Asian c-store trends

By Paul Martin

Planet Ltd | November 2010

part of The definitive source of global retail insight

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2 of XX Asia c-store trends www.planetretail.net Planet Retail: Sample Clients

3 of XX Asia c-store trends www.planetretail.net Agenda

1. Region overview

2. Leading retailers

3. Top channels

4. Leading c-store players

5. Top 3 regional trends

4 of XX Asia c-store trends www.planetretail.net Region overview Retail Sales by Market (% growth of retail sales in local currency)

Asia: Retail Sales by Market, 2004-2009 (EUR bn)

+0% +92% 6,000

5,065 5,000 4,728

GDP

4,000 Retail Sales

3,000

+73% 2,000

Retail Sales (USD bn) (USD Sales Retail +28% +101% +20% 1,424 1,438 +27% 1,259 +28% +51% +24% 1,000 831

490 538 378 205 232 262 211 191 112 177 84 33 55 33 0 India S Korea Hong Singapore Kong

Note: % change in local currency. Source: Planet Retail Ltd – www.planetretail.net

5 of XX Asia c-store trends www.planetretail.net Asia: Top Grocery Retailers Top 10 retailers by sales and store numbers (% CAGR) Top 10 Grocery Retailers in Asia, 2009

Sales CAGR, Store CAGR, Retailers Sales (USD bn) Store no.s 2004-09 (%) 2004-09 (%)

AEON 88.8 11.8% 14,426 10.4%

Seven & I 68.1 9.5% 17,822 4.9%

Uny 22.6 1.8% 7,934 -0.2%

LAWSON 19.1 7.8% 11,057 5.9%

FamilyMart 18.7 8.5% 15,777 6.5%

Walmart 16.3 5.5% 688 6.1%

Tesco 15.2 18.7% 1,335 35.3%

Carrefour 12.4 9.4% 1,591 21.7%

Lottte 12.0 8.4% 427 33.2% Shopping

China 10.5 27.9% 4,257 11.8% Resources

6 of XX Asia c-store trends www.planetretail.net Winners & Losers

Winners Losers

1. Seven & I (large) 1. (large)

2. Lotte Shopping (medium) 2. Life (medium)

3. Alfa Mart (small) 3. Tokyu Store Chain(small)

Mainly expanding through Mainly in just one low- organic growth growth market – eg Japan

Situated in number of Limited or no exposure in markets overseas markets

Situated in growth channels Situated in low growth – eg c-stores channels – eg

7 of XX Asia c-store trends www.planetretail.net What’s Driving Growth?

. Rapidly growing markets – e.g. consumer spending per capita, has doubled in markets such as Indonesia and over the past five years.

. Growing acceptance of modern retailing – shift away from traditional sector. Health scares (e.g. Avian flu and SARs) and government policy has accelerated the trend.

. Rapid expansion in store numbers – e.g. store numbers increased from 1,018 in 2004 to 3,750 in 2009.

. Mergers & acquisitions – of weaker small and medium-sized rivals, e.g. AEON acquired underperforming competitors Daiei and Maruetsu in Japan.

. Greater expertise – the best Asian grocers are gaining experience in areas such as private label and management (often from foreign rivals), which is making them increasingly competitive.

8 of XX Asia c-store trends www.planetretail.net What’s Driving Growth?

Characteristics of typical fast and slow growing retailers

Fast growing retailers Slow growing retailers . Present in a number of . Only present in a single different markets market . Operates a multi-channel . Only operates a single strategy format . Primarily hypermarket or . Primarily focussed on focussed supermarkets and department stores . Situated in a high growth market . Situated in a low growth market

9 of XX Asia c-store trends www.planetretail.net Asia: Channel growth CAGR growth of sales and store numbers by channel (%), 2004-09

Sales

16.0 Store no.s 14.8 14.0 13.8 14.0

12.0 10.9 10.6

10.0 09 (%) 09 - 8.5 8.0 8.3 8.0 7.7 7.6

6.0

4.0 CAGR change, 2004 change, CAGR

2.0

0.0 Convenience stores Drugstores, Hypermarkets & Supermarkets & Cash & carries perfumeries & superstores neighbourhood pharmacies stores

Source: Planet Retail Ltd – www.planetretail.net

10 of XX Asia c-store trends www.planetretail.net C-store growth slowing – but still strong

. Modern c-stores first appeared in mid-1970s when Seven & I (formerly Ito-Yokado) acquired the rights to 7-Eleven in Japan. . Rapid expansion since 1970s. 7-Eleven had 15 stores in 1974, 4,300 in 1990 and 8,600 in 2000. . The three big Japanese heavyweights (7-Eleven, FamilyMart and ) dominate the sector. . Other important players include & Sunkus (operated by Uny), GS25 in and Indonesian players Alfa Mart and Indomaret. . Store numbers are expected to increase significantly in the coming years – even in already saturated markets such as Taiwan, Thailand, South Korea and Japan. . There is huge potential in new markets such as Vietnam and India.

11 of XX Asia c-store trends www.planetretail.net No stopping the c-stores

Asia: Leading C-store Banners by Store Numbers, 2004-2014

Banner Stores, 2004 Stores, 2009 Stores, 2014 f

7-Eleven 20,830 30,216 36,341

FamilyMart 11,501 15,777 23,194

LAWSON 8,284 10,047 10,797

GS25 1,400 4,200 5,500

Indomaret 1,018 3,750 5,000

Subtotal 43,033 63,990 80,832

12 of XX Asia c-store trends www.planetretail.net Small stores still the realm of Asian grocers

. There is still huge potential to grow c-stores in most Asian markets – many could see c-store numbers double to reach more mature markets of South Korea, Japan and Taiwan.

Asia: C-stores per Head of Population, 2009

450

400

350

300

250

200

stores per Million per stores - 150

100

50 Numbers of C of Numbers 0 Indonesia Malaysia Thailand Singapore South Korea Japan Taiwan

Source: Planet Retail Ltd – www.planetretail.net

13 of XX Asia c-store trends www.planetretail.net Trend 1 – Segmenting brands to target consumers

. As the channel becomes saturated in some markets, retailers are responding is by segmenting their networks into new formats designed to target specific consumer groups.

LAWSON c-stores Mature business 8,500 stores Limited growth prospects in saturated market Decreasing sales per new store Typical consumer is young, single male

Natural LAWSON LAWSON STORE 100 HAPPY LAWSON Launched in 2001 Discount launched 2005 Launched in 2006 Natural, healthy eating focus Located in residential areas Aimed at parents with small children Aimed at young, health conscious Targets housewives and the elderly as consumers – especially females well as those with no transport to reach out of town grocery superstores

14 of XX Asia c-store trends www.planetretail.net Trend 2 – Private label on the rise

. Leading players – eg Seven & I (Seven Premium) and Lotte Shopping looking to boost private label penetration to combat global grocers, boost profits, build brands and differentiate from rivals.

. Eg - Lotte Shopping has aggressively pushed its private label range over the past five years with significant success.

Lotte Mart: Private Label Penetration, 2003-09 (%) 20.0 17.5 15.0 12.5 10.0

7.5 Sales (%) Sales 5.0 2.5 0.0 2003 2004 2005 2006 2007 2008 2009

Source: Planet Retail Ltd – www.planetretail.net

15 of XX Asia c-store trends www.planetretail.net Trend 3 – Going discount

. Discount stores are not yet important in Asia. However, there are signs that they are gradually gaining share in some markets. . Asian grocers are already well positioned to take advantage at this early stage.

Seven & I’s The Price Pxmart Launched in Japan in 08 Fast growing discount format in Taiwan Groceries 25-30% less than IY superstores 100 stores in 2001 30% less SKUs Over 500 now Focus on PL Gaining market share over mainstream rivals

16 of XX Asia c-store trends www.planetretail.net Summary

1. Asia is key growth region for global and local grocers

2. Fastest growing players are those with multi-format and multi-market strategy

3. C-store channel is seeing growth slow as markets saturate

4. But, there are still huge opportunities to grow stores in low-penetration markets such as Vietnam and India

5. Regional trends point towards segmenting of brands, growing private label penetration and an increasing focus on price

17 of XX Asia c-store trends www.planetretail.net Contact details

Paul Martin Commercial Director

Planet Retail Ltd T: +44 (0)207 728 5600 F: +44 (0)207 728 4999 [email protected]

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