1. Trends in Retail – A Nordic Perspective New Innovations and Markets Hanasaari 18.8.2011 Federation of Finnish Commerce Kari Ekholm, Deloitte

2. © 2011 Deloitte & Touche Oy, Group of Companies Trends in Retail – A Nordic Perspective Nordic – local vs. global Trends impacting retail Nordic retailers within the globalizing world Need to embrace new trends Understanding and serving the consumer needs still key 2

3. Global trends influence consumers and retailers

4. © 2011 Deloitte & Touche Oy, Group of Companies The changing shape of the global economy Global economic imbalance ‒ The crisis of 2008-9 ‒ Rebalancing Global economic recovery ‒ Europe struggles with an internal imbalance Consumer economy of 2020 ‒ Growth in emerging markets ‒ Emerging middle class Challenges remain ‒ Slow consumer spending growth overall ‒ High price sensitivity 4Source: Deloitte : Consumer 2020

5. © 2011 Deloitte & Touche Oy, Group of Companies Changes in consumer demographics and consumers’ menu Falling birthrates as countries develop Aging population in much of the world Young markets, stressed resource Shift in food consumption Changing global food market dynamics 5Source: Deloitte : Consumer 2020

6. © 2011 Deloitte & Touche Oy, Group of Companies Sustainable consumption and the information economy Sustainability takes center stage Mainstreaming sustainable consumption Technological revolution Social, political and economic revolution 6Source: Deloitte : Consumer 2020

7. How are retailers responding in these challenging times

8. © 2011 Deloitte & Touche Oy, Group of Companies These trends will continue to dramatically change consumer behaviors over the next decade Consumers will want value aligned with their changing values Emerging market consumers will drive changes in global consumption Consumers will live more sustainably Global economic rebalance Demographics shifts Sustainability imperative Global economic recession Tech and media availability and adoption Consumer will control their information environment Pressure on resources Growing share of online and online related sales Consumer are becoming true cross channel shoppers Technology is driving change New emerging market middle class Ageing population The most successful consumer businesses will best innovate and anticipate changing consumer needs, while at the same time understanding that consumers are all different GlobalizationSustainabilityMultichannel 8

9. Leaving home – globalization of retail

10. © 2011 Deloitte & Touche Oy, Group of Companies Top 250 global retailers list 2009 Retail sales rank CompanyOrigin2009 group revenue (USD mil.) 2009 retail sales (USD mil.) 2009 group net income (USD mil.) Dominant operational format # countries of operation 2004-2009 retail sales CAGR 1Wal-Mart Stores, Inc.U.S.408 214405 04614 848Hypermarket/Supercen ter/Superstrore 167,3 % 2Carrefour S.A.France121 861119 887609Hypermarket/Supercen ter/Superstrore 363,4 % 3Metro AGGermany91 38990 850724Cash & Carry/Warehouse Club 333,0 % 4Tesco plcU.K.90 435 3 712Hypermarket/Superce nter/Superstrore 1310,9 % 5Schwarz Unternehmens Treuhand KG Germany77 221 n/aDiscount store259,8 % 30The IKEA GroupSweden29 100 n/aOther specialty3810,9 % 65H&MSweden13 218 2 136Apparel specialty3613,6 % 68S GroupFinland16 29912 747377Supermarket510,3 % 71ICA ABSweden12 46312 230209Supermarket56,4 % 79Dansk SupermarkedDenmark10 664 399Discount54,0 % 82Kesko CorporationFinland11 78010 429187Supermarket85,4 % 93Reitangruppen ASNorway9 1609 068n/aDiscount315,1 5 10Source: Deloitte : Leaving home: Global Powers of Retailing 2011

11. © 2011 Deloitte & Touche Oy, Group of Companies Developments in European retail European retailers are most international … … and will continue to enter new markets What will European retailers do? ‒ Food retailers will go abroad ‒ Food retailers will consolidate ‒ Non-food will consolidate ‒ Hypermarkets will struggle with discounters 11Source: Deloitte : Leaving home: Global Powers of Retailing 2011

12. © 2011 Deloitte & Touche Oy, Group of Companies Nordic retailing markets – still a market area of its own? Nordic retail markets entrants are typically global chains of non-food sector or Nordic grocery or non-food chains The Nordic grocery retail markets are fairly small, concentrated and mature As a result the sector has been rather uninteresting to foreign operators The interest in Nordic markets grows as current markets stagnate Bubble size: Grocery retail sales 2010 Low – Top 5 grocery retailers – High Combined market share (% grocery retail sales) Low – Compound annual growth rate – High 2006-2010 Market attractiveness – Grocery sales growth and market concentration by country 2006-2010 12Sources: Deloitte : Leaving home: Global Powers of Retailing 2011, Planet Retail

13. © 2011 Deloitte & Touche Oy, Group of Companies Internationalization of Nordic retailers Nordic retailers are traditionally inward bound and tend to expand their operations only near borders – there are some exceptions though Typical international players originating from Nordic countries are: ‒ discounters in daily goods ‒ non-food chains (Swedes in fashion and cosmetics, Finland in DIY) and ‒ hypermarkets/department stores The traditional way is to study the companies going abroad, but the focus is shifting more to knowhow of international marketing and innovations – knowing your customer 13