PAST, PRESENT, AND FUTURE OF 1
FROM PAST TO PRESENT RETAIL EVOLUTION 2
What is the definition of Modern Trade TODAY? Offline Online Hypermarket, Supermarket, Department store, Convenience store, Outlet, Cosmetics store, Brand shop, Drugstore, Duty free shop Internet mall, Door-to-door, Delivery, TV Home-shopping&Catalogue order Traditional: Traditional market, Butchers, Produce market, Fish market, Mom&pop, etc. Source: Kantar Worldpanel 3
Modern Trade (Young/Premium) vs. Traditional(Old/Mass) 20s Young High income 30s Premium Low-high income 40s Middle income 50s Old Mass Low income Modern Trade Traditional Basis=Total Korea Basis: Total Korea incl. fresh food, Shopper profile by channel (Modern Trade vs. Traditional, basis: Total Korea=100), 2012Y 4
Definition of Modern Trade changes Stage 1 Penetration Stage 2 Expansion Stage 3 Maturation Stage 4 Post-Modern Door-to-door Delivery Supermarket/SSM Hypermarket Convenience Store Catalogue Order TV Home-shopping Internet Health&Beauty What s Next? Mobile 5
Concentration Retail evolution stage of Korea and other Asian countries? Korea in Post-Modern! Taiwan Thailand Korea Korea (incl. fresh food) Malaysia Vietnam (Key 4 cities) Indonesia Philippines China (Mainland) Stage 1 Penetration Stage 2 Expansion Stage 3 Maturation Stage 4 Post-Modern Modernization Source: Kantar Worldpanel Asia, Basis: Each country excl. fresh food, Modern Trade value% in total FMCG market/ Top3 retailers value% in total FMCG market/circle size: avg. spend per shopper of each country/2012y 6
Entering the era of Post-Modern Looking into the past, present, and future of Korea retail Modernization Modern Trade value% by country Vietnam(Key 4 cities) Indonesia Philippines China(Mainland) Thailand Taiwan Malaysia Korea 18.1% 18.6% 28.4% 41.1% 52.5% 58.0% 72.4% 89.3% Hypermarket Supermarket Other Modern Trade Concentration Top3 Retailers value% by country 13.5% 7.3% 8.0% 7.2% 26.7% 27.9% 24.2% 29.6% Source: Kantar Worldpanel Asia Basis: Each country excl. fresh food, Modern Trade value% by country/top3 retailers value% by country/2012y 7
Korea retail evolves in format, product, and relationship with shoppers Stage 1 Penetration Stage 2 Expansion Stage 3 Maturation Stage 4 Post-Modern Past Present Future Format Actual Actual + Virtual Product Specialized Local Standardized National? Relationship with Shoppers Personal Impersonal Source: Kantar Worldpanel 8
Concentration Korea retail in different evolution stage by category Household care Fresh food Total Korea (incl. fresh food) Frozen&Cold Food grocery Personal care Stage 3 Maturation Stage 4 Post-Modern Modernization Basis: Total Korea incl. fresh food, Modern Trade value% by category/top3 retailers value% by category/ circle size: avg. spend per shopper of each category/2012y 9
Concentration Evolving from 2007, expanding Modern Trade and intensifying competition! Household care Fresh food Total Korea (incl. fresh food) Frozen&Cold Food grocery Personal care Stage 3 Maturation Stage 4 Post-Modern Modernization Basis: Total Korea incl. fresh food, Modern Trade value% by category/top3 retailers value% by category/ circle size: avg. spend per shopper of each category/2007y vs. 2012Y 10
From 2007 to 2012, Evolution keywords diverse across categories Fresh food Frozen&Cold Personal care Food grocery Household care 53.3% 54.3% 53.3% 54.3% 75.6% 79.7% 82.5% 87.3% 89.9% 92.2% Modern Freshness Bulky/Genuine Low price/bulky/ Decent quality New/Young/ Hit/Global Convenience Basis: Total Korea incl. fresh food, Modern Trade value% by category/2007y vs. 2012Y 11
Modern shoppers are category specifics when shopping across channels Hypermarket Supermarket Convenience store TV Home-shopping +Catalogue order Internet Drugstore Fresh food Food grocery Non-food Baby 1 Fresh meat Fresh meat Dairy Cosmetics Cosmetics products Fish & 2 Fruit Fruit Beverage Cosmetics Seafood Personal care Dried Dried 3 Dairy Vegetable Liquor Snack produce produce Basis: Total Korea incl. fresh food, Category value% by channel, 2012Y 12
Waning the Old & Rising the Young Hypermarkets are at stake! +330% +174% +38% +40% +1% +14% +26% +47% +54% +55% +79% -3% Older Younger Basis: Total Korea incl. fresh food, Channel value growth%, 2007Y vs. 2012Y 13
2013, hypermarket tries to incorporate all types of TPOs Planned Everyday Virtual Life Style Weekend Trip Convenience Participation Embraced Hypermarket Club type PB/PL retailing Supermarket Virtual QR code store Internet mall Mobile app Health&beauty Drugstore Convenience store Source: Kantar Worldpanel 14
Especially gaining competitive edge online with fresh food Personal care 13.9 Household care 45.3 53.9 62.8 8.6 25.1 44.8 Food grocery Frozen&Cold Fresh food 8.9 12.8 3.9 29.1 10.5 11.6 1.3 22.7 7.8 10.7 2.8 15.9 9.2 43.3 7.0 8.8 5.1 34.3 Internet Open market Homeshopping Hypermarket mall & Dept. store mall Others Basis: Total Korea incl. fresh food, Category value% by internet sub-channel, 2012Y 15
Hypermarket mall ONCE a rising star, threatened by the next generation of E-commerce (%) 60 Open market Hypermarket mall Homeshopping&Dept. store mall Others (Social commerce, Overseas, Blog, Brand mall, etc.) 50 40 30 20 10 0 2009 2010 2011 2012 Basis: Total Korea incl. fresh food, Sub-channel value% in internet, Latest 4Yrs 16
Active participation of 40-50s will shake up the online landscape! (%) 100 20s 30s 40s 50s 90 80 70 60 50 40 30 20 10 0 2007 2008 2009 2010 2011 2012 Basis: Total Korea incl. fresh food, Internet mall penetration% by age, Latest 6yrs 17
The Future of Korea retail? Stage 1 Penetration Stage 2 Expansion Stage 3 Maturation Stage 4 Post-Modern Past Present Future Format Actual Actual + Virtual Value + Experience Product Specialized Local Standardized National Collaborative Global Relationship with Shoppers Personal Impersonal Interactive 18
[Format] Value + Experience On = Off Fresh & New Pop-up restaurants Healing Brazil fashion retailer C&A Fashion Like Groupon interactive kiosks in Chicago IKEA furniture collection pop-up restaurants Senior lifestyle shops E-bay offline mall in NY Selfridges, No Noise Marketing 19
[Product] Collaborative Global Evolving the Old, TV Home-shopping & Subscription Emerging the New TV Home-shopping Collaboration Transform into Subscription commerce www.mybeans.co.kr TV Homeshopping collaborate with fashion designers Carrefour Contact/City Urban style TV Homeshopping collaborate with beauty mentors Hobby subscription, Bambox Nerd/Party/Business Tesco/Carrefour Drive through Pickup service TV Homeshopping collaborate with stars TV Homeshopping sell mid-luxury TV Homeshopping sell mid-luxury GS shop Lifestyle/theme online mall www.10box.co.kr Carrefour Montagne Trip/leisure 20
[Relationship with Shoppers] Interactive Past Present Future Relationship with Shoppers Personal Impersonal Interactive In-store/Online marketing Customer Service 21
Concentration Retail and shoppers are evolving rapidly, are YOU ready for this? Stage 3 Maturation Stage 4 Post-Modern Present Future Household care Format Actual + Virtual Value + Experience Total Korea (incl. fresh food) Frozen&Cold Food grocery Product Fresh food Standardized National Collaborative Global Personal care Relationship with Shoppers Impersonal Interactive Modernization Source: Kantar Worldpanel 22
Shoppers Change EVERYDAY YOUR BEST PARTNER, www.kantarworldpanel.co.kr