Shelf Fresher Availability Carefully Visibility engineered, Eye- enjoyable & Natural atmosphere, easy catching light shopping experience Differentiated consumer offering reflected in excellent Mystery Shopper score of 87 (1) Source: Management information. Average 2018. Source: Mia Organizasyon Restorasyon Yayıncılık ( Günışığı Kitaplığı ); Score range: 0-49 (Inadequate), 50-60 (Medium), 70-84 (1) 14 (Good), 85-100 (Excellent).
Conclusion: Şok’s offering is ahead of competitors ✓ ✓ Experts in convenient Proximity small-box format ✓ ✓ Competitive everyday low prices and effective Price promotions ✓ ✓ Most relevant product choice, differentiated by Choice strong fresh, tobacco and personal care offering ✓ ✓ Unrivalled choice of national brands and heritage Brands exclusive brands ✓ ✓ Carefully engineered, enjoyable atmosphere, Experience easy shopping experience 15
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