Nordic Business Update
9 September 20119 September 2011
John BrowettChi f E tiChief Executive
Agenda
● Overview● Market background● Business modelBusiness model● Country overviews● Multi-channel opportunity● Store tours● Store tours
3 Nordic Business Update9 September 2011
The market leading electrical retailer in the Nordics
Single market approach Key facts
● Overall Nordic market share of more than 20%
● Group profit exceeds sum of● Group profit exceeds sum of competitors’
● 285 stores of which 37% are franchised
● Approx 7,000 employees
● Committed and experienced managementmanagement
● ”The Elkjøp concept”
● Strong culture cultivated through the organisation
4 Nordic Business Update9 September 2011
“The winner takes it all”
Strong track record
● Outperformed market in the long and short term, good times and hard times● Consistent channel, format and range innovation
Cultivated concept
● A clear operating model that delivers results● Blend local market and customer knowledge with low cost centralised operation
Strong market presence ● Market leaders and growing share in all Nordic countries
Procurement● Aggregating volume delivers unrivalled negotiating power● Supply chain structure is cost effective for Elkjøp and suppliers
Prime location ● Strong retail sites in all countries with focused and active management
Culture ● The Elkjøp culture is ingrained throughout the business from sales to MD● Strong internal loyalty and determination to win
5 Nordic Business Update9 September 2011
Elkjøp Nordic Management Team
● Marianne Kuras - CFO
● Marianne Nøkleby – Director Wholesale & Supply Chain
● Robert Grefstad - IT Director
● Tone Matssen – Marketing PR and HR Director
● Per Sigvardsson - COO
● Eirik Jarl Nilsen - Franchise Director
● Andreas Niss - MD Elkjøp Norway
T d S l
● Ronny Blomseth – MD
● Trond Samuelsen - MD Lefdal Norway
● Anders Nilsen - MD Elgiganten Sweden
J B MD El i t D k● Jesper Boysen - MD Elgiganten Denmark
● Irmeli Rytkonen - MD Gigantti Finland
6 Nordic Business Update9 September 2011
Ronny BlomsethMD ElkjøMD - Elkjøp
Agenda
● Overview
M k b k d● Market background● Business modelBusiness model● Country overviews● Multi-channel opportunity● Store tours● Store tours
8 Nordic Business Update9 September 2011
ELKJØP39 STORES
ELGIGANTEN53 STORES
ELGIGANTEN28 STORES
GIGANTTI22 STORES
ELKOFRANCHISE4 STORES
ELDINGFRANCHISE3 STORES
PISSFIKFRANCHISE6 STORES
ELKJØP EXPRESS17 STORES
F‐GROUP65 STORES40% OWNERSHIP
ELGIGANTENFRANCHISE17 STORES
GIGANTTIFRANCHISE19 STORESS O S
ELKJØPFRANCHISE55 STORES
7 STOR S 9 STOR S
285 stores in 7 countriesLEFDAL20 STORES
LEFDALFRANCHISE2 STORES2 STORES
9 September 20119 Nordic Business Update
Elkjøp Nordic have a record of long term growth
2 500● 1962: Elkjøp Norway foundedGBPm
Revenue growth Major achievements
2,000
2,500 ● 1986: Super store concept introduced● 1994: ElGiganten Sweden established● 1996: ElGiganten Denmark established● 1996: Acquired Lefdal Lavpris (NO)
1,500
● 1996: Acquired Lefdal Lavpris (NO)● 1997: Nordic distribution center established● 1999: Gigantti Finland established● 2000: Acquired by Dixons Group
14.6% CAGR
1,000
● 2000: Web site launched● 2001: Acquired Super Radio (DK)● 2005: Acquired Markantalo (FI)● 2005: Acquired Electronic World (DK)
500
● 2005: Acquired Electronic World (DK)● 2006: PC City transferred from Dixons Group● 2006: Acquired 40% of Fona Group (DK)● 2007: Acquired Electric City (DK)
0
04/05 05/06 06/07 07/08 08/09 09/10 10/11
● 2008: Elkjøp Express established● 2009: Closed down unprofitable chains in
Sweden (PC City) and Finland (Markantalo● 2011: Acquired Epoq kitchen in June 2011
10 Nordic Business Update9 September 2011
● 2011: Acquired Epoq kitchen in June 2011Source – Dixons Retail Accounts
Unique business model has enabled Elkjøp to outperform the market
I t t i d
Elkjøp LfL Index vs retail Index
● Investment in good locations
●Store refurbishment135
140
145
●Store refurbishment
●Category development125
130
●People development
●Constant low price i ti
110
115
120
communication
●Strong brand preference100
105
02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10 10/11
*Elkjøp like for like sterling revenue growth indexed to base value 100 in FY02/03
**Eurostat retail data for Norway Sweden Denmark and Finland are equally weighted
Elkjøp Group * Nordic Countries Index ** EU Countries Index
11 Nordic Business Update9 September 2011
Eurostat retail data for Norway, Sweden, Denmark and Finland are equally weighted and indexed to base value 100 in 02/03
Online is the big opportunity
140 000
160,000
●Online market now starting to take shape
120,000
140,000 starting to take shape
●Market growth expected to come
80,000
100,000expected to come through online channel
40,000
60,000 ●Opportunity for– Established brands
M lti h l t
0
20,000
– Multi-channel operators
02006 2007 2008 2009 2010 2011 2012 2013 2014
Online Stores
12 Nordic Business Update9 September 2011
Source: Eurostat , Datamonitor and Dixons Retail estimates
Competitive landscape is comprised of a few large operators
Key Competitor
Market presence
Key characteristics Key product categories
25%
Expert NO, SE , DK, FI, EST
- Small and medium sized stores- Own and franchise stores- Acquired 30 Onoff stores July 2011
MDA, CE
Komplett NO, SE, - Major eCommerce player Computing
51%
Other
DK, FI - Ownership in MPX and computer components
Siba NO, SE, DK
- Medium sized stores- Very strong in sales of insurance
d dit l
Computing, Telecom, Foto
4%
10% and credit sales- Ownership in NetonNet- Own stores
MediaMarkt SE - Large stores CE, 4%
4%2%
- High share of self-service and low share of customer service in the stores
- Own stores
Computing, Telecom, Foto
F-Group DK - Small and medium sized stores- Own stores- 40% owned by Elkjøp Nordic AS
Brown Goods, Entertainment
13 Nordic Business Update9 September 2011
Source: Annual reports, market data and management estimates
Agenda
● OverviewM k t b k d● Market background
● Business modelBusiness model● Country analysis● Multi-channel opportunity● Store tours● Store tours
14 Nordic Business Update9 September 2011
Clear business objective
VISIONTh E th’ t t t i d fit bl t il !The Earth’s most customer centric and profitable retailer!
CUSTOMER PROPOSITIONCUSTOMER PROPOSITIONOffer a rich choice of quality brands at the lowest price to most people.
BUSINESS IDEABeing the most efficient and profitable distribution channel for consumer electricals, g p
electrical household appliances and related services.
The Elkjøp concept includes centralised purchasing, centralised distribution, superstores with large showrooms and multi-channel offerings
15 Nordic Business Update9 September 2011
Key success factors for electricals operation
● High sales densities
● Lean back office organisation
● Cross border synergies
● Standard operating model
● Part time employees in high season● Part time employees in high season
● Logistics and central distribution centre
● Common IT systems supporting the operating model
● Multichannel – internet is growing as a sales channel with low costs
16 Nordic Business Update9 September 2011
Elkjøp focus is to lower costs to sales
●Elkjøp has continued to lower costs even in difficult times
●Variances appear during the year, but objective remains the same
32%
34%
OnOff bankrupt July
2011
26%
28%
30%2011
22%
24%
26%
18%
20%
2007/08 2008/09 2009/10 2010/11
Elkjøp Fona Media OnOff SIBA
“The key to success is the balance between costs and margin!”
17 Nordic Business Update9 September 2011
y gSource: Annual reports, market data and management estimates
A lean organisational structure
MD
Operations Support functions
Finance Support & Business NordicMultichannel Finance Control DevelopmentWholesaleMultichannel
PRODUCT CATEGORY
SALESSALESSALES
PURCHASINGDIRECTOR
PURCHASINGDIRECTOR
PURCHASINGDIRECTOR BUYING
SALES MANAGER
PURCHASINGDIRECTOR
SALES MANAGER
SALES MANAGER
SALES MANAGER
SALES MANAGER
SALES MANAGERMANAGERMANAGER CHAIN
DEPARTMENTMANAGER STORE
Management are close to the market enabling quick decision-making
18 Nordic Business Update9 September 2011
g g q g
Win model – best for customers and best for us
19 Nordic Business Update9 September 2011
In depth training and embedded culture
● Product training– Centralised training of all employeesg p y– Centralised training of specialists– Local product training in store
Online training of new employees– Online training of new employees
● Selling and win training– All employees once per year– Continuous assessment through reporting and
management
● Culture– All employees includes those in back office– Strength in teamwork
20 Nordic Business Update9 September 2011
Centralised procurement is key
● Local product managers decide ●Centralised purchasing across territories
Elkjøp buying model Key elementsp g
ranges
●Elkjøp procurement strategy based on huge bulk purchases
p g
●Annual purchasing contracts
●Net/net pricing on huge bulk purchases
●Centralised purchasing function located in Elkjøp Nordic – Supported
●Net/net pricing
● Large volume of narrow agreed ranges
by the Dixons Retail group
●Category purchasing managers are responsible for negotiating both
●Volume forecasting
●Few variationsresponsible for negotiating both product prices and volumes
●Supporting local sales managers who
●Control of consumer product decision
●Minimum need for local supportare close to the customer
● 90% of total buying● ”Elkjøp” one country
21 Nordic Business Update9 September 2011
Supported by an efficient distribution platform
● Range management
Elkjøp vs competitors Supply chain principlesg g
– A very tight range, with wide choice for customers, but with most of the sales and profit from win products
● Stock managementCENTRAL WAREHOUSE
MANUFACTURER
p ● Stock management
– Manage stock by product type, advertising, win/support lines and range
● Supplier management
P t ith k li t i d
CENTRAL WAREHOUSE90%DIRECTLY
10%
STORES
Elkj
øp
– Partner with key suppliers to increase speed and flow of products and information
● Availability
– Make sure no one tries harder than us to get
STORES
STORESgreat availability on advertising and win/support products
– Try to always be in stock
● Reverse logisticsmpe
titor
SUPPLIERS/WAREHOUSE g
– Only send product one way, don’t spend time or money on reverse logistics
● 3rd party deliveries and cross docking
Com
MANUFACTURER
22 Nordic Business Update9 September 2011
Jönköping is a key element of centralised distribution
●All goods purchased by Elkjøp Nordic are shipped directly to Nordic Distribution Center in Jönköping, Sweden
●Built in 1997 - expanded in 2000 and 2007●Storage area: 95,000 m2
85 d ki b d il li● 85 docking bays and own railway line● 250-500 employees● 130 forklifts●Goods arrival:
– 825,000 m322 000 t il– 22,000 trailers
– 2,500 railway wagons– Online order confirmation &
booking – eLOG Jönköping
23 Nordic Business Update9 September 2011
Road, Rail and Sea links in central location
24 Nordic Business Update9 September 2011
Stock management improvements
Retail Wholesale
1. Improvement of manual forecasts from stores through training
1. Monitoring stock days rather than total stock levels
training
2. System upgrades to support more automated forecasting
2. Stock days for benchmark stores to be implemented for the rest of
more automated forecasting from stores
3 3rd party and cross docking
the stores
3. Improved systems, training and 3. 3rd party and cross-docking
options (integrated with suppliers)
focus
pp )
Targeting a 10-15% improvement in stock turn
25 Nordic Business Update9 September 2011
g g p
Flexible store format●4 different formats:
– Elkjøp Express
– Franchisees
– Superstores
– Megastore
●Fomats deployed depending on:
– Customer segments
– Location type & drive times
– Market size (by sector)
C titi– Competition
– Service requirements
26 Nordic Business Update9 September 2011
Express store format
●Mobile and Data communication specialistco u cat o spec a st
● Located in shopping centers and on high streets
●Typically 50 sqm ●Average sales of NOK5m● 17 stores in Norway● 17 stores in Norway ●Further 50 stores planned●Express customers: p ess custo e s
– Young people– Older people
Women– Women
27 Nordic Business Update9 September 2011
Franchise stores● 102 stores across the Region
●Avg sales area: 650 sqm
55 storesRepresent 49% of total no.28% of retail revenue
19 storesRepresent 46% of total no.19% of retail revenue
●Purpose of franchise– Fits smaller markets – Add volume– Add volume
– Increased profitability– Increased buying power
F hi t
2 storesRepresent 10% of total no.2% of retail revenue
●Franchise concept– No franchise fees– No royalty or license fees
17 stores– All investments and costs born by
franchisee (incl. establishment)
● Low investment and high profitability
17 storesRepresent 24% of total no.11% of retail revenue
Low investment and high profitability
28 Nordic Business Update9 September 2011
Superstores
●Backbone of portifolio
●144 across Nordics
●From 1,000 – 2,500 sqm
●Catchment area from 30,000
●Typical rent of NOK1200 per Sqm
●Offering full specialist range of consumer electricalsconsumer electricals– 5,000 SKUs
●Full service offering●Full service offering
29 Nordic Business Update9 September 2011
Megastores●First Megastore in Lorenskog
opened in May 2008
21 M t● 21 Megastores now open
● 5 more will open in 2011
O t it f t t l f●Opportunity for a total of 40-50 across Nordics
●Average size of 2,500 to g ,5,000 sqm
●Catchment area fom 80,000
●Extended specialist product range– 15,000+ SKUs,
●Enhanced range of services and product demonstration
30 Nordic Business Update9 September 2011
Opportunity in added value services
SPECIALIST OPPORTUNITY●A trusted, knowledgeable technology expert who’s always by your side
d idand on your side
RELATIONSHIP OPPORTUNITY●Convert ‘service-minded’ segments from occasional customers into life
time members
INCREASED VOLUME & QUALITY OF SALES OPPORTUNITIES
●Step-change sales of existing attached services
●Create new range of AVS services to enable customers to get ‘more out of…’
●Drive sales of repair and fix services as default/trusted option
●Create relationships with non-Elkjøp customers
31 Nordic Business Update9 September 2011
Roll out plan for a wide range of added value services DELIVER &
INSTALLSETUP &
UPGRADEHELP &
SUPPORTREPAIR & PROTECT
● Delivery options– Express– Time to suit
● Installation standalone
● Computer “ready to go”
● Mobile “ready to go”
● Mobile “ready to go” advanced
● Support agreements
● Data transfer
● Date erase
S t
● Insurance
● Instant replacement (under NOK1000)
standalone– Computer– Aerial– Set top boxes– MDA
● Installation with
advanced
● GPS “ready to go”
● Internet ready set-up
● Camera set up
● System rescue
● Online storage/sharing
● iPad media stream
● Virus removal● Installation with delivery– Laundry– Refrigeration– Swap doors
Cooking
p
● Memory upgrade
● Software installation
● Operating system
● Virus removal
● Home network trouble shooting
● Driver downloads– Cooking– Built-in– TV system set up– TV Wall mount
● Home Network set up
install/upgrade for:– Computer– Mobile– GPS
● Component upgrade
● Health check
● Speed up your PC
● Data recovery● Home entertainment
setup
● Component upgrade
● Online tutorials ● Data recovery Advanced
● Repairs
32 Nordic Business Update9 September 2011
Flexible operating model
1. 100% outsourced and 3rd party solution●Repairs today●Repairs today●Home delivery in Norway, Sweden and Finland
2. Partnership with ownership●Home delivery in Denmark
3. In house solution●Technical helpdesk for Elkjøp Nordic
33 Nordic Business Update9 September 2011
Example from Norway “Computer – Support agreement”
● What we do for the customer1 Unpack PC start up1. Unpack PC start up
2. Run full preparation and image install
3. Install software and tune for best fperformance
4. Install Online backup and anti virus protection
5. Setup of wireless network
6. Function test
7 Al il bl t t7. Always available to support
8. 36 month insurance
● Price NOK 3 495 good margin● Price NOK 3,495,- good margin
● Approx 1/3rd are sold with “ready to go”g
34 Nordic Business Update9 September 2011
Agenda
● OverviewM k t b k d● Market background
● Business model
● Country analysis● Multi-channel opportunity● Store tours● Store tours
35 Nordic Business Update9 September 2011
Outperformance has been in all product categories, in all countries (last 18 months)
92
100
98Brown Goods*
White Goods*
90
104
110
91
97
108
96
109
105
103
104
111
White Goods
SDA*106
114
119
105
117
142
109
122
117
102
103
109Computing**
102
106
106
98
101
117
110
100
125
103
110Telecoms**
Base level = 100
117
Base level = 100
120
Base level = 100
105
Base level = 100
Market Index FY 2010 + H1 2011 Elkjøp Index FY 2010 + H1 2011
- Elkjøp Index is based on sales to retail, compared to last year sales
36 Nordic Business Update9 September 2011
- Market Index is based on Dixons Retail estimates- Data are sales values (*) or sales volumes (**)
Elkjøp and Lefdal – leaders in Norway
Extensive store network Historical performanceSales
9000
Sa esNOKm
39 Elkj tNorway 8000
8500
• 39 Elkjøp stores
• 17 Elkjøp Express stores
• 55 Elkjøp franchise stores
• 20 Lefdal stores
7500
• 2 Lefdal Franchise stores
• 2,000 Employees (FTE)
• 115,230 Sqm selling space 6500
7000
• Main competitors:• Expert• Komplett• Euronics
2008/09 2009/10 2010/11
37 Nordic Business Update9 September 2011
Elkjøp market leader in all major cities, Lefdal no.2
●The Elkjøp Group has a c.30% market share in Norway
Ekjøp is definite market leader– Ekjøp is definite market leader– Competes alongside Expert in major
citiesElkj i ifi t b i i– Elkjøp possesses significant bargaining power against suppliers
– Strong brand awareness– Excellent store portfolio
●Elkjøp expected to be less exposed to●Elkjøp expected to be less exposed to current global downturn
●Expert operates more stores than Elkjøp but those are smaller and haveElkjøp, but those are smaller and have lower turnover
●Well developed eCommerce marketKomplett no 3 regardless of channel
31%
38 Nordic Business Update9 September 2011
– Komplett no.3 regardless of channel
Positive outlook for electricals in Norway
8.0%
10.0%
35,000
40,000
6.0%30,000
4.0%
20,000
25,000
0.0%
2.0%
10 000
15,000
(2.0)%5,000
10,000
31%
(4.0)%02007 2008 2009 2010 2011F 2012F 2013F
Electricals spend Growth
39 Nordic Business Update9 September 2011
Source Dixons Retail estimates NOKM
ElGiganten 50% growth since Media Markt entry
Largest store network Historical performance
S l
7,000
Sales NOKm
Sweden• 53 El-Giganten stores 6,000
• 17 El-Giganten franchise stores
• Electroworld on line brand
• 1,350 Employees (FTE) 5,000
• 108,063 Sqm selling space
• Main competitors:• Media Markt• Siba/NetonNet 4,000
2008/09 2009/10 2010/11• Expert 2008/09 2009/10 2010/11
40 Nordic Business Update9 September 2011
Sweden is the biggest market but extremely competitive
●ElGiganten has a c.18% market share in Sweden– Market leader, but tough competition from
Media Markt●Fragmented market
– Several competitors with 5-10% market shares
●Consolidation has started●Consolidation has started – NetOnNet acquired by SIBA in February– OnOFF bankrupt in July– Growth opportunity
●eCommerce market well developed– Dustin and CDon are largest playersg p y– Competitive opportunity through
elgiganten.se and electroworld.se
41 Nordic Business Update9 September 2011
Forecasts for steady growth in Sweden
6.0%4,600
4 0%
5.0%
4 200
4,400
3.0%
4.0%
4,000
4,200
2.0%3,800
1.0%3,600
0.0%3,4002007 2008 2009 2010 2011F 2012F 2013F
Electricals spend Growth
42 Nordic Business Update9 September 2011
Source Verdict electrical spend Eurom
Danish operations developed with Elkjøp “win-model”
Growing store network Historical performanceSales
Denmark• 28 ElGiganten stores
3500
Sales NOKm
• 28 ElGiganten stores
• 800 Employees (FTE)
• 47,527 Sqm selling space
• Main competitors:3000
• Expert• Fona
2500
20002008/09 2009/10 2010/11
43 Nordic Business Update9 September 2011
Danish market is consolidating
●ElGiganten has c.14% market share in Denmark– Market leader– Has benefitted from consumers move
from high street to out of towng
●ElGiganten, Expert and F-Group are largest players– Many niche stores– 8 big mixed electrical retail brands have
closed since 2000
●Success with ”win-model” since 2009– Outperforming market and increasing
market sharemarket share
●Potential for ElGiganten franchise and some more stores
44 Nordic Business Update9 September 2011
Strong recovery since 2009 in electricals spend
5.0%
6.0%
2,600
2,650
3.0%
4.0%
2,500
2,550
1.0%
2.0%
2 400
2,450
,
(1.0)%
0.0%
2,350
2,400
(3.0)%
(2.0)%
2,250
2,300
(4.0)%2,2002007 2008 2009 2010 2011F 2012F 2013F
Electricals spend Growth
45 Nordic Business Update9 September 2011
Source Verdict electrical spend Eurom
Solid earnings in Finland post closure of Markantalo
Established store network Historical performanceSales
• 22 Gigantti stores19 Gi tti f hi t
Finland 400,000NOKm
• 19 Gigantti franchise stores• 600 Employees (FTE)• 45,658 Sqm selling space• Main competitors:
• Expert
350,000
p• Verkkokaupa• Musta PÖrssi• Veikon Kone 300,000
250,000
200,0002008/09 2009/10 2010/11
46 Nordic Business Update9 September 2011
Finnish Gigantti has a strong brand in both channels
●Gigantti has c.23% market share in Finland
●Very strong brand recognition– Service– Low price perception
●Gigantti and Expert are largest playersFragmented market– Fragmented market
– Many niche stores
●Tough competition from g pverkakkauppa.com
●Fantastic success since the start
●Potential for growing the franchise business
47 Nordic Business Update9 September 2011
Finish market expecting more modest recovery €M
6.0%
7.0%
2,580
2,600
€M
3 0%
4.0%
5.0%
2,540
2,560
1.0%
2.0%
3.0%
2,500
2,520
(1.0)%
0.0%
2,460
2,480
(4 0)%
(3.0)%
(2.0)%
2 400
2,420
2,440
(4.0)%2,4002007 2008 2009 2010 2011F 2012F 2013F
Electricals spend Growth
48 Nordic Business Update9 September 2011
Source Verdict electrical spend Eurom
Agenda
● OverviewM k t b k d● Market background
● Business model● Country analysis
● Multi-channel opportunity● Store tours● Store tours
49 Nordic Business Update9 September 2011
A difficult birth…“Internet is a flop” “Internet is a temporary trend”
Multichannel milestones:1996 Elkjøp Contact centre was launched1997 ElGiganten Sweden contact centre launched1998 cyberia.no was launched – “games”1998 ElGiganten Denmark contact centre launched1999 elkjop.no was launched2000 elgiganten.se, elgiganten.dk, gigantti.fi launches2002 Full eCommerce platform was launched2008 Elkjøp online market leader within Multichannels2009 Elkjøp online market leader within B2C2010 Gigantti contact centre launches
Ines Uusmann, Swedish Minister of communicationSvenska Dagbladet 12 May 1996
Leif Osvold, Norwegian debaterDagens Næringsliv, 20 August 1996 Svenska Dagbladet, 12 May 1996Dagens Næringsliv, 20 August 1996
50 Nordic Business Update9 September 2011
Importance of online retailing
●eCommerce is a major global trend
Why internet is important Key features●eCommerce is a major global trend
penetrating the traditional brick store concept
●Online retailing possesses several
67%
55%Easier
Cheaper
●Online retailing possesses several advantages over traditional retailing
– Allows business without barriers of time and distance
46%
39%Easy to compare prices
Found what I wanted
– Expands market size– Reduces direct cost of sales
●7% of online buying is at
28%
27%
Open 24/7
Door delivering
elkjop.no, Elgiganten.se, Elgiganten.dk and Gigantti.fi
– Expected to increase in coming years
26%
22%
21%Used to shop online
Easy to get info
Fast delivery
●Elkjøp has the preferred homepage for seeking information in Norway and Finland
21%
9%Ok terms of payment
Used to shop online
51 Nordic Business Update9 September 2011
Source: Carat Insight & Norstat,
Pureplay vs Multichannel
Local Multichannels
Global Multichannels
Local Pureplayers
Global PureplayersMultichannels Multichannels Pureplayers Pureplayers
Example Example Example Example
Prime strategy Prime strategy Prime strategy Prime strategy
52 Nordic Business Update9 September 2011
Top 5 Nordic internet operatorsOperator Markets
presenceCustomer segment focus
Focus and range
Traffic rank* Annual turnover online
Profit
.SE B2B, B2C (80/20) Consumer electronics,
NO 392 / SE 192 € 440 M € 5,4 M
.NO
.DK
Pureplayerelectronics,
11.900 SKU’sDK 1195 ~ 24,4% market share
All B2B, B2C (60/40)
P l i k
Consumer electronics
NO 78 / SE 164
DK 354
€ 331 M
18 4% k t h
€ 5,7 M
Pureplayer w pick-up points 6.300 SKU’s
DK 354 ~ 18,4% market share
All B2C
Multichannel
Consumer electronics, Domestic
NO 74( #1) /SE 127 (#2)DK 70 (#1) /
€ 220 M
~12,2% market share
n/a
Domestic appliances
4.900 SKU’s
DK 70 (#1) /FI 96 (#2)
,
All B2C Entertainment products consumer
NO 136 € 150 M n/a
Pureplayerproducts, consumer electronics
448.000 SKU’s
SE 78 ~ 8,3% market share
All B2C, B2B (90/10) Consumer l t i
? € 107 M n/a
Pureplayer, Multichannel
electronics,
14.300 SKU’s~ 5,9% market share
* Estimated total Nordic eCom market 2011, 1,8 bn Euro* Statistics from Alexa.com
53 Nordic Business Update9 September 2011
Multi-channel offering wins●Multi-channel better than pure play
●Largest competitors have weak multi-h l ff ichannel offering
– e.g. Media Markt, Komplett and Expert
● Internet sites– Keeping customers with Elkjøp while leveraging on
eCommerce trends– Provides extended range in stock efficient manner– Launched in 2000– Opportunity for higher average purchase– Stores provide after sales comfort to customers
●Physical storesC di ib i h l– Core distribution channel
– Several size formats
●Collect@StoreE h d lti h l i t ti– Enhanced multi-channel integration
– Provides convenience and lower cost (no postage) for the customer
– Minimal incremental cost to Elkjøp
54 Nordic Business Update9 September 2011
Multichannel strategy
Stores WEB Contact Centre Franchise
● Variable ranges
● Variable prices
● Variable service
● Widest range
● Lowest price
● Variable service
● WEB offer ● Variable ranges
● Variable prices
● Variable serviceurre
nt
Variable service
● Variable offer
Variable service
● Variable offer
Variable service
● Variable offerCu
● Equal ranges
● Equal prices
● Equal service
● Equal ranges
● Equal prices
● Equal service
● Equal ranges
● Equal prices
● Equal service
● Equal ranges
● Equal prices
● Equal serviceture
● Equal service
● Equal offer
● Equal service
● Equal offer
● Equal service
● Equal offer
● Equal service
● Equal offerFut
Store sizes will vary: We will not overinvest to provide
Everything to Everyone Everywhere!
55 Nordic Business Update9 September 2011
y g y y
Summary
●Very strong business model
●Leading market shares
●High sales densities●High sales densities
●Centralised operational structure
●Low cost to sales
●Opportunities to take market share●Opportunities to take market share
●Growing markets
56 Nordic Business Update9 September 2011
Cautionary statement● All statements other than statements of historical fact made in this presentation, including, without
limitation, those regarding Dixons Retail’s financial position, business strategy, plans and objectives of management for future operations (including development plans and objectives relating to Dixons Retail’s renewal and transformation plan, the roll out of “Megastores”, its focus on increasing its presence on the web and its ongoing expansion in the Nordics and Central and Eastern Europe) arepresence on the web and its ongoing expansion in the Nordics and Central and Eastern Europe), are forward looking statements. Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from any expected future events or results referred to in these forward looking statements.
● Such forward-looking statements are based on numerous assumptions regarding Dixons Retail’s● Such forward looking statements are based on numerous assumptions regarding Dixons Retail s present and future business strategies and the environment in which Dixons Retail will operate in the future. Among the important factors that could cause Dixons Retail’s actual results, performance or achievements to differ materially from those in the forward-looking statements include, among others, the continuing impact of the economic downturn on consumer spending, the actions of its competitors, difficulty in implementing the renewal and transformation plan stock availability from or change in thedifficulty in implementing the renewal and transformation plan, stock availability from or change in the commercial relationships with third-parties whose products we sell, failure to meet debt obligations, changing technology or consumer preferences, seasonality of our business, the effects of deflationary pricing on money margins and other such risk factors. Forward-looking statements should, therefore, be construed in light of such risk factors and undue reliance should not be placed on forward-looking statements These forward-looking statements speak only as of the date of this presentation Unlessstatements. These forward looking statements speak only as of the date of this presentation. Unless otherwise required by applicable law, regulation or accounting standard, we do not undertake any obligation to update or revise any forward looking statements, whether as a result of new information, future developments or otherwise.
● The information, statements and opinions contained in this presentation do not constitute a public offerThe information, statements and opinions contained in this presentation do not constitute a public offer under any applicable legislation or an offer to sell or solicitation of an offer to buy any securities or financial instruments or any advise or recommendation with respect to such securities or other financial instruments.
57 Nordic Business Update9 September 2011