1. L'Oreal is the world's largest cosmetics company with sales of 17.5 billion euros in 2008 across 130 countries. 2. It operates in key distribution channels like hair salons, mass market retailers, selective retailers, and pharmacies. 3. L'Oreal works with retailers on category management to optimize shelf space, product assortments, and in-store merchandising based on consumer insights. This helps drive growth for both L'Oreal brands and retailers.

1. Insight Information in Category Management Co-operation Xavier FILOU General Manager of Corporate Trade Relations L’OREAL Copresident ECR France

3. 2009 Key Figures World’s number 1 cosmetics group 23 international brands (1) 130 countries 67,500 employees 17.5 billion euros of sales in 2008 patents registered in 2008 674 (1) Brands with annual sales of more than 50 million euros.

4. Hair salons Mass market Selective Pharmacies Present in 4 key distribution channels A Pure Player in Beauty

5. Excluding soap, toothpaste and razors. Provisional estimates for 2008. Source: L’Oréal estimates +5.5% +3.0% (1993 – 2008* - Annual growth rate) 2008 1993 1994 1996 1997 1998 1999 2000 2001 2003 2002 1995 2004 2006 2005 2007 A resilient cosmetics market… Annual growth rate of + 4.5 % over the last 15 years

6. World’s number 1 cosmetics group L’Oréal Procter & Gamble * Unilever * Estée Lauder Avon Beiersdorf Shiseido * Johnson & Johnson * Kao Corp.* Chanel * 0 5 10 15 20 25 30 Sales in billion US dollars 25,81 19,8 15,55 7,84 7,6 7,03 6,49 5,8 5,56 4,43 * estimates WWD Beauty Biz Ranking Sept. 2009 2008 Sales « Beauty’s Top 100 » in US $

7. Constantly improving its worldwide positions L’Oréal market share* 2000–2008 Based on estimates of the worldwide cosmetics market updated in 2007 14.3% 15.2% 15.8%** 13.8% * Excluding soap, toothpaste and razors. Source: L’Oréal estimates. ** 2008 with YSL Beauté over a full year 2000 11.0% 11.7% 13.6% 12.4% 13.2% 2001 2002 2003 2004 2005 2006 2007 2008

8. A unique portfolio of strong and complementary brands MIZANI Luxury Products Active Cosmetics The Body Shop Consumer Products Professional Products

9. 1.2 billion X 2 2.5 billion Our ambition: double our consumer base

10. Accelerated urbanisation: … 60% of the population will be city-dwellers in 2020

11. X 2 > 60 years < 25 years € 87.3 € 25.1 Average skin care expenses per consumer in France, by age Source: TNS Worldpanel France - 2008 Women over 60 years old spend twice as much on facial skincare as women under 25 years old

12. Men: the potential of the new generation Cosmetics’ usage, by age and by category European Health & Beauty Survey – Men - 2007 - IPSOS * H&B Survey - 2005 Cleansing Products users (%) Moisturizing day cream users (%) 20 – 29 years old 50-59 years old 15 % 23 % 17 % 30 % 20 – 29 years old 50-59 years old

13. Accessible innovation Opening up new categories Accelerating globalisation Reducing costs and streamlining organisational structures Strengthening business drivers Increasing our consumer base 5 strategic thrusts 1 2 3 4 5

14. Breakthrough innovations at the heart of each market 14

15. Breakthrough innovations at the heart of each market 15

16. Breakthrough innovations at the heart of each market 16

17. Category Management at L’OREAL today

18. Markets complexity New products, growing segmentation  Necessity to develop markets, then growth, and to optimize assortment Evolution of purchasing behaviors A more and more informed, volatil, fickle , and clever purchaser. Planned, timely, immediate, conditionned, identified purchases...  Necessity to fit to trends consumption System of information explosion Scanning, panels, loyalty card…  New information to use The explanatory factors of the Category Management birth Today, Category Management is a tool of differenciation, in full transformation. It is a strategic function of General Management

19. N°1 worldwide, we are bearer of responsabilities vis-à-vis consumers and retailers Category Management Scope of Actions The Hygiene-Beauty Expertise : To define and express the strategic vision of L’OREAL on HB To anticipate market evolutions, distribution changes and competitor’s initiatives To develop partnerships on HB department with our customers The category strategy : -To identify the growth driver by category and by banner (market and performance review) -To influate the retailer in the building of his category strategy (assortment, merchandising, valorisation...) -To coordonate projects, to ensure the follow-up, the measure of the results and the implementation of possible corrective actions. The operational and focus action : -To coordonate the « trans-affaires » projects and the specific actions for the retailers (special events, Club Beauté, ECR,... )

20. L’Oréal’s mission To understand the shopper ( Study market background Hygiene-Beauty Men and Women) : Perception of hygiene-beauty today Expectations to anticipate consumption changes To understand the categories The contribution of brands and innovations

21. To understand the shopper Main teachings of the study shared with retailers (1/3) The consumer’s perception: HYGIENE-BEAUTY: avoid naming => The BEAUTY contains henceforth the whole offer The consumer lives the Beauty experience as a pleasure of recentring on himself. => SELF CARE caracterises the values associated to this universe Today and in an-ill assorted way, the department does not reflect the evolution towards dream, sensorality and the pleasure conveyed by the products and brands’ communications. Source : Etude Fond de marché L’Oréal 2006

22. To understand the shopper Main teachings of the study shared with retailers (2/3) Shoppers’ expectations : Expectation of a priviledged and differenciated space within the shop => a real « bubble of pleasure » Desire for an atmosphere inviting to escape and focus on oneself To make an area with appeal stand out: => Good deals corner : promotion area => Innovation t heatralisation => Brands speaking => Special performance of « self image » categories Source : Etude Fond de marché L’Oréal 2006

23. To understand the shopper Main teachings of the study shared with retailers (3/3) 3 universe of « Self Care » well differenciated: Take « Self Care » with a moment of pleasure and preparation of oneself Take « Self Care » working and playing with self image Take « Self Care » in the secret of a relation with our intimate body A specific and independant area : For Men Source : Etude Fond de marché L’Oréal 2006

24. Understanding the shopper A study used to lay the foundations for hygiene-beauty department

25. 1. To select CATEGORIES that will be actor of the universe Make-up, Perfums, Hair colorant, Hair care, Shampoo, Styling, Hair accessories, Deodorants, Bath, shower, Soaps, Skin care, Body care, Sun protection, Female care, Oral Care, Foot care… 2. Bring together categories by FAMILY 3. Family repartition according to distribution areas Understanding and working the categories « Essential keys » factor of differenciation and profitability 02.2010 L’Oréal DPGP / Essential keys NEED FAMILY PLEASURE FAMILY

26. 4 . To create ‘’Boutique’’ surroundings 02.2010 L’Oréal DPGP / Essential keys

27. 5. Visibility of the whole universe 6. Fluidity and free movement among the departments 7. Clean & Lighting Understanding and working the categories « Essential keys » factor of differenciation and profitability 02.2010 L’Oréal DPGP / Essential keys

28. FLUIDITY OF CONSUMER FLOW PLEASURE NEED IMPORTANCE OF NEW LAUNCHES ORGANISATION OF THE CATEGORIES VISIBILITY Ideal practice 02.2010 L’Oréal DPGP / Essential keys

29. The deployment of category management by L’OREAL with retailers Asia – Latin America - Europe – East - West – France (Wal*Mart International) (Latin America, USA) (stores) (region) (formats –CRM) (small formats) (formats – future – new countries) (nobody is forgiven) (Droguery-Market)

30. CHINA . WAL*MART UK . ASDA

31. ARGENTINA . WAL*MART MEXICO . WAL*MART

32. UK . TESCO HUNGARY . TESCO

33. DI . Belgium

34. The deployment of category management by L’OREAL with retailers in Asia

35. Chine . Beijing. Argentine . Indonésie . Singapour . Turquie . Bulgarie Bulgarie

36. The deployment of category management by L’OREAL with 3 ECR France partners

37. Flash on ECR The 4 areas of in 2010 Organisation of the new international maturity cards Focus on Consumer Connected Business Information Share our Supply Chain Prepare People

38. Category management?

39. Categories?

40. ECR definitions of category management Category : A category is a distinct, manageable group of products/services that consumers perceive to be interrelated and/or substitutable in meeting consumer's needs Category management : Category Management is a retailer - supplier process of managing categories as strategic business units, producing enhanced business results by focusing on delivering consumer value. ECR Europe – Rapport des meilleurs pratiques du Category Management (1997)

41. Men category Market

42. Men category Market

43. Men category Market

44. Men category Market

45. Overall results Store average : sell-out x8 CARREFOUR Market advantage for the whole category: Panels : +10% L’Oréal Group : +11.8%

46. CASINO in CLICHY

47. CASINO in CLICHY

48. CASINO in CLICHY

49. Perspectives Casino 2010 A know-how... Casino in Clichy (-22% before reorganization) Perfumery at + 66.4% in turnover / PGC Store + 27% # customers + 29% (+15% pdv) Spendings + 29.2% Average price + 14.1% 24-nov-08 au 22-nov-09 (52 semaines) + 66.4% Weight Perfumery Clichy 7.3% vs 5.4% Casino Contribution Parfumery growth T/O 14% Seconde réalisation Asnières Parf +26.9% vs +8.7% pdv

50. LECLERC in FRANCONVILLE

51. New generations LECLERC in FRANCONVILLE

52. LECLERC in FRANCONVILLE New generations

53. LECLERC in FRANCONVILLE New generations

54. LECLERC in FRANCONVILLE New generations

55. LECLERC in FRANCONVILLE New generations

56. Pascal Baudhuin Int'l Category Manager . L’Oréal DPGP 09. Maquillage 01. Acs Maquillage 09. Soin du visage & corps 01,5. Parfums Femme 03,5. Déo Femme 01. Solaire 08. Savon Bain Douche 05. Dentaire 03. Para 05. Coton mouchoir 07,5. Homme Rasage dépilatoire 05. Coloration 03. Styling 02. Acs Cheveux 08. Shampooing 1. Innovation Promotion 9. Maquillage Innovation Promo Promo 5. Dentaire 1,5. Parf 3,5. Déo F Acs maq 9. Soin visage & corps solaire 07,5. homme . Ras depl H 3. styling 2. Acs chv 5. coloration 8. shp ap shp 8. SAVON BAIN DOUCHE 3. para 5. Coton mouchoir SBD Franconville

57. LECLERC in FRANCONVILLE

58. L’OREAL UK A good example of anglo-saxon experience

59. The UK Category Management team is structured by category and there is a dedicated team for Grocery Grocery Team Core Category Experts

60. Cat Man Key Tasks and Competencies Retailer Insights Insights on Retailer Performance in our Categories Deliver Category and Shopper Expertise

61. Cat Man Key Tasks and Competencies Retailer Insights Benchmark Retailers on Key Business Drivers Drive the Beauty Opportunity

62. Cat Man Key Tasks and Competencies Retailer Insights Insights gained through Relationship and Retailer Meetings Retailer’s Own Objectives for Category Reviews Retailers View on Brand Performance Retailers view on Commercial Teams and Overall Trading Relationship Retailers Timings for Category Reviews … .. Deliver Category and Shopper Expertise

63. “ Sweating the space as hard as possible!!!” Reviewing the performance of every sku on each bay size to ensure best sales balanced range benchmarked vs market ease of shop/brand blocking space vs sales analysis Cat Man Key Tasks and Competencies Optimising the retailer category range Right brands, Right space, Right adjacencies BUT ALSO : Defending and developing L’Oreal group share of space through objective analysis Support Range Reviews

64. Cat Man Key Tasks and Competencies Sales Analysis Support Range Reviews

65. Cat Man Key Tasks and Competencies Space Analysis Support Range Reviews

66. Cat Man Key Tasks and Competencies Planogram Proposals Current Proposed Support Range Reviews

67. Cat Man Key Tasks and Competencies Follow-up Analysis Creating Category Growth following each Range Review… … with L’Oreal Paris & Garnier’s sales leading the trend Support Range Reviews

68. Cat Man Key Tasks and Competencies In-Store Environment Drive the Beauty Opportunity

69. Store Project Examples: Morrisons New Look H&B LARGE FORMAT (3,500 sq. ft) : 15 Stores Beauty Advice Centre Impactful visuals signpost entry to H&B; mixture of low and high fixtures encourages browsing; Headers and on- shelf education assist consumers navigate through the fixture

70. Store Project Examples: Morrisons New Look H&B SMALL FORMAT (2,600 sq. ft): 60 Stores Adaption & Roll-out to 3- Aisle Stores RESULTS: Morrisons is the fastest growing Retailer in the Beauty Categories

71. Tesco Home Plus In Store Evolution 13 stores over 3 year period 2006 -2009 Future vision layout & merchandising for H&B achieved in 2008 stores Key features – curved free standing gondolas, testers, illuminated branded headers, graphics and lightboxes, interactive educational panels for Skincare & Colourants and category information Tesco Nottingham 2008

72. Tesco Homeplus bespoke Skincare units (headers + Shelfstrips) Educational GE’s on Skincare Regime + Testers bespoke Colourants units (headers + Shelfstrips) Skincare Advise Tool Tesco Nottingham 2008

73. Shopper insights: Branding and education is key in skincare Source: L’Oreal Skincare U&A 2009, In-store Research 2010, Quantitative & Qualitative Research Insights February 2009 Engagement at fixture is also key – over 10 minutes browsing result in higher purchase basket shelf-strips can be used to help consumers understand the different franchises, Leading to consumers purchasing what is right for them Women find shopping the category confusing and overwhelming in both high-street and supermarkets 32% of skincare shoppers wanting more ‘consultant/advice available’ Over 70% of shoppers know what brand/product they want before entering the store

74. Opportunity: Facial skincare Tesco Extra Slough Morrisons Milton Keynes Asda Living Bradford Superdrug Westfield Boots Hammersmith

75. FAIRPRICE SINGAPORE TESCO HUNGARY CARREFOUR AUTEUIL GUARDIAN MALAYSIA KUALA LUMPUR CARREFOUR ARGENTINA FAIRPRICE SINGAPORE Opportunity: Facial skincare

76. Impactful visuals in ‘chilled’ section Generic fins to navigate through Herbs & Spices Large banners and on-shelf education Sainsbury’s using strong, clear signage throughout Food & Beverage

77. How can we replicate education in Skincare to maximise growth? Very little inspiration to encourage browsing -no clear signage or on-shelf education to assist consumers in finding the right brand/product to match their needs

78. JS Skincare Vision: Use of impactful visuals and lit shelving to create an inspirational environment; while branded fins help navigate the fixture… LOW FIXTURE: Bringing a high-street feel to the grocery environment to encourage browsing

79. … complemented with information panels and educational shelf strips across all key players to assist shoppers in making the right choice

80. … with information panels (and glorifiers ) centrally located at eye-level Interchangeable -to provide generic information as well as to shout about ‘New’

81. The Future The concepts of the future

82. « Christophe Robin, Expert Colorist for L’Oréal Paris gives you live all his expert tips and advice » 1. « Bring your phone close to the shelf and meet Christophe Robin, the colorist of the stars » 2. « Select the product of your choice and get Christophe Robin’s specific advice on it » 3. « You need more advice? An expert advisor calls you on the spot to guide you in your selection » Mobile Initiatives EVENT & IMAGE COMMUNICATION

83. Mobile Initiatives EVENT & IMAGE COMMUNICATION « L’Oréal Paris star secrets confidentially on your mobile » 1. « Bring your phone close to the shelf » 2. « Enter in a confidential relation with Laetitia Casta and discover her favorite lipstick color » 3. « Download a signed kiss from Laetitia Casta as wallpaper and send it over »

84. « Download for free «The World Is Mine» on your mobile for one Party Proof purchased!! » 1. « Bring your phone close to the shelf » 2. « Listen to an extract of Guetta’s last HIT» 3. « At the cashier, download for free the whole HIT on your mobile, and you’re ready to challenge your look! » Mobile Initiatives Promotion cross merchandising

85. « 1€ reduction on your Party Proof for the purchase of Guetta’s CD » 1. « Bring your phone close to the shelf » 2. « Discover how you can challenge your look with Party Proof» 3. « At the cashier, for the purchase of David Guetta’s CD, 1€ reduction on your Party Proof! » Mobile Initiatives Promotion cross merchandising