Download Castorama Russia

Castorama Russia
Investor visit
July 2007
Introduction: Castorama Russia
• 4 stores: Moscow (1), St.
Petersburg (2), Samara (1)
• Next opening: Rostov-onDon – September 2007
• People:
• Stores: 1150
• Headquarters: 115
11.07.2007
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Introduction: Oleg Pisklov
•
37 years old
•
Has an extensive experience in the British,
Turkish and Russian FMCG & retail sectors
•
3 years in Castorama:
• joined Castorama Russia as Commercial Director /
Deputy Managing Director in 2004
• Managing Director of Castorama Russia since March
1, 2007
•
4 years in Tesco:
• prior to joining Kingfisher Plc had worked for Tesco
plc in the UK as Category Director and Turkey as
Commercial Director
11.07.2007
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Introduction: Natalia Morozova
•
33 years old
•
Has an extensive experience in marketing/
brand management in Russian FMCG sector
•
3 years in Castorama
• joined Castorama Russia as Marketing Manager in
2005
•
10 years in brand management
• has held various senior marketing positions in
several leading FMCG companies: Dirol Cadbury
LLC, Wimm-Bill-Dann, Bestfoods/CPC Ltd., Oleina
S.A. etc.
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AGENDA
1. Why Russia?
2. The Russian home improvement market
3. Castorama Russia overview
4. Store visit
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1. Why Russia?
•
•
•
•
•
•
One of the largest consumer markets in Europe
The fastest growing economy in Europe
Large home owning population
Fast developing home building and renovation market
High demand for DIY and DIFM products and services
Highly fragmented local competitors
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1. Why Russia?
Macro-economic overview
11.07.2007
2006 GDP Measured at PPP
(US$m) per EIU
2 500 000
2 000 000
1 500 000
1 000 000
7%
Bulgaria
Finland
Slovakia
Hungary
Czech Republic
Greece
Austria
Sweden
Poland
Netherlands
Spain
Turkey
Italy
Russia
UK
France
0
Romania
500 000
2006 Real GDP Growth Rates
in Europe per EIU
6%
5%
4%
3%
2%
Italy
Germany
France
UK
Austria
Spain
Netherlands
Finland
Greece
Sweden
Poland
Hungary
Turkey
Romania
Bulgaria
0%
Czech Republic
1%
Slovakia
•
3 000 000
Germany
•
No 5 European economy
Fastest real GDP growth +6.8% in 2006
Population 142.8 m people
2006 statistics
• retail sales $ 300 bn (+22% YOY)
• ave income per capita +25% YOY
• New housing + 50.2 m sq.m
Home ownership
• 70% own apartments
• 50% have dachas (country house)
• 72% live in cities/towns
Russia ranks No 2 in the retail
development index and is quoted as
having the 3rd LOWEST country risk
within the top 10.
Russia
•
•
•
•
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1. Why Russia?
Macro-economic overview
•
•
Recently average population incomes have improved considerably
There still exists a great difference in incomes level in various parts of Russia
11.07.2007
Source: Interfax, A COMPREHENSIVE INSIGHT IN RUSSIA'S RETAIL MARKET IN 2006, Jan 2007
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2. Home improvement market
Russian market
₤ 10* billion
12% annual growth rate
•
The Russian market is difficult to asses due to the high proportion of
sales through open-air markets.
• Retail formats are developing (hypermarkets, convenience chains,
non-food big boxes). Open markets today are 75% of DIY market, but
are losing their position. Down to 20% share over the next 5 years
*this figure doesn’t include dacha market
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Example of open market: Kashirskiy Dvor
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2. Home improvement market
Differs by region
Moscow
•All key international players
are already here
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St. Pet
Regions
• Very competitive market,
• No strong local players
international and local players
• Big interest in DIY big box
format
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2. Home improvement market
Customer Behaviour
• Customers do not trust retailers to keep prices low.
• Share of DIYers (vs. DIFM) varies from 45% to 75% depending on income
level
• Consumers, who spend >20 000 RUR (₤ 387), make about 70% of total
spending. Thus market is driven by projects not individual purchases
• Customer values are changing, attitude to home renovation is changing ,
purchases are becoming more aspirational. Customers paying more
attention to home improvement ideas
• Customers do need service, advice, education
• All new apartments are Shell & Сore
11.07.2007
Source: Comcon Spb, Image Tracking Study, May-June 2006
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2. Home improvement market
Moscow competitors overview
Open market
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Under construction
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3. Castorama Russia
Moscow
St. Petersburg
Rostov-on-Don
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Samara
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3. Castorama Russia
Format & positioning: providing the elements for completing projects
Price
Advice
Range
Castorama has all the quality products at
affordable prices for home, business
and dacha (building, renovation,
decoration and home improvement) and
advice and services to enable you to
complete the projects
PRAISE
Services
Aspiration
Inspiration
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3. Castorama Russia
Keeping Prices Low
Ge ne ral pric e inde x
OBI MSK_KHIMKI
17 0 %
16 0 %
LM MSK_STROGINO
15 0 %
KD MSK_1
14 0 %
STROYMASTER
SPB_KIMA
13 0 %
METRIKA
SPB_PULKOVO
12 0 %
MAKSIDOM
SPB_MOSKOVSKIY
11 0 %
OBI_SPB
10 0 %
PTICHIY SAM
90%
STROYDOM SAM
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•
•
w20
w18
w16
w14
w12
w10
w8
w6
w4
w2
w51
w49
w47
w45
w43
w41
w39
w37
w35
w33
w31
w29
w27
w25
w23
w21
w19
w17
w15
80%
BYSRTOSKLAD SAM
To ensure Castorama has the best price offer we run weekly price check monitoring (4
cities, 3 major competitors in each)
Castorama prices are always lower than the competitor’s
Price check basket has been recently increased up to 1000 skus (25% of sales)
11.07.2007
Source: Weekly price check monitoring
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3. Castorama Russia
Customer profile
Men and
women
Have no
or 1 child
under 16
25-60
years old
Household
size – 3
members
Married
Have a car
Low and
middle
income (₤
100-260
per capita)
Have a
dacha
DIYers
Well
educated
11.07.2007
Source: Comcon Spb, Image Tracking Study, May-June 2006
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3. Castorama Russia
Targeted types of customer
Active DIY:
ƒ are currently into renovation or have recently
completed it. The whole scope of works was done/is
being done by themselves
ƒ higher percentage of males,
ƒ visit DIY store 8-9 times a year
ƒ spent on DIY goods on average 2000 RUR (70 USD)
Passive DIY:
ƒ are not conducting renovation. Intend to do all works
by themselves in case if start it
ƒ visit DIY store 6-7 times a year
ƒ spent on DIY goods on average 1000 RUR (35
USD)
Active LSEDI:
ƒ are currently into renovation or have recently
completed it. Some share of works were done / are being
done by professionals
ƒ bigger share of young (25-34) buyers
ƒ visit DIY store 7-8 times a year
ƒ spent on DIY goods on average 3000 RUR (110 USD)
Passive LSEDI:
ƒ are not conducting renovation. Intend to hire
professionals to conduct some share of works
ƒ higher percentage of females
ƒ visit DIY store 5-6 times a year
ƒ spent on DIY goods on average 1000 RUR (35 USD)
ƒ We mostly aim at Active DIY and Active LSEDI since they report the heaviest expenses per one visit.
ƒ More than 65% of Castorama visitors are active (currently into renovation or have recently completed it).
11.07.2007
Source: Magram market research “Customer Satisfaction Study”, Feb 2006 – Oct 2006
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3. Castorama Russia
Image check: Samara – successful start
Castorama-Samara position:
• Awareness: #2 in Samara
(74%)
• Purchases: #2 (35%)
• Satisfaction: #1
• Evaluation: #1
50
45
40
35
Purchase, %
Samara
30
Ptichiy
Casto ram a
25
20
Muraveynik
15
Eliz arovo
10
Bys tros k lad
5
S k ala
0
0
10
20
S troydom
SK
Kirovs k iy
S hapito
Dom ovoy Megas troy-2
Rak itovs k iy
30
40
50
Dom inat
Dz hinnS troy
Megas troy-1
Tri Gnom a
60
70
80
90
100
Total awareness, %
11.07.2007
Source: “DIY Shopping Monitor 2006”, GFK, nov-dec 2006
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3. Castorama Russia
Customer satisfaction
ƒ Castorama in all cities shows good satisfaction rating of all key parameters
(price, range, special offers, quality, stock), but still has low satisfaction level of the
staff knowledge and availability in Absolut and Samara
Low prices per the majority of goods
Broad range of goods
I am satisfied with this shop (market)
4,5
The shop/market is kept clean and in perfect
order
High-quality goods
3,5
Easy to park a car
Sufficient amount of goods (on shelves)
2,5
Shop assistants come up and offer help
Low prices per special offers/sales
High-quality goods offered during sales and
per discounted prices
No queues at registry, no crowds of people
Shop-assistants can give many details on the
product
Shop-assistants are always around
Castorama-Moscow
11.07.2007
Castorama-Absolut
Easy navigation
Polite and friendly staff
Castorama-Pulkovo
Source: Customer Satisfaction Study, Magram Market Research, May 2007
Castorama-Samara
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3. Castorama Russia
Customer communication
For customers
renovation with
Castorama is
simple,
interesting,
exciting!
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3. Castorama Russia
Targets market leadership
STRATEGIC OBJECTIVE
1. Develop economic model
ACTIVITY
LFL Sales
Margin Improvements
Cost Efficiencies
2. Develop business organisation
Regional structures
Head office infrastructure
Communication
3. Develop infrastructure
Logistics
Systems Development
Training and Development
4. Develop our people
5. Develop the supply base
Paying Good Market Rates
Retention
Agreements negotiations (buying terms)
Range rationalisation
Vendor Management
6. Open stores
11.07.2007
Find good locations at a sensible price
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Conclusion
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A very attractive home improvement market
Huge opportunity for growth and economic returns
Castorama has got off to a very good start
Clear plans for profitable expansion
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Moscow store visit
• Location: South-East of Moscow
• Size: selling space 8 875 square metres
• Product mix: building, timber, decor, lighting, showrooms, flooring,
ceramics, tools, hardware, garden
• Staff: 228
11.07.2007
LET’S VISIT THE STORE!
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