Cencosud’sPrivate Label Strategy

Private Label’s Strategy

CENCOSUD VISION

Be the most

profitable & admired retailer

in Latin America.

PL OBJECTIVES

• Product Differentiation vs.

competition

• Incremental profitability

vs. national brands

Private Label Strategic Pillars

1. Brands

Develop a strong portfolio of brands that operate across the

region.

2. Organization

& Processes

Build both local & regional teams, strengthening its operations

through BIC processes.

Portfolio

Description

Portfolio

Size

Brand

Building

LOCAL NEEDS AND

OPPORTUNITIES

• Local Brands from acquisitions

• Positioning: mostly OPP

Total Brands : 79

None

Starting Point

Private Label’s Strategy

Strategic Pillar #1: Regional Brand Portafolio

REGIONAL CORE

BRANDS

1st Stage (2009-2011)

• Intellectual property focus• Non-Food regional Brands• Food Mega Brand

• Eliminated: 38• New: 4 • Total Brands : 48

New Brand Framework:

• Equity Pyramid

• Brand Manuals• Store Execution

REGIONAL NICHE

BRANDS

3rd Stage (2012-2013)

• Specialty Brands in Easy• Paris Brands’ redefinition• Food sub brands

• Eliminated: 5• New: 20 • Total Brands : 60

Brand Execution:

• Communication strategy

Brand campaigns• Store execution

Supermarkets Home Impr. Dep. Stores

Private Label’s Strategy

Total Portafolio

60 Brands

Food Non Food

X 5

Countries

Strategic Pillar #1: Regional Brand Portafolio

Specialist

Transversal

Brands 10

Mega

Brands 9

Core

Brands 7

Core

Brands 21

Core

Brands 13

CO

RP

TE

AM

BU

SIN

ES

S

UN

IT

S’T

EA

MS

Private Label’s Strategy

Strategic Pillar #2: Work Class Private Label Organization and Processes

Corp. PL Team

B

U

1

B

U

2

B

U

3

B

U

4

B

U

5

Reg. Category 2

Reg. Category 1

Objective:

• Take synergies in core

categories.• Specialization in buying

and store execution

2nd Stage (2012-2013)

Corp. PL Team

B

U

1

B

U

2

B

U

3

B

U

4

B

U

5

Reg. Category 2

Reg. Category 1

Reg. Category 3

M

K

T

G

L

O

G

I

S

P

L

A

N

Objective:

New corporate capabilities:

• Marketing (i.e.: regional campaigns)

• Planning (i.e.: 8 annual collections)

• Logistics (perishables warehousing)

3rd Stage (2013-2016)

Corp. PL Team

B

U

1

B

U

2

B

U

3

B

U

4

B

U

5

Objective:

• Set a common strategy

• Local business optimization

• Buying by 1 leading country (Captain)

1st Stage (2009-2011)

Private Label’s Strategy

Brand Results

(2013*)

• 1 regional team:

• Planning

• Design

• Packaging

• Buying

• Marketing

• 5 countries

• TOP 5 PL Brand

• +3.000 new products /yr

KREA CASE: A REGIONAL SUCCESS CASE

2005 2009 2011 2012 2013

Brand

Redefinition

Strategic Pillar #2: Work Class Private Label Organization and Processes

Equity Pyramid

New Image

New Packaging Store Execution Catalogues

Brand Strategy Brand Executions

*

Private Labels Results – Colombia Food Case

Leveraging on the Regional Strategy & Platform

• JBO

• METRO

• MÁXIMA

Pillar #1: Regional Brands

• PL Food Team (Dec ’12)

• Quality Management Process (Mar ‘13)

• Innovation Pipeline Process (Sep ‘13)

Pillar #2: Teams & Processes

• Portfolio : 167 Skus vs (CRF 1700)

• Sales : 38% of PL Program CTF

• Margin NBE : +9,2 pts. (vs. Carrefour Brand)

• Margin OPP : +1,3 pts. (vs. Discount Brand)

Early Results: Cencosud (YTD 2013) vs. Carrefour (2012)

Private Labels Results – Electro Regional Case

1st Private Label in 5 Countries and 3 Retail Formats

Pillar #1: Regional Brands

• NEX

(National Brand Equivalent)

• Global Home / Veeden

(Opening Price Point)

Pillar #2: Teams & Processes

• Regional team

– Product development

– Portfolio management & go-to-market

–Quality assurance / Post sales Mgmt

• 5 buying seasons / year

Key Results (2010 – 2013)

• Portfolio : 155 SKUs

• Growth Sales : +81%

• Inc. Margin vs. Categories : +10,9 pts.

• Defects : < 1%

PL Performance

Sales /

Contribution

2013E/2010

Same Banner Sales Growth (excl: Johnsons, Bretas, Prezunic, Smkt Colombia)

+78% sales

+93% contribution

Brand portfolio

2013E

3 brands : sales > US$ 100 MM

5 brands : US$ 50 MM < sales < US$ 100 MM

16 brands: US$ 10 MM < sales < US$ 50 MM

Brand manuals100% of Supermarket Division

100% of Home Improvement Division80% of Department Stores Division

Cencosud’sPrivate Label Strategy