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The Reality of Retailing & Luxury
Ralf MatthaesRegional Managing Director
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Agenda
Present consumer reality and confidence
spend
Areas of spend / areas of saving
Confidence
Consumer
Modern retail not growing very fast due toWhat 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
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Consumer Confidence 2011-2012
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2008 2012 Consumer Confidence Index
4
89
64
78 79
68
0
20
40
60
80
100
2008 2009 2010 2011 2012
110
Index has fallen drastically due to poor Vietnamese economic performance
Source: TNS CCIP 2008 2012 urban only
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Consumer overview of Vietnam's next 12 months
51
44
29
34
20
13
34
30
41
35
38
48
15
26
30
32
35
39
Value of the
Vietnamese dong
Employment
The cost of living
Vietnam's economy
Foreign investment
My personal standardof living
Worse Same Better
57
20
21
13
7
5
25
42
43
27
42
43
16
36
36
58
41
51
2011 = 79
Q: In the next 12 months would you think that the following will be better, the same or worse than they are now?
Confidence has dropped substantially in the past 12 months
Source: TNS CCIP 2011 2012 urban only
2012 = 68
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76
68
17
20
6
12
Early 2011
Mid 2012
Present job is safe
Chance of unemployment
Don't know
Job Security is Falling
6
Do you think your present job is safe, or do you think theres a chance you may become unemployed?
Source: TNS CCIP 2011 2012 urban only
Job security is falling, driving consumer caution
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30
25
54
69
16
6
Early 2011
Mid 2012
Will see a fall in unemployment
Will see a rise in unemployment
Same/ Don't know
Employment Concerns
7
Will unemployment rise or fall in 2012 in Vietnam?
Source: TNS CCIP 2011 2012 urban only
An additional 15% of the population believe unemployment willincrease in 2012
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Consumers savings
8
55
32
18
26
14
23
13
18
Early 2011
Mid 2012
Up to 5% 5% - 10% 10% - 20% More than 20%
Roughly how much of your monthly income do you save?
++
Source: TNS CCIP 2011 2012 urban only
Not only savings but the percentage consumer are saving has risen sharply
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47
46
37
32
32
27
25
25
24
24
20
46
43
55
52
54
56
52
58
55
59
65
7
12
8
15
14
16
23
17
21
17
15
Education
Health care products/services
Food & beverages products
Personal care products
Household utilities
House hold care products
Entertainment & dining out
Mobile, Laptop, Devices
Home appliances
Transportation
Communications
More Same Less
Consumers spending in the near future?
9
Given the economic situation, will you be spending, less, the same, or more on each of the following items?
Source: TNS CCIP 2011 2012 urban only
Some sectors continue to see growth, whilst other continue to decline
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Modern retail in
Vietnam
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Groceries32%
Eating/drinking out15%
Education10%
Transportation9%
Utilities8%
Communications5%
Toiletries5%
Housing4%
Entertainment4%
Healthcare3%
Travel/ holidays3% Investment
2%
Source: TNS VietCycle 2011. 2011 TNS
Monthly household spend
47% of all spend is still spent on FoodWhat is the mix of food versus other items at modern retailers?
Groceries = 32%Eat / drink out = 15%Total = 47%
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Most frequented Modern retail outlets
67
38
2016
5 2 2 1 04
65
35
2 0
73
20
10
Co-op Mart Big C Metro Maximark Lotte Mart Citimart Parkson Vincom Fivimart
HCM City Ha Noi
Source: VietCycle 2011Base: HCMC & Hanoi
Nationally Big C followed by Metro are the most frequented outletsNote low penetration of high end venues
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Value Growth of Modern vs other trade channels
2008-09 2009-10 2010-11 2011-12 1st half
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The Luxury Myth
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Who is Vietnams luxury consumer?
Gender
18Source: TNS VietCycle 2011 Urban only
52% Male
Living in Hanoi = 36% - HCMC = 19%
Age between 35 54 = 49%
Monthly Income 8.5 Mil. vnd plus = 67%
% f l ti hi h h b ht l it
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19
% of populations which have bought luxury itemsin last 12 months
14
*Luxury item here is defined as valued over VND 10,000,000
2011
10
Source: TNS VietCycle 2011 Urban only
Slow growth indicates that luxury is still well out ofreach for most consumers
2008
U b D l d hl h h ld i
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SEF F
3%
E22%
D25%
C31%
A9%
SEC A+
1%
2,500,001 5,500,000
less than VND 2,500,000
5,500,001 8,500,000VND 8,500,001 13,500,000
13,500,001 15,500,000
15,000,001 40,000,000
Urban Declared monthly household income
Urban luxury market is estimated to be about 19% of urban population
9%
B
Source: TNS VietCycle 2011 Urban only
41,000,000 VND Plus
Vi t N ti l l h h ld i
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1.5%
3.9%
5.6%
11%
15%
29%
34%
A1
A
B
C
D
E
F
Vietnam National annual household income
2/3rds of Vietnamese are still eking out a day to day existence
Source: TNS Vietnam
BOP
63%54 mil
Middle26%
22 mil
Affluent9.5%
8.2 mi
Wealthy 1.5%1.3 mil
What does Luxury mean to Vietnamese consumers
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22
What does Luxury mean to Vietnamese consumers
60
56
36
32
26
23
18
14
Premium price
Premium quality
Unique design
Used by famous people
Hard to find
Country of origin
Limited edition
Exclusive
Q: Which of the following statements describe what is luxury to you?
Source: TNS VietCycle 2011 Urban only
Vietnam Luxury = Price & Quality,Western World Luxury = Exclusive & Country of origin
How we define luxury?
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23
How we define luxury?
65
45
57
27
44 44
21
60 58
52
4239
35
26
2008 2011
Dining out at 5-star
restaurants/hotels
Travelling for
pleasure abroadPlaying golf
Shopping at
boutique venues
Living in a high-end
apartment
Staying at 5-star
hotels/resorts
Having membership
to VIP club
Q: Which of the following activities do you consider to be luxury?
Source: TNS VietCycle 2011 Urban only
Until end of 2011 boutique shopping & overseas leisuretravel were on the rise as luxury past-times
Th l i diff
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PREPARED FOR DIAGEO
The luxurious differencebetween Hanoi & HCMC
13 2011 TNS
63
18
13
9
82
6
46
22
HCMC Hanoi
Having asuccessful life
Showing offFlashy
Enjoy highquality life
With goodtaste
Source: TNS VietCycle 2011 Urban only
H i HCMC L i
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PREPARED FOR DIAGEO
Hanoi versus HCMC, Luxury is.
10 2011 TNS
56
44
21
52
61
26
HCMC Hanoi
Premiumquality
Premiumprice
Countryof origin
For Hanoians luxury perceptions are much higher than in HCMC ,except for Quality
Source: TNS VietCycle 2011 Urban only
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PREPARED FOR DIAGEO
Technology the top of the luxury food chain
58
35
2927
2420 18
15 13
Tech itemlaptop,LCD TV,camera
Householditems
Cars Clothes Jewelry FurnitureAccessories
footwearCosmetics/
PerfumeAlcohol
Categories I would be willing to pay a premium for
Top-2-box agreement (%)
21 2011 TNS
Almost 2 in 3 luxury buyers willing to pay a premium for tech items.
Source: TNS VietCycle 2011 Urban only
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PREPARED FOR DIAGEO
Premiumbrands
Most desired luxury brands
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Most desired luxury brands
iPhone /
Apple
SonyToyota Honda Gucci
Top 5 most desired luxury brands
24 2011 TNS
Technology & vehicles rule the luxury roost
Source: TNS VietCycle 2011 Urban only
I Brands willing to pay a premium for
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PREPARED FOR DIAGEO
I Brands willing to pay a premium for
23%
14%
11%
22%
13%
10%
8%
7%
9%
5%
22%
13%
10%
4%
4%
25 2011 TNS
Which brand would you be most willing to pay a big premium for in this category?
Source: TNS VietCycle 2011 Urban only
Retail Synopsis
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Retail Synopsis
Due to the below factors, retailing is not what it issupposed 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 withconsumer affordability
30
R il S l i
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Retail Solution
31www tnsglobal com www tnsvietnam vn
Many products under one roof at affordable prices
Must offer grocery / food & beverage outlets
Must offer reasonable prices to entice consumersMust offer right mix of consumer basket needs
Location - Location - Location