Asian c-store trends By Paul Martin Planet Retail Ltd | November 2010 part of The definitive source of global retail insight . Global Retail Analysts since 1988 . Monitors 10,000+ retail and restaurant operations including: Grocery, Electronics, HoReCa, Apparel, Entertainment, Department Store, Health & Beauty, Fashion . Used by: 78% of 10$ bio + FMCG companies; 80% of world’s top 20 retailers; and many more . Providing critical retail insights to Suppliers, Investors and Retailers that drive competitive advantage 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 Japan China India S Korea Indonesia Taiwan Thailand Hong Malaysia 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. Uny (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 supermarkets 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 Vietnam 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. Indomaret 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 convenience store 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 LAWSON) dominate the sector. Other important players include Circle K & Sunkus (operated by Uny), GS25 in South Korea 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 supermarket 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] United Kingdom: Germany: USA: China: Japan: Greater London House, Dreieichstrasse 59, 350 South Northwest H’way 10-1-202, Minami-Magome 5-42-3-508, Hampstead Road, D-60594 Frankfurt am Main, Suite 300 88 Tongxing Road, Ohta-ku, London, Germany Park Ridge Qingdao 266034, Tokyo 143-0025, NW1 7EJ Illinois 60068 China Japan United Kingdom USA T: +44 (0)207 728 5600 T: +49 (0) 69 96 21 75-6 T: +1 (1) 847 656 5378 T: +86 (0)532 85981272 T: +81 (0) 3 3775 4158 F: +44 (0)207 728 4999 F: +49 (0) 69 96 21 75-70 F: +1 (1) 847 656 5201 F: +86 (0)532 85989372 F: +81 (0) 3 3775 4162 18 of XX Asia c-store trends www.planetretail.net twitter.com/PlanetRetail facebook.com/PlanetRetail tinyurl.com/PR-linkedin 19 of XX Asia c-store trends www.planetretail.net www.planetretail.net 2010 part of.