Brands crisis-the crisis before the financial crash

Brands needs a trade off to cope with the fact that - retailers can offer premium products at very affordable prices - retailers can decide what brands to have on the shelf -retailers can offer their own shopping experience

Always steal choice away from competition Redefine your consumers as shoppers Have a great product Retailize your company Shopping for your product is as important as your product Retailization source

Less money Less spending Reassessing needs Adjusting behavior

Less money

Less spending

Reassessing needs

Adjusting behavior

Consumer Credit in Romania Consumer credit has literally exploded in the past 2 years Since December 2005, loans for periods longer than 5 years have grown 6 times At the end of 2007, Romanians had borrowed 71.5 Billion Lei, 78% of it was long term loan Billion LEI

Consumer credit has literally exploded in the past 2 years

Since December 2005, loans for periods longer than 5 years have grown 6 times

At the end of 2007, Romanians had borrowed 71.5 Billion Lei,

78% of it was long term loan

Consumer Spending Romania Romanians still spend more than half of their income on basic needs like food and beverage In 2008 durables accounted for only 22% of income spending Data: INSSE Report 2008

Consumer Spending France By comparison, the French were allocating the same 22% on durables half a century ago

Global Crisis but Local Reactions. A cultural conflict Developed economies were already almost stagnant when the crisis hit so they will probably slump into depression Their consumers had already seen 50 years of savage consumerism so they will accept to change their lifestyle to save wherever needed But emerging economies were caught during a period of expansion and the crisis will slow them down rather than turn them around Besides, their consumers are still hungry for the abundance they’ve just barely tasted and they won’t be so happy to go back to austerity

Developed economies were already almost stagnant when the crisis hit

so they will probably slump into depression

Their consumers had already seen 50 years of savage consumerism

so they will accept to change their lifestyle to save wherever needed

But emerging economies were caught during a period of expansion

and the crisis will slow them down rather than turn them around

Besides, their consumers are still hungry for the abundance

they’ve just barely tasted and they won’t be so happy to go back to austerity

Cutting Consumption We expect consumers in developing countries like Romania to adjust consumption on all levels of need rather than cut out completely some of the higher levels in order to insure abundance for the lower levels Before Crisis

We expect consumers in developing countries like Romania

to adjust consumption on all levels of need rather than cut out completely some of the higher levels in order to insure abundance for the lower levels

Cutting Consumption We expect consumers in developing countries like Romania to adjust consumption on all levels of need rather than cut out completely some of the higher levels in order to insure abundance for the lower levels Before Crisis During Crisis Developed Economy

We expect consumers in developing countries like Romania to adjust consumption on all levels of need

rather than cut out completely some of the higher levels in order to insure abundance for the lower levels

Cutting Consumption We expect consumers in developing countries like Romania to adjust consumption on all levels of need rather than cut out completely some of the higher levels in order to insure abundance for the lower levels Before Crisis During Crisis Developed Economy

We expect consumers in developing countries like Romania to adjust consumption on all levels of need

rather than cut out completely some of the higher levels in order to insure abundance for the lower levels

Cutting Consumption We expect consumers in developing countries like Romania to adjust consumption on all levels of need rather than cut out completely some of the higher levels in order to insure abundance for the lower levels Before Crisis During Crisis Developed Economy During Crisis Emerging Economy

We expect consumers in developing countries like Romania to adjust consumption on all levels of need

rather than cut out completely some of the higher levels in order to insure abundance for the lower levels

Cutting Consumption We expect consumers in developing countries like Romania to adjust consumption on all levels of need rather than cut out completely some of the higher levels in order to insure abundance for the lower levels Before Crisis During Crisis Developed Economy During Crisis Emerging Economy

We expect consumers in developing countries like Romania to adjust consumption on all levels of need rather than cut out completely some of the higher levels in order to insure abundance for the lower levels

The new Romanian consumer: pragmatic hedonist We believe Romanians will adapt to the new economic realities by finding alternative solutions to their needs rather than short-listing needs and cutting out the fancier ones Romanians will still go on holidays but Greece will be replaced by Bulgaria Romanians will still buy fancy phones but the iPhone will be replaced by Samsung Omnia Romanians will still buy cars but Skoda will be replaced by Dacia

We believe Romanians will adapt to the new economic realities

by finding alternative solutions to their needs

rather than short-listing needs and cutting out the fancier ones

Romanians will still go on holidays

but Greece will be replaced by Bulgaria

Romanians will still buy fancy phones

but the iPhone will be replaced by Samsung Omnia

Romanians will still buy cars

but Skoda will be replaced by Dacia

The new consumer outside

Paying more attention to what he is consuming Swapping segments / shift to a repertoire of brands consumption across different segments Looking for enhanced value /reassurance in the purchases made Restraining the consumption to essentials

Shopping trips management Source: Nielsen, Shopping trends in UK, France, Germany – Feb 2009 Decreasing the number of shopping trips They love shopping …. They maintain the number of trips but purchase less Value to the limit !

First in line, first to shoot

First in line, first to shoot Retailers are building on their existing advertising platform whilst adding on to it a price dimension

Retailers are building on their existing advertising platform whilst adding on to it a price dimension

First in line, first to shoot SURPRISE STRATEGY Builds on the existing communication platform A dedicated communication architecture : a founding film to shift the perception of the consumer from Tesco as the biggest retailer to that of the main discounter Tesco - UK

SURPRISE STRATEGY

Builds on the existing communication platform

A dedicated communication architecture :

a founding film to shift the perception of the

consumer from Tesco as the biggest retailer to

that of the main discounter

First in line, first to shoot In Germany, where the discounters have already strongly established their price superiority, it is interesting to note that brands are trying to engage consumers from an emotional point of view vs an only rational one. LIdl brand endline ‘Lidl, pays off’ consequently takes on several layers of meaning, the rational one : it costs you less, and the emotional one : it enriches your personal life. Lidl - Germany

In Germany, where the discounters have already strongly established their price superiority,

it is interesting to note that brands are trying to engage consumers from an emotional point

of view vs an only rational one.

While there is a strong drive for value reassurance in the purchasing behaviour, there are still plenty of things that people do not want to trade and can spend money on. Here is a couple of drivers… What about brands ?

rituals Regardless recession and a more planned buying behaviour, they still have their ritual brands

48% of the French declare they keep on buying regularly the brands to which they are really attached. This trend is even more important among the people between 15 and 19 (60%). We still love our rituals Source : CLM BBDO/OMG/Scanblog study

We keep up with appearances Source : CLM BBDO/OMG/Scanblog study Despite evidence of frugal behaviour and a growing acceptance of being cheap there are some occasions when we’re absolutely NOT willing to compromise

kids Kids

Quality of meals Leisure time Toys – the area with the highest propensity of cost cutting They don’t cut on kids Source : The New York Times, April 2008

And we don’t want to cut our precious time A sense of escape - people tend to maintain the spending on family and friends events but most probably trading on the overall arrangements (frequency, location, etc)

Recap of key pointers Consumers will still make high-value purchases, but will require greater reassurance . They are less likely to debt fund significant purchases. Reconsider in store communication Consumers will be massively price sensitive . They will price compare and use digital channels to facilitate this. Given every retailer is offering some form of promotion, consumers know they can access value. But they also want entertainment and escapism . Brands that help them achieve great value and enjoyment are most likely to succeed .

Consumers will still make high-value purchases, but will require greater reassurance . They are less likely to debt fund significant purchases.

Reconsider in store communication

Consumers will be massively price sensitive . They will price compare and use digital channels to facilitate this. Given every retailer is offering some form of promotion, consumers know they can access value.

But they also want entertainment and escapism . Brands that help them achieve great value and enjoyment are most likely to succeed .