TNS Supply Chain Retail Luxury Realities2

7/31/2019 TNS Supply Chain Retail Luxury Realities2

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The Reality of Retailing & Luxury

Ralf MatthaesRegional Managing Director


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Agenda

Present consumer reality and confidence

spend

Areas of spend / areas of saving

Confidence

Consumer

Modern retail not growing very fast due toWhat and where consumers spend

The growth of Modern vs traditional trade

Drivers of growth

Hindrances of growth

Luxury myth

% whom have bought luxury items

Definition of luxury

Consumer misperception of luxury


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Consumer Confidence 2011-2012


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2008 2012 Consumer Confidence Index

4

89

64

78 79

68

0

20

40

60

80

100

2008 2009 2010 2011 2012

110

Index has fallen drastically due to poor Vietnamese economic performance

Source: TNS CCIP 2008 2012 urban only


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Consumer overview of Vietnam's next 12 months

51

44

29

34

20

13

34

30

41

35

38

48

15

26

30

32

35

39

Value of the

Vietnamese dong

Employment

The cost of living

Vietnam's economy

Foreign investment

My personal standardof living

Worse Same Better

57

20

21

13

7

5

25

42

43

27

42

43

16

36

36

58

41

51

2011 = 79

Q: In the next 12 months would you think that the following will be better, the same or worse than they are now?

Confidence has dropped substantially in the past 12 months


2012 = 68


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76

68

17

20

6

12

Early 2011

Mid 2012

Present job is safe

Chance of unemployment

Don't know

Job Security is Falling

6

Do you think your present job is safe, or do you think theres a chance you may become unemployed?


Job security is falling, driving consumer caution


7/31

30

25

54

69

16

6

Early 2011

Mid 2012

Will see a fall in unemployment

Will see a rise in unemployment

Same/ Don't know

Employment Concerns

7

Will unemployment rise or fall in 2012 in Vietnam?


An additional 15% of the population believe unemployment willincrease in 2012


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Consumers savings

8

55

32

18

26

14

23

13

18

Early 2011

Mid 2012

Up to 5% 5% - 10% 10% - 20% More than 20%

Roughly how much of your monthly income do you save?

++


Not only savings but the percentage consumer are saving has risen sharply


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47

46

37

32

32

27

25

25

24

24

20

46

43

55

52

54

56

52

58

55

59

65

7

12

8

15

14

16

23

17

21

17

15

Education

Health care products/services

Food & beverages products

Personal care products

Household utilities

House hold care products

Entertainment & dining out

Mobile, Laptop, Devices

Home appliances

Transportation

Communications

More Same Less

Consumers spending in the near future?

9

Given the economic situation, will you be spending, less, the same, or more on each of the following items?


Some sectors continue to see growth, whilst other continue to decline


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Modern retail in

Vietnam


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Groceries32%

Eating/drinking out15%

Education10%

Transportation9%

Utilities8%

Communications5%

Toiletries5%

Housing4%

Entertainment4%

Healthcare3%

Travel/ holidays3% Investment

2%

Source: TNS VietCycle 2011. 2011 TNS

Monthly household spend

47% of all spend is still spent on FoodWhat is the mix of food versus other items at modern retailers?

Groceries = 32%Eat / drink out = 15%Total = 47%


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Most frequented Modern retail outlets

67

38

2016

5 2 2 1 04

65

35

2 0

73

20

10

Co-op Mart Big C Metro Maximark Lotte Mart Citimart Parkson Vincom Fivimart

HCM City Ha Noi

Source: VietCycle 2011Base: HCMC & Hanoi

Nationally Big C followed by Metro are the most frequented outletsNote low penetration of high end venues


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Value Growth of Modern vs other trade channels

2008-09 2009-10 2010-11 2011-12 1st half


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The Luxury Myth


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Who is Vietnams luxury consumer?

Gender

18Source: TNS VietCycle 2011 Urban only

52% Male

Living in Hanoi = 36% - HCMC = 19%

Age between 35 54 = 49%

Monthly Income 8.5 Mil. vnd plus = 67%

% f l ti hi h h b ht l it


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19

% of populations which have bought luxury itemsin last 12 months

14

*Luxury item here is defined as valued over VND 10,000,000

2011

10

Source: TNS VietCycle 2011 Urban only

Slow growth indicates that luxury is still well out ofreach for most consumers

2008

U b D l d hl h h ld i


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SEF F

3%

E22%

D25%

C31%

A9%

SEC A+

1%

2,500,001 5,500,000

less than VND 2,500,000

5,500,001 8,500,000VND 8,500,001 13,500,000

13,500,001 15,500,000

15,000,001 40,000,000

Urban Declared monthly household income

Urban luxury market is estimated to be about 19% of urban population

9%

B


41,000,000 VND Plus

Vi t N ti l l h h ld i


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1.5%

3.9%

5.6%

11%

15%

29%

34%

A1

A

B

C

D

E

F

Vietnam National annual household income

2/3rds of Vietnamese are still eking out a day to day existence

Source: TNS Vietnam

BOP

63%54 mil

Middle26%

22 mil

Affluent9.5%

8.2 mi

Wealthy 1.5%1.3 mil

What does Luxury mean to Vietnamese consumers


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22

What does Luxury mean to Vietnamese consumers

60

56

36

32

26

23

18

14

Premium price

Premium quality

Unique design

Used by famous people

Hard to find

Country of origin

Limited edition

Exclusive

Q: Which of the following statements describe what is luxury to you?


Vietnam Luxury = Price & Quality,Western World Luxury = Exclusive & Country of origin

How we define luxury?


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23

How we define luxury?

65

45

57

27

44 44

21

60 58

52

4239

35

26

2008 2011

Dining out at 5-star

restaurants/hotels

Travelling for

pleasure abroadPlaying golf

Shopping at

boutique venues

Living in a high-end

apartment

Staying at 5-star

hotels/resorts

Having membership

to VIP club

Q: Which of the following activities do you consider to be luxury?


Until end of 2011 boutique shopping & overseas leisuretravel were on the rise as luxury past-times

Th l i diff


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PREPARED FOR DIAGEO

The luxurious differencebetween Hanoi & HCMC

13 2011 TNS

63

18

13

9

82

6

46

22

HCMC Hanoi

Having asuccessful life

Showing offFlashy

Enjoy highquality life

With goodtaste


H i HCMC L i


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PREPARED FOR DIAGEO

Hanoi versus HCMC, Luxury is.

10 2011 TNS

56

44

21

52

61

26

HCMC Hanoi

Premiumquality

Premiumprice

Countryof origin

For Hanoians luxury perceptions are much higher than in HCMC ,except for Quality



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PREPARED FOR DIAGEO

Technology the top of the luxury food chain

58

35

2927

2420 18

15 13

Tech itemlaptop,LCD TV,camera

Householditems

Cars Clothes Jewelry FurnitureAccessories

footwearCosmetics/

PerfumeAlcohol

Categories I would be willing to pay a premium for

Top-2-box agreement (%)

21 2011 TNS

Almost 2 in 3 luxury buyers willing to pay a premium for tech items.



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PREPARED FOR DIAGEO

Premiumbrands

Most desired luxury brands


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PREPARED FOR DIAGEO

Most desired luxury brands

iPhone /

Apple

SonyToyota Honda Gucci

Top 5 most desired luxury brands

24 2011 TNS

Technology & vehicles rule the luxury roost


I Brands willing to pay a premium for


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PREPARED FOR DIAGEO

I Brands willing to pay a premium for

23%

14%

11%

22%

13%

10%

8%

7%

9%

5%

22%

13%

10%

4%

4%

25 2011 TNS

Which brand would you be most willing to pay a big premium for in this category?


Retail Synopsis


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PREPARED FOR DIAGEO

Retail Synopsis

Due to the below factors, retailing is not what it issupposed to be.

NAT is limiting value/volume retail from opening up

Lack of prime space

Low consumer confidence

High Inflation

High rents

High product cost restrictive to consumers

Wrong mix of retail outlets all premium and not in line withconsumer affordability

30

R il S l i


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Retail Solution

31www tnsglobal com www tnsvietnam vn

Many products under one roof at affordable prices

Must offer grocery / food & beverage outlets

Must offer reasonable prices to entice consumersMust offer right mix of consumer basket needs

Location - Location - Location

Documents

TNS Supply Chain Retail Luxury Realities2