Luxury_Brand

The Reality of Retailing & Luxury Ralf Matthaes Regional Managing Director Agenda  Present consumer reality and confidence  spend  Areas of spend / areas of saving  Confidence  Consumer  Modern retail not growing very fast due to…  What and where consumers spend  The growth of Modern vs traditional trade  Drivers of growth  Hindrances of growth  Luxury myth  % whom have bought luxury items  Definition of luxury  Consumer misperception of luxury Consumer Confidence – 2011-2012 2008 – 2012 Consumer Confidence Index 110 100 80 60 40 20 0 2008 2009 2010 2011 2012 89 78 64 79 68 Index has fallen drastically due to poor Vietnamese economic performance 4 Source: TNS CCIP – 2008 – 2012 urban only Consumer overview of Vietnam's next 12 months Q: In the next 12 months would you think that the following will be better, the same or worse than they are now' Value of the Vietnamese dong Employment The cost of living Vietnam's economy Foreign investment My personal standard of living 2012 = 68 51 44 30 2011 = 79 15 26 20 21 13 7 5 27 42 43 34 57 42 43 25 36 36 58 41 51 16 29 34 20 13 Worse 41 35 38 48 Same 30 32 35 39 Better Confidence has dropped substantially in the past 12 months Source: TNS CCIP – 2011 – 2012 urban only Job Security is Falling Do you think your present job is safe, or do you think there’s a chance you may become unemployed' Mid 2012 68 20 12 Early 2011 76 17 6 Present job is safe Chance of unemployment Don't know Job security is falling, driving consumer caution 6 Source: TNS CCIP – 2011 – 2012 urban only Employment Concerns Will unemployment rise or fall in 2012 in Vietnam' Mid 2012 25 69 6 Early 2011 30 54 Will see a fall in unemployment Will see a rise in unemployment Same/ Don't know 16 An additional 15% of the population believe unemployment will increase in 2012 7 Source: TNS CCIP – 2011 – 2012 urban only Consumers savings Roughly how much of your monthly income do you save' ++ Mid 2012 32 26 23 18 Early 2011 55 18 14 13 Up to 5% 5% - 10% 10% - 20% More than 20% Not only savings but the percentage consumer are saving has risen sharply 8 Source: TNS CCIP – 2011 – 2012 urban only Consumers spending in the near future' Given the economic situation, will you be spending, less, the same, or more on each of the following items' Education Health care products/services Food & beverages products Personal care products Household utilities House hold care products 47 46 46 43 7 12 37 32 32 27 25 25 24 52 58 55 52 54 56 55 15 14 16 23 17 21 8 Entertainment & dining out Mobile, Laptop, Devices Home appliances Transportation Communications 24 20 More 59 65 Same Less 17 15 Some sectors continue to see growth, whilst other continue to decline 9 Source: TNS CCIP – 2011 – 2012 urban only Modern retail in Vietnam Monthly household spend Travel/ holidays Healthcare Investment 3% 3% 2% Groceries Entertainment Eat / drink 4% Total Housing 4% Groceries Toiletries 32% 5% Communications 5% Utilities 8% Transportation 9% Education 10% out = 32% = 15% = 47% Eating/drinking out 15% 47% of all spend is still spent on Food What is the mix of food versus other items at modern retailers' © 2011 TNS Source: TNS VietCycle 2011. Most frequented Modern retail outlets HCM City 67 65 Ha Noi 38 35 20 16 20 5 7 0 2 Citimart 10 4 Co-op Mart Big C Metro 2 Maximark 2 3 Parkson 1 Vincom 0 Fivimart Lotte Mart Nationally Big C followed by Metro are the most frequented outlets Note low penetration of high end venues Source: VietCycle 2011 Base: HCMC & Hanoi Value Growth of Modern vs other trade channels 2008-09 2009-10 2010-11 2011-12 1st half 13 The Luxury Myth Who is Vietnam’s luxury consumer'  Gender  Living in  Age between 52% Male Hanoi = 36% - HCMC = 19% 35 – 54 = 49%  Monthly Income 8.5 Mil. vnd plus = 67% 18 Source: TNS VietCycle 2011 – Urban only % of populations which have bought luxury items in last 12 months *Luxury item here is defined as valued over VND 10,000,000 2008 2011 10 14 Slow growth indicates that luxury is still well out of reach for most consumers Source: TNS VietCycle 2011 – Urban only 19 Urban Declared monthly household income 41,000,000 VND Plus SEC A+ SEF F 1% 3% less than VND 2,500,000 A 9% E 22% 15,000,001 – 40,000,000 B 9% 13,500,001 – 15,500,000 2,500,001 – 5,500,000 C 31% D 25% VND 8,500,001 – 13,500,000 5,500,001 – 8,500,000 Urban luxury market is estimated to be about 19% of urban population Source: TNS VietCycle 2011 – Urban only Vietnam National annual household income Wealthy 1.5% 1.3 mil Affluent 9.5% 8.2 mi Middle 26% 22 mil A1 A B 1.5% 3.9% 5.6% C D 11% 15% BOP 63% 54 mil E F 29% 34% 2/3rds of Vietnamese are still eking out a day to day existence Source: TNS Vietnam What does Luxury mean to Vietnamese consumers Q: Which of the following statements describe what is luxury to you' Premium price Premium quality Unique design Used by famous people Hard to find Country of origin Limited edition Exclusive 60 56 36 32 26 23 18 14 Vietnam Luxury = Price & Quality, Western World Luxury = Exclusive & Country of origin Source: TNS VietCycle 2011 – Urban only 22 How we define luxury' Q: Which of the following activities do you consider to be luxury' 65 2008 60 58 45 57 2011 52 42 44 39 44 35 27 21 26 Dining out at 5-star restaurants/hotels Travelling for pleasure abroad Playing golf Shopping at boutique venues Living in a high-end apartment Staying at 5-star hotels/resorts Having membership to VIP club Until end of 2011 boutique shopping & overseas leisure travel were on the rise as luxury past-times Source: TNS VietCycle 2011 – Urban only 23 The luxurious difference between Hanoi & HCMC HCMC 82 Hanoi 63 46 18 22 13 6 9 Having a successful life PREPARED FOR DIAGEO Showing off Flashy Enjoy high quality life With good taste 13 © 2011 TNS Source: TNS VietCycle 2011 – Urban only Hanoi versus HCMC, Luxury is…. HCMC Hanoi 61 56 52 44 26 21 Premium quality Premium price Country of origin For Hanoians luxury perceptions are much higher than in HCMC , except for Quality 10 PREPARED FOR DIAGEO Source: TNS VietCycle 2011 – Urban only © 2011 TNS Technology – the top of the luxury food chain 58 Categories I would be willing to pay a premium for… Top-2-box agreement (%) 35 29 27 24 20 18 15 13 Tech item laptop, Household LCD TV, items camera Cars Clothes Jewelry Furniture Accessories Cosmetics/ Alcohol footwear Perfume Almost 2 in 3 ‘luxury’ buyers willing to pay a premium for tech items. 21 PREPARED FOR DIAGEO Source: TNS VietCycle 2011 – Urban only © 2011 TNS Premium brands PREPARED FOR DIAGEO Most desired luxury brands Top 5 most desired luxury brands iPhone / Apple Toyota Sony Honda Gucci Technology & vehicles rule the luxury roost 24 PREPARED FOR DIAGEO © 2011 TNS Source: TNS VietCycle 2011 – Urban only I Brands willing to pay a premium for Which brand would you be most willing to pay a big premium for in this category' 23% 22% 22% 14% 11% 13% 10% 13% 10% 8% 7% 4% 4% 9% 5% 25 PREPARED FOR DIAGEO Source: TNS VietCycle 2011 – Urban only © 2011 TNS Retail Synopsis  Due to the below factors, retailing is not what it is supposed to be….  NAT – is limiting value/volume retail from opening up  Lack of prime space  Low consumer confidence  High Inflation  High rents  High product cost restrictive to consumers  Wrong mix of retail outlets – all premium and not in line with consumer affordability 30 PREPARED FOR DIAGEO Retail Solution Many products under one roof at affordable prices Must offer reasonable prices to entice consumers Must offer right mix of consumer basket needs Must offer grocery / food & beverage outlets Location - Location - Location www.tnsglobal.com www.tnsvietnam.vn 31 PREPARED FOR DIAGEO