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This artwork was created using Nielsen data. Copyright © 2020 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute. COVID-19 IN CZ&SK FMCG TODAY AND TOMORROW 24.4.2020
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This artwork was created using Nielsen data.

Copyright © 2020 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute.

COVID-19 IN CZ&SK FMCG TODAY AND TOMORROW

24.4.2020

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SPEAKERS

LENKA LÁCHOVÁ CLIENT BUSINESS PARTNER

RETAILER SERVICES

KAREL TÝRA MANAGING DIRECTOR

NIELSEN CZ&SK

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WEBINAR CONTENT

• WHAT’S GOING ON?

• SIX CONSUMER BEHAVIOR THRESHOLDS OF COVID-19

• REACTIONS OF CZECH CONSUMERS – MIND SHIFTS

• HOW IS IT IMPACTING FMCG?

• IMPACT ON SHOPPERS BEHAVIOR

• CHANGES IN SHOPPING BASKET, ONLINE SALES AND HORECA

• HIGHLIGHTS FROM SLOVAKIA

• WHAT’S NEXT?

• LIVING A NEW NORMAL

• WHAT SHALL WE EXPECT AND HOW TO BE READY?

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How do you think the COVID-19 is going to impact your company?

Do you think, the situation will lead to…

Very

positive

impact

Rather

positive

impact

No

significant

impact

Rather

negative

impact

Very

negative

impact

2%

20% 13%

57%

9%

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CZ AND SK IN STAGE 5, EXPECTING NEW

NORMAL TO COME

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PEAK IN HOSPITALS IS PROBABLY OVER

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Number of hospitalized patients

Serious, Critical conditions

Source: https://onemocneni-aktualne.mzcr.cz/covid-19; Source: https://www.worldometers.info/coronavirus/#countries (24.4.)

CZ 7.188

SK 1.325

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0

500

1000

1500

2000

2500

3000

3500

4000

4500

Day o

f 10

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D+

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Number of COVID-19 cases - from day of 100 cases per Mil. inhabitants

Czechia

Spain

Switzerland

USA

Italy

UK

Netherlands

Austria

Sweden

Slovakia

CEE CURVES ARE VERY CONSERVATIVE

30x

20x

11x

7x

Source: https://www.worldometers.info/coronavirus/#countries

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This artwork was created using Nielsen data.

Copyright © 2020 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute.

REACTIONS OF CZECH

SHOPPERS

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DESPITE CZ IS IN V4 IMPACTED THE MOST

CZECHS ARE MORE OPTIMISTIC

673

245

273

239

Czechrepublic

Slovakia

Poland

Hungary

64

70

73

71

65

65

54

53

51

59

61

61

60

67

68

71

Number of cases

per M inhabitants Index of PANIC

Index of TRUST in

government/state Index of PESIMISM Index of IMPACTS

Source: https://www.nationalpandemicalarm.eu/ (16.4.2020) / https://www.worldometers.info/coronavirus/#countries (24.4.2020)

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65% Check multiple

times per day

26% Check once

per day

News on TV

84%

Online Newspaper

51%

Social Media

59%

Online search

43%

STRONG GROWTH OF MEDIA CONSUMPTION

Source: NIELSEN COVID-19 STUDY N=1000; Q6. How closely are you following the information/update news of Coronavirus Disease 2019/Covid-19?; Q7. What are the sources that you use to update and keep up with Coronavirus Disease 2019/Covid-19?

DAILY ATS TOTAL TV (H:MM), TARGET GROUP 4+

Source: ATO – Nielsen Admosphere, Czech peoplemeter measurement, live + TSO-3 calculated 17.4.2020

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WE EXPECT QUICK RECOVERY IN CZ/SK

4%

33%

28%

20%

15%

2%

9%

24%

29%

38%

4%

34%

29%

24%

9%

In the nextmonth

2-3 months 4-6 months 6-12 months 1 year +

CZ

EU

SK

Source: NIELSEN COVID-19 STUDY N=1000; Q13A. When do you think Coronavirus Disease 2019/Covid-19 will end in the Czech Republic/Slovakia?; Q13B. And when do you think it will end in rest of rest of Europe?

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BUT CHANGING MANY HABITS,…

81%

29%

45%

40%

Source: NIELSEN COVID-19 STUDY N=1000; QA5A How is Corona Virus Disease 2019/Covid-19 outbreak impacting your personal habits? Which of the following statements do you apply?

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ONLINE PURCHASING TO CONTINUE

ONLINE SHOPPING

26%

22%

HYPER & SUPERMARKETS

44%

45%

(MUCH) LESS OFTEN

RETURN TO THE SAME LEVEL

AS BEFORE COVID-19

(MUCH) MORE OFTEN

Source: NIELSEN COVID-19 STUDY N=1000; Q14a. What is the level of impact that Coronavirus Disease 2019 / Covid-19 has placed on your [ACTIVITY]? ; Q14c. For which of the activities / behaviours do you feel you would go back to the same levels as before the outbreak?

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This artwork was created using Nielsen data.

Copyright © 2020 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute.

IMPACT ON FMCG SALES

IN THE CZECH REPUBLIC

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2 4 3

19

4

38

3 2 7

16

2 4 3

13

4

30

44 41

43 43

0 0 0

5

0

6

-28 -28 -25

-19

FebW6

FebW7

FebW8

FebW9

MarW10

MarW11

MarW12

MarW13

AprW14

AprW15

TOTAL SALES % CHG LY

AVERAGE BASKET SIZE % CHG LY

NO. OF TRANSACTIONS % CHG LY

QUARANTINE CHANGED SHOPPER BEHAVIOUR

TOTAL FMCG Development on KAI HM+SM+DRUG

Source: Nielsen TSR Report; KAI includes: Albert, Billa, dm drogerie, Globus, Kaufland, Penny Market, Rossmann, Tesco, Teta drogerie, TOP drogerie

24.2.-1.3. 2.3.-8.3. 9.3.-15.3. 16.3.-22.3. 23.3.-29.3. 30.3.-5.4. 6.4.-12.4.

QUARANTINE

Formats Development in Last 4W (%)

11

6

-15

HMs

SMs

DRUG

31

53

31

-15

-30

-35

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STOCK UP STAY HOME BEAUTY PREVENTION

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DIFFERENT PHASES IN BEHAVIOUR

1% 28% 8%

3% 36% 4%

3% 15% 10%

5% 12%

-21%

Feb W6 Feb W7 Feb W8 Feb W9 Mar W10 Mar W11 Mar W12 Mar W13 Apr W14 Apr W15

QUARANTINE PREPARATION QUARANTINE NORMAL LIVING

Periods: normal living (W6-W8), quarantine preparation (W9-11), quarantine (W12-W15)

Source: Nielsen TSR Report; KAI includes: Albert, Billa, dm drogerie, Globus, Kaufland, Penny Market, Rossmann, Tesco, Teta drogerie, TOP drogerie

PREVENTION

STOCK UP

STAY HOME

BEAUTY

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DISINFECTION EXPERIENCING BOOM

6% 6% 13%

120%

98%

195%

121%

92%

116%

80%

Feb W6 Feb W7 Feb W8 Feb W9 Mar W10 Mar W11 Mar W12 Mar W13 Apr W14 Apr W15

Sales Development in Disinfection on KAI HM+SM+DRUG

+139% +102%

W9-11 2020 W12-15 2020

QUARANTINE

PREPARATION QUARANTINE

Disinfection: Hand sanitizer, household cleaners, household desinfection, soap

Source: Nielsen TSR Report; KAI includes: Albert, Billa, dm drogerie, Globus, Kaufland, Penny Market, Rossmann, Tesco, Teta drogerie, TOP drogerie

PREVENTION

QUARANTINE

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CZECHS GOT READY FOR HOME BAKING

THE WEEK BEFORE QUARANTINE

Sales Development in Baking on KAI HM+SM+DRUG

+45% -5%

W9-11 2020 W12-15 2020

QUARANTINE

PREPARATION QUARANTINE

Baking: flour, sugar, baking additives - yeast, baking mix (bread, dough, cake)

Source: Nielsen TSR Report; KAI includes: Albert, Billa, dm drogerie, Globus, Kaufland, Penny Market, Rossmann, Tesco, Teta drogerie, TOP drogerie

-9%

19%

50%

26% 19%

109%

-23%

39%

23%

-31%

Feb W6 Feb W7 Feb W8 Feb W9 Mar W10 Mar W11 Mar W12 Mar W13 Apr W14 Apr W15

STOCK UP QUARANTINE

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STAYING HEALTHY AS PRIORITY

Sales Development in Fruit & Veg. on KAI HM+SM+DRUG

+17% +18%

W9-11 2020 W12-15 2020

QUARANTINE

PREPARATION QUARANTINE

F&V categories

Source: Nielsen TSR Report; KAI includes: Albert, Billa, dm drogerie, Globus, Kaufland, Penny Market, Rossmann, Tesco, Teta drogerie, TOP drogerie

1%

6% 4%

11%

6%

35%

18%

10%

17%

26%

Feb W6 Feb W7 Feb W8 Feb W9 Mar W10 Mar W11 Mar W12 Mar W13 Apr W14 Apr W15

STAY HOME QUARANTINE

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BEAUTY HIT BY QUARANTINE THE MOST

-6%

-63%

-43%

26%

3%

-10%

47%

-18%

Feb W6 Feb W7 Feb W8 Feb W9 Mar W10 Mar W11 Mar W12 Mar W13 Apr W14 Apr W15

DECORATIVE COSMETICS

HAIR CARE

ORAL CARE

+12% -21%

W9-11 2020 W12-15 2020

QUARANTINE

PREPARATION QUARANTINE

BEAUTY

Sales Development in Beauty on KAI HM+SM+DRUG

Beauty: decorative cosmetics, skin care, hair care, oral care, perfumery&deodorants

Source: Nielsen TSR Report; KAI includes: Albert, Billa, dm drogerie, Globus, Kaufland, Penny Market, Rossmann, Tesco, Teta drogerie, TOP drogerie

QUARANTINE

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56% 58%

56% 55% 55% 51% 50% 50%

Feb W6 Feb W7 Feb W8 Feb W9 Mar W10 Mar W11 Mar W12 Mar W13

TOTAL FOOD DRUG

PROMO PRESSURE DECLINES DURING

QUARANTINE

Facts: Any promo, Sales Value. All Nielsen audited categories; Period: MAR (W10-13)

Source: Nielsen Scantrack; KAI includes: Albert, Billa, dm drogerie, Globus, Kaufland, Penny Market, Rossmann, Tesco, Teta drogerie, TOP drogerie

Promo share % on KAI HM+SM+DRUG

-18pp -9pp

+5pp +5pp

Promo share pp CHG vs LY on KAI HM+SM+DRUG

MAR20 vs MAR19

CLEANERS MILK

MINERAL WATER CONFECTIONERY

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HUGE SHIFTS ACROSS LOCATIONS

BORDER BELT WITH

GERMANY

STORES CLOSE

TO SCHOOLS

Source: Nielsen Clusters of chains (3k+ stores of key chains)

+13%

BORDER BELT WITH

POLAND

-3pp

+5pp

-10pp

-53pp STORES IN

PRAGUE 1

VALUE GROWTH IN TOTAL

CZECH REPUBLIC (W9-W15)

OUTPERFORMANCE OF SELECTED STORE CLUSTERS

24

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Copyright © 2020 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute.

MANUFACTURERS

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35%

65%

Declining Growing

PLS OUTPERFORMING POLARIZED BRANDS

13%

16%

Sales Value Trends During

COVID19 Period

MANUFACTURERS

PRIVATE LABELS

Source: NIELSEN RMS; Manufacturers = All manufacturers reaching 1 MIL CZK in sales value in YTD2020

Growing vs declining Manufacturers

(vs pre-Covid period)

-38%

-34%

-33%

-21%

-9%

-9%

-7%

-6%

-5%

-4%

-3%

-2%

FRAGRANCES

SHOE CARE

DECORATIVE COSMETICS

CHEWING GUM

DEODORANTS

SHAVING PRODUCTS

FOOT CARE

PETFOOD

ORAL CARE

INSTANT DRINKS

ENERGY DRINKS

CANDIES

Selected Categories with significant drop

(vs pre-Covid period)

26

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ONLINE SALES

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-1

16 3

43

162

178

JanW4

JANW5

FebW6

FebW7

FebW8

FebW9

MarW10

MarW11

MarW12

MarW13

AprW14

AprW15

Offline Online x2.4 growth vs pre-COVID

% Value Growth of Italy FMCG vs 2019

BOOM OF ONLINE IN ITALY CONTINUES,…

Source: Nielsen eCommerce tracking, sales by value, Total Italy online & offline

Home Delivery

110% Click & Collect

220%

ITALY

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ONLINE RETAILERS ON GROWTH ALSO IN CZ

30 38 38 33 33 33 33 33 33 33

50

16

50 65

89 112

71

FebW6

FebW7

FebW8

FebW9

MarW10

MarW11

MarW12

MarW13

AprW14

AprW15

% Sales Value growth of FOOD and DRUG

categories on CZ KAI Online vs 2019

+115%

+64%

+58%

-23%

+42%

Source: Nielsen Online KAI (Alza, Mall, Tesco, Košík, DM drogerie, Teta Drogerie); CORONA effect = incremental growth over avg YTD growth (W9-W15); Growth W9-W15

W9-W15 Value growth vs 2019

29

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Copyright © 2020 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute.

HORECA

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87%

77%

65%

50%

37%

13%

23%

35%

50%

63%

BAR

PUB

SOCIAL

RESTAURANT

BUFFET

BARS AND PUBS ARE MOST IMPACTED

38%

62%

TOTAL HORECA in quarantine

OPEN CLOSED

Turnover dropped by 90%

immediately from the first day

14 BLN CZK MONTHLY DROP!

Source: Nielsen Horeca Fusion

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Feb W7 Feb W8 Feb W9 Mar W10 Mar W11 Mar W12 Mar W13

BEVERAGES SALES 97%-99% DOWN!

BEER

SPIRITS

NON-ALCO

WINES

SMOKING

- 93 %

- 95 %

FOOD

- 90 %

Source: Nielsen Horeca Fusion

- 97 %

- 99 %

- 97 %

HORECA CATEGORIES SALES VALUE vs. pre-COVID

TOTAL ALCO

CONSUMPTION

HORECA+RETAIL

-30%

32

This artwork was created using Nielsen data.

Copyright © 2020 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute.

CZECH REPUBLIC:

KEY TAKE OUTS

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CZECH REPUBLIC: KEY TAKE OUTS

Quarantine changed shopper

behaviour – less store visits with

bigger basket size

Significant differences reflecting

micro-regional specifics

Higher demand reflected in promo

share decline, driven by drug

categories

Both A-brands and private labels

benefiting from the situation

Boom of online FMCG sales,

quarantine speeding the growth

HORECA in troubles, part of sales

moving to FMCG

vs.

34

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Copyright © 2020 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute.

FOCUS ON SLOVAKIA

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4 5 6

19

13

31

13

3

8

5

Feb W6 Feb W7 Feb W8 Feb W9 Mar W10Mar W11Mar W12Mar W13Apr W14 Apr W15

SALES UP BY 31% DRIVEN BY DRUG CHAINS

FMCG SALES VALUE % Change on KAI HM+SM+DRUG % Sales Value change vs LY

18

30

6

-2

Hypermarkets &Supermarkets

DRUG chains

QUARANTINE PREPARATION QUARANTINE

Source: Nielsen TSR Report; KAI includes: 101 drogerie, Billa, dm drogerie, Fresh, Kaufland, Kraj, Moja Samoška,Terno, Tesco, Teta drogerie

QUARANTINE

24.2.-1.3. 2.3.-8.3. 9.3.-15.3. 16.3.-22.3. 23.3.-29.3. 30.3.-5.4. 6.4.-12.4.

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PREVENTION STOCK UP STAY HOME BEAUTY

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DIFFERENT PHASES IN BEHAVIOUR

8% 35% 8%

5% 39% 10%

4% 11% 5%

7%

-5% -16%

24.2.-1.3. 2.3.-8.3. 9.3.-15.3. 16.3.-22.3. 23.3.-29.3. 30.3.-5.4. 6.4.-12.4.

Feb W6 Feb W7 Feb W8 Feb W9 Mar W10 Mar W11 Mar W12 Mar W13 Apr W14 Apr W15

QUARANTINE PREPARATION QUARANTINE NORMAL LIVING

PREVENTION

STOCK UP

STAY HOME

BEAUTY

Periods: normal living (W6-W8), quarantine preparation (W9-12), quarantine (W13-W15)

Source: Nielsen TSR Report; KAI includes: 101 drogerie, Billa, dm drogerie, Fresh, Kaufland, Kraj, Moja Samoška,Terno, Tesco, Teta drogerie

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27% 19%

-29%

170%

144%

184%

76%

-13%

66%

29%

Feb W6 Feb W7 Feb W8 Feb W9 MarW10

MarW11

MarW12

MarW13

AprW14

AprW15

SK

CZ

SLOVAKS EXPERIENCING BAKING BOOM

Baking: flour, sugar, baking additives - yeast, baking mix (bread, dough, cake)

Source: Nielsen TSR Report; KAI includes: 101 drogerie, Billa, dm drogerie, Fresh, Kaufland, Kraj, Moja Samoška,Terno, Tesco, Teta drogerie

Sales Development in Baking on KAI HM+SM+DRUG

+142% +21%

QUARANTINE

PREPARATION QUARANTINE

STOCK UP QUARANTINE

W9-12 2020 W13-15 2020

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-2%

1% 2%

13% 10%

25%

17%

6%

12% 9%

Feb W6 Feb W7 Feb W8 Feb W9 MarW10

MarW11

MarW12

MarW13

AprW14

AprW15

SK

CZ

DEMAND FOR F&V NOT AS HIGH AS IN CZ

F&V categories

Source: Nielsen TSR Report; KAI includes: 101 drogerie, Billa, dm drogerie, Fresh, Kaufland, Kraj, Moja Samoška,Terno, Tesco, Teta drogerie

Sales Development in F&V on KAI HM+SM+DRUG

+16% +9%

QUARANTINE

PREPARATION QUARANTINE

STAY HOME

W9-12 2020 W13-15 2020

QUARANTINE

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SLOVAKIA: KEY TAKE OUTS

Slovaks panicking more than

Czechs, despite the situation being

much better than in CZ

This is reflected in sales development

during quarantine - stocking up

continues

Drugstores hit more by quarantine

than HM/SM, but not as significantly

as in CZ

Demand for F&V not as high as in

CZ, but the bigger baking boom in

SK

Higher demand reflected in promo

share decline, driven by drug

categories

Current situation = opportunity for

fast development of FMCG online

sales

41

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Copyright © 2020 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute.

LIVING A NEW NORMAL

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LIVING A NEW NORMAL

COVID-19 quarantines are lifted beyond

region/country’s most affected hotspots

and life starts to return to a new normal.

CONSUMER BEHAVIOUR SHIFTS

People return to daily routines (work, school etc.)

but operate with new cautiousness about health.

Shifts in supply, e-comm & hygiene practices.

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ALTERED ENVIRONMENTS WILL EMERGE AS

NEW OPPORTUNITIES

CHINA

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RETAILERS STRATEGIES & LEARNINGS

CHINA

MARKET PERFORMANCE

DURING COVID

Polarized retailers performance

• HMs/SMs growing, top retailers

getting stronger

• Small stores slowing down

• Specialty stores suffered

44% reported growth

42% reported decline

CHALLENGES & RESPONSES

DURING COVID

Challenges • Insufficient stock in some categories

• Difficulty in logistics

• Inadequate staff to deliver orders

Responses

• Flexible coordination of supply chain

participants

• Showing care and concern for

employees

• Rationally deploying staff

• Adjusting opening hours

• Rapidly expanding online sales

• Strengthening corporate / brand

marketing to enhance trust and

empathy

RETAIL OPPORTUNITIES AFTER

THE PANDEMIC

46% are optimistic (next 6M)

36% are worried (about the future)

HMs/SMs

• Adjust supply chains

• Expand Omni-channel

Small stores

• Specialize in fresh from local pr.

• Resolve bottlenecks in supply via

local and digital means

Specialty stores

• Accelerate integration of online and

offline

• Promote innovation and community

operations

Source: Nielsen China

45

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Copyright © 2020 The Nielsen Company (US), LLC. Confidential and proprietary. Do not distribute.

WHAT’S NEXT?

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DIFFERENT FUTURE OF CATEGORIES

PERMANENTLY

INCREASED

CONSUMPTION

TEMPORARILY

INCREASED

CONSUMPTION

STOCK-UP

CATEGORIES

NON-ESSENTIALS,

LONGER CATCH UP

PRE-COVID

SALES

STOCKING

QUARANTEEN

NEW NORMAL

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BE SMART

SMART PRICING AND

PROMOTIONS

SMART PRODUCT

OFFERING

• Use the momentum of

decreased promo pressure

• Smart Item level elasticity

based decision not an option

anymore – is going to be a

MUST HAVE

• Decrease the waste on

promotions to improve revenue

management and profitability

• Right product mix with

appropriate range of price

levels

• Right size mix for individual

store types and adjusted

shopping behaviour

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BE QUICK AND AGILE Immediate adoption of new consumer trends

E-COMMERCE

FOOD DELIVERY

SUBSCRIPTION MODELS

USE TECHNOLOGY

• Trial significantly increased

• New players to enter

• New target groups gaining

momentum

• Trial significantly increased

• Retailers - fresh products supply

(fixed weight)

• Opportunity for manufacturers

• Direct to consumers to gain loyalty,

be independent on supply chain

• Augmented reality to keep client

experience (fashion, decorative

cosmetics,…)

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COMMUNICATE WELL

Trust and quality

Local origin

Are incredibly important as consumer seek greater

assurance that the products they buy are free of risk.

Be more overt in communicating your value proposition

in this.

As consumers support products associated with local

origin, retailers and manufacturers that can leverage

local´s appeal to mitigate consumer concerns and

overcome supply chain constrains will win.

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BE GOOD AND FAIR PARTNERS

YOU CAN NOT WIN ALONE!

51

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INTERESTED IN MORE

DETAILS?

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UNDERSTAND WHAT´S IN

SHOPPERS MIND SPEED MATTERS

WEEKLY UPDATES ON:

• CATEGORIES

• MANUFACTURERS AND BRANDS

• CHANNELS DYNAMICS

FRESH SYNDICATED CONSUMER

STUDY WITH INSIGHTS ON:

• MARKET SENTIMENT

• E-COMMERCE ECOSYSTEM

• CATEGORIES ON DEMAND

• TRAVEL BEHAVIOR

FOR MORE DETAILS CONTACT YOUR NIELSEN CONSULTANT

53 Co

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UPCOMING NIELSEN EVENTS / STUDIES

SHOPPER TRENDS

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