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APresentation on

THE POST-RECESSION SCENARIOOF THE FMCG-RETAIL SECTOR

Presented To :Hay Group

Presented By :Nikita Jain


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WHAT IS RETAIL-FMCG INDUSTRY?


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Retail/FMCG Sector

FMCG are products that are sold quickly

at relatively low cost.

though the absolute profit made are relatively small,

generally sell in large quantities,

so the cumulative profit on can be large.

Alternatively called as CPG (Consumer packaged goods) it isexpected to reach US$ 175-200 billion by 2016.

FMCG industry is regarded as the largest sector in New Zealandwhich accounts for 5% of its Gross Domestic Product (GDP).


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WHAT ARE THE PROBLEMS OR ISSUES FACED BYTHE FMCG-RETAIL SECTOR POST-RECESSION ?


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KEY CHALLEGES POST-RECESSION-2010

Shortage of skilled manpower

High attrition rate (due to retirement, resignation or death)

Severe shortage of trainers.

Problems due to employee strikes

Need of human resource development has increased.

The primary challenges of this sector are as follows:


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KEY CHALLEGES 2010 (conti..)

Supply Chain Management

Frauds in Retail

Challenges with Infrastructure and Logistics

The greatest concern for the retail sector is getting

the suppliers in sync with the fast pace the retailers

have to maintain. They must keep stores properlystocked and deliver the perfect order every time.

They must balance the need for low costs, proper

inventory levels and maximum service.


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WHAT PROLEMS ARE BEING FACED BY THEBIG FMCG PLAYERS?


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c

The French-based company Carrefour Group is the worlds second largest retailer but No#1 in

Europe.

With over 15,000 stores in 34 countries and more than 475,000

employees

Currently operates in three major markets: Europe, LatinAmerica and

Asia.

It has 4 main store formats- Hypermarkets

- Supermarkets

- Hard Discounts Stores

- Convenience


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Sales of Carrefour


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During Recession Q-4:2008

c

2008 was a year of contrasts. In an

environment characterized by a

widespread slowdown in economic

growth in the 4th quarter in most markets

, and falling inflation in the food sector

over the course of the year, THE

CARREFOUR GROUP POSTED ASOLID PERFORMANCE

Lars Olofsson , CEO-CARREFOUR


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PROBLEMS ISSUES FACED BY CARREFOUR

POST RECESSION-09/10


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THE ECONOMIC CRISISWAS HAVING AN IMPACT ON THE PURCHASING

POWER ANDWAS DRIVING CUSTOMERS TO DISCOUNT CHAINS.

Stagnant sales in France

Declining profitability in France & Europe(2009)

Carrefour needs brand repositioning 01 Mar,2010 In Belgium, the chain of Carrefour supermarkets is in trouble. Fourteen out of fifty

six supermarkets are to be closed down due to miserable financial results which will

result in major layoffs of staff.

"The strike will cost a fortune. On top of that we will lose customers.We therefore

have every interest in ensuring the strike doesn't continue," Gerard Lavinay, the

company's executive director for Belgium told the local l'Echo daily paper.

HOW DID CARREFOUR COMPETE?


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CONSOLIDATED SALES INCLUDING VAT


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STRATEGIES ADOPTED BY CEO-Carrefour

Carrefour did not have a good pricing image and that image was certainly

misleading. Carrefour suffered from a real mismatch b/w its actual prices, which are

often among the best in the market, and its perceived price image.

It was vital that the group immediately regained control of the message

on this issue.

To do so Carrefour planed to :

conduct communications, in-store and advertising

Campaigns about our prices & promotions.

Offer our own brands at appropriate prices. A new discount rage of own-brand

products will soon appear on the shelves.

Lastly , lets not forget that the Carrefour group is a important player in the

convenience discount segment, with its Dia and Ed baners.We tend to expand this

format and regain the initiative in France as we have successfully done in other

countries, particularly Spain.


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STRATEGIES ADOPTED BY MD-Carrefour

Carrefour MD

Shafie Shamsuddin

25TH APRIL, 2009 : In Malaysia

At Carrefour, we approach the crisis as a bigopportunity.:

We developed a tool, the 4 ACs to protect our

profitability

1. Accept Crisis (AC),

2. Adapt Cost (AC),

3. Assist Customers (AC) and4. Activity Contributions. (AC).

5. Have a client oriented culture and innovate as much

as possible.

To serve and reward them for their long-term loyalty

and support, we reduced and pegged the prices of 45

basic necessities from Mar 13, 09 to Dec 31, 09 to

soften the impact of the financial crisis. The response

has been fantastic.


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STRATEGIES:2009Carrefour tailored a plan in which

They had three top priorities: Customers, Cost and Cash.

Want to keep a close relationship with their customers.

Plan to invest 600million Euros in their retail business

Develop competitive prices, promotion to customers

A 40% increase in their own Carrefour brand of products for gaining market share

Reduce their operating costs 500 million Euros as a part of transformation plan.

Reducing their stock levels from 37 to 35 days to free up the resources that they needfor growth

Accelerating convergence of banners under the Carrefour brand

Reinventing our hyper markets : by revitalizing their hard discount stores because theymeet consumer needs.


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RESULTS OF STRATEGIES

Lionel Laurent, 03 Dec ,09 : If investor approval was all Lars Olofsson, theCarrefour chief executive, was looking for, he certainly got it on Thursday.

Shares of the French retail chain soared nearly 6.0% in Paris, after the new

CEO outlined plans to spend 600.0 million Euros ($767.3 million) on

increasing Carrefour's price-competitiveness after a slowdown in France

and Europe hurt annual profits.

In 2010, in an environment that is likely to remain challenging, we will

consolidate these gains through flawless execution of the transformation

plan and strengthened sales dynamics in our key markets. Carrefour, with a

renewed and leaner organization and new management, will continue to

implement its strategy to attain its ambition: become the preferred

retailer. LARS OLOFSSON , CEO-CAREFOUR


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CURRENT EVENTS 2010: PRESS

France March 26th

, 2010 Carrefour launches new digital download site with

complete music, video game and software offeringcarrefour.fr/telechargement

France February 22nd, 2010 The Carrefour Group and TheWalt Disney Company

develop a line of Carrefour Kids food products with afocus on nutrition

France ,February 10th, 2010

Carrefour wins the Top Employeur (Top Employer)award for the second consecutive year in recognition of itsperformance in the field of human resources


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WAL-MART

Wal-Mart Stores, Inc. (branded as Wal-Mart) is an American

public corporation

Runs a chain of large, discount department stores.

Wal-Mart serves customers and members more than 200 milliontimes per week at more than 8,446 retail units under 55 different

banners in 15 countries.

With fiscal year 2010 sales of $405 billion, Wal-Mart employs

more than 2.1 million associates worldwide.

A leader in sustainability, corporate philanthropy and

employment opportunity,Wal-Mart ranked first among retailers

in Fortune Magazines 2010 Most Admired Companies survey.


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Relatively wellinsulated from

the credit crisis

and economic

decline.

Wal-Marts pricesare, on average,

10 percent lower

than competitors

prices. walmart

fact sheet

Wal-Mart Stores, Inc. again posted record sales and earnings for fiscal year 2008. Total net

sales for the Company were $374.5 billion, an 8.6 % increase over the previous fiscal year

and a record for any retailer. I am optimistic about our future because I know that

customers everywhere will continue to depend on Wal-Mart to save their money so they

can live better. And, we accomplished this during a quarter when most of retail was goingin the other direction

In 2008 it was the world's largest (No# 1)public corporation by revenue, according to the Fortune

Global 500 for that year.

Lee Scott

President and ChiefExecutiveOfficer

WAL-MART DURING RECESSION

Economies of scale andruthless efficiencies

allowWal-Mart to keep

prices so low that

competitors, found it

difficult to match them.


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ISSUES FACE BYWAL-MART POST-

RECESSION-2010

Wal-Mart sick-pay policy puts public at risk-ByAngela Woodall , Oakland Tribune, 01 Mar 2010

The sick-leave policy of the world's largest retailer, Wal-Mart Stores Inc., is putting the public at risk because

workers are not paid the first day they take off for an illness, even if it is a serious contagious disease, according

to members of several unions and labor watchdog groups.

Wal-Mart discriminates against women: The femaleplaintiffs in this case claim they have been paid and promoted less than their male Wal-Mart co-workers,

and the women are seeking back pay and punitive damages from the world's largest retailer.

Wal-Mart censors its products: Green Day has the most popularCD in the country, but you wont be able to find it at your local Wal-Mart. The band says the giant

superstore chain refused to stock its latest CD, 21st Century Breakdown, because Wal-Mart wanted the

album edited for language and content, and they refused.


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WALMARTS

GLOBALSTRATEGIES-

2010

Remain committed to

being the price leader

in each market.

In the entertainment

category : continue to

improve brand offerings

and introduce newtechnology.

Pharmacy has been

redesigned to be more

customer friendly.

$4 prescription

program continues to

build customer loyaltyand gain broaderacceptance.

The International segment is

guided by three strategicinitiatives:

Create shareholder value

through portfolio optimization

EnhanceWal-Marts global

leverage

Win in each market

Growth: We will continue to grow around

the world. We have many opportunities to

grow by :opening new stores

entering new markets

making acquisitions

integrating online channels

developing new, innovative formats to

allow people to experience the Wal-Mart

brands.

Returns: We have a rich

heritage of delivering strong

shareholder returns. Each

operating segment is focusedon contributing to consistent,

strong company returns.

Leverage:We also

remain committed toleveraging operating

expenses and finding

additional ways to

increasingly benefit

from our global

expertise, talented

associates andcompany scale.


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Wal-Mart Reports Fiscal Year 2010 Results

"Walmart's exceptional

earnings for the fourth

quarter and the full year

exceeded our

expectations," said Mike

Duke, Wal-Mart Stores,

Inc. president and chief

executive officer. "These

results reflect the

ongoing underlying

strength of our business

and our strategies to

improve shareholdervalue through our

priorities - delivering

growth, leveraging

expenses and improving

returns.

Net sales were as follows (dollars in billions):Three Months Ended Years Ended

January 31, January 31,

--------------------------- ---------------------------

Percent Percent

2010 2009 Change 2010 2009 Change

--------------------------- ---------------------------

Net Sales:

Walmart U.S. $70.969 $71.293 -0.5% $258.229 $255.348 1.1%

International 29.572 24.751 19.5% 100.107 98.840 1.3%

Sam's Club 12.285 11.836 3.8% 46.710 46.899 -0.4%

--------------------------- ---------------------------

Total

Company $112.826 $107.880 4.6% $405.046 $401.087 1.0%


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CURRENT EVENTS-WALMART June 4, 2010: 500,000 new jobs worldwide in 5 years:Wal-Mart Stores Inc. said Friday it plans to

create 500,000 jobs throughout the world in the next five years, saying there is tremendousopportunity for growth globally.

May 14, 2010: Walmart increases giving in United States, Pennsylvania :Wal-Mart announced itscharitable giving in the United States totaled more than $467 million in cash and in-kind gifts in thefiscal year ending 2010.

In Pennsylvania,Wal-Mart gave more than $11.59 million to support non-profits like Shrines Hospitalfor Children, Make-A-Wish Foundation of Greater Pennsylvania and more than 90,000 bottles of water,

24,000 blankets, 27,000 tents and more than 127 million pounds of nutritious food -- the equivalent ofnearly 100 million meals, more than 20,000 units of medical supplies, such as gauze and surgicalmasks, were donated in response to the Haiti earthquake.

Walmart CEO Mike Duke Outlines Strategies for Building the "Next GenerationWalmart" :

Become a truly global company;

Understand the business challenges that retailers will face and solve them;

Play an even bigger leadership role on social issues that matter to our customers;Keep our culture strong everywhere.


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Our Company is so well positioned fortodays difficult economy and tomorrows

changing world.We have an exceptionally

strong management team, able to execute

our strategy, perform every single day,

and deliver results.

Michael T. Duke

President and CEO,WAL-MART Stores ,INC

. v ng e er s s mp y a resu o ose sav ngs

AtWal-Mart Stores, we know that our

customers want unbeatable prices on quality

brands in a fast, friendly, easy shopping

experience. Thats why our message is

clear:When you shop atWal-Mart, you

save money so you can live better.

The fact that we save our customers

money has long been part of our

DNA. Living better is simply a result of those savings


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Is the world's leading Nutrition, Health andWellness company.

It created the largest research and developmentnetwork in the industry, employing over 5,000scientists and technicians.

Nestl has a strong corporate culture which unitesmore than 278 000 people working in more than100 countries.


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Nestle DURING RECESSION

Vevey, Switzerland-based Nestl, owner of brands such as Kit-Kat, Gerber baby

food and Nescafe coffee, saw sales fall of 2.1% in 2009, to 107.62 billion Swiss

francs ($99.87 billion) from 109.91 billion francs in 2008.

Despite the very different challenges in 2008 Nestle had not only achieved,but even outperformed the nestle model , with organic growth at 8.3%.

Nestl has responded to recession by selling smaller, cheaper versions ofproducts in developing economies. So far, its move away from commodity items

seems to be paying off.

Paul Bulcke

CEO


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ISSUES FACED BY NESTLE Nestl union claim strong support for strike ballot:10th April 2010, The press, New York

Nestl is not employing (and certainly not employing in a responsible way) thousands of the workers making

Nestl products.

In the important growing Indonesian market for example, only 44% - significantly less than half - of the workers

making Nestl branded products in four factories and one warehouse are permanent Nestl workers. This is typical

of Nestl in Asia and other poorer regions of the world. And in Europe over 10% of workers in Herten Germany, for

instance, are agency workers making Nestl Herten productsbut not working for Nestl. In Hungary (Diosgyori)

over 20% are non-permanent, in Portugal (Avanca) over 25% and in the UK (York) almost one in eight workers are

not permanent Nestl employees

The IUF challenges Nestl to come clean with consumers and call their brand "Nestl hybrid" with the "hybrid"meaning product made by non-permanent or non-existent Nestl workers or made in non-Nestl facilities. If they

won't we challenge Nestl to take a close look at their employment practices so they can guarantee that branded

Nestl products are made in Nestl facilities by Nestl workers and managers on decent and permanent Nestl

work contracts.

Nestle workers voted overwhelmingly in favour of a ballot earlier this year, before the dispute over a proposed pay

freeze escalated into a national issue, and they have now been voting for a second time.

(The International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers

Associations (IUF) is an international trade union federation composed of 375 trade unions in 120 countries with an

affiliated membership of over 2.6 million members. It is based in Geneva, Switzerland).


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Global Rights for Global Nestl Worker (reported by):- The IUF July 10, 2009

For growing numbers of Nestl workers around the world, it's "Good Food -

Good Life Goodbye to Union Rights in theWorkplace". They call this

Nespressure - in the race to create "shareholder value" Nestl workers are beingleft behind.

Nestl in 2008 spent CHF 8.7 billion buying back its own shares on the stock

market in order to reduce the number of shares in circulation and boost the

earnings per share ratio.

That's over half of what the company claims to have spent on wages and

salaries, and nearly double the capital expenditure for the year! Together with

the enormous dividend hike, this is money that was not invested in research,

new capacity, training, improved wages and pensions or other benefits for whatNestl calls "our people".What it actually represents is the growing diversion of

enormous amounts of cash to shareholders, against a background of persistent

violations of trade union rights.


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On International Labour Day, 1 May 2010 ,Workers March in Panjang, Indonesia for Respect of Union Rights at Nestle


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NESTLES STRATEGIES- 2010

Employee Engagement ProgramTo help create an effective and efficient working environment:

Nestle will listen and respond to the views of their employees

Relaunched the Nestl & I global employee survey.

All Nestl people, at all levels of the business, will be invited to participate by theend of 2010, and their feedback will be used to launch initiatives to improve Nestl'sperformance around the world.

To maintain the spirit of localization, Nestle has updated the survey to have a verylocal flavor.With a small core set of global questions, markets can select additionaltopics for inclusion that best fit with their environment, as well as select the surveytiming to suit local circumstances.

The process will provide the possibility for managers throughout Nestl to accesstheir individual results, to allow for improvement activities to take place at all

levels, and tools to be made available to support action planning.

This new, enhanced survey will ensure nestle measures not only employeeengagement but also aligns with their strategic roadmap, their leadership and howthey enable employees to succeed. The relaunch process includes many more toolsto enhance and expand action on feedback throughout the organization.


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The Future-Nestle

(2010) Paul Bulcke, Nestl CEO: Our strong salesperformance in the first quarter confirms we are capturingopportunities in our different growth pillars, both inemerging and developed markets, even in a globaleconomic environment which remains challenging. By

keeping the initiative and with appropriate pricing, we arebuilding our market positions in different categories aspart of our long-term, disciplined commitment tosustainable, profitable growth. We continue to increase

investment in our brands, our innovation and newmanufacturing and distribution capabilities, and willfurther drive our efficiency programmes across the world.I therefore reconfirm our outlook for 2010, both top and

bottom line improvement.


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Nestle-CURRET EVENTS-2010 June 15, 2010 :An investment of CHF 60 million (1.6 billion roubles) for the construction

of a new stat e-of-the-art factory in Russia has been announced by Nestl.

June 8, 2010 : A social programme which helps small commercial businesses following

the Chile earthquake is completed by Nestl Chile.

May 27, 2010 : Over 70 delegates from 34 countries gathered to share experiences

and develop best practice models for the Nestl Healthy Kids Global Programme, on

26 May 2010.

Delegates included representatives from national health authorities, child nutritionexperts, NGOs and education experts who are working in partnership with Nestl to

deliver this important programme, which aims to raise Nutrition, Health and Wellness

awareness of school age children around the world.


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2010 & BEYOND :TRENDS IN GLOBAL FMCG

In developed countries , now retailers are practicing Vendor management inventory (VMI)

systems, where the supplier has access to the point of sales data of the retailer and plansautomatic replenishments responding to the stocks available to the retailer.

In sharp contrast, 90 per cent of retailers and 75 per cent of FMCG firms expect business

performance to reach or surpass target levels this year. Almost all FMCG companies (95 per cent)

and a majority of retailers (92 per cent) will provide a salary increase.

The Australian Market has matured with the explosion of digital marketing. The recovery process

of the economy has begun and its time to look to the future. 2010 is seeing the death of the

one-way websites which tend to lack personality, interaction and participation with brands to

prompt consumers to react in their favor.

There is a strong growth potential in areas of mobile and online advertising particularly in areas

such as mobile marketing, integrated content, social networking, electronic direct mail, display

advertisements.

Store design : Retailers are now concentrating on creating a customer-pull environment that

increases the amount of impulse shopping. Research shows that the chances of senses dictating

sales are upto 10-15%. Retail chains like MusicWorld, Baristas, Piramyd and Globus are laying

major emphasis & investing heavily in store design.

Marketers are going for Celebrity endorsements: the highest recall among consumers,

immediate positive impact on sales, new brand launches and re-introductions etc.


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