Between Thrifty Demanding Bulgarian Shopperss Trends Miroslava Georgieva

Between “Thrifty” & “Demanding” Bulgarian Shoppers’s Trends Miroslava Georgieva Email: miroslava. georgieva@gfk. com

Welcome in 2008 2

MOBILITY, PRICE SENSITIVITY AND DEMANDINGNESS are the most differentiating factors. 3 IMMOBILE PRICE SENSITIVE UNDEMANDING Thrifty Communicative housekeeper 23% UNDEMANDING Mobile pragmatic Economist 12% 7% PRICE NON-SENSITIVE UNDEMANDING Undemanding conservative 36% Comfortable opportunist Generous Demanding

Undemanding Conservative and Thrifty are typical Bulgarian types of shoppers. Yet, Mobile Pragmatic segment is growing! 4 +2. 0 +6. 0 -3. 0 +2. 0 -3. 0 0. 0 Source: Gf. K Shopper Typology 2007/2008, Main shoppers (2007 -n=1070; 2008 - n=1000) -7. 0 +6. 0

MOBILITY, PRICE SENSITIVITY AND DEMANDINGNESS are the most differentiating factors. 5 MOBILE IMMOBILE PRICE SENSITIVE DEMANDING Communicative housekeeper UNDEMANDING Mobile pragmatic 12% PRICE NON-SENSITIVE DEMANDING Comfortable opportunist DEMANDING Economist 7% PRICE NON-SENSITIVE UNDEMANDING Generous DEMANDING Demanding

Thrifty Immobile/Price Sensitive/ Undemanding 6 SEGMENT SIZE: Representation of 23% (stable) SOCIO-DEMOGRAPHY The oldest segment: Av. age: 48 y. o. Most likely to be found in rural area and small towns (up to 20000 inhabitants) Average HH Monthly Income: 248 euro PREFERRED FORMATS AND CHAINS o Traditional trade formats (minimarkets in the neighborhood) o Shopping in stores close to place of residence o Strong orientation on price MAIN MOTIVATORS o Near location of a store and low prices are the priority o. Pleasant and willing to help personnel o. Cleanness of shop

Undemanding Conservative Immobile/Price Non-Sensitive/ Undemanding 7 SEGMENT SIZE: Representation of 36% (7. 0 decrease) SOCIO-DEMOGRAPHY Av. age: 47 y. o. Most likely to be found in rural area and small towns (up to 20000 inhabitants) Average HH Monthly Income: 198 euro PREFERRED FORMATS AND CHAINS o Shops in the neighborhood Conservative shopping habits (trust in well-tried products and well-tried shops ) MAIN MOTIVATORS o. Near location of a store is the priority; prices (including special offers) and also assortment is of lower importance o. Tradition: well-tried shops

MOBILITY, PRICE SENSITIVITY AND DEMANDINGNESS are the most differentiating factors. 8 IMMOBILE PRICE SENSITIVE UNDEMANDING Thrifty DEMANDING Communicative housekeeper 23% PRICE NON-SENSITIVE UNDEMANDING Undemanding conservative 36% PRICE NON-SENSITIVE DEMANDING Comfortable opportunist UNDEMANDING Generous DEMANDING Demanding

Mobile Pragmatic Mobile/Price Sensitive/ Undemanding 9 SEGMENT SIZE: Representation of 12% (6. 0 increase) SOCIO-DEMOGRAPHY Av. age: 42 y. o. Most likely to be found in urban area between 200000 to 500000 inhabitants Average HH Monthly Income: 348 euro PREFERRED FORMATS AND CHAINS o Discount oriented hypermarket (Kaufland), Cash&Carry o Buy private labels of selected product categories o Shopping according to the leaflets MAIN MOTIVATORS o. Assortment range and good prices are of high priority o Car park capacity o Loyalty points

Economist Mobile/Price Sensitive/ Demanding SEGMENT SIZE: Representation of 7% (2. 0 increase) SOCIO-DEMOGRAPHY The youngest segment: Av. age: 38 y. o. Most likely to be found in urban area with above 100000 inhabitants Average HH Monthly Income: 340 euro PREFERRED FORMATS AND CHAINS Supermarkets and Hypermarkets chains Most preferred: Metro, Billa & Kaufland Buy private labels of selected product categories MAIN MOTIVATORS Loyalty schemes Price promotions Card Payment Capacity of parking lot Additional services offered 10

15 Growing number of Mobile Shoppers

Growing Physical Mobility Private Car Penetration CEE cars per 1000 inhabitants Source: VDA, International Auto Statistics, Edition 2007, Gos. Kom. Stat 16

Growing Physical Mobility The Bulgarian Car Market Number of sold new cars 2004 -2007 • In the first 5 months of 2008 25 002 new cars were sold. This is an increase of 24% compared to the same period in 2007. Source: VDA, International Auto Statistics, Edition 2007, Gos. Kom. Stat 17

Growing Physical Mobility The Bulgarian Car Market Used cars • 349 thousand used cars were registered in Bulgaria in 2007. • On average almost 1000 used cars were bought every day in 2007. • There is an 200% increase in the sales of used cars compared to 2006. • 80% of the cars were imported by private persons. • More than a half of the registered used cars or approximately 200 000 were registered in Sofia. Source: newspaper “ 24 chasa”, 15. 01. 2008, http: //www. avabulgaria. com/index. php? page=7&open_events=78&offset=20 18

Growing Physical Mobility Who are the car drivers? • 44. 5% of the Bulgarian population have a driving license. • 79% of the car drivers are male and 21% are female. • 70 % of car drivers are aged 20 to 49 years old • 15% of the car drivers are situated in the capital Sofia, 37% in the regional centers, 29% in smaller towns and 19% in villages. • 39% of Bulgarian population who have a driving license drive a car every day Source: Gf. K Omnibus nation-wide representative survey (Bulgarian population 15+), March 2007 19

20 Growing Importance of Price

Purchasing Power Index 2007 by Districts Administrative Territorial Divisions of the Republic of Bulgaria – 28 Districts Purchase Power of the Districts compared to the average level for the country (in %) 21

Private labels: How Big Is Their Piece Of The Pie? Total FMCG Bulgaria PL Share Development Private Labels Shares by Baskets 2007 FY Source: Gf. K Consumer Tracking Based on Consumer Index; Period: 2007 22

Private Labels: Piece Of The Pie Varies Across The Region 23 Slovakia Poland Russia Czech Republic Ukraine Hungary Bosnia & Herzegovina Serbia Bulgaria Source: Gf. K Consumer Tracking; Calculation based upon consumer basket including monitored product categories; Measure: value share (%); Period: 1 HY 2007

24 Growing number of Demanding Shoppers

Growing importance of Additional Services 25 • Core target of credit cards: 20 -50 aged, well-educated, full time employed, highly qualified, owners, high income level Source: FMDS 2002 -2008 Base: 1000; population 15 years and above; data in %

Growing Virtual Mobility 26 Desk research Gf. K Austria, August 2008

Growing Virtual Mobility 27 Desk research Gf. K Austria, August 2008

Growing Virtual Mobility 28 What is the Level of Internet Penetration? Gf. K Bulgaria, 15+ aged, n=1000

Who are the Internet Users? • No differences in terms of sex representation; 29 Yet, On-line Universe in comparison to general population figures consists of predominantly: • 15 -49 years old or 56. 7% of total population; • People with secondary and University education or 73. 1% of total population • Urban Area or nearly 70% of total population • White colour employees, Freelancers, Administrative personnel, Managers, Owners and Students

30 What we could expect in the Future

The future's already here it just isn't evenly distributed. William Gibson 31 Growing mobility Location analysis: no need to be in the city center Growing prise sensitivity Private labels and Discounters: a good future Growing demandigness ATMs and POS is a must to modern trade Car Lot Capacity Loyalty Programs Redefining Convinience On-line Catalogues? On-line Orders?

Thank YOU.