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Evolution of the retail trade market and the role of modern distribution - Hélène Hotellier

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In this presentation ADM sketches a general framework of the situation of retail trade market in Italy within the European context. After some references to the macroeconomic context and to the forecasts, the focus is moved to household consumption model, analyzing structural trends and the impact of the crisis. Afterwards, modern retail trade in Italy is analyzed in comparison with European countries and finally the latest trends and the new challenges are briefly illustrated.
http://www.istat.it/en/archive/168897
http://www.istat.it/it/archivio/168890

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Evolution of the retail trade market and the role of modern distribution - Hélène Hotellier

  1. 1. Modern Retail in Italy | Main features and latest trends Workshop Scanner Data - Rome, 1 October 2015 Hélène Hotellier Responsabile Ufficio studi e Affari europei Federdistribuzione per ADM hh@federdistribuzione.it
  2. 2. ADM represents the Modern Retail sector in dealing with the agro-food / Fast Moving Consumer Goods industry. ADM aims at the improvement of the supply chain, boosting and promoting efficiency in relations between operators. Members of ADM are the three main representative trade associations of the large Modern Retail sector - Federdistribuzione, ANCC-Coop, ANCD-Conad - and about 800 retail companies operating in Italy. ADM is a forum where the main retail industry associations can discuss to identify possible common paths on institutional issues. FederdistribuzioneperADM 2
  3. 3. FederdistribuzioneperADM 1. Focus on Italy | Macroeconomic context and forecasts 2. Focus on Italy| Household consumption model: structural trends & impact of the crisis 3. Modern Retail in Italy | Main features, comparison with European countries and latest trends 4. Modern Retail in Italy | New challenges 3
  4. 4. FederdistribuzioneperADM 5.4 3.9 1.7 1.8 1.7 2.5 2.7 2.5 2.7 2.2 1.9 2.1 1.8 3.3 0.8 1.5 2.8 3.0 1.2 0.2 2.9 1.1 2.0 1.8 1.6 2.9 1.9 0.5 0.0 1.7 0.9 2.2 1.7 -1.2 -5.5 1.7 0.6 -2.4 -1.9 -0.4 2.2 0.8 3.2 2.9 2.3 3.3 1.1 0.2 1.0 0.7 0.6 1.5 1.4 -0.8 -1.6 1.5 -0.3 -4.0 -2.6 0.3 -6.0 -4.0 -2.0 0.0 2.0 4.0 6.0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Consumer prices GDP Consumption 1. Focus on Italy | GDP, Households consumption, Consumer prices Source: Istat 4
  5. 5. FederdistribuzioneperADM 1. Focus on Italy | Macroeconomics forecasts 2014 2015 2016 GDP (real terms) -0,4 +0,9 +1,6 Household consumption (real terms) +0,3 +0,8 +1,5 Unemployment rate (%) 12,7 12,3 11,9 Consumer prices (% Var.) +0,2 +0,3 +1,0 Deficit (Deficit/GDP) -3,0 -2,6 -2,2 Public debt (Public debt/GDP) 132,1 132,8 131,4 Source: DEF Italian Government (18 september 2015) 5
  6. 6. FederdistribuzioneperADM 16.6% 18.5% 18.7% 19.3% 11.0% 12.7% 13.4% 13.5% 1.8% 4.5% 3.6% 3.7% 3.3% 3.8% 3.8% 3.9%9.5% 16.0% 14.0% 13.8% 18.9% 19.6% 24.6% 24.4% 19.2% 12.7% 11.8% 11.5% 19.7% 12.2% 10.1% 9.9% 1991 2003 2013 2014 Source: Istat, GNLC Nielsen, Indicod Ecr-TradaLab Food & Non Food goods spending 212 Non food 98 Food 114 Housing / allowances spending 455 Housing, power… 242 Transports, communication 137 Health, Education 39 Insurances, Financial services 37 Recreative spending 325 Restaurants & Hotels, Travels 134 Wellness, Sport, Culture, … 191 € billion429 835 992986 38,9% 24,9% 21,9% 21,4% 33,5% 43,9% 46,0% 45,8% 27,6% 31,2% 32,1% 32,8% 2. Focus on Italy | How has Household spending changed overtime 6
  7. 7. FederdistribuzioneperADM - 8,0% = € 79,9 bn - 6,4% = € 63,4 bn Household consumption 2. Focus on Italy | Household Consumption hit by a 2-phase crisis Source: TradeLab on Istat data 7
  8. 8. FederdistribuzioneperADM Total Modern Retail sales 127,3 bn € Total Retail sales 212,2 bn € Every week, 60 million people enter Modern Retail stores 450.000 co-workers +131% invested in professional training per FTE in 2014 vs 2006 Source: Federdistribuzione, Istat, Nielsen, TradeLab 92% with open-ended contracts 58% women 17% under 30 3. Modern Retail in Italy| Main features - 2014 60% 8
  9. 9. FederdistribuzioneperADM •Incl. Cash & Carry Source: AC Nielsen, Istat, Indicod Ecr - TradeLab 11.9 12.5 12.6 12.7 12.8 42.1 29.8 28.7 27.9 27.2 46.1 57.7 58.7 59.4 60.0 2000 2011 2012 2013 2014 Modern Retail Traditional small shops Market stalls, e- commerce, … 198,5 215,4220,4 € billion212,2226,3 58.159* stores 696.886 stores 188.274 stores 3. Modern Retail in Italy | Retail formats % market shares - Total retail sales 9
  10. 10. FederdistribuzioneperADM 9.8 10.0 10.1 10.1 10.2 27.1 18.2 17.9 17.5 16.9 6.2 10.0 10.5 11.1 11.4 12.0 10.0 9.4 9.0 8.7 37.3 22.5 22.2 22.2 22.4 17.6 18.5 19.0 19.7 7.6 11.7 11.5 11.1 10.7 2000 2011 2012 2013 2014 Hypermarkets > 4.500 sq.m. Superstores (1.500 - 4.500 sq.m.) Supermarkets (400 - 1.500 sq.m.) Convenience stores Discounts Small Traditional shops Market stalls, ecommerce,… 10 100,8 117,3 € billion116,0117,5 Source : AC Nielsen, Istat, Indicod Ecr - TradeLab 114,1 378 stores 6.969 stores 13.872 stores 4.830 stores 191.540 stores 36.196 stores 1.619 stores 3. Modern Retail in Italy | Retail formats % market shares - Food retail sales 63,1% 72,9% 10
  11. 11. FederdistribuzioneperADM 100% 96% 96% 95% 92% 91% 91% 89% 86% 82% 81% 80% 78% 78% 78% 76% 74% 69% 69% 57% 46% 0% 4% 4% 5% 8% 9% 9% 11% 14% 18% 19% 20% 22% 22% 22% 24% 26% 31% 31% 43% 64% Ger Fra Ned Bel Swe Den Aus UK Por Nor Spa Fin Swi Ita Gre Eir Cze Slva Hun Pol Tur Large Modern Retail (over 400m2) Rem (under 400m²) Source: Nielsen - Total Store 2012 3. Modern Retail in Italy | Retail formats % market shares - Food retail sales (excl. market stalls) 11
  12. 12. FederdistribuzioneperADM 14.0 15.1 15.5 15.7 16.1 57.5 42.4 41.4 40.7 39.2 19.6 30.6 30.9 31.2 32.1 4.7 5.0 5.4 5.7 5.9 4.2 6.9 6.9 6.8 6.6 2000 2011 2012 2013 2014 Hyper+Super Department Stores Large Specialized Stores Small Traditional shops Market stalls, ecommerce,… 12 100,8 103,1 € billion99,5108,8 98,1 Source: Indicod Ecr - TradeLab 505.837 stores 152.078 stores 8.966 stores 979 stores 29.127 stores 3. Modern Retail in Italy | Retail formats % market shares - Non food retail sales 12
  13. 13. FederdistribuzioneperADM 13 •Incl. Cash & Carry Source: Osservatorio del commercio (MISE) - Nielsen 2010 2014 % Var. 2014 vs. 2010 Var. Retail stores 776.365 755.045 -2,75 -21.320 Modern Retail 59.508* 58.159* -2,27 -1.349 Small traditional shops 716.857 696.886 -2,79 -19.971 Market stalls 170.845 188.274 10,20 17.429 Total stores 947.210 943.319 -0,41 -3.891 3. Modern Retail in Italy | Number of stores by retail formats (1) 13
  14. 14. FederdistribuzioneperADM 14 Source: Osservatorio del commercio (MISE) - Nielsen 2010 2014 Var. % Var. 2014 vs. 2010 Food Modern Retail stores 29.366 27.668 - 1.698 - 5,8 Hypermarkets > 4500 sq.m. 382 378 - 4 - 1,0 Superstores 1500-4500 sq.m. 1.456 1.619 + 163 + 11,2 Supermarkets 400-1500 sq.m. 7.279 6.969 - 310 - 4,3 Convenience stores 100-400 sq.m. 15.867 13.872 - 1995 -12,6 Discounts 4.382 4.830 + 448 + 10,2 Cash & Carry 396 385 -11 -2,8 Non Food Modern Retail stores 29.746 30.106 360 +1,2 3. Modern Retail in Italy | Number of stores by retail formats (2) 14
  15. 15. FederdistribuzioneperADM 3. Modern Retail in Italy | Total sales surface - Grocery market % Var. new sq.m.sq.m. (‘000) Source: Nielsen GNLC - January ed. 15
  16. 16. FederdistribuzioneperADM Source: AC Nielsen - January 2015 2.8 3.1 3.4 4.9 6.2 7.2 8.7 9.4 11.7 15.0 Finiper Gruppo Pam Sigma Eurospin Gruppo Carrefour Gruppo Auchan Esselunga Selex Conad Coop Italia 3. Modern Retail in Italy| Top 10 food retailers: % market shares 16
  17. 17. FederdistribuzioneperADM TESCO ASDA SAINBURY’S EDEKA REWE ALDI CARREFOUR LECLERC CASINO COOP CONAD SELEX Source: Nielsen, Kantar - 2014 TESCO ASDA J SAINBURY’S EDEKA REWE SCHWARZ Gr. MERCADONA CARREFOUR DIA CARREFOUR LECLERC INTERMARCHE COOP CONAD SELEX 62,5% 61,0% 38,0%56,0% 36,1% UK Germany Spain France Italy 3. Modern Retail in Italy | A low level of market concentration % market share of TOP 3 food retailers 17
  18. 18. FederdistribuzioneperADM 1 bn € of investments generates 750 mln € of value added & involves 15.000 persons 100% 118% 104% 77% 96% 83% 81% 74% 76% 0% 20% 40% 60% 80% 100% 120% 140% 2006 2007 2008 2009 2010 2011 2012 2013 2014 € 4,0 - 4,5 bn of investments in the pre-crisis phase € 2,5 - 3,0 bn of investments today 3. Modern Retail in Italy | Investments pre & post-crisis Source: PwC study for Federdistribuzione - 2014 figures 18
  19. 19. FederdistribuzioneperADM % Var. (2006 = base 100) 100.0% 101.6% 105.4% 106.9% 105.0% 106.5% 107.3% 105.6% 103.8% 100.0% 102.2% 106.5% 107.9% 105.5% 107.7% 109.1% 107.8% 106.4% 94.0% 96.0% 98.0% 100.0% 102.0% 104.0% 106.0% 108.0% 110.0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 Ricavi per FTE - Variazione % da 2006 (base 100) - All Costi per FTE - Variazione % da 2006 (base 100) - All 3. Modern Retail in Italy| Sales vs. Costs Sales by FTE Costs by FTE 19
  20. 20. FederdistribuzioneperADM 2,1 1,7 1,1 100 100 100 Source: TradeLab on a representative sample of retailers’ income statement Net sales = 100 Cost of sales + labour costs + other expenses EBIT Net income 20102006 2013 1.4 0.8 -0.1 3. Modern Retail in Italy | Consumption crisis and costs increase has led to a negative profitability 20
  21. 21. FederdistribuzioneperADM RETAILERS Market shares (%) Retailers with National capital 80,3% Retailers with Foreign capital 19,7% Auchan (FR) 7,2 % Carrefour (FR) 6,2 % Lidl (DE) 2,6 % Despar (Aspiag - AT) 2,2 % Penny Market (DE) 1,5 % Metro (Cash & Carry - DE) not taken into account (wholesale format) 3. Modern Retail in Italy| National vs. Foreign-capital retailers Source: Nielsen 21
  22. 22. FederdistribuzioneperADM 17.1 18.4 19.6 20.9 21.6 22.5 23.2 23.1 22.4 22.7 24.3 25.6 26.4 27.4 28.7 29.3 8.4 7.4 7.9 8.9 9.2 9.6 10.3 10.4 10.0 10.0 10.9 11.7 12.2 12.4 12.9 13.4 0 5 10 15 20 25 30 35 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Share of Price promotion on total sales (%) % ref. with price promotion Source: Nielsen Trade*Mis - Hyper+Super+LS 3. Modern Retail in Italy| Priority to price convenience to sustain purchasing power 22
  23. 23. FederdistribuzioneperADM 4. Modern Retail challenges | Omni-channel business model Online sales trend Source: Politecnico di Milano 23
  24. 24. FederdistribuzioneperADM Goods Services 4. Modern Retail challenges | Omni-channel business model Source: Politecnico di Milano Online sales trend 24

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