Redcats Workshop Redctas

WELCOME

Workshop Redcats February 15th, 2001

A genda 9.30 - 9.45 Welcome (David Newhouse) 9.45 - 10.15 Strategic overview (Hartmut Krämer) 10.15 - 10.30 Financial highlights (Bertrand Vinot) 10.30 - 10.45 Q/A 10.45 - 11.00 E-commerce challenges & prospects at Redcats (Hartmut Krämer) 11.00 - 11.30 La Redoute on-line (Paul Delaoutre) 11.30 - 11.45 Coffee break 11.45 - 12.15 Optimization of international development (Pascal Bazin) 12.15 - 12.30 Q/A 12.30 - 1.30 Lunch

A genda 1.30 - 2.00 Catalog conception (Nicolas Bernard) 2.00 - 2.15 Q/A 2.15 - 2.45 Customer Relationship Management (Patrick Terrier) 2.45 - 3.00 Q/A 3.00 - 3.30 Bus transfer to Leers (Logistics Center) 3.30 - 5.00 Presentation and visit of the logistics Center (Patrick Terrier / Gérard Seulin) 5.00 - 6.00 Q/A with Redcats management 6.00 - 6.30 Bus transfer to train station

REDCATS

Strategic overview Hartmut Krämer

Outline
Redcats and its home shopping competition in key markets
Drivers of growth & profitability
Strategic focus
Existing brand mapping
Leveraging of common ressources

Main competitors - Home Shopping Net Sales 30 000 40 000 50 000 60 000 70 000 M FRF OTTO QUELLE Net Sales - 20 000 40 000 60 000 80 000 100 000 120 000 1996 1997 1998 1999 M FRF OTTO QUELLE REDCATS / NECKERMANN

Main competitors France Home Shopping Market Q UELLE- N ECKERMANN

Main competitors US Home Shopping Market Net Sales - 500 1 000 1 500 2 000 2 500 3 000 3 500 4 000 4 500 1997 1998 1999 M USD JC PENNEY SPIEGEL Group LANDS'END BRYLANE FINGERHUT/MACY/ BLOOMINGDALE

Main competitors UK Home Shopping Market Net Sales - 200 400 600 800 1 000 1 200 1 400 1 600 1 800 2 000 1996 1997 1998 1999 M GBP GUS LITTLEWOODS GRATTAN REDCATS UK

Main competitors Sweden Home Shopping Market

Strategic focus
Leader in customer satisfaction
An internationally well-positioned portfolio of current brands
Successful implementation of new organisation with shared services and infrastructure
Multi-channel retailer with emphasis on being a major e.commerce player : double digit % share of sales
Develop Home / Lifestyle business in Europe and USA
External growth in Europe and USA

Existing brand mapping Market Potential Competency Positioning GLOBAL EUROPE / USA LOCAL French Lifestyle La Redoute Scandinavian Lifestyle Redcats Nordic Lane Bryant Roamans/Jessica London Large Sizes Men KingSize Senior Apparel To be named Daxon - Edmée - Celaia Children Apparel T o be named Vertbaudet Home + Leisure Low income / credit Empire - Maison de Valérie Sportswear Modern Somewhere Sportswear Classic Cyrillus Budget / Off price Apparel To be named Chadwick's /Lerner /Empire /Josefson American Lifestyle Brylane Home Large Sizes Women

Leveraging of common ressources
New organisation
La Redoute
Redcats UK
Redcats Nordic
Brylane as one
Specialized Brands from France
Operational Center France
New top management team to improve competitive position and to shape future strategic portofolio development
Succesful development in E.commerce
Have the tools and the environment to develop, attract and retain the best people

New organization : Principles
STRONG FOCUS IN EACH
GEOGRAPHIC MARKET
To focus on the retailing business
To control customer satisfaction
To manage strategic mapping brands
TO CONCEIVE AND DEVELOP THE FORMATS OF TOMORROW
COMMON BACK OFFICE
INFRASTRUCTURE
To reach and exceed critical size
To generate economies of scale
To have a profit centre
To raise expertise
To open up the activity to third parties within the Group and possibly outside the Group
TO STRENGHTEN COMPETITIVE ADVANTAGE

Provide all companies with a complete and competitive order preparation / dispatching service
Eveil et Jeux
Add to e-commerce offering remote selling distribution services
Fnac.com
Develop network pick-up points ; complement available functionalities (sales / credit card payment)
Pooling logistics and distribution infrastructures for out-of-store sales businesses

E-commerce challenges and prospects at Redcats Hartmut Krämer

Redcats: one of the three main business models of PPR’s e-commerce strategy
A strategy to gain market share on current competition
Increased flexibility of the offering: frequent renewal of the product range
More efficient direct marketing
An important productivity gain potential
Cost reduction in terms of catalogs, call-centers, mailing

Redcats: e-commerce
Major competitive advantages for Redcats
A strong expertise in selling through pictures
Infrastructure for home delivery and return management
Important customer database
Know-how in CRM and one-to-one marketing
Strong presence on high usage Internet markets (Scandinavia, US)
40 e-commerce sites
(15% to 20%) of internet customers are not standard mail order customers

Major challenges and opportunities
Adapting product dimension (conception/sourcing) to the rythm possibilities of the web
Scalability of technical infrastructure
Mutualisation of development costs

E-COMMERCE : KEY ACTIVITY DATA 1999 2000 % of sales through internet La Redoute 0.2% 1.5% Ellos 2.9% 5.2% Brylane 0.2% 3.8% Chadwicks 0.2% 7.0% Brylane Home - 8.0% Dec-00 2.7% 5.8% 6.6% 12% 11.5%

Financial highlights Bertrand Vinot

in million Euros NET SALES 4 355 EBITDA 270 CAPEX (Operational, non-financial) 75 ROCE (total) 14 % ROCE (excluding Brylane (1) ) 28 % HEADCOUNT 22 900 (1) A two stage acquisition (1997 & 1999) 1999 Key financial data

(1) Denmark, Estonia, Finland, Norway, Sweden (2) Austria, Belgium, Germany, Portugal, Spain, Switzerland A worldwide home shopping company In million Euros 2000 Figures % France 1 973 41 UK 620 13 Scandinavia (1) 285 6 Other Europe (2) 205 4 Total Europe 3 083 64 USA 1 738 36 Asia 13 0 Total 4 834 100

A sustained international development through acquisitions In billion Euros 1996 1997 1998 1999 2000 Redcats North America Redcats Nordic 1996 Perimeter 2.4 2.7 4.1 4.4 4.8 2.8 2.8 3 2.6

A multichannel distribution group 1999 2000 Catalogs 95.2% 94.5% Retail 4.5% 3.4% E.Commerce 0.3% 2.1% 100% 100%

A retail group dedicated to its customers’ well-being through a large variety of products % net Sales 2000 Apparel 69 Home 23 Services & Other 8 100

The most internationally diversified group in the home shopping world Net Sales (Billion Euros) % of Sales Outside home country 1 Otto Versand 20.5 39 2 Quelle / Neckermann 7.4 17 3 Redcats 4.8 59 4 JC Penney 4.2 0 5 Gus 3.2 17 6 Littlewoods 1.9 15 (1999 data, except redcats 2000)

Key operational factors
Present in 17 countries
18 global or local catalogs
93 billion of catalog pages
85 million parcels / year
60 million customer addresses worldwide
100 million phone calls
40 Web sites
More than 100 stores
22 900 associates

La Redoute E-commerce Paul Delaoutre

La Redoute 2000 Web sites’ sales
4.6 Millions single visits (3.5 Millions in France)
250 000 clients bought on our sites (161 000 in France)
5 % of visitors placed an order (9% in Dec)
338 000 orders (172 000 in France )
More than one million articles sold on the line (604 000 in France)
120 000 catalog demands in France.
1999 Budget 2000 2000 Sales International France Total 17 14 31 48 65 113 63 84 147 (In million FF)

laredoute.fr’s 2000 monthly sales Demand Sales
AN EFFICIENT WAY TO REACH NEW CUSTOMERS
10% of new customers
16 000 new web buyers in France = 3% of La Redoute new buyers (against 1.1% of total sales)
Market share : La Redoute’s share of the French e-commerce market (approx. 4 bn FF in 2000) is in excess of 4% vs a 1.2% global share of the French retail market. - 5 000 000 10 000 000 15 000 000 20 000 000 25 000 000 JAN FEBR MARCH APRIL MAY JUNE JULY AUG SEPTEMB OCT NOVEMB DÉCEM - 2 000 000 4 000 000 6 000 000 8 000 000 10 000 000 12 000 000 14 000 000 Initial Dem. Sales

Internet: a rising part of sales Austria 5.4 8.3 Switzerland 4.9 8.2 UK 4.3 9.2 USA 3.7 13.3 Spain 2.0 4.4 Belgium 1.6 1.9 Portugal 1.0 1.8 France 1.1 3.0 % of total sales in 2000 % of sales in December 2000 (in %)

Our e-commerce approach E-commerce E-business E-CRM 100% dynamic web platform – Customization of contents and services – integrated production workflow Deep integration into mainframes and legacy functionalities and databases Commercial Intelligence Knowledge Management Rules engines No e-commerce without e-business No e-CRM without e-business No e-commerce without client intelligence France’s first fully web enabled call center, alloweb is a multi-content, multi-access, relationship tool dealing with entering and outgoing 14 000 monthly contacts

E-Marketing : a clear territory and positioning
Competitive field : The leading site in people and home equipment
Positioning : laredoute.xx, evolves as fast as fashion and is always up to date
Client Promises :
Product offers : frequent update. Additional offers to the catalogue
Services : map locator, search tools, Style Advisor, all in one order, secured payment ...
Prices : variable prices and dynamic merchandizing

An ambitious « net-chandizing »
27 « Daily Bargains »
9 daily « Coups de Cœur »
50 specials web commercial events / year
A product policy involving the whole company through a Web Commitee
5% of Novelty products specific to the web
Nouveautés Nouveautés Nouveautés Nouveautés Nouveautés Nouveautés B.A du jour Offre personnelle Chronofolies ... Coup de cœur B.A dans chaque boutique Nouveaux prix Exclusivités ... Fête des pères Offre Grand froid Rentrée scolaire Les invités de la saison ... Produits associés Conseils d’achat Dossiers tendance Conseil en style Recherche par marque, couleur... alloweb, ... Mise en ligne progressive dans la saison Ventes rapides de 1 heure à 7 jours 10 à 100 codifs produits e-mailing & offres promos Merchandising de 1 à 7 jours 100 à 1.000 codifs produits Quinzaines commerciales de 1 à 3 semaines 1.000 à 5.000 codifs produits Fonds de rayon référencement permanent 40 à 100.000 codifs env. 8 mois Femme Lingerie Enfant Homme Sport Maison Image &Son Jeux & Micro Electro- ménager

What’s going on ?
In France, 23% of sales is additional « pure web » turnover
77% of the web sales is transferred from the paper catalogs
Average Purchase of 128 Euros (15% higher than average) and of 152 Euros + for « pure e-boutique » orders
JAN FEB MARCH APRIL MAY JUNE JULY AUG SEPT OCT NOV DEC Direct orders Additional orders Web & mail order : additional sales through the clicks
A high end market and a specific product mix
61 % of e-boutique sales through Housing and technical products (vs 35% overall)
In million FF 0 2 4 6 8 10 12 14 16 18 20

Web impacts on P&L
Extra turnover in 2001
25% of additional sales
13% new customers
better satisfied clients lead to improved sales ratios
Industrialization of sales allow economies of scale and productivity gains
Gains through strong decrease in cost of order processing (1/6 ratio or 8 F saved FF per order in 01 )
Lighter and faster Customer relationship
Economies on commercial spending through cheaper and fewer mailings and on cost of boutique per customer

2001 highlights
Additional growth will be searched through
An increased coordination between Paper & Web marketing plans and commercial pressure
Launch of multi-channel sales campaigns using retail – catalogs – paper mailings – web marketing
New paths to the customer will be explored through
Sales of innovative products well adapted to internet channel and to high level and fidelity-prone clients
Keep leading CRM expertise and develop high-return services

Catalog conception Nicolas Bernard

Catalogue creation
Focus on the global process
From the database to paper catalogue printing

16 million addresses THE CUSTOMER FILE 8 million buyers in the last 4 seasons 4 million buyers in woman apparel

MAPPING OF SECTIONS IN WOMAN APPAREL liz claiborne la mode sans se ruiner créateurs,marques images références active wear marques junior tipster softgrey couleur bain moderne côté femme laura clément marques jeans double page chaussures prix mini junior édéis prix mini mode best bain classique linéa moda la boutique prix mini classique impeccables tabliers 4ème de couverture romantique=derhy stop aff mode on n'est pas des anges la city Axe 2 Axe 1 SENIOR JUNIOR SOPHISTICATED CASUAL

Positioning of the section Laura Clement
Target
Her needs
Competitors
Life style
Communication codes
Casting

Assortment of the section Laura Clement
Category of items
Price level vs Market
Level of Quality /
Size range vs Redoute

Collection creation Laura Clement
Double pages
Internal designers
Coherence with assortment

Technical specifications
Fabric
Washing instruction
Size specification
Packing instruction

Proposal of layout

Fitting before photo

Photos
Fast move from Argentic to digital photography
External
photographers
Various photo locations

Text implementation

Photo combinations

Artwork and printing
Syquests given to photograveurs for Artwork
Rotogravure printing in Europe
Big book of La Redoute 20.000.000.000 printed pages / year

Final page

Optimization of international development Pascal Bazin

Redcats: a unique combination of competitive advantages
A portfolio of 18 brands / catalogs with
a strong positioning on their customer target / market
a significative and constant growth
professional and ambitious teams
A “Customer megabase” per country
with high level of customer qualification
easy multibrands access
powerful analysis tools

Powerful back-office internal organizations and systems
well established in the main markets : USA - the UK - FRANCE - SCANDINAVIA
offering very competitive costs
able to handle multi brands activities with a common tool
Redcats: a unique combination of competitive advantages

This unique combination of competitive advantages gives REDCATS very strong opportunities of optimized international development organized around 3 models

First model : “Full exportation”
Full concept & product offer
Same catalog
Central buying
Similar direct marketing technics with local support and back office Vertbaudet UK
Optimization of international development

Second model : “Exportation”
Selection in product assortment
Different catalog
Central buying
Potential different marketing technics with local support and back office La Redoute USA Chadwicks UK

Third model : “Licence”
Integration in a brand / catalog of a product know-how developed by an other brand / catalog Vertbaudet Sweden Daxon Christmas Offer UK

A real optimization of our international development based on a very strong and international know-how on
Development of offers / buying capacities
Realization of catalogs
Deep local market know-how
Competitive internal back-offices
In conclusion

Customer Relation Management at REDCATS How Redcats’ order-takers are becoming TELEMARKETEERS Patrick Terrier

VIDEO: The Customer Relationship at MOVITEX

Redcats Customer Relation Departments The strategic, operational interface of our Services to the Customer
Main functions
Order-taking
Before and after sales advice
Payment processing
Answering customer queries
Claims management.
Through various media :
Telephone Mail Minitel (France) Internet

Organisation
The departments are ‘services to customer’oriented and take into account the ever-increasing ratio of phone calls.
Approx. 100 M calls / year to Redcats .
85% of orders are by phone at Brylane.
65% at Redcats Nordic.
55% at La Redoute.
At Vertbaudet phoned-in orders increased from 12% in 1992 to 55% in 2000.

Extended call center opening-hours.
24H a day, 7 days a week at Brylane
7 days a week at La Redoute, Redcats Nordic, Vertbaudet, Empire Stores
Before and after-sales advice development
La Redoute, LMDV,
Advice from a specialised technician on specific products.
Capacity pooling
Dedicated teams (sharing a common infrastructure) or complete cross-brand adaptability
Mail / phone versatility (Redcats Nordic)
Multi-lingual operators (Cyrillus, Brylane)
International development (USA, the UK, Sweden, Portugal)
Objectives : Increase service rate
Uphold brand particularities

New developments in Customer Relations
For CR operations, internet development generates:
e.mail activity
web call centers
E.mails
A new development in the operator’s job
Learning to use new tools
Written contact but not quite the same as a letter
Quick, precise replies expected by customers
More numerous contacts generated

Web Call Center
100% interactivity with the Web-surfer
chats
voice on IP, voice button, call-back...
REDCATS NORDIC / BRYLANE
Specialised structure for answering e.mails
Ellos: 25000 emails/year
Brylane: 45 000 emails/year
2 teams covering 15 hours / day
Objectives to answer within 2 hours
2001: the set-up of real Web call centers

Effective Web call centers.
La Redoute: today nearly 500 contacts daily  65% = e.mails
objectives = answer within 4 hours
Interactive contact : different options used
1. the chat
2. the call-back (using normal telephone - 2nd line or GSM)
3. the voice on IP is rarely used
Areas for development
Optimise organisation to be able to adapt to volume growth
January 2000 - 3000 contacts / month
December 2000 - 12000 contacts / month
Specialisation of operators according to the medium used
Help in answering e.mails.
REDOUTE / CYRILLUS

New developments in Customer Relations
Different types of pro-active sales
Substitution: suggest a replacement article when item not available: another colour, similar product...
Services: promote services associated with the products:
extend a guarantee
open a credit account
subscribe to a magazine
…
Take advantage of customer contacts to generate additional sales

At Redcats Nordic and Brylane, the procedure is highly developed At La Redoute , the procedure is in full boom as well At the Specialised Brands , currently tested and implemented New developments in Customer Relations
Different types of pro-active sales
Additional sales:
suggest a complementary item
e.g. batteries for a game, cassettes for video recorders, ties for shirts etc.
promote the ‘offer of the day’
e.g. highly visual, low priced sales offer
suggest other items from the catalogue

Net perception
This tool will return a list of upsell items to the associate for offer to the customer
Realtime recommendation engine
Using past buying history of the customer and knowledge gained from a similar taste community
Combination of statistical or neural net modeling, trending and filters
- Liquidation of inventory
- Selling staple items
- Promoting new trends
- …..
BRYLANE: Tested this past FW 2000 with associates from Roaman’s
2% lift in sales
Generalisation this Spring

Information system support
Permanent dialogue between the product, Marketing and CR sectors
Support and training of operators
Training of management to motivate sales staff
Put into place instruments measuring activity
A real change of the tele-operators job

Redcats Workshop Redctas

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