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An Amárach Research PresentationOctober 2010

© Amárach Research

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1. Reality Check

from here to there

2. It‟s Psychological

beyond negativity

3. This Time Is Different

innovation nation

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1. Reality Check

from here to there

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Online survey of SII Members

October 2010

(previously February 2010,

& September 2009)

Current experiences in Ireland

& future expectations

165 responses –

all sizes and sectors

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Are We There Yet?

19%

52%

27%

2%

13%

48%

34%

5%

13%

42%38%

7%

Bad and getting worse

Bad but stabilising Bad but showing signs of

improvement

Over the worst and improving strongly

Current Perceptions of the Irish Market

Sept '09 Feb '10 Oct '10

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Hard to Call

32%

38%

30%

34%

27%

39%

Higher than previous year Same as previous year Lower than previous year

Irish Sales Outlook for 2010

2010 Outlook in February 2010 2010 Outlook in October 2010

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Still Hopeful

67%

28%

5%

50%

39%

11%

Higher than previous year Same as previous year Lower than previous year

Irish Sales Outlook for 2011

2011 Outlook in February 2010 2011 Outlook in October 2010

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Driving Sales

30%29%

10%8%

3%

20%

33%32%

10% 10%

4%

11%

32% 32%

11%

3% 4%

18%

Lower Prices Better Value, Same Prices

New Products Volume Discounts

Advertising & Promotion

Other (e.g.: trade shows

etc)

What Sales Approach is Currently Successful?

Sept '09 Feb '10 Oct '10

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Pricing Pressures

5%

15%

21%

36%

24%

Increased Significantly

Increased Slightly

Remained the Same

Fallen Slightly Fallen Significantly

Trend In Your Prices (Over the Past 18 Months)

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Are We There Yet?

5%

11%

21%

29%28%

Already over the worst

By end of 2010 By middle of 2011

By end of 2011 After 2011

When Will The Worst Be Over In Irish Market?

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Staffing Up

24%26%

22% 23%26%

32%34%

27%

32% 31%

All Irish Owned Foreign Owned Mainly Irish Sales Mainly Foreign Sales

Expect To Hire More Sales Staff in the Year Ahead? % Yes

Feb '10 Oct '10

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Future Possibilities

Still a tough, deflationary sales

environment for many

But there is a positive

momentum expected to

continue through next year

Prepared to staff up for growth

Key challenge will be to gain

pricing power again: depends

on consumer psychology...

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2. It‟s Psychological

beyond negativity

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DABDA did it

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The Emotional Future

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Unemployment drives confidence ...

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Gaining Confidence

Correlation Confidence

Supermarkets 0.882

Household Durables 0.868

DIY 0.864

Furniture 0.857

ALL RETAIL 0.844

Pharmacies 0.844

Newsagents 0.822

Bars 0.788

Clothing & Footwear 0.739

Motor Trade 0.728

Electrical Goods 0.720

Department Stores 0.659

Petrol Stations 0.632

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Over the Worst

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Weakening Trend

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Back to DABDA

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Who do you trust?

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Price, Price, Price

Choice of Supermarket:

No. 1: Convenience (61%)

No. 2: Price (31%)

No. 3: Quality (21%)

Choice of Supermarket:

No. 1: Price (70%)

No. 2: Convenience (55%)

No. 3: Quality (12%)

Take advantage of special offers and coupons:

2007: 30% 2010: 53%

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The Big Switch

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The Price Trap

“Price is what you pay, value is what you get”.

Warren Buffett

Price is „additive‟ – higher/lower: one dimensional

Value is „multiplicative‟ – many dimensions

30% of purchase influences are „rational‟.

70% of purchase influences are „emotional‟.

In the absence of Trust then

Price becomes the focus...

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The Prize

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New insights from Evolutionary Psychology point to a greater importance for parenting and

the family in life satisfaction than assumed in late 20th century

„Old Maslow‟

„New Maslow‟

Forget Maslow

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In the Mood

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3. Innovation 2.0

this time is different

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“The fundamental drivers of growth are

stronger than they have been at any

point in human history. These include

the increasing number of highly

educated and capable people in the

world, the breathtaking speed of

technological breakthroughs,

globalization, the inclusion of „the next

billion‟ into the world economy, and

relative political stability.”

Hans-Paul Buerkner

Boston Consulting Group

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New Influences

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This Time Is Different

Innovation 1.0 Innovation 2.0

Ready, Aim, Fire Fire, Ready, Aim

New Is Better Better Is Better

Nice To Have Necessary To Have

Features & Benefits Feelings & Experiences

Be Cool Be Human

Bells & Whistles Keep It Simple

Personal Autonomy Family Integrity

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We need a new story: one that explains how Irish businesses will deliver growth and success in the years ahead.

This time is different: even if economy is going „backwards‟, demography & technology are moving forward.

Loyalty: you can‟t afford to take it for granted any more.

Get emotional: multiply your value

And remember: all recessions end in recovery – and so will this one.

36Towards Recovery gerard.oneill@amarach.comwww.amarach.com