European Trends and Implications for Portugal By Boris Planer and Tatjana Wolff Planet Retail Ltd | January 2012

2 European Trends and Implications for Portugal Boris Planer Chief Economist Presented at the annual conference of Portugal's modern retail association APED (Associação Portuguesa de Empresas de Distribuição), running from January 2012 in Lisbon, under the "Win the Future" tagline. Boris Planer and Tatjana Wolff look at trends in the European economy and retail sector, discussing which trends are likely to ultimately reach Portugal, to what extent and how Portuguese retailers can learn from experiences elsewhere in crisis-struck markets across Europe. All images ©Planet Retail Ltd unless otherwise stated. Tatjana Wolff Associate Analyst

3 Contents 1.Economy & Demography 2.Retail Evolution 3.Trends

4 1 Economy & Demography

5  Europe continues to be divided economically.  Positive outlook for countries benefiting from emerging markets growth and featuring stable domestic economy (e.g. Germany).  Difficult outlook for countries struck by public and household debt crises (UK, Ireland, Spain, Greece, Portugal), with most problems coming from the inside.  Portugal unlikely to return to pre-crisis output levels until 2015, Greece to follow in 2016/17 (in real terms, today’s forecasts).  Structural adaptations in retail will be accordingly deep & fast (unlike Germany, where it is largely business as usual).  IMF/ECB/EU bailouts have helped to avoid chaos, but they guarantee that predictably tough times are ahead.  Consumer confidence is key in a country like Portugal.  But not all structural change is economy-led. Further drivers are demographic trends and technological progress. Key Framework Trends - Overview