WORLDWIDE AND RUSSIAN
RETAIL MARKETS 2009-2016
MAKING CONCLUSIONS
BUILDING PLANS
2
ABOUT CSR ENTER
CENTER OF STRATEGIC RESEARCH OF ENTER
(CSR ENTER)has been created in 2011.
One of our ambitious targets ...
3
CONTENTS
WORLDWIDE AND RUSSIAN RETAIL MARKETS
USA..........................................................................
4
METHODOLOGY
TERMS AND MEASURES:
CAGR (Compound annual growth rate) — shows average weighted growth rate over several per...
WORLDWIDE AND
RUSSIAN RETAIL
MARKETS
SALES VOLUME & GROWTH RATES
EXPANSION OF E-COMMERCE
6
WORLDWIDE MARKETS
RETAIL IN THE US
USA
Retail Sales* USD bln
KEY FACTS
During 2012 non-food retail grew up 3 times
more ...
7
WORLDWIDE MARKETS
E-COMMERCE IN THE US
USA
E-commerce Sales USD bln
KEY FACTS
E-commerce market was growing faster than
...
8
WORLDWIDE MARKETS
RETAIL IN CHINA
CHINA
Retail Sales* USD bln
KEY FACTS
In contrast to other developed countries
share o...
9
WORLDWIDE MARKETS
E-COMMERCE IN CHINA
CHINA
E-commerce Sales USD bln
KEY FACTS
E-commerce market in China is growing
rap...
10
RETAIL IN RUSSIA
RUSSIA
Retail Sales* USD bln
KEY FACTS
Non-food retail in Russia is growing faster than
food retail: w...
11
E-COMMERCE IN RUSSIA
RUSSIA
E-commerce Sales USD bln
KEY FACTS
According to CSR Enter estimation, Russian
e-commerce ma...
12
RETAIL IN RUSSIA
Non-Food Retail Segments
RETAIL IN RUSSIA
RUSSIA. Non-Food Retail Segments
Sales, USD bln (estimation)...
13
18%
12%
9%
Товары для красоты и здоровья
Парфюмерия и косметика
Одежда и обувь
13.9%
11.3% 12.3%
8.5%
29%
29%
28%
Мебел...
SEGMENT
ANALYSIS
PERFUMES
& COSMETICS
GET NOWSEGMENT ANALYSIS OF
INTERNATIONAL & RUSSIANRETAIL MARKETSRESEARCH@ENTER.RU
15
METHODOLOGY
«Worldwide markets» section is based on the data provided by National Statistical Services: US Census («Hea...
16
WORLDWIDE MARKETS
PERFUMES & COSMETICS MARKET IN THE US
USA
Retail Sales*, USD bln
Share of Perfumes &
Cosmetics in Non...
17
WORLDWIDE MARKETS
PERFUMES & COSMETICS MARKET IN CHINA
CHINA
Retail Sales*, USD bln
KEY FACTS
According to the estimati...
18
PERFUMES & COSMETICS MARKET IN RUSSIA
SALES AND GROWTH RATES
KEY FACTS
The economic crisis of 2008-2009 had no
signific...
19
Growth in constant prices, %
Growth in current prices, %
MARKET VOLUME AND INFLATION
* The data rate of «Sports & Outdo...
INTERNET
~ 3-5%
DIRECT SALES + MLM*
~ 40-45%
OFFLINE SALES
~ 45-50%
KEY SALES CHANNELS,
% KEY FACTS
q  The share of direc...
21
KEY FACTS
q  Maximum peak of retail sales in
Russia within a year has been
reached in December (sales are
2.3x of mont...
22
The core sales channel - OFFLINE
SpecialistRetailersMixedProductRangeRetailers
The core sales channel - ONLINE
Producer...
23
Average number of weekly unique visitors within first 13 weeks in 2013, in
thousand
Averagegrowthrateofweeklytrafficwit...
24
WEEKLY TRAFFIC OF KEY PLAYERS WEBSITES IN 1st QUARTER 2013
Unique weekly visitors, in thousand
Average growth rate: 1,1...
PRODUCT RANGE BREAKDOWN*
IN ACCORDANCE WITH THE SKU AVAILABLE ON THE ONLINE RETAILERS WEBSITES
* According to monitoring o...
26
The classification is disclosed on «methodology» slide
Economy
26%
Mid –
15%
Premium
31%
Mid +
14%
Economy
19%
Premium
...
KEY FACTS
§  Consolidated share of top-10
brands (according to the number
of SKU*) is just about 20%
Dior 3%
Clarins 3%
S...
Traditional offline market develops steadily. It’s
occupied by federal players competing in quantity and
quality of exclus...
SEGMENT
ANALYSIS
JEWELRY & WATCHES
IN PARTNERSHIP WITH
«LUCAS ZOLOTO»
GET NOWSEGMENT ANALYSIS OF
INTERNATIONAL & RUSSIAN
R...
30
METHODOLOGY
«Worldwide markets» section is based on the data provided by National Statistical Services: US Census («Jew...
31
WORLDWIDE MARKETS
JEWELRY MARKET IN THE US
USA
Retail Sales*, USD bln
Share of Jewelry
in Non-Food Retail
While the pro...
32
WORLDWIDE MARKETS
JEWELRY MARKET IN CHINA
CHINA
Retail Sales*, USD bln
KEY FACTS
While the projected CAGR of total jewe...
33
JEWELRY & WATCHES MARKET IN RUSSIA
SALES AND GROWTH RATES
KEY FACTS
Projected CAGR of total jewelry sales, watches
and ...
34
Growth in constant prices, %
Growth in current prices, %
MARKET VOLUME AND INFLATION
* The data rate of «Sports & Outdo...
35
JEWELRY & WATCHES MARKET IN RUSSIA
SHARE OF DISTANT SALES
KEY SALES CHANNELS,
%
KEY FACTS
The share of Internet sales o...
36
JEWELRY & WATCHES MARKET IN RUSSIA
SEASONALITY
SEASONALITY OF RETAIL SALES *
2012
KEY FACTS
Maximum peak of retail sale...
37
JEWELRY & WATCHES MARKET IN RUSSIA
MARKET STRUCTURE
SALES BREAKDOWN (2012):
By material type
KEY FACTS
Sales of gold an...
38
JEWELRY & WATCHES MARKET IN RUSSIA
MARKET STRUCTURE
SALES BREAKDOWN (2012):
By product type
KEY FACTS
The key types of ...
39
Ozon.ru
ENTER
585
Yashma
Adamas
MIUZ
Russkie
Samotsvety
Jenavi
Accessorize
Selena
Krastsvetmet
Alltime.ru
Bestwatch.ru
...
40
DIY (Do It Yourself)
Furniture
Kids’ Products
Household
Goods
Sports & Outdoor
JEWELRY
Perfumes & Cosmetics
-3%
-2%
-1%...
41
85
105
128
147 144 147 146 147
166
187
156
109
135
1 2 3 4 5 6 7 8 9 10 11 12 13
Number of a week
AllTime.ru
bestwatch....
ONLINE RETAILERS PRODUCT RANGE
PRODUCT MIX
PRODUCT RANGE BREAKDOWN *
BY MATERIAL TYPE
in accordance with the sku available...
KEY FACTS
The majority of products (among available for
purchase SKU on the selected websites) are
rings (44% of the produ...
44
ECONOMY 9%
MID
37%
PREMIUM
33%
LUXURY
21%
Economy 6%
Mid
34%
Luxury 8%
Premium
43%
Mid 44%
Premium
31%
Mid
36%
Luxury
3...
ENTER OUTLOOK
Conservatism is the major feature of the Russian
jewelry industry and its players. JUNWEX, the main
industry...
SEGMENT
ANALYSIS
FURNITURE
GET NOWSEGMENT ANALYSIS OF
INTERNATIONAL & RUSSIANRETAIL MARKETSRESEARCH@ENTER.RU
47
METHODOLOGY
«Worldwide markets» section is based on the data provided by National Statistical Services: US Census («Fur...
48
WORLDWIDE MARKETS
FURNITURE MARKET IN THE US
USA
Retail Sales*, USD bln
Share of Furniture
in Non-Food Retail
While the...
49
WORLDWIDE MARKETS
FURNITURE MARKET IN CHINA
CHINA
Retail Sales*, USD bln
KEY FACTS
The projected CAGR of total furnitur...
FURNITURE MARKET IN RUSSIA
SALES AND GROWTH RATES
KEY FACTS
The projected CAGR of total furniture sales in
Russia is about...
51
Growth in constant prices, %
Growth in current prices, %
MARKET VOLUME AND INFLATION
* The data rate of «Sports & Outdo...
FURNITURE MARKET IN RUSSIA
SHARE OF DISTANT SALES
KEY SALES CHANNELS,*
%
KEY FACTS
The share of furniture sales through In...
53
FURNITURE MARKET IN RUSSIA
SEASONALITY
SEASONALITY OF RETAIL SALES *
2012
KEY FACTS
Peak sales of furniture are traditi...
54
FURNITURE MARKET IN RUSSIA
MARKET STRUCTURE
SALES BREAKDOWN
2012
KEY FACTS
According to CSR Enter estimation, the struc...
55
Specialist online-
retailers without
showrooms
Manufacturers with
retail stores
Retailers without
production
capacities...
56
DIY (Do It Yourself)
FURNITURE
Kids’ Products
Household
Goods
Sports & Outdoor
Jewelry
Perfumes & Cosmetics
-­‐3%	
  
-...
57
84
93
106
98
122
117
105 109
111
103
110
126
132
1 2 3 4 5 6 7 8 9 10 11 12 13
Number of a week
Mebelrama.ru
askona.ru
...
58
18%
16%
14%13%
11%
9%
6%
5%
5%
2% 1% Мягкая мебель
Мебель для спальни
Мебель для кухни
Мебель для гостиной
Мебель для д...
59
ECONOMY
15%
MID–
22%
MID
28%
PREMIUM
16%
MID +
19%
Economy 6%
Mid–
13%
Premium
13%
Mid +
32%
Economy
15%
Mid–
18%
Mid +...
ENTER OUTLOOK
Today multichannel (offline and online) sales
of furniture develop rapidly. The perspectives of
the furnitur...
SPECIAL FOCUS:
WORLDWIDE
BEST-PRACTICES
BUSINESS MODELS
KEY TRENDS
PROFILES OF KEY INTERNATIONAL
PLAYERS
GET NOWANALYSIS O...
62
INCREASING SHARE OF
HIGH-MARGIN PRODUCTS
Quick product range extension and
expansion to different sales
channels
WORLDW...
63
Revenue Structure of Target (2012)
Revenue Structure of Sears Holdings (2012)
Gradual increasing share of high-
margin ...
64
ULTA SALON
CHILDREN’S PLACEBLUE NILE
BETER BED
Wide range of extra
services in the company
outlets
Unique service of
pr...
65
WORLDWIDE BEST-PRACTICES
PERFUMES & COSMETICS MARKET — KEY BUSINESS MODELS
CHARACTERISTICSBUSINESS MODELS *
Majority of...
66
WORLDWIDE BEST-PRACTICES
PERFUMES & COSMETICS MARKET – TRENDS
CUSTOMER LOYALTY PROGRAM & GIFT CERTIFICATES
Stimulate cu...
67
Revenue – $2,2 bln
2012 *
Capitalization – $6,2 bln
By the end of 2012 *
Number of countries – 1
Number of stores – 550...
68
WORLDWIDE BEST-PRACTICES
JEWELRY & WATCHES MARKET – KEY BUSINESS MODELS
CHARACTERISTICSBUSINESS MODELS *
Customization ...
69
INTERNATIONAL BEST-PRACTICES
JEWELRY & WATCHES MARKET – TRENDS
CUSTOMER COACHING
Informing clients about jewelry throug...
70
Revenue – $400 mln
2012 *
Capitalization – $478 mln
By the end of 2012 *
Number of countries – 45**
Number of employees...
71
WORLDWIDE BEST-PRACTICES
FURNITURE MARKET – KEY BUSINESS MODELS
CHARACTERISTICSBUSINESS MODELS *
Only Internet sales – ...
72
INTERNATIONAL BEST-PRACTICES
FURNITURE MARKET – TRENDS
ROOM DESIGINING
Separate section of website – specialized servic...
73
Revenue– $519 mln
2012 *
Capitalization – not quoted
By the end of 2012 *
Number of countries – 7
Number of stores – 1 ...
МЫ ДАРИМ ВРЕМЯ ДЛЯ НАСТОЯЩЕГО.
ЧЕСТНО. С ЛЮБОВЬЮ. КАК ДЛЯ СЕБЯ.
Electronic publication by Enter.ru «Worldwide and Russian ...
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Worldwide & Russian Retail Markets Facts 2009-2012. Forecasts 2012-2016 Research.Enter

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• Retail and e-commerce in Russia, USA, China: volumes, growth rates, forecasts 2009-2016
• Perfumes, Furniture, Jewelry markets: key players, retailers product mix, website traffic analysis

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Worldwide & Russian Retail Markets Facts 2009-2012. Forecasts 2012-2016 Research.Enter

  1. 1. WORLDWIDE AND RUSSIAN RETAIL MARKETS 2009-2016 MAKING CONCLUSIONS BUILDING PLANS
  2. 2. 2 ABOUT CSR ENTER CENTER OF STRATEGIC RESEARCH OF ENTER (CSR ENTER)has been created in 2011. One of our ambitious targets is to form trends in the retail industry, mainly market research and analytics. This led to the creation of CSR Enter, the core aim of which is to increase the market transparency. Public researches can be downloaded for free on www.enter.ru/research Visit us on Facebook: http://www.facebook.com/research.enter Center of Strategic Research of Enter (CSR Enter) has been created in 2011. One of our ambitious targets is to form trends in the retail industry, mainly market research and analytics. This led to the creation of CSR Enter, the core aim of which is to increase the market transparency. ABOUT CSR ENTER Public researches can be downloaded for free on www.enter.ru/research 2   Market Research by CSR Enter: Visit us on Facebook: http://www.facebook.com/research.enter In case of questions & queries, comments and proposals for partnership, e-mail us: research@enter.ru «Present Trends in Retail: the New Way of Shopping» 2 April 2012.   «Online Retail Barometer: New Knowledge (2Q 2012)» 27 July 2012   «Business Results of the Retailers for 2011 and 1Q 2012» 3 September 2012   «Present Trends in Online Retail: Facts and Figures»  10 October 2012 «Customer-Centrism: metrics, cases, facts»  28 February 2013 «Business Results of the Retailers for 2011»  8 April 2013 In case of questions & queries, comments and proposals for partnership, e-mail us: research@enter.ru
  3. 3. 3 CONTENTS WORLDWIDE AND RUSSIAN RETAIL MARKETS USA....................................................................................................................................................................6 CHINA.................................................................................................................................................................8 RUSSIA...............................................................................................................................................................10 SEGMENT ANALYSIS PERFUMES & COSMETICS.................................................................................................................................14 JEWELRY & WATCHES........................................................................................................................................29 FURNITURE........................................................................................................................................................46 SPECIAL FOCUS: WORLDWIDE BEST-PRACTICES......................................................................61
  4. 4. 4 METHODOLOGY TERMS AND MEASURES: CAGR (Compound annual growth rate) — shows average weighted growth rate over several periods. Offline Retailers – companies which operate only through stationary retail stores. Online Retailers – companies which operate through their own website, catalogue or (and) call-center. Multichannel (both online and offline) – companies which operate both though the Internet and other distant channels and through traditional retail outlets. Mixed Product Range – segment which consists of retailers that are specialized on 2 or more commodity categories. Weekly Traffic (Unique Weekly Visitors) – average number of weekly unique visitors of an internet retailer’s website. Traffic of retail segments is estimated by top-3 companies in each segment.
  5. 5. WORLDWIDE AND RUSSIAN RETAIL MARKETS SALES VOLUME & GROWTH RATES EXPANSION OF E-COMMERCE
  6. 6. 6 WORLDWIDE MARKETS RETAIL IN THE US USA Retail Sales* USD bln KEY FACTS During 2012 non-food retail grew up 3 times more than food retail (7.2% vs 2.6%). The total retail market’s CAGR in the USA reached 6.3% in 2009–2012. * In current prices (including inflation) Sources: US Census, analysis by CSR Enter Food Retail Non-Food Retail
  7. 7. 7 WORLDWIDE MARKETS E-COMMERCE IN THE US USA E-commerce Sales USD bln KEY FACTS E-commerce market was growing faster than the total retail market in the US during 2009- 2012 (with CAGR of 14% vs 6%). Source: Morgan Stanley analytics F F F F
  8. 8. 8 WORLDWIDE MARKETS RETAIL IN CHINA CHINA Retail Sales* USD bln KEY FACTS In contrast to other developed countries share of food retail in total retail market is still more than share of non-food retail (56.2% vs 43.8% in 2012) but non-food retail is growing much faster than food (28% vs 10%). * In current prices (including inflation). Exchange rate: 1 RMB = 0,1585 USD Sources: NBSC, analysis by CSR Enter Food Retail Non-Food Retail
  9. 9. 9 WORLDWIDE MARKETS E-COMMERCE IN CHINA CHINA E-commerce Sales USD bln KEY FACTS E-commerce market in China is growing rapidly: according to different forecasts the volume of the market is to raise up by 340 bln USD in 2016 and catch up with the US level. Source: Morgan Stanley analytics F F F F
  10. 10. 10 RETAIL IN RUSSIA RUSSIA Retail Sales* USD bln KEY FACTS Non-food retail in Russia is growing faster than food retail: with CAGR of 15% vs 12% in 2009– 2012). Share of non-food retail increased from 51.4% in 2009 to 53.5% in 2012. * In current prices (including inflation). Exchange rate: 1 USD = 31.065 RUR Sources: Rosstat, analysis by CSR Enter Food Retail Non-Food Retail
  11. 11. 11 E-COMMERCE IN RUSSIA RUSSIA E-commerce Sales USD bln KEY FACTS According to CSR Enter estimation, Russian e-commerce market’s CAGR was approximately 25% in 2009-2012; projected CAGR for the period of 2012-2016 fluctuates from 22% to 35% by different estimations. * Forecasts made by Fast Lane Ventures and InSales are estimated till 2015. Sources: analysis by CSR Enter, Morgan Stanley, InSales, Fast Lane Ventures 7 10 13 19 26 36 43 8 11 13 15 19 23 28 2010 2011 2012 2013П 2014П 2015П 2016П E-COMMERCE IN RUSSIA * Forecasts made by Fast Lane Ventures and InSales are estimated till 2015. Morgan Stanley Estimation CSR Enter Estimation Fast Lane Ventures Estimation InSales Estimation RUSSIA. E-commerce Sales* USD bln Sources: analysis by CSR Enter, Morgan Stanley, InSales, Fast Lane Ventures KEY FACTS q  According to CSR Enter estimation, Russian e-commerce market’s CAGR was approximately 25% in 2009-2012; projected CAGR for the period of 2012-2016 fluctuates from 22% to 35% by different estimations. 2013F 2014F 2015F 2016F
  12. 12. 12 RETAIL IN RUSSIA Non-Food Retail Segments RETAIL IN RUSSIA RUSSIA. Non-Food Retail Segments Sales, USD bln (estimation) 2011 2012 Electronics & Home Appliances Household Goods & DIY* Kids’ goods ** Furniture Perfumes & Cosmetics Jewelry & Watches Pets’ Products +23% +24% +12% +15% +13% +13% +21% Segment CAGR 2012-2016 ~ 11% ~ 13% ~ 16% ~ 12% ~ 16% ~ 19% ~ 10% ~ 17% Share of Internet Sales ~ 2% ~ 6% ~ 4% ~ 4% ~ 1% ~ 9% CSR Enter estimation based on official statistics * Textiles, household chemical goods, tableware, floor coverings, building materials ** Excluding baby food Sources: analysis of CSR Enter, Rosstat, GFK * In current prices (including inflation). Exchange rate: 1 USD = 31.065 RUR 2,9 7,5 11,1 11,3 14,3 22,3 37,7 2,4 6,6 9,8 9,8 12,3 18,0 30,6
  13. 13. 13 18% 12% 9% Товары для красоты и здоровья Парфюмерия и косметика Одежда и обувь 13.9% 11.3% 12.3% 8.5% 29% 29% 28% Мебель Товары для дома и DIY Ювелирные украшения и часы 15.1% 12.9% 20.8% 18.8% 10,7% 7,8% 4,7% Одежда и обувь Товары для дома и DIY Парфюмерия и косметика 10.3% 7.4% 7.7% 7.6% 37% 28% 13% Автозапчасти Спортивные товары Ювелирные украшения и часы 12.1% 11.6% 16.1% 11.2% 8% 6% 3% Товары для красоты и здоровья Товары для спорта и отдыха Одежда и обувь 7.9% 2.7% 10.8% 5.2% 2.0% -0.5% 0.8% -1.3% GROWTH RATES OF WORLDWIDE MARKETS 1st QUARTER 2013 * Non-food retail does not include retail sales of automobiles and petrol. ** In all rates considering 1st quarter 2012 the updated data is taken. WORLDWIDE RETAIL GROWTH RATES SLOW DOWN Growth rate 1st quarter 2013 to 1st quarter 2012 Growth rate 1st quarter 2012 to 1st quarter 2011 Sources: analysis of CSR Enter, US Census, Eurostat, NBSC, IBGE, Statistics South Africa, Rosstat Health & Beauty Sports & Outdoor Apparel & Footwear Health & Beauty Perfumes & Cosmetics Apparel & Footwear Furniture Household Goods & DIY Jewelry & Watches Clothing & Footwear Household Goods & DIY Perfumes & Cosmetics Auto Parts Sports & Outdoor Jewelry & Watches 0,3% -1,6% -2,8% Товары для красоты и здоровья Электроника Одежда и обувь Health & Beauty Electronics Apparel & Footwear Retail Non-Food Retail* Top-3 Segments USA European Union** Brazil China** South Africa Russia**
  14. 14. SEGMENT ANALYSIS PERFUMES & COSMETICS GET NOWSEGMENT ANALYSIS OF INTERNATIONAL & RUSSIANRETAIL MARKETSRESEARCH@ENTER.RU
  15. 15. 15 METHODOLOGY «Worldwide markets» section is based on the data provided by National Statistical Services: US Census («Health & personal care» sales excluding pharmacies and drug stores sales) and National Bureau of Statistics of China («Perfumes & Cosmetics» category). Historical sales are calculated in current prices (including inflation), the forecast sales are calculated according to McKinsey and Euromonitor estimations. «Online-retailers product range» section is based on the analysis of 5 selected companies of the industry: «Il de Beaute», «L’Etoile», «Rive Gauche», «Ozon.ru», «Enter.ru» — in accordance with the SKU available on the website. Price ranges are calculated according to present classification: «Worldwide markets» section is based on the data provided by National Statistical Services: US Census («Health & personal care» sales excluding pharmacies and drug stores sales) and National Bureau of Statistics of China («Perfumes & Cosmetics» category). Historical sales are calculated in current prices (including inflation), the forecast sales are calculated according to McKinsey and Euromonitor estimations. «Online-retailers product range» section is based on the analysis of 5 selected companies of the industry: «Il de Beaute», «L’Etoile», «Rive Gauche», «Ozon.ru», «Enter.ru» - in accordance with the SKU available on the website. Price ranges are calculated according to present classification: METHODOLOGY Economy Mid - Mid Mid + Premium Perfumes Products < 1 000 1 001 -  1 500 1 501 -  2 000 2 001 -  2 500 > 2 501 Gift Sets < 1 000 1 001 -  1 500 1 501 -  2 000 2 001 -  2 500 > 2 501 Skin & Body Care Products < 300 301 -  600 601 -  900 901 -  1 200 > 1 201 Hair Care Products < 300 301 -  600 601 -  900 901 -  1 200 > 1 201 Make-up Products < 300 301 -  600 601 -  900 901 -  1 200 > 1 201
  16. 16. 16 WORLDWIDE MARKETS PERFUMES & COSMETICS MARKET IN THE US USA Retail Sales*, USD bln Share of Perfumes & Cosmetics in Non-Food Retail While the projected CAGR of Perfumes & Cosmetics market in the US for 2012-2016 is 5%, Internet sales are to grow almost twice faster (~10%). * In current prices (including inflation). Forecast sales are based on the growth rates at constant prices (Euromonitor) and inflation (US Census). Sources: US Census, Euromonitor, analysis of CSR Enter KEY FACTS 2,1% 2012 35.5 3.,4 42.3 46.9 49.1 51.4 53.8 56.3 8.0% 8.2% 7.9% 8.0% 8.5% 8.9% 9.4% 9.9% 2009 2010 2011 2012 2013П 2014П 2015П 2016П Продажи, млрд. долл. Доля онлайн-ритейла, % CAGR 2009-2012 = 10% CAGR 2012-2016 = 5% Retail Sales, USD bln Share of Internet Sales, % 2013F 2014F 2015F 2016F
  17. 17. 17 WORLDWIDE MARKETS PERFUMES & COSMETICS MARKET IN CHINA CHINA Retail Sales*, USD bln KEY FACTS According to the estimation Perfumes and Cosmetics market share in total retail market in China is to grow up from 6.6% in 2012 to 17.2% in 2016. * In current prices (including inflation). Exchange rate: 1 RMB = 0,1585 USD Sources: NBSC, analysis by CSR Enter Share of Perfumes & Cosmetics in Non-Food Retail 23.5 27.4 30.2 33.2 36.5 40.1 44.2 48.6 2.4% 4.0% 5.1% 6.6% 8.3% 10.6% 13.5% 17.2% 2009 2010 2011 2012 2013П 2014П 2015П 2016П Продажи, млрд. долл. Доля онлайн-ритейла, % CAGR 2009-2012 = 12% CAGR 2012-2016 = 10% Retail Sales, USD bln Share of Internet Sales, % 2013F 2014F 2015F 2016F
  18. 18. 18 PERFUMES & COSMETICS MARKET IN RUSSIA SALES AND GROWTH RATES KEY FACTS The economic crisis of 2008-2009 had no significant impact on this segment: CAGR remained high (21%) for the period of 2007- 2009. Projected growth rate (CAGR) of market sales in Russia for 2012-2016 is about 16% thus Perfumes & Cosmetics sales can reach 20 USD bln in 2016. * In current prices (including inflation). Exchange rate: 1 USD = 31,065 RUR. Sources: Rosstat, Euromonitor, analysis by CSR Enter Share of Perfumes & Cosmetics in Non-Food Retail RUSSIA Retail Sales in Current prices*, USD bln 7.3 8.4 9.8 11.1 12.9 14.9 17.3 20.0 2009 2010 2011 2012 2013П 2014П 2015П 2016П CAGR 2012-2016 = 16% CAGR 2009-2012 = 15% 2013F 2014F 2015F 2016F
  19. 19. 19 Growth in constant prices, % Growth in current prices, % MARKET VOLUME AND INFLATION * The data rate of «Sports & Outdoor» sales in 1Q 2012 is incomparable with 1Q 2011 because of Rosstat methodological change. 1Q 2012 to 1Q 2011 1Q 2013 to 1Q 2012 Sources: Rosstat, analysis by CSR Enter PERFUMES & COSMETICS MARKET IN RUSSIA n/a* 20.1% 10.7% 8.8% 3.0% 6.5% 9.6% 5.2% 3.4% 3.0% 37.5% 28.1% 24.4% 13.1% 11.8% 11.7% 11.3% 10.0% 7.4% 9.5% 8.8% -1.9% 7.3% 14.2% 9.8% 8.3% 3.5% 24.4% 19.8% 14.9% 22.7% 14.0% 17.1% 14.9% 12.6% Автозапчасти Спортивные товары Игры и игрушки Ювелирные украшения и часы Товары для дома и DIY БТиЭ Косметика и парфюмерия Мебель Одежда и обувь Auto Parts Sports & Outdoor Toys & Games Jewelry & Watches Household Goods & DIY Electronics & Home Appliances Perfumes & Cosmetics Furniture Clothes & Footwear
  20. 20. INTERNET ~ 3-5% DIRECT SALES + MLM* ~ 40-45% OFFLINE SALES ~ 45-50% KEY SALES CHANNELS, % KEY FACTS q  The share of direct sales through catalogs is reducing in favor of Internet sales. According to CSR Enter estimation this channel will grow about 2 times faster than the total market with CAGR of about 30% in 2012-2016. * MLM – Multi-level marketing – is a marketing strategy in which the sales force is generated mainly from the recruited salespeople SHARE OF DISTANCE SALES Sources: analysis by CSR Enter PERFUMES & COSMETICS MARKET IN RUSSIA KEY FACTS The share of direct sales through catalogs is reducing in favor of Internet sales. According to CSR Enter estimation this channel will grow about 2 times faster than the total market with CAGR of about 30% in 2012-2016. 20 KEY SALES CHANNELS %
  21. 21. 21 KEY FACTS q  Maximum peak of retail sales in Russia within a year has been reached in December (sales are 2.3x of monthly average) and in March (1,4x of monthly average) q  Minimum peaks of retail sales in Russia within a year have been reached in April and May SEASONALITY OF RETAIL SALES * 2012 Source: analysis by CSR Enter SEASONALITY PERFUMES & COSMETICS MARKET IN RUSSIA 0.8 1.1 1.4 0.6 0.6 0.7 0.9 0.9 0.8 1.1 0.9 2.3 * One «unit» stands for the arithmetic mean value of market sales per annum divided into 12 months. Consequently the diagram illustrates real distribution of annual sales by months. PERFUMES & COSMETICS MARKET IN RUSSIA SEASONALITY SEASONALITY OF RETAIL SALES * 2012 KEY FACTS Maximum peak of retail sales in Russia within a year has been reached in December (sales are 2.3x of monthly average) and in March (1,4x of monthly average) Minimum peaks of retail sales in Russia within a year have been reached in April and May Source: analysis by CSR Enter* One «unit» stands for the arithmetic mean value of market sales per annum divided into 12 months. Consequently the diagram illustrates real distribution of annual sales by months.
  22. 22. 22 The core sales channel - OFFLINE SpecialistRetailersMixedProductRangeRetailers The core sales channel - ONLINE Producers practicing direct sales through catalogue and multichannel marketing * Drogerie retailers - non-food retail chains specialized in day-to-day goods including perfumes, cosmetics, home care etc. Multichannel retailers Online retailers Traditional specialist retailers Selection - 15 companies with revenue more than 300 mln RUR in 2012 disclosed in mass media and Spark Interfax Drogerie retailers The size corresponds for total consolidated revenue of each company (without VAT) in 2012. Source: analysis by CSR Enter KEY TYPES OF THE MARKET PLAYERS PERFUMES & COSMETICS MARKET IN RUSSIA Avon Oriflame L’Etoile Amway Rive Gauche Ile De Beaute Mary Kay Faberlic Yves Rocher Sangi Stil Magnit Cosmetics Ulybka Radugi E5.ru Ozon.ru Enter
  23. 23. 23 Average number of weekly unique visitors within first 13 weeks in 2013, in thousand Averagegrowthrateofweeklytrafficwithinfirst13weeksin2013,% DIY (Do It Yourself) Furniture Kids’ Products Household Goods Sports & Outdoor Jewelry PERFUMES & COSMETICS -3% -2% -1% 0% 1% 2% 3% 4% 5% 6% Average = 922 200 900100 2000 3000 Auto Parts Electronics & Home Appliances Clothes & Footwear Mixed Product Range * Traffic of retail segments is estimated by top-3 companies in each segment. WEEKLY TRAFFIC OF KEY MARKET PLAYERS WEBSITES IN 1st QUARTER 2013 PERFUMES & COSMETICS MARKET IN RUSSIA Average = 2,4% Source: monitoring of internet retailers by CSR Enter GET NOWTOP-66 ONLINE-RETAILERSWEEKLY TRAFFIC REPORTRESEARCH@ENTER.RU PERFUMES & COSMETICS MARKET IN RUSSIA WEEKLY TRAFFIC OF KEY MARKET PLAYERS WEBSITES IN 1ST QUARTER 2013
  24. 24. 24 WEEKLY TRAFFIC OF KEY PLAYERS WEBSITES IN 1st QUARTER 2013 Unique weekly visitors, in thousand Average growth rate: 1,1% Average growth rate: 2,0% Average growth rate: 1,6% Average growth rate: 6,8% Source: monitoring of internet retailers by CSR Enter PERFUMES & COSMETICS MARKET IN RUSSIA WEEKLY TRAFFIC OF KEY MARKET PLAYERS WEBSITES IN 1st QUARTER 2013 121 121 123 121 139 126 130 125 184 195 154 179 154 1 2 3 4 5 6 7 8 9 10 11 12 13 Number of a week etoya.ru letu.ru shop.rivegauche.ru среднее Ile De Beaute (etoya.ru) L’Etoile (letu.ru) Rive Gauche (shop.rivegauche.ru) Average
  25. 25. PRODUCT RANGE BREAKDOWN* IN ACCORDANCE WITH THE SKU AVAILABLE ON THE ONLINE RETAILERS WEBSITES * According to monitoring of internet retailers by CSR Enter in March 2013. Selection – «Il de Beaute», «L’Etoile», «Rive Gauche», «Ozon.ru», «Enter.ru» websites MAKE-UP PRODUCTS SKIN & BODY CARE PRODUCTS PERFUMES PRODUCTSHAIR CARE PRODUCTS KEY FACTS q  The most significant number of SKU are goods from 3 categories: Make-up Products (34% of the product range*), Body & Facial Care products (34%) and Perfumes products (21%) – in total almost 90% of the online retailers’ product mix ONLINE RETAILERS PRODUCT RANGE STRUCTURE 21% 2% 9% 34% 34% GIFT SETS Source: monitoring of internet retailers by CSR Enter ONLINE RETAILERS PRODUCT RANGE STRUCTURE PRODUCT RANGE BREAKDOWN* in accordance with the sku available on the online retailers websites KEY FACTS The most significant number of SKU are goods from 3 categories: Make-up Products (34% of the product range*), Body & Facial Care products (34%) and Perfumes products (21%) – in total almost 90% of the online retailers’ product mix * According to monitoring of internet retailers by CSR Enter in March 2013. Selection — «Il de Beaute», «L’Etoile», «Rive Gauche», «Ozon. ru», «Enter.ru» websites Source: monitoring of internet retailers by CSR Enter 25 GET NOWINTERNET RETAILERSPRODUCT RANGE MONITORINGRESEARCH@ENTER.RU
  26. 26. 26 The classification is disclosed on «methodology» slide Economy 26% Mid – 15% Premium 31% Mid + 14% Economy 19% Premium 31% Economy 5% Premium 40% Mid 12% Economy 21% L’ETOILE EL DE BEAUTE RIVE GAUCHE OZON.RU Economy 50% THE MARKET * Premium 18% Mid + 14% Mid 16% Mid – 19% Economy 33% ENTER.RU Premium 53% Mid – 16% Mid 18% Mid + 16% Mid + 18% Mid 16% Mid – 8% Mid + 15% Mid – 12% Premium 11% Mid + 7% Mid 11% Mid – 21% Mid 14% * According to total number of SKU of the following companies: «Il de Beaute», «L’Etoile», «Rive Gauche», «Ozon.ru», «Enter.ru» ONLINE RETAILERS PRODUCT RANGE PRICE RANGES (ACCORDING TO THE NUMBER OF SKU) Source: monitoring of internet retailers by CSR Enter
  27. 27. KEY FACTS §  Consolidated share of top-10 brands (according to the number of SKU*) is just about 20% Dior 3% Clarins 3% Shiseido 3% Clinique 2% L'Oreal Paris 2% Estee Lauder 2% Collistar 2% Payot 2% Givenchy 2% Guerlain 2% Other 80% ONLINE RETAILERS PRODUCT RANGE TOP-10 BRANDS (ACCORDING TO NUMBER OF SKUs) Source: monitoring of internet retailers by CSR Enter* According to total number of SKU of the following companies: «Il de Beaute», «L’Etoile», «Rive Gauche», «Ozon.ru», «Enter.ru» KEY FACTS Consolidated share of top-10 brands (according to the number of SKU*) is just about 20% * According to total number of SKU of the following companies: «Il de Beaute», «L’Etoile», «Rive Gauche», «Ozon.ru», «Enter.ru» Source: monitoring of internet retailers by CSR Enter 27
  28. 28. Traditional offline market develops steadily. It’s occupied by federal players competing in quantity and quality of exclusive purchasing contracts and actively promoting private labels. Detailed researches indicate that the premium class perfume is equally demand by customers both in large cities and regions. Regional consumers with lower income are ready to spend for perfumes however they do really save money on care cosmetics and make- up products. During the high season buyers prefer to buy premium class perfumes as a gift (especially in December) Internet sales of perfumes and cosmetics are developing intensively. Enter’ analytics demonstrate that the conversion of products in this category is 10% higher compared to the other products. Most likely it happens due to the fact that Internet consumer comes for the very particular product: favorite perfume, tested tone or hair-dyes. Nevertheless the major brands and retailers give preference to the traditional offline retailing, being very watchful to the web-shop window. That definitely stops the development of e-commerce and stimulates shadow market. OFELIA SAMEDOVA Director of «Jewelry, Watches & Perfumes» Department ENTER OUTLOOK 28
  29. 29. SEGMENT ANALYSIS JEWELRY & WATCHES IN PARTNERSHIP WITH «LUCAS ZOLOTO» GET NOWSEGMENT ANALYSIS OF INTERNATIONAL & RUSSIAN RETAIL MARKETSRESEARCH@ENTER.RU
  30. 30. 30 METHODOLOGY «Worldwide markets» section is based on the data provided by National Statistical Services: US Census («Jewelry stores» category) and National Bureau of Statistics of China («Gold and Silver jewelries» category). Historical sales are calculated in current prices (including inflation), forecast sales are calculated according to McKinsey and Euromonitor estimations. «Online-retailers product range» section is based on the analysis of 5 selected companies: «Sunlight», «Magicgold. ru», «MIUZ.ru», «Almaz-holding.ru», «Enter.ru» – in accordance with the SKU available on the website. Price ranges are calculated according to present classification: Economy Mid Premium Luxury Jewelry with precious stones Rings < 6 500 6 501 ₋  13 000 13 001 ₋  25 000 > 25 001 Jewelry with precious stones Earrings < 9 500 9 501 ₋  23 000 23 001 ₋  30 000 > 30 001 Jewelry with precious stones Neckwear < 3 500 3 501 ₋  12 000 12 001 ₋  27 000 > 27 001 Jewelry with semi-precious stones Rings < 4 000 4 001 ₋  8 500 > 8 501 Jewelry with semi-precious stones Earrings < 8 000 8 001 ₋  12 500 > 12 501 Jewelry with semi-precious stones Neckwear < 3 000 3 001 ₋  5 000 > 5 001 Jewelry with artificial gemstones Rings < 3 000 3 001 ₋  6 000 > 6 001 Jewelry with artificial gemstones Earrings < 5 000 5 001 ₋  9 000 > 9 001 Jewelry with artificial gemstones Neckwear < 2 000 2 001 ₋  3 500 > 3 501 Jewelry without stones Rings < 3 000 3 001 ₋  6 000 > 6 001 Jewelry without stones Earrings < 5 000 5 001 ₋  9 000 > 9 001 Jewelry without stones Chains < 5 000 5 001 ₋  8 000 > 8 001 Jewelry without stones Wristwear < 3 500 3 501 ₋  6 500 > 6 501 Jewelry without stones Neckwear < 2 000 2 001 ₋  3 500 > 3 501 «Worldwide markets» section is based on the data provided by National Statistical Services: US Census («Jewelry stores» category) and National Bureau of Statistics of China («Gold and Silver jewelries» category). Historical sales are calculated in current prices (including inflation), forecast sales are calculated according to McKinsey and Euromonitor estimations. «Online-retailers product range» section is based on the analysis of 5 selected companies: «Sunlight», «Magicgold.ru», «MIUZ.ru», «Almaz-holding.ru», «Enter.ru» – in accordance with the SKU available on the website. Price ranges are calculated according to present classification: METHODOLOGY
  31. 31. 31 WORLDWIDE MARKETS JEWELRY MARKET IN THE US USA Retail Sales*, USD bln Share of Jewelry in Non-Food Retail While the projected CAGR of Jewelry sales in the US 2012-2016 is 4%, the same rate for Internet sales is about 10%. * In current prices (including inflation). Forecast sales are based on the growth rates at constant prices (Euromonitor) and inflation (US Census). Sources: US Census, Euromonitor, analysis of CSR Enter KEY FACTS 1,4% 2012 26.0 26.4 29.1 30.7 31.9 33.1 34.4 35.8 5.8% 6.1% 6.1% 6.2% 6.6% 7.0% 7.4% 7.8% 2009 2010 2011 2012 2013 2014 2015 2016 Продажи, млрд. долл. Доля онлайн-ритейла, % CAGR 2009-2012 = 6% CAGR 2012-2016 = 4% Retail Sales, USD bln Share of Internet Sales, % 2013F 2014F 2015F 2016F
  32. 32. 32 WORLDWIDE MARKETS JEWELRY MARKET IN CHINA CHINA Retail Sales*, USD bln KEY FACTS While the projected CAGR of total jewelry sales in China for the period of 2012-2016 is 16%, the same ratio for Internet sales is more than 40%. The share of Internet sales remains insignificant vs the background of the traditional format, but will double for the further periods. * In current prices (including inflation). Forecast sales are based on the growth rates at constant prices (Euromonitor) and inflation (NBSC). Exchange rate: 1 USD = 6,3091 RMB. Sources: NBSC, analysis by CSR Enter Share of Jewelry in Non-Food Retail 2,7% 2012 13.7 20.0 29.1 34.8 40.2 46.5 53.8 62.2 0.3% 0.2% 0.2% 0.3% 0.4% 0.4% 0.5% 0.6% 2009 2010 2011 2012 2013П 2014П 2015П 2016П Продажи, млрд. долл. Доля онлайн-ритейла, % CAGR 2009-2012 = 36% CAGR 2012-2016 = 16% Retail Sales, USD bln Share of Internet Sales, % 2013F 2014F 2015F 2016F
  33. 33. 33 JEWELRY & WATCHES MARKET IN RUSSIA SALES AND GROWTH RATES KEY FACTS Projected CAGR of total jewelry sales, watches and costume jewelry in Russia is about 17% for the period of 2012-2016. Thus sales of these products are to exceed 14 bln USD by 2016. * In current prices (including inflation). Exchange rate: 1 USD = 31,065 RUR. Sources: Rosstat, Euromonitor, analysis by CSR Enter Share of Jewelry in Non-Food Retail 2012 2,0% RUSSIA Retail Sales in Current Prices*, USD bln 0.5 0.5 0.6 0.6 0.7 0.7 0.8 0.91.0 1.2 1.4 1.6 1.9 2.2 2.5 2.9 3.3 4.0 4.6 5.3 6.3 7.4 8.8 10.5 2009 2010 2011 2012 2013П 2014П 2015П 2016П Часы Бижутерия Ювелирные украшения CAGR 2009-2012 = 16% CAGR 2012-2016 = 17% Watches Costume Jewelry Jewelry 2013F 2014F 2015F 2016F
  34. 34. 34 Growth in constant prices, % Growth in current prices, % MARKET VOLUME AND INFLATION * The data rate of «Sports & Outdoor» sales in 1Q 2012 is incomparable with 1Q 2011 because of Rosstat methodological change. 1Q 2012 to 1Q 2011 1Q 2013 to 1Q 2012 Sources: Rosstat, analysis by CSR Enter JEWELRY & WATCHES MARKET IN RUSSIA n/a* 20.1% 10.7% 8.8% 3.0% 6.5% 9.6% 5.2% 3.4% 3.0% 37.5% 28.1% 24.4% 13.1% 11.8% 11.7% 11.3% 10.0% 7.4% 9.5% 8.8% -1.9% 7.3% 14.2% 9.8% 8.3% 3.5% 24.4% 19.8% 14.9% 22.7% 14.0% 17.1% 14.9% 12.6% Автозапчасти Спортивные товары Игры и игрушки Ювелирные украшения и часы Товары для дома и DIY БТиЭ Косметика и парфюмерия Мебель Одежда и обувь Auto Parts Sports & Outdoor Toys & Games Jewelry & Watches Household Goods & DIY Electronics & Home Appliances Perfumes & Cosmetics Furniture Clothes & Footwear
  35. 35. 35 JEWELRY & WATCHES MARKET IN RUSSIA SHARE OF DISTANT SALES KEY SALES CHANNELS, % KEY FACTS The share of Internet sales of jewelry in 2012 is about 1% but the segment remains one of the most promising in e-commerce in general Sources: analysis by CSR Enter, Euromonitor INTERNET OTHER RETAILERS SPECIALIST JEWELRY RETAILERS ~ 1% ~50% ~49%
  36. 36. 36 JEWELRY & WATCHES MARKET IN RUSSIA SEASONALITY SEASONALITY OF RETAIL SALES * 2012 KEY FACTS Maximum peak of retail sales in Russia within a year has been reached in December (sales are 2.3x of monthly average), January (2x of monthly average) and traditionally in March (1,7x of monthly average). Source: Partner of the research company «Lucas Zoloto» * One «unit» stands for the arithmetic mean value of market sales per annum divided into 12 months. Consequently the diagram illustrates real distribution of annual sales by months. 2.0 0.7 1.7 0.7 0.6 0.7 0.8 0.6 0.4 0.7 1.0 2.3 January February March April May June July AugustSeptember October November December
  37. 37. 37 JEWELRY & WATCHES MARKET IN RUSSIA MARKET STRUCTURE SALES BREAKDOWN (2012): By material type KEY FACTS Sales of gold and silver jewelry makes the largest share of sales of the overall market (about 44%), with 95% of similar products produced in Russia. Also, 80% of products with colored stones are produced in the domestic market. Exactly the opposite situation is in the field of diamond products (only 30% of the products sold were produced in Russia in 2012) Source: Partner of the research company «Lucas Zoloto» JEWELRY WITH JEMSJEWELRY WITH DIAMONDS OTHER JEWELRY GOLD, SILVER etc. 28% 28% 44% 70%-imported goods 30%-domestic goods 5%- imported goods 95%- domestic goods
  38. 38. 38 JEWELRY & WATCHES MARKET IN RUSSIA MARKET STRUCTURE SALES BREAKDOWN (2012): By product type KEY FACTS The key types of products are rings, as well as the neck-accessories, occupying more than 60% of the market in terms of sales. Source: Euromonitor NECKWEAR RINGS EARRINGS WRISTWEAR OTHER 36% 27% 14% 16% 7%
  39. 39. 39 Ozon.ru ENTER 585 Yashma Adamas MIUZ Russkie Samotsvety Jenavi Accessorize Selena Krastsvetmet Alltime.ru Bestwatch.ru Bronnitskiy uvelir Sunlight Specialist online- retailersCostume jewelry manufacturers with multichannel retail network Manufacturers with retail stores JEWELRY & WATCHES MARKET IN RUSSIA KEY TYPES OF THE MARKET PLAYERS The core sales channel - OFFLINE SpecialistRetailersMixedProductRangeRetailers The core sales channel - ONLINE Selection - 15 companies with revenue more than 300 mln RUR in 2012 disclosed in mass media and Spark Interfax The size corresponds for total consolidated revenue of each company (without VAT) in 2012. Source: analysis by CSR Enter Multichannel retailers Online retailers
  40. 40. 40 DIY (Do It Yourself) Furniture Kids’ Products Household Goods Sports & Outdoor JEWELRY Perfumes & Cosmetics -3% -2% -1% 0% 1% 2% 3% 4% 5% 6% Average = 922 200 900100 2000 3000 JEWELRY & WATCHES MARKET IN RUSSIA WEEKLY TRAFFIC OF KEY MARKET PLAYERS WEBSITES IN 1st QUARTER 2013 Average number of weekly unique visitors within first 13 weeks in 2013, in thousand Averagegrowthrateofweeklytrafficwithinfirst13weeksin2013,% * Traffic of retail segments is estimated by top-3 companies in each segment. Source: monitoring of internet retailers by CSR Enter Auto Parts Electronics & Home Appliances Clothes & Footwear Mixed Product Range Average = 2,4% JEWELRY & WATCHES MARKET IN RUSSIA WEEKLY TRAFFIC OF KEY MARKET PLAYERS WEBSITES IN 1ST QUARTER 2013 GET NOWTOP-66 ONLINE-RETAILERSWEEKLY TRAFFIC REPORTRESEARCH@ENTER.RU
  41. 41. 41 85 105 128 147 144 147 146 147 166 187 156 109 135 1 2 3 4 5 6 7 8 9 10 11 12 13 Number of a week AllTime.ru bestwatch.ru miuz.ru среднее Average Growth Rate: 7,5% Average Growth Rate: 2,0% Average Growth Rate: -3,1% Average Growth Rate: 3,9% AllTime.ru Bestwatch.ru Miuz.ru Average JEWELRY & WATCHES MARKET IN RUSSIA WEEKLY TRAFFIC OF KEY MARKET PLAYERS WEBSITES IN 1st QUARTER 2013 WEEKLY TRAFFIC OF KEY PLAYERS WEBSITES IN 1st QUARTER 2013 Unique weekly visitors, in thousand Source: monitoring of internet retailers by CSR Enter
  42. 42. ONLINE RETAILERS PRODUCT RANGE PRODUCT MIX PRODUCT RANGE BREAKDOWN * BY MATERIAL TYPE in accordance with the sku available on the online retailers websites KEY FACTS The largest amount of commodity categories by type of material takes Products with precious stones (63% of the product range *) * According to monitoring of internet retailers by CSR Enter in March 2013. Selection – «Sunlight», «Almaz-holding.ru», «Magicgold.ru», «Miuz.ru» websites Source: monitoring of internet retailers by CSR Enter 42 JEWELRY WITHOUT STONES JEWELRY WITH ARTIFICIAL GEMSTONES 13% 13% 11% 63% JEWELRY WITH SEMI- PRECIOUS STONES JEWELRY WITH PRECIOUS STONES * According to monitoring of internet retailers by CSR Enter in March 2013. Selection – «Sunlight», «Almaz-holding.ru», «Magicgold.ru», «Miuz.ru» websites GET NOWINTERNET RETAILERSPRODUCT RANGE MONITORINGRESEARCH@ENTER.RU
  43. 43. KEY FACTS The majority of products (among available for purchase SKU on the selected websites) are rings (44% of the product range*), earrings (34%) and neckwear (15%), which together account for 93% of the product mix 43 ONLINE RETAILERS PRODUCT RANGE PRODUCT MIX PRODUCT RANGE BREAKDOWN * BY PRODUCT TYPE in accordance with the sku available on the online retailers websites * According to monitoring of internet retailers by CSR Enter in March 2013. Selection – «Sunlight», «Almaz-holding.ru», «Magicgold.ru», «Miuz.ru» websites Source: monitoring of internet retailers by CSR Enter 34% 44% 15% 3% 4% NECKWEAR EARRINGS CHAINS WRISTWEAR RINGS
  44. 44. 44 ECONOMY 9% MID 37% PREMIUM 33% LUXURY 21% Economy 6% Mid 34% Luxury 8% Premium 43% Mid 44% Premium 31% Mid 36% Luxury 35% Premium 25% Economy 3% SUNLIGHT MAGICGOLD MIUZ ALMAZ HOLDING Economy 19% Premium 33% Luxury 18% THE MARKET* Luxury 2% Mid 25% Economy 38% ENTER.RU Luxury 22% Premium 35% Economy 4% Mid 31% ONLINE RETAILERS PRODUCT RANGE PRICE RANGES (ACCORDING TO THE NUMBER OF SKU) The classification is disclosed on «methodology» slide * According to total number of SKU of the following companies: «Enter.ru», «Sunlight», «Almaz-holding.ru», «Magicgold.ru», «Miuz.ru» Source: monitoring of internet retailers by CSR Enter
  45. 45. ENTER OUTLOOK Conservatism is the major feature of the Russian jewelry industry and its players. JUNWEX, the main industry exhibition, demonstrates it perfectly. The key Russian producers are not keen to make any design experiments, price making experiments and year by year the produce the same best-selling SKUs, which are actually sold in the very same stores for the very same target audience. It’s obvious that the Tiffany-style ring will always stay up-to-date as little black dress by Chanel. Nevertheless I’m sure that those players who could «gain the time» will win. As the jewelry purchase is not an investment anymore. It’s proved by active growth of 17-sided diamonds sales share in comparison to the traditional 57-sided diamonds; sales of 375 standard jewelry, and silver jewelry with diamonds. In contrast to the most Russian producers, Hong Kong manufacturers optimize the self-cost of jewelry using computer modeling, the latest technology in the production, and reducing «manual» work. The Italian companies do make experiments with the design without increasing the weight of products (and therefore its price), and using tricks such as, for example, less weighted gold. I think that the future of the jewelry industry in Russia belongs to the manufacturers which could take into account jewelry production cost-optimizing technologies, change the design and involve young and talented designers, working with the latest promotion channels. By now the major sales are made offline. However, based on 2012 results consumers can and are ready to purchase jewelry online in case of: a) Trusted website b) Interesting in and convenient offer (lack of time for offline shopping). Time, correct product range, professional e-marketing will drive the online segment. OFELIA SAMEDOVA Director of «Jewelry, Watches & Perfumes» Department 45
  46. 46. SEGMENT ANALYSIS FURNITURE GET NOWSEGMENT ANALYSIS OF INTERNATIONAL & RUSSIANRETAIL MARKETSRESEARCH@ENTER.RU
  47. 47. 47 METHODOLOGY «Worldwide markets» section is based on the data provided by National Statistical Services: US Census («Furniture stores» category) and National Bureau of Statistics of China («Furniture» category). Historical sales are calculated in current prices (including inflation), the forecast sales are calculated according to Euromonitor estimations. «Online-retailers product range» section is based on the analysis of 12 selected companies: «Hoff», «HomeMe.ru», «Mebelrama.ru», «Mnogomeb.ru», «Toris.ru», «Aquaton», «Dyatkovo», «Ormatek», «Stolline», «Stolplit», «Shature. com», «Enter.ru» – in accordance with the SKU available on the website. Price ranges are calculated according to present classification: Economy Mid - Mid Mid+ Premium Mattresses < 7 000 7 001 -  12 000 12 001 -  20 000 20 001 -  30 000 > 30 001 Furniture set for bathroom < 10 000 10 001 -  18 000 18 001 -  36 000 36 001 -  50 000 > 50 001 Furniture set for living room < 10 000 10 001 -  20 000 20 001 -  40 000 40 001 -  80 000 > 80 001 Furniture set for children room < 10 000 10 001 -  20 000 20 001 -  30 000 30 001 -  50 000 > 50 001 Office chairs < 3 000 3 001 -  8 000 8 001 -  15 000 15 001 -  25 000 > 25 001 Computer desk < 1 000 1 001 -  3 000 3 001 -  8 000 8 001 -  15 000 > 15 001 Furniture set for kitchen < 8 000 8 001 -  15 000 15 001 -  35 000 35 001 -  60 000 > 60 001 Soft furniture (Sofas) < 15 000 15 001 -  25 000 25 001 -  45 000 45 001 -  70 000 > 70 001 Furniture set for dining room (table+ 4 chairs) < 5 000 5 001 -  10 000 10 001 -  20 000 20 001 -  40 000 > 40 001 Bedrooms (bed + 2 bedside tables, wardrobe, bureau, mirror) < 20 000 20 001 -  40 000 40 001 -  70 000 70 001 -  100 000 > 100 001
  48. 48. 48 WORLDWIDE MARKETS FURNITURE MARKET IN THE US USA Retail Sales*, USD bln Share of Furniture in Non-Food Retail While the projected CAGR of total furniture sales in the USs is 3% in 2012-2016, the same rate for Internet sales is almost twice higher (6%). * In current prices (including inflation). Forecast sales are based on the growth rates at constant prices (Euromonitor) and inflation (US Census). Источники: US Census, Euromonitor, analysis of CSR Enter KEY FACTS 4,2% 2012 86.1 87.2 88.8 95.6 98.7 101.9 105.2 108.6 2.8% 2.9% 3.0% 3.0% 3.1% 3.2% 3.3% 3.4% 2009 2010 2011 2012 2013 2014 2015 2016 Продажи, млрд. долл. Доля онлайн-ритейла, % CAGR 2009-2012 = 4% CAGR 2012-2016 = 3% Retail Sales, USD bln Share of Internet Sales, % 2013F 2014F 2015F 2016F
  49. 49. 49 WORLDWIDE MARKETS FURNITURE MARKET IN CHINA CHINA Retail Sales*, USD bln KEY FACTS The projected CAGR of total furniture sales in China is 16% for the period of 2012-2016, meanwhile the same ratio for Internet sales is about 42%, which indicated that online segment of this market in China is growing 2.5 times faster than the whole market. * In current prices (including inflation). Forecast sales are based on the growth rates at constant prices (Euromonitor) and inflation (NBSC). Exchange rate: 1 USD = 6,3091 RMB. Sources: NBSC, analysis by CSR Enter Share of Furniture in Non-Food Retail 5,8% 2012 47.5 55.0 63.8 73.7 85.3 98.6 114.0 131.8 0.2% 0.6% 1.1% 1.2% 1.5% 1.9% 2.3% 2.8% 2009 2010 2011 2012 2013 2014 2015 2016 Продажи, млрд. долл. Доля онлайн-ритейла, % CAGR 2009-2012 = 16% CAGR 2012-2016 = 16% Retail Sales, USD bln Share of Internet Sales, % 2013F 2014F 2015F 2016F
  50. 50. FURNITURE MARKET IN RUSSIA SALES AND GROWTH RATES KEY FACTS The projected CAGR of total furniture sales in Russia is about 12% for the period of 2012- 2016, while Internet sales are to grow by 20% per year. * In current prices (including inflation). Exchange rate: 1 USD = 31,065 RUR. Sources: Rosstat, Euromonitor, analysis by CSR Enter Share of Furniture in Non-Food Retail 3,1% 2012 RUSSIA Retail Sales in current prices*, USD bln 50 7.9 8.6 9.8 11.3 12.7 14.3 16.1 18.1 2009 2010 2011 2012П 2013П 2014П 2015П 2016П CAGR 2009-2012 = 13% CAGR 2012-2016 = 12% 2013F 2014F 2015F 2016F
  51. 51. 51 Growth in constant prices, % Growth in current prices, % MARKET VOLUME AND INFLATION * The data rate of «Sports & Outdoor» sales in 1Q 2012 is incomparable with 1Q 2011 because of Rosstat methodological change. 1Q 2012 to 1Q 2011 1Q 2013 to 1Q 2012 Sources: Rosstat, analysis by CSR Enter PERFUMES & COSMETICS MARKET IN RUSSIA n/a* 20.1% 10.7% 8.8% 3.0% 6.5% 9.6% 5.2% 3.4% 3.0% 37.5% 28.1% 24.4% 13.1% 11.8% 11.7% 11.3% 10.0% 7.4% 9.5% 8.8% -1.9% 7.3% 14.2% 9.8% 8.3% 3.5% 24.4% 19.8% 14.9% 22.7% 14.0% 17.1% 14.9% 12.6% Автозапчасти Спортивные товары Игры и игрушки Ювелирные украшения и часы Товары для дома и DIY БТиЭ Косметика и парфюмерия Мебель Одежда и обувь Auto Parts Sports & Outdoor Toys & Games Jewelry & Watches Household Goods & DIY Electronics & Home Appliances Perfumes & Cosmetics Furniture Clothes & Footwear
  52. 52. FURNITURE MARKET IN RUSSIA SHARE OF DISTANT SALES KEY SALES CHANNELS,* % KEY FACTS The share of furniture sales through Internet channel in Russia is only about 4% (Projected CAGR for the period of 2012-2016 is about 20%). Sources: analysis by CSR Enter, Euromonitor 52 INTERNET OTHER RETAILERS Mixed product range retailers Retailers specialized in Household goods Supermarkets SPESIALIST FURNITURE RETAILERS ~ 4% ~62% ~34%
  53. 53. 53 FURNITURE MARKET IN RUSSIA SEASONALITY SEASONALITY OF RETAIL SALES * 2012 KEY FACTS Peak sales of furniture are traditionally autumn and New Year period, from September to the end of the year when the market generates nearly half of annual sales. The period of the most notable decline is summer, due to the long holydays. Source: analysis by CSR Enter* One «unit» stands for the arithmetic mean value of market sales per annum divided into 12 months. Consequently the diagram illustrates real distribution of annual sales by months. 0.9 0.8 0.8 0.7 0.7 0.7 0.8 1.0 1.1 1.3 1.5 1.7 January February March April May June July AugustSeptember October November December
  54. 54. 54 FURNITURE MARKET IN RUSSIA MARKET STRUCTURE SALES BREAKDOWN 2012 KEY FACTS According to CSR Enter estimation, the structure of the furniture market remains fairly stable. Thus, the share of soft and cabinet furniture is over 70%, meanwhile sales of kitchen furniture are actively developing (share for the 2012 — about 15%). Source: analysis by CSR Enter KITCHEN FURNITURE CABINET FURNITURESOFT FURNITURE 37% 36% 15% 12% OTHERS
  55. 55. 55 Specialist online- retailers without showrooms Manufacturers with retail stores Retailers without production capacities FURNITURE MARKET IN RUSSIA KEY TYPES OF THE MARKET PLAYERS The core sales channel - OFFLINE SpecialistRetailersMixedProductRangeRetailers The core sales channel - ONLINE Selection - 15 companies with revenue more than 300 mln RUR in 2012 disclosed in mass media and Spark Interfax The size corresponds for total consolidated revenue of each company (without VAT) in 2012. Source: analysis by CSR Enter Multichannel retailers ENTER IKEA HomeMe.ruStolplit Shatura Lazurit Maria Kuhnistroy Stokdivanov.ru Mnogomeb.ru Miass-mebel Hoff А-stil Mebelrama.ru Yuterra
  56. 56. 56 DIY (Do It Yourself) FURNITURE Kids’ Products Household Goods Sports & Outdoor Jewelry Perfumes & Cosmetics -­‐3%   -­‐2%   -­‐1%   0%   1%   2%   3%   4%   5%   6%   Average = 922 200 900100 2000 3000 FURNITURE MARKET IN RUSSIA WEEKLY TRAFFIC OF KEY MARKET PLAYERS WEBSITES IN 1st QUARTER 2013 Average number of weekly unique visitors within first 13 weeks in 2013, in thousand Averagegrowthrateofweeklytrafficwithinfirst13weeksin2013,% * Traffic of retail segments is estimated by top-3 companies in each segment. Source: monitoring of internet retailers by CSR Enter Auto Parts Electronics & Home Appliances Clothes & Footwear Mixed Product Range Average = 2,4% FURNITURE MARKET IN RUSSIA WEEKLY TRAFFIC OF KEY MARKET PLAYERS WEBSITES IN 1ST QUARTER 2013 GET NOWTOP-66 ONLINE-RETAILERSWEEKLY TRAFFIC REPORTRESEARCH@ENTER.RU
  57. 57. 57 84 93 106 98 122 117 105 109 111 103 110 126 132 1 2 3 4 5 6 7 8 9 10 11 12 13 Number of a week Mebelrama.ru askona.ru shatura.com среднее Average Growth Rate: 11,7% Average Growth Rate: 3,9% Average Growth Rate: 0,0% Average Growth Rate: 4,8% Mebelrama.ru Askona.ru Shatura (shatura.ru) Average FURNITURE MARKET IN RUSSIA WEEKLY TRAFFIC OF KEY MARKET PLAYERS WEBSITES IN 1st QUARTER 2013 WEEKLY TRAFFIC OF KEY PLAYERS WEBSITES IN 1st QUARTER 2013 Unique weekly visitors, in thousand Source: monitoring of internet retailers by CSR Enter
  58. 58. 58 18% 16% 14%13% 11% 9% 6% 5% 5% 2% 1% Мягкая мебель Мебель для спальни Мебель для кухни Мебель для гостиной Мебель для домашнего кабинета Мебель для прихожей Мебель для детской Мебель для ванной Матрасы Шкафы-купе Мебель из ротанга Soft furniture Bedroom furniture Kitchen furniture Living room furniture Home office furniture Hall furniture Children room furniture Bathroom furniture Matrasses Wardrobes Rattan furniture ONLINE RETAILERS PRODUCT RANGE STRUCTURE PRODUCT RANGE BREAKDOWN * in accordance with the sku available on the online retailers websites KEY FACTS The basic amount of product types available for purchase on selected websites are «soft furniture» (18% of the product range*), «Bedroom furniture» (16%) and «Kitchen furniture» (15%) which together account for almost 50% of the product range. * According to monitoring of internet retailers by CSR Enter in March 2013. Selection – «Hoff», «Mebelrama.ru», «HomeMe.ru» websites Source: monitoring of internet retailers by CSR Enter GET NOWINTERNET RETAILERSPRODUCT RANGE MONITORINGRESEARCH@ENTER.RU
  59. 59. 59 ECONOMY 15% MID– 22% MID 28% PREMIUM 16% MID + 19% Economy 6% Mid– 13% Premium 13% Mid + 32% Economy 15% Mid– 18% Mid + 22% Mid– 39% Mid 16% Economy 40% SHATURA MEBELRAMA.RU HOMEME.RUHOFF Economy 8% Mid– 18% Mid 21% Mid + 16% Premium 37% THE MARKET* Mid 37% Mid + 14% Mid 35% Mid– 32% Economy 17% ENTER.RU Premium 15% Mid 30% Mid + 4% Premium 1% Premium 2% Mid + 24% Mid 32% Mid– 31% Economy 12% STOLLINE Премиум 2%Premium 1% Mid 32% Mid– 37% Economy 24% STOLPLIT Премиум 2%Premium 1% Mid + 6% ONLINE RETAILERS PRODUCT RANGE PRICE RANGES (ACCORDING TO THE NUMBER OF SKU) The classification is disclosed on «methodology» slide * According to total number of SKU of the following companies: «Enter.ru», «Hoff», «HomeMe.ru», «Mebelrama.ru», «Mnogomeb.ru», «Toris.ru», «Aquaton», «Dyatkovo», «Ormatek», «Stolline», «Stolplit», «Shature». Source: monitoring of internet retailers by CSR Enter
  60. 60. ENTER OUTLOOK Today multichannel (offline and online) sales of furniture develop rapidly. The perspectives of the furniture market in Internet are obvious. Both producers and retailers continue to develop e-sales. Medium and small companies of the market consider Internet-related projects mainly as a «trial» and try to catch the trend, while federal players already demonstrate positive results both in cabinet furniture and soft furniture. Enter’s furniture sales breakdown is practically the same as the market average. This allows to conclude that most consumers have no significant prejudice buying through internet, terminal, contact-center or catalogue. ANTON TERENTYEV Director of «Furniture» Department 60
  61. 61. SPECIAL FOCUS: WORLDWIDE BEST-PRACTICES BUSINESS MODELS KEY TRENDS PROFILES OF KEY INTERNATIONAL PLAYERS GET NOWANALYSIS OF INTERNATIONAL BEST-PRACTICES ANDRETAIL STRATEGIESRESEARCH@ENTER.RU
  62. 62. 62 INCREASING SHARE OF HIGH-MARGIN PRODUCTS Quick product range extension and expansion to different sales channels WORLDWIDE BEST-PRACTICES RETAIL STRATEGIES MIXED PRODUCT RANGE RETAILERS SPECIALIST RETAILERS Product range extension and sales channels diversification Product range extension due to acquisitions of retailers specialized on different products Expansion to different markets (В2В, С2С, loan facilities etc.) Target, Dangdang Sears, Amazon Tesco, Walmart Product range extension in related product categories Adding with extra services related to the products the company sells Carpetright, Leroy Merlin Ulta, Blue Nile IKEA DEVELOPING WITHIN CHOSEN MARKET SEGMENTS
  63. 63. 63 Revenue Structure of Target (2012) Revenue Structure of Sears Holdings (2012) Gradual increasing share of high- margin product categories («Perfumes & Cosmetics», «Apparel & Footwear», «Jewelry») due to decreasing share of low-margin categories WORLDWIDE BEST-PRACTICES RETAIL STRATEGIES - MIXED PRODUCT RANGE RETAILERS 22% 20% 19% 18% 23% 24% 25% 25% 20% 20% 19% 19% 16% 17% 19% 20% 19% 19% 19% 18% 2009 2010 2011 2012 Home Furnishings & Décor Food & Pet Supplies Apparel & Accessories, Jewelry & Costume Jewelry Health, Beauty & Household Essentials Electronics & Home Appliances, Sport & outdoor, Toys 49% 49% 49% 47% 28% 29% 29% 30% 14% 14% 14% 14% 8% 8% 8% 10% 2009 2010 2011 2012 Service and Other Food and Drug Apparel & Footwear, Jewelry, Costume Jewelry Electronics & Home Appliances, Auto Parts, Sport & outdoor, Toys
  64. 64. 64 ULTA SALON CHILDREN’S PLACEBLUE NILE BETER BED Wide range of extra services in the company outlets Unique service of providing customized products Wide range of stores (different locations); wide product range Purchase convenience and confidence in retailer LOYALTY Gaining client’s trust Forming a habit to purchase exactly in this companyTo meet client’s needs in self-actualization Customer acquisition WORLDWIDE BEST-PRACTICES RETAIL STRATEGIES – SPECIALIST RETAILERS
  65. 65. 65 WORLDWIDE BEST-PRACTICES PERFUMES & COSMETICS MARKET — KEY BUSINESS MODELS CHARACTERISTICSBUSINESS MODELS * Majority of products — private labels The main sales channel — chain of sales representatives (brokers) Lack of personal stationary retail outlets Internet — additional secondary sales channel with informational function (delivery — outsourcing) PRODUCERS PRACTICING DIRECT SALES & MULTI-LEVEL MARKETING Avon, Amway, Mary Kay, Faberlic TRADITIONAL OFFLINE RETAILERS DEVELOPING INTERNET SALES CHANNEL Sasa, Ulta Salon, Sephora, Perfumania Wide chain of offline owned stores Internet — valuable sales channel (wide product range) Online sales is growing comparably with total sales or faster ONLINE RETAILERS, «GROUP OF INTERNET SHOPS» Drugstore.com, Quidsi.com Umbrella brand for specialized internet websites within one large holding Each separate website has its own brand and product range Selling 3rd parties products; Lack of private labels * Without mixed product range retailers Source: analysis by CSR Enter
  66. 66. 66 WORLDWIDE BEST-PRACTICES PERFUMES & COSMETICS MARKET – TRENDS CUSTOMER LOYALTY PROGRAM & GIFT CERTIFICATES Stimulate customers to purchase more to get additional discounts, bonuses etc.1 FREE SAMPLES & GIFTS Free offer to try new production; Gifts after reaching the level of receipt2 RELATED PRODUCTS’ SETS Making a purchase much more easier for a customer (sometimes with offering additional discount)3 CUSTOMER COACHING Introducing the product range to costumers on special seminars, trainings and through specialized mass media (website, catalogue etc.) 4 ADDITIONAL PRIVATE CONSULTATING & BEAUTY SHOP SERVICES Attracting potential customers by relevant (to the product) services professional consultants, visagistes etc. 5 Source: analysis by CSR Enter
  67. 67. 67 Revenue – $2,2 bln 2012 * Capitalization – $6,2 bln By the end of 2012 * Number of countries – 1 Number of stores – 550 Number of employees: 16 000 By the end of 2012 * Specialization: Perfumes & Cosmetics, Beauty& Health products and services Revenue Structure: q  According to overall results in 2011 online sales increased by 27% to 2010 q  Share of online sales in the company revenue in 2011 came to 2% q  According to overall results in 2012 gross profit margin came to 38% q  More than 50% of total sales accounts for 11 million active users of the customer loyalty program q  10% of total area in the company stores is taken for beauty shops * 52 weeks within the year ended 02.02. Sources: the company official website http://www.ulta.com, Internetretailer.com, Bloomberg.com, analysis by CSR Enter OnlineOffline 2% 98% 1,085 1,223 1,455 1,776 2,220 46 68 119 196 280 4.3% 5.6% 8.2% 11.0% 12.6% -3,0% -1,0% 1,0% 3,0% 5,0% 7,0% 9,0% 11,0% 13,0% - 500 1 000 1 500 2 000 2 500 3 000 3 500 4 000 2008 2009 2010 2011 2012 Revenue, mln USD Operational profit, mln USD Operational profit margin, % WORLDWIDE BEST-PRACTICES ULTA SALON, COSMETICS & FRAGRANCES
  68. 68. 68 WORLDWIDE BEST-PRACTICES JEWELRY & WATCHES MARKET – KEY BUSINESS MODELS CHARACTERISTICSBUSINESS MODELS * Customization of purchase (a customer can make his own individual product: for instance to choose characteristics (such a setting) of a brilliant Focus on quality: providing certificates after purchase «INDIVIDUAL APPROACH» Blue Nile, Ross Simons, Zale «AUCTION TRADE» Bidz.com, JTV Auctions, Fallingstarauctions.com Focus on auctions (lasting several hours) – as a result increasing traffic on the companies’ websites English open auction (ascending-price action) – start from 1$ Dutch auction – start from maximum price, declining till somebody’s purchase «DISCOUNTING» Jewelry.com Majority of products are sold at a reduced price (comparing with prices in a store) sometimes with discount 30-50% Liquidation sales with discounts more than 50% * Without mixed product range retailers Source: analysis by CSR Enter
  69. 69. 69 INTERNATIONAL BEST-PRACTICES JEWELRY & WATCHES MARKET – TRENDS CUSTOMER COACHING Informing clients about jewelry through specialized website section – some kind of a library with information about, for instance, kinds of brilliants, gems etc. 1 CUSTOMIZED OFFERS A customer can chose any characteristics thus make his own individual product2 EXTRA JEWELRY SALON SERVICES To increase customer loyalty companies offer relevant care services or insurance3 PAWNSHOP Attracting new clients offering new service — change old jewelry to new one4 VISUALIZATION Focus on website interface as on one of the main sales channels — adding 3D review, attaching deep product characteristics and certificates 5 Source: analysis by CSR Enter
  70. 70. 70 Revenue – $400 mln 2012 * Capitalization – $478 mln By the end of 2012 * Number of countries – 45** Number of employees – 241 By the end of 2012 * Specialization: Jewelry Revenue Structure: q  According to overall results in 2012 total sales increased by 15% comparing to 2011 q  By the end of 2012 gross profit margin came to 19% q  1/3 of the company website traffic in 4th quarter 2012 came from mobile devices q  The company website interface gets capability to order customized product q  From 2013 Xiu.com is to sell Blue Nile products in China * 52 weeks within the year ended 30.12. ** Countries the company deliver to Sources: the company official website http://www.bluenile.com, Internetretailer.com, Bloomberg.com, analysis by CSR Enter ONLINE 100% WORLDWIDE BEST-PRACTICES BLUE NILE 295 302 333 348 400 16 19 21 17 12 5.4% 6.4% 6.4% 4.9% 3.1% -3,0% -2,0% -1,0% 0,0% 1,0% 2,0% 3,0% 4,0% 5,0% 6,0% 7,0% 0 100 200 300 400 500 600 700 800 900 1000 2008 2009 2010 2011 2012 Revenue, mln USD Operational profit, mln USD Operational profit margin, %
  71. 71. 71 WORLDWIDE BEST-PRACTICES FURNITURE MARKET – KEY BUSINESS MODELS CHARACTERISTICSBUSINESS MODELS * Only Internet sales – direct delivery to the client Collaboration with local partners for the quick delivery from their stores ONLINE RETAILERS SELLING OWN AND PARTNERS PRODUCTS Furniture.com TRADITIONAL OFFLINE RETAILERS DEVELOPING INTERNET SALES CHANNEL Haverty’s (USA), Carpetright (Great Britain), Cost plus Sofas (Great Britain), The Brick (Canada) PRODUCERS WITH OWN STORES, ALSO DEVELOPING INTERNET SALES CHANNEL IKEA, Rooms To Go (USA), Crate&Barrel (USA) Wide chain of offline personal stores Internet – valuable sales channel (wide product range) Online sales is growing comparably with total sales or faster Majority of products - private labels The main sales channel – chain of own stores Internet – additional secondary sales channel with informational function (delivery – outsourcing) Source: analysis by CSR Enter
  72. 72. 72 INTERNATIONAL BEST-PRACTICES FURNITURE MARKET – TRENDS ROOM DESIGINING Separate section of website – specialized service that helps to make arrangement of furniture before purchase 1 CUSTOMIZED OFFERS A customer can chose any characteristics thus make his own individual product (material, size, color etc.) 2 WEB SEARCH CONVENIENCE Capability to search and sort goods by any index: by type, size, color, style etc.3 SMALL SPACE SOLUTIONS Separate website section – consolidation of all the solution for small apartments4 INCREASING OF RELEVANT PRODUCT MIX Adding to product range new related products: household goods, garden furniture etc.5 Source: analysis by CSR Enter
  73. 73. 73 Revenue– $519 mln 2012 * Capitalization – not quoted By the end of 2012 * Number of countries – 7 Number of stores – 1 219 Number of employees –2 500 By the end of 2012 * Specialization: Beds, matrasses Revenue Structure: q  In 2012 online sales came to 5% of the company revenue q  By the end of 2012 gross profit margin came to 56% q  The company website entered top-100 of the most convenient for customers in Holland in 2012 q  % of just-in-time deliveries came to 95% in 2012 in Holland * 52 weeks within the year ended 31.12. Sources: the company official website www.beterbedholding.com, Internetretailer.com, Bloomberg.com, analysis by CSR Enter OnlineOffline WORLDWIDE BEST-PRACTICES BETER BED 5% 95% 469 473 490 519 519 41 43 49 50 31 8.7% 9.0% 10.0% 9.6% 6.0% -3,0% -1,0% 1,0% 3,0% 5,0% 7,0% 9,0% 11,0% - 200 400 600 800 1 000 1 200 2008 2009 2010 2011 2012 Revenue, mln USD Operational profit, mln USD Operational profit margin, %
  74. 74. МЫ ДАРИМ ВРЕМЯ ДЛЯ НАСТОЯЩЕГО. ЧЕСТНО. С ЛЮБОВЬЮ. КАК ДЛЯ СЕБЯ. Electronic publication by Enter.ru «Worldwide and Russian Retail 2009-2016. Making conclusions, building plans». Editorial office: 11/10 Ordjonikidze street. Managing editor: Kolotenko Andrei Vladimirovich. Authors: Center of Strategic Research of Enter. Release date: 11.06.2013. Certificate of mass media registration: Эл. №ФС77-48467, date of issue: 06.02.2012. Issued by Federal Service for Supervision in the Sphere of Telecom, Information Technologies and Mass Communications. This research was conducted by «Enter» LLC exclusively for the purpose of informing and designed for private use. Any copying and utilization of materials of this research is welcomed and allowed without written consent upon condition of mentioning CSR Enter (ЦСИ Enter, ЦСИ Энтер) as a source. All the information presented in this research is collected from publicly available sources. Editorial staff took all possible measures to ensure accuracy and actuality of information provided in this research. Editorial staff do not incur liabilities in case of any economic losses and damages resulted from utilization of materials of this research by third parties. Any additional information can be provided on demand. All trademarks belong to their rights holders and used according to legislation of Russian Federation. Copyright © ООО «Энтер» This research was conducted by CSR Enter team: Timur Gabdrahimov, Igor Kulyukhin, Zhanna Bogdashina, Pavel Bulankin, Dmitry Pozdnyakov, Danila Okishev, Andrei Karalin, Petr Yakovlev, Mark Khlynov. We also thank our experts, Ofelia Samedova, Anton Terentyev, and our partner of this research — «Lucas-zoloto» company.
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