An IMAPRETAILReport

Retail Industry Global Report — 2010

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IMAP’s Retail Industry Global Report 2010: Page 1

Contents2010 witnesses contraction in retail M&A activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Change in consumer preference fuels online retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Convenience, value and selection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Increase in global online population . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Localization strategy supports online retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Transformation in online retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Smart shopping and smart-store theme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Multi-channel retail emerging . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Web influence on total retail sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Financial analytics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Cross-border online purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Social media takes retailers to social networks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Quick growth through globalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Major hurdles to globalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Investment opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Mobile Commerce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Online grocery shopping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Online healthcare. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Future outlook. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Statistical reference (Appendices) Appendix A: Global overview of retail and online retail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-i Appendix B: Summary of M&A transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-i Appendix C: Growth drivers of online retail industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-i Appendix D: Niche focus areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D-i

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IMAP’s Retail Industry Global Report — 2010: Page 2

There were 1,409 transactions valued at $17.1 billion USD in the last twelve months (ended September 2010) for the retail sector, representing a downside of 33.6 percent in terms of transaction value ($25.7 billion USD during the previous 12-month period with 1,473 deals). Dollar volume in this period included two major transactions (Kohlberg Kravis Roberts/Pets at Home and Lotte Shopping Co/GS Square and GS Mart), which represented $2.7 billion USD or nearly 15.8 percent of total dollar volume. During the previous period, the largest transaction was the acquisition of Next Rx LLC by Express Scripts for $3.5 billion USD.

In terms of business segments, specialty and distributors accounted for the highest in terms of value at nearly 56 percent of total dollar volume for the period.

In terms of geography, the United Kingdom had the highest transaction value of $3.9 billion USD with a total of 161 transactions over the last 12 months. The United States came in second with a value of $3.4 billion USD through 370 transactions. Among other regions, Europe was the clear leader at $7.3 billion USD with 688 transactions.

Going forward, large grocers and mass merchants will start looking to invest in emerging markets, especially in the BRIC1 region, where valuations are low. Also, the retail sector is highly fragmented; hence, consolidation through inorganic growth by foreign players will drive the M&A segment. Albeit, considering the dim retail industry outlook, retail companies will continue to find it hard to raise the funds to finance transactions.

1 Brazil,Russia,IndiaandChinacountries

2010 witnesses contraction in retail M&A activity

2010 V. 2009 LTM ended 3Q 2009

LTM ended 3Q 2010

Transaction value (USD billion) 25.7 17.1

Top 5 transactions 32.4% 27.3%

Segment Analysis

Segment No. of transactions Value (USD bn)

Specialty Stores 299 5.1

Distributors 692 4.5

Department Stores 50 2.4

General Merchandise Stores 28 1.6

Home Furnishing Retail 38 1.1

Internet Retail 124 0.8

Top 5 regions No. of transactions Value (USD bn)

Europe 688 7.3

North America 412 4.1

Asia Pacific 245 4.1

Latin America 36 1.4

Middle East 13 0.2

Top 5 countries No. of transactions Value (USD mn)

United Kingdom 161 3.9

United States 370 3.4

South Korea 3 1.2

France 87 1.1

China 66 0.9

Source:CapitalIQDatabase,IMAP

M&A Activities at a Glance

IMAP’s Retail Industry Global Report 2010: Page 3

allows them to pass benefits to customers in terms of low cost, and can be operated 24x7. The rise in Internet penetration and a change in view of consumer mindsets is happening as more consumers feel more comfortable purchasing and using their credit cards online.

In summary, the Internet has evolved into an important retail channel. An increase in tech-savvy consumers, an increase in Internet access and growing confidence in payment security and privacy have advanced this retail channel.

Convenience, value and selection — major catalyst for online channel uptakeThe online retail channel has consistently outperformed because most consumers are valuing low and transparent prices, convenience, and comprehensive assortment of goods and services. As per the survey4 conducted in North America which is the largest market for online retail, 67 percent of online buyers find the products online that they cannot find in stores easily; 65 percent of US-based Web buyers buy the products online as they save time by shopping online; and 63 percent of Web buyers find better deals online.

4 NorthAmericanTechnographicsRetailOnlineSurvey,Q32009

The recessionary period has been a chaotic period for the global retail industry. Factors which affect retail sales such as people’s purchasing ability (disposable income) and willingness to spend (consumer confidence) were at rock bottom during this period. Eventually, global retail sales declined 3.7 percent in 2009 to $13.9 trillion USD1. While sales for 2009 were low, it is worth noting that sales of the global retail industry have doubled since 2003. Along with sales decline, profitability for most retailers shrunk due to heavy promotional expenses incurred in 2009. Profitability of the 200 largest retailers in the world fell to 2.4–4.1 percent during fiscal ended 2009, wherein

1 EconomistIntelligenceUnit(EIU)

more than 30 retailers reported operating losses2. This trend affected almost every retail category and geographical area except Africa and the Middle East where retailers reported an increase in profitability.

With the worst behind, 2010 began with guarded optimism following signs of a recovery in the global retail sector during the second half of 2009. It is certain that a recovery is on the way; however, the worst-ever recession has changed the industry’s dynamics with the changing nature of consumers and their shopping habits.

2 Bloomberg

Global recession hit retail hard

Change in consumer preference fuels online retailEven as sales through traditional channels declined, online retail formats provided some respite for retailers as global online retail sales grew by 14.5 percent in 2009 to reach $348.6 billion USD1. Electronics was the largest segment in global online retail sales, contributing around 22.6 percent. While the online retail sales sector continues to outperform, its magnitude remains small with 2.5 percent of total global retail sales. On an average basis, globally, online sales account for 6.6 percent of total sales for the top 100 retailers in 20092.

The US remains the biggest market for online retail with 37.2 percent market share. Total spending reached $129.8 billion USD in 20093, marginally lower than $130.1 billion USD in 2008. A high level of product differentiation together with low fixed costs and dynamic market revenue growth is seen in the US market. However, it also creates competition in the market with a large number of active players and the absence of consumer switching costs.

The online channel is outperforming wider retail as it has a number of counter-recessionary characteristics. The online channel offers considerable benefits to retailers. Relatively low operating costs (compared to an equivalent store network)

1 Datamonitor,July2010.Theonlineretailmarketconsistsofthetotalrevenuesgener-atedthroughthesaleofretailgoodsviaonlinechannels,valuedatretailsellingprice.

2 ForresterResearch,January20103 TheUSDepartmentofCommerce

Traditional Retail Growth

Online Retail Growth

25%

20%

15%

10%

5%

0%

-5% 2006 2007 2008 2009

22.7% 22.1%

12.4%14.5%

-3.7%

9.4%10.9%

7.2%

Source:EIU,Datamonitor,IMAP

Traditional vs. Online Retail Industry Growth

Businesses such as Dwell Retail in the UK have experienced dramatic growth in the largely traditional home furnishing sector, as a result of their multi-channel offer to consumers attracted by the ability to ‘try in store – buy online’ large item furniture with next day and timed delivery.Marc Gillespie, Head of IMAP’s Retail Industry Group, IMAP UK (Clearwater Corporate Finance)

IMAP’s Retail Industry Global Report — 2010: Page 4

Increase in global online population promotes online retail spending

Between 2005 and 2009, the global Internet population increased from 1 billion to more than 1.6 billion and by 2014 it is projected to grow by another 42 percent, reaching a level of 2.3 billion1.

Most of the growth in online population is expected to come from the Asia Pacific, Middle East and Africa, which had very low Internet penetration levels of 19.7 percent as of June 2010. These regions will represent 54.9 percent of the online popula-tion in 2014, whereas North America and Europe will represent 34.1 percent. Other emerging Asian countries such as Vietnam and Indonesia are expected to have nearly 10 percent of global online users by 2014, but Apple is the only online retailer in the US which operates a transactional Web site for these countries.

While Internet penetration growth does not show a direct relationship with online retail market growth, online retail market dynamics will change as the global Internet penetration changes, boosting international expansion for most retailers.

Also, the level of adoption of online shopping does not always reflect the level of online spending. For example, North America has one of the highest online spending rates per person, while the overall penetration of online buyers is relatively low compared with other markets. Along similar lines, Asian e-commerce giants such as Japan and South Korea are climbing the levels in online spending because of improved access through technology and wider selection of online stores. Altogether, the market potential is huge with increasing Internet penetration levels.

Along with penetration, localization strategy also supports online retail

Traditionally, there was a tendency among online retailers in terms of not changing content according to local requirements and languages. This strategy had its disadvantages in terms of repelling customers who were not comfortable with the English language and standard layout across the globe. It catered largely to English-speaking markets. Today, however, online retailers are adopting the strategy of "localization",

1 ForresterResearch,September2010

i.e. Web sites with local languages along with regional customs — even if with a small amount of content at first. These retailers are better equipped to take the advantage of an increasingly diverse global online user base than their counterparts with English-only Web sites.

It is worth noting that there is a strong preference for local-language content in European markets such as France, while more than 95 percent of online users indicate a preference for local-language content in Asian markets such as Japan and Korea2. Even though localization strategy is being adopted by the global retailers, a lot still needs to be done. For example, while 5 percent of the global population speaks Arabic, just 1 percent of online content is estimated to be available in the language.

Similar to local language preference, customer behavior and expectations also vary across countries. More customized online strategy is required for the regions such as the Middle East or Latin America. Indeed, companies have started operating localization initiatives such as IP mapping techniques to localize prices, directing customers to local stores with products on display in the local language and having a local office in the country. Strategies of localizing content and understanding online customer behavior and preference are likely to boost online sales.

With all these inhibitors, in the long run, the keen interest in the Web in the post-recession economy and the growth spurt in Web-related technology will continue to drive the growth of the online retail segment, subject to the online business innovations by e-retailers. With its clear price advantage over the bricks-and-mortar channel, online retail will become more attractive to recession-hit shoppers. By 2014, global online retail sales are expected to be $778.6 billion USD3, increasing at a CAGR of 22.2 percent. The major regions such as US and Western Europe are forecast to reach $248.7 billion USD and $158.5 billion USD by 2014, respectively4.

2 AsiaPacificTechnographicsSurvey,Q420093 Datamonitor,July20104 ForresterResearch,March2010

Source:ForresterResearchInc.andInternetworldstats.com,June2010

Global Online Population

Region 2009 2010 2012ENorth America 259 266 292Europe 415 475 500Asia Pacific 645 846 1,033

Latin America and Caribbean 178 204 255Middle East and Africa 135 173 241

Total 1,632 1,964 2,321

IMAP’s Retail Industry Global Report 2010: Page 5

Transformation in online retailPost recession, online retail industry has undergone a fundamental shift in the way it performs and operates. Developments such as smart shopping and smart store, multi-channel retail, financial analytics in e-commerce, cross-border online purchases, influence of social media on retailers and globalization in non-US markets have all changed online retail.

Post recession, consumers believe in smart shopping and smart-store theme Since the recession, consumers have changed their buying habits dramatically. According to a survey on US consumers1, 76 percent have changed their spending style due to the recession and 43 percent report that their spending style will remain unchanged post recession. Customers are making informed purchasing decisions, keeping retailers on their toes to provide enhanced shopping facilities and precise information. As a matter of process, customers collect all sufficient information about product features, prices, warranties, availability and environmental impact and then compare these with competitors’ products, before purchasing. More time is spent researching on the internet about the products they wish to purchase.

To boost sales and enhance customer satisfaction, retailers are coming up with innovative techniques—revamping stores, establishing new retail formats and adopting online and social media to promote/sell products. To address this, Banana Republic opened a concept store in 2009. Further, Marsh’s efforts to revamp its store formats over the past two years is a significant move away from the chain’s traditional approach, where all stores sported similar layouts and displayed the same basic product mix. Using psychographic, demographic and transactional data, Marsh teams adjusted foot traffic patterns to give shoppers more options on how to navigate the stores. With this, most categories saw 7-10 percent growth.

Retailers are also becoming more technologically sophisticated with in-house (possible competitive advantage) and outsourced (lower price) solutions. Some retailers are

1 SurveyconductedbycomScore,July2010

also tapping into emerging technologies such as radio frequency identification (RFID) tags and virtual shopping, in which consumers "shop" in a simulated store online and record displays that capture their attention. The combination of traditional and emerging research approaches is giving companies a better perspective of shoppers’ behavior.

Multi-channel retail emerging — bricks, clicks and catalogs are creating synergiesAlong with the smart-store concept, on the retail format front, most retailers have started adopting multi-format strategies, i.e., along with traditional retail stores, establishing online stores, catalogs, mobile stores and convenience stores to gain a competitive edge and expand their customer base.

With slowing demand, retailers are inevitably finding themselves having to compete much harder against their rivals to achieve previously accustomed levels of growth. With the market maturing and customer penetration level saturating, targeting the right customer becomes essential. Also, new players such as Gap, Zara and H&M in the market will further increase the competition. At present, multi-channel retailers are outperforming their pure-play rivals, as they are able to provide greater convenience through services such as "click & collect" along with strong brand affiliation.

Another factor that is promoting multi-channel retailing is con-sumer tendencies to mix channels during their purchasing drive with a very particular way of choosing the product they want, where they want it, how they want it and with a variety of deliv-ery options. According to a consumer survey2, 78 percent of re-spondents in the US have used two or more retailing channels and 30 percent have used three or more channels to research and then finally make their purchases. Thus, the demand for an excellent customer experience across channels is compelling retailers to integrate their multi-channel operations.

Retailers need to work on preventing a fragmented shopping experience and allow shoppers to both research and

2 SurveybycommercesolutionproviderATG,December2009

Source:OvumResearch,IMAP

Browse BuyBuy Return

Catalog Store

Online Mobile

Multi-channel Retail Strategy

Source:IEAandIPCC,IMAP

Today’s E-commerce

Solutions

Social Computing

Optimization

Globalization Multiple Devices

Multiple Business Models User-generated Content

Multiple Channels More & Rich Content

Enterprise Integration Personalization

Product Discovery Saas Point Solutions

RIAs Data, More Data

New Developments in E-commerce

IMAP’s Retail Industry Global Report — 2010: Page 6

buy across all channels. Retailers have started implementing multi-channel strategies — such as alternative delivery options, integrated customer service, and aligned marketing efforts — that facilitate both researching and buying across channels. In May 2010, Marks & Spencer announced the launch of a new version of its Web site, designed to be easily accessible from mobile devices. This allows customers to conveniently browse and buy items by using their mobile devices. Similarly, Kroger, Safeway and ShopRite are sending "smart electronic shopping coupons" to their customers through wireless devices, televisions and computers. This option lets customers use these coupons to get discounts on their product purchases without going through the trouble of clipping and collecting paper coupons while helping retailers increase their distribution. Tesco, whose online retail sales during the year ending February 2010 grew 7.3 percent annually, set up a consultancy named Task Retail, which will advise Tesco on its online clothing strategy.

The Web will influence more than half of total retail sales by 2014 in the USOnline product research is not only driving online sales but also land-store sales. In 2009, store sales influenced by online research totaled $917 billion USD in the US1 while retail e-commerce sales were $155 billion USD. It means for every one US dollar in online sales, the internet influenced $5.91 USD of store sales. A majority of consumers are using online channels — comparing sites to find bargains. Post recession, consumers have become quite cautious spenders. They do extensive research online before closing the deal. Apart from US, European consumers are also mixing online and offline channels during their multi-channel purchasing decision.

Going forward, online and Web-influenced offline retail sales will grow at a 9 percent CAGR over the next five years2, as consumers increasingly use the Internet to research products before purchasing.

In brief, any retailer who is not using the online channel to promote offline sales — as well as online sales — is missing out on opportunities in today’s multi-channel scenario.

Financial analytics — becoming integral part of operational strategy3

The e-commerce industry has matured quite rapidly — in the time span of a decade. In the developed world, almost every company has an online retail store, hence, merely establishing Web presence does not lead to success in the business. With the maturity of the e-commerce market, customers are now demanding a more comprehensive look at online retail offerings with cost benefit vis-à-vis the competitors.

Traditional marketing methods are no longer viable for a variety of reasons, including the fact that regulated

1 eMarketer2 ForresterResearch3 http://www.ecommercetimes.com

monopolies are now few and far between. The Internet has eliminated many of the traditional geographical barriers companies have employed to fend off competitors. Now firms can market their goods and services worldwide. In addition, in developed countries such as the US and UK, the number of potential new customers is shrinking because most large companies have deeply penetrated into their prospect bases.

Today, companies have to search for innovative ways to determine how each e-commerce business process impacts the bottom line. Financial analytics tools offer retailers the opportunity to more closely examine their assets and liabilities. These analytic tools that help in performing robust analysis of retail business, covering various areas from product design to marketing to customer care services, have become more important. Unlike the traditional practice of focusing on quality and quantity of goods and services, retailers now are required to do a better job of analyzing their business in order to beat the competition.

This will give rise to new customer-driven metrics and new metrics designed to improve the shopper journey and point-of-purchase experience.

Cross-border online purchases are booming In today’s cutting-edge scenario, consumers are buying cross-border for various reasons, such as price, quality and unique product selection through international sites. Apart from these key reasons, localization of Web sites also favors cross border purchases.

Most cross-border consumers claim they get deals on products from overseas retailers even when shipping costs are considered. Manufacturers selling directly to consumers tend to be conscious of price differences on products in the countries in which they operate. As per one of the surveys conducted in early 20104, nearly one-third of European online buyers made Web purchases outside of their home country. On a similar note, in the US, more than one-quarter bought items from online retailers based outside of the US and among consumers aged 18–24, up to one-third of consumers bought from non-US sites5.

Also, from the online retailers’ point of view, these cross-border buyers are desirable consumers because they show high online buying tenure, have high levels of disposable income, and outspend other online buyers.

Going forward, retailers will continue to add international or cross-border options in their offerings for consumers, such as adding translated content to sites to attract international buyers. Fruugo, a shopping Web site, has started using machine translation to enable cross-border commerce. Additionally, Urban Outfitters from UK has added separate French- and German-language pages that explain how to order from its site.

4 ForresterResearchSurvey5 ForresterResearch

IMAP’s Retail Industry Global Report 2010: Page 7

Social media takes retailers to social networks — customer-generated content, blogs and wikis are influencing purchases The rapid adoption and evolution of social media networking sites such as Facebook and Twitter has become so important in terms of influence on consumer behavior and purchasing habits that the retail industry needs to pay attention. Globally, unique visitors to social networking sites have increased 27 percent to 307 million in 2009 from the 2008 level and the average time spent on social media was more than 5.5 hours per month in December 2009, a year-over-year increase of 82 percent1. Moreover, from the product review point of view, 19 percent of Europeans with Internet access read customer reviews and ratings at least monthly, and 46 percent of European Internet users agree that customer ratings and reviews help them to decide whether or not to purchase a product or service2. Therefore, it is essential for retailers to adopt social media marketing practices.

Though the concept of social media started gaining momentum in 2009, most retailers avoided or cautiously considered it causing it to remain in a testing phase. However, with the initial signs of an economic recovery and the increases in advertising budgets, investment in social media has increased in 2010. Following successful campaigns through social media, retailers are using social media as a core advertising tool. Shopping sites have increasingly used social media to promote their wares.

More than half of retailers had added or improved their Facebook and Twitter pages and nearly two-thirds of retailers had added or enhanced blogs and RSS feeds. Luxury brand Gucci has a Facebook fan following on its official page, which it updates regularly by introducing new photos and videos.

1 NielsenResearch,January20102 WesternEuropeTechnographics®Survey,Q12010

Greeting-card maker Hallmark Cards added a shopping tab on its Facebook page after realizing that its customers are spending more time on Facebook than on Hallmark.com. In this way, Hallmark was able to promote the idea and ability to personalize and buy a real physical card without ever leaving Facebook. Domino’s Pizza announced in December 2009 that it would use Facebook, Twitter and other social media to promote its revamped pizza pie. The company decided to produce this new pizza offering after analyzing the feedback from its customers coming in through various social media.

In January 2010, Dunkin Donuts launched a marketing campaign to promote donuts and related products, called Twitter Games, on Twitter. The participants were required to "tweet" information such as how they liked their coffee, in order to win gifts from the retailer.

Source:NielsenResearch,IMAP

Emergence of Social Media in Retailing

Ratings & Review Sites

Social Networks

TwitterVideo

Feedback Portals

Usenet Newsgroups

Micro-Community

Sites

Discussion Forums

Groups

Audio Blogs

Video BlogsMarketer

Blogs

Media Blogs

Mobile Blogs

Co-Creation

Consumer Blogs

Early-Stage Internet

Type

s of C

onsu

mer-G

ener

ated M

edia

Today

IMAP’s Retail Industry Global Report — 2010: Page 8

Major hurdles to globalization of online retail Online retailers are entering into global markets without physical infrastructure, and related expenses along with corresponding risk. However, retailers must ensure their e-commerce and regulatory platforms can effectively deal with cross-border sales.

Local laws and regulations Each country has its own import and export laws. While doing cross-border transactions, retailers need to understand the dynamics of shipment from a legal point of view. Apart from the list of commonly prohibited items such as currency, livestock and hazardous materials, each country has its own list of goods and services that are forbidden.

The above mentioned list is indicative of the complexity of cross-border trade. Hence, retailers need to undergo a hard-hitting test before setting up business in a new territory.

Even duties and taxes create hasslesRetailers are required to understand various taxes and duties that are levied across states within a country. These regulations increase in international trade and services and global retailers need to understand the appropriate rates for taxes and duties by country, then calculate, collect, remit and manage these funds. Hence, retailers are required to maintain the discipline across the organization for trade.

Retailers are looking for quick growth through globalization via non-US marketsSlow growth, heavy discounting, restrictive legislation and more erratic shopping in recession-weary developed markets have made retailers think about international expansion into non-US markets. Retail executives are learning that core markets such as US and Europe are not the powerful engines they once were. Today, relying on developing countries is not only desirable but also mandatory for survival. According to a recent survey of retail executives1, the BRIC region remains the highest priority markets for retail expansion, with nearly 80 percent of respondents citing one of these markets as part of their firms’ plans for short-term international growth.

Along with developed market players, 92 percent of respon-dents from emerging markets are looking to expand beyond their home market. These emerging market retailers are using their unique insights into local business and culture to expand regionally; a trend that will impact the global retail landscape. In addition, retailers are looking for a shorter payback period of three years (compared to five to seven years in 2005).

For expansion, acquisition activities have been mostly in non-food. Since market concentration has reached a high level, retailers have chosen to expand abroad through partnerships us-ing a franchise model due to government regulations. To support international retailers, local partners’ business models are made such that they can franchise international brands across the re-gion. While retailers are spreading their footprint internationally, they are not selling goods in the same retail formats as those in their home markets, except hypermarkets and cash and carry. Usually, customers are not open to changing their buying styles and patterns and do not always react well to new concepts.

Retailers need to set up channels in line with the consumer mindset with clear segmentation and localization. The real growth will come by operating multiple formats and multiple concepts, targeted to specific customer segments, in specific local markets, for specific end-use needs and occasions, while operating in specific shopping modes. Retailers will need to combine global market savvy and sourcing with local market delivery and know-how.

1 Aspartof2010GlobalRetailDevelopmentIndex,A.T.Kearneysurveyed60retailexecutivesfromaroundtheworldtoidentifyemergingcompetitivetrendsandconfirmtheGRDIrankings.

Country List of Items Prohibited

Argentina Furs, radios, televisions, phonographs and ready-made clothes

Australia Goods produced wholly or partly in prisons or by convict labor

Brazil Canes and umbrellas

China Walkie-talkies, wrist watches, cameras, bicycles and sewing machines

Fiji Dyes and coloring materials

Iran Musical instruments, games involving dice or brown sugar

Peru Gloves, household linens or wooden utensils

Source:USPostalService,IMAP

Examples of Legal Restrictions

IMAP’s Retail Industry Global Report 2010: Page 9

Investment OpportunitiesHOTChange in consumer behavior and demand-supply dynamics (due to recessionary blues) has spawned mobile commerce, online grocery stores and online health care.

Mobile Commerce (M-Commerce)1

M-commerce began in the last decade, and similar to mobile banking, has expanded very little. Despite the massive numbers of mobile users in the US and UK, those who use their phones to make purchases remains few. Tepid demand among consum-ers, technological limitations and lack of standardization in application has constrained the widespread proliferation of m-commerce.

While m-commerce is still immature, retailers are showing in-terest in this customer service channel with the idea of enhanc-ing the experience by allowing greater interaction between the consumer and retailer. Exploiting mobile technology will enable retailers to become more service-oriented, create more personalized relationships and get better at meeting customer needs. As per a study by the National Retail Federation in the US, 74 percent of online retailers either have in place or are de-veloping mobile commerce strategies (20 percent have already implemented their complete plans).

A number of recognized retail brands have launched m-com-merce programs. For m-commerce, eBay is the clear leader with their iPhone application launched in 2008, and Blackberry and Android applications that were launched in 2009 and 2010. In 2009, the company experienced more than $600 million USD in goods sold via the mobile application — a 200 percent increase from 2008. On new start-ups, MLB, the Philadelphia Phillies and Aramark began allowing consumers to use their iPhones to order food. Sears has effectively used mobile for customer service by sending text alerts to confirm that a Web order is ready for in-store pickup.

M-commerce revenues are still small in most markets, but 2010 will be the first meaningful year for this channel. By 2015, shoppers around the world will spend about $119 billion USD on goods and services bought via their mobile phones2. In the US alone, mobile shopping rose from $396 million USD in 2008 to $1.2 billion USD in 2009, and is forecasted to reach about $2.2 billion USD in 2010.

1 M-commerceisthebuyingandsellingofgoodsandservicesthroughwirelesshandhelddevicessuchascellulartelephonesandpersonaldigitalassistants(PDAs).Knownasnext-generatione-commerce,m-commerceenablesuserstoaccesstheInternetwithoutneedingtofindaplacetoplugin.

2 StudybyABIResearch

Online grocery shoppingOnline grocery shopping has continued to experience a rapid evolution in recent years, facilitated by the ongoing develop-ment of the Internet and related technologies. From a con-sumer perspective, the convenience factor of placing an order online and having goods delivered to the door is perhaps the biggest appeal to consumers looking for ways to save time or have physical difficulty carrying products.

The UK is the most developed online grocery market, with 15 percent of adults having shopped for their groceries online in 2009. The UK market grew at a CAGR of 24.9 percent during the period of 2004 to 2009, reaching a level of $7.8 billion USD in 2009 and is expected to reach $11.8 billion USD by 20143. Another major market is the US, which is catching up with online grocery shopping habits. With its vast online population, the US tops the online grocery shopping arena with a total market size of $9.1 billion USD in 2009. However, the per capita spending is still less for US consumers when compared to the UK market.

One key difference with grocery products is freshness: many consumers still prefer to see the produce before purchase, which remains a significant hurdle for the development of the online market. Furthermore, the time lag between placing the order and delivery means that online grocery purchasing only fits with regular, planned shopping rather than impulse or top-up shopping.

Online healthcareNowadays, healthcare consumers gather information online which includes healthcare-related information and services, looking for doctors, researching medicines, sharing personal health details and tracking health conditions for themselves. While consumers are becoming more self-reliant and empow-ered, healthcare providers are beginning to offer their services online and learning how to become more consumer-focused.

Given this evolution, online healthcare marketers in the US have the opportunity to build a bridge between healthcare providers and patients. It is estimated that the market for electronic health records will reach about $5 billion USD by 2015, according to Kalorama Information. To capture this vast potential, Google and Wal-Mart have together invested significantly in online healthcare services.

3 DatamonitorResearch

IMAP’s Retail Industry Global Report — 2010: Page 10

Future OutlookEven though retail sales exhibited signs of recovery towards the beginning of 2010, there is skepticism regarding the retail outlook for the developed economies. Western Europe will remain depressed, restrained by markets such as Ireland, Spain and the UK, which continue to face problems such as high government borrowing, household debt and unemployment. North America is expected to witness a slight improvement but growth will be subdued because of more jobless claims. Multi-store chains continue to respond to recessed retail consump-tion with store closings. The number of retail store closures in 2010 so far appears to be lower compared to that in 2009. However, it is still significant. Despite this, global retail sales growth is expected to be 7.3 percent in 2010, before slowing to 5.8 percent in 2011 and then rising again to 7.4 percent in 2012. In terms of volume growth, the global retail market is expected to return to comparable pre-2008 levels only by 20111.

To survive in these tough times, retailers must increasingly look to enhance their multi-channel retailing capabilities, as custom-ers are tending to purchase more and more through multiple channels.

The best performers in the retail industry will be those that optimally combine the brick-and-mortar experience with the electronic retailing experience, keeping in mind the interest of the customer. Given the pessimism prevailing in the retail segment, non-store and online sales will likely remain strong as

1 EIU

buyers will continue to buy online to obtain lower prices. Off-mall value specialty stores and small-ticket discretionary categories may see a return to profitability and growth.

It is expected that in the next couple of years online sales will be shipped directly from the manufacturer to the consumer on a just-in-time basis. Internet retailing through mobile devices offers a huge opportunity for growth, as growth in traditional online retail matures. This can be primarily attributed to the expected global growth in mobile Internet usage.

Whatever the future holds, the Internet will continue to break down barriers to create a level playing field for companies, countries and individuals around the world.

Source:EIU,August2010

Global Retail Sales

2005 2006 2007 2008 2009Retail Sales (USD billion) 11,100 11,900 13,200 14,500 13,900

Retail Growth Rate – 7.2% 10.9% 9.8% -4.1%

Online Sales (USD billion) 181 222 271 304 349

Online Growth Rate – 22.7% 22.1% 12.4% 14.5%

IMAP’s Retail Industry Global Report 2010: Appendix A-i

Value chain of the retail market• The retail industry is composed of individuals

and companies engaged in the sale of finished products to end-user consumers. It implies that retailing is the final step in the distribution of merchandise—the last point in the supply chain—connecting the bulk producers of commodities to the final consumers, Retailing covers diverse products such as food, apparels, consumer goods, financial services, leisure, etc.

• Considering the nature of the business, retailing is extremely competitive and the failure rate of retail establishments is relatively high. While price is the most important arena of competition, other factors such as location, selection and display of merchandise, attractiveness of the establishment and reputation also matter.

• Retail is usually classified by the type of products as follows: - Food products - Soft goods: clothing, apparel and other fabrics - Hard goods (hardline retailers): appliances, electronics,

furniture, sporting goods, etc.

• Traditionally, the retail business was dominated by smaller family-run or regionally targeted stores, but this market is increasingly being taken over by multinational conglomerates such as Wal-Mart and Sears, indicating the era of “retail globalization.”

These larger retailers have managed to set up huge supply/distribution chains, inventory management systems, financing pacts and wide-scale marketing plans. This dynamic nature of the retail business has created different business models and a wide range of new formats such as vending machines, door-to-door and telephone sales, direct-mail marketing, online retailing1, and traditional formats such as discount houses, specialty stores, department stores, supermarkets, and consumer cooperatives. This has led to the emergence of multichannel retailing, which refers to the concept of selling goods through multiple channels rather than just one, such as traditional stores.

1 Onlineretailingisatypeofelectroniccommerceusedforbusiness-to-consumer(B2C)transactionsandmailorder.

Appendix A: Global overview of retail and online retail

Major formats of in-store retailersFormat Description Value Proposition

Branded Stores Exclusive showrooms either owned or franchised by a manufacturer

Complete range available for a given brand, certified product quality

Specialty Stores (Multi-brand) Focus on a specific consumer need, carry most of the brands available

Greater choice to the consumer, comparison between brands possible

Department Stores Large stores having a wide variety of products; organized into different departments, such as clothing, house-wares and toys

One-stop shop catering to varied consumer needs

Supermarkets Extremely large self-service retail outlets One-stop shop catering to varied consumer needs

Discount Stores Stores offering discounts on the retail price by selling high volumes and through economies of scale Low prices

Hyper-marts Larger than a supermarket, sometimes with a warehouse appearance; generally located in quieter parts of the city

Low prices, vast choice available including services as cafeterias

Convenience Stores Small self-service formats located in crowded urban areas Convenient location and extended operating hours

Shopping Malls An enclosure having different formats of in-store retailers all under one roof Variety of shops available close to each other

Major formats of non-store retailers*

Format Description Value PropositionDirect Response Television (DRTV) Advertising Including Infomercials

Marketed directly over television, with prominent display of a toll-free number and/or internet address, asking the consumer to take specific action leading to or making a product sale

Rapidly and cost-effectively introduce a new product or revive an under-marketed product

Catalog Sales/ Online Catalog Sales

Customers select products from catalogs and fill out an order form. The order is brought to the sales executive, who completes the order through the warehouse

Lower prices than other retailers and lower overhead expenses due to the smaller size of the store

Vending MachinesChewing gum to hot meals have been sold through these machines and have become an integral part of contemporary consumption

No human efforts required; vending machines are beneficial for low-cost consumables

E-commerce Buying and selling of products or services over electronic systems such as the Internet and other computer networks

Increases consumers’ ability to gather information about products and prices

Multi-level MarketingProducts and company are marketed directly to consumers and potential business partners by means of relationship referrals and word-of-mouth marketing

Cost of logistics is low

*Thoseengagedinthesaleofproductsusingmarketingmethodswhichdonotincludeaphysicallocation

Retail Value Chain

Source:ImagetakenfromMicrosoftwebsite

IMAP’s Retail Industry Global Report — 2010: Appendix A-ii

Global Overview of Retail Sector• Global retail sales declined 3.7 percent in 2009 to 13.9 trillion

USD1. While sales for 2009 were low, it is worthwhile to note that sales of the global retail industry have doubled since 2003 when worldwide retail sales were $7 trillion USD.

• Along with sales growth, profitability for most retailers was also sharply affected. Profit margins of the 200 largest retailers in the world fell to 2.4 percent from 4.1 percent during fiscal 2008-09 with more than 30 retailers reporting operating losses2. This trend affected almost every retail category and geographical area except Africa and the Middle East where retailers saw an increase in profitability.

• The composition of the top 10 retailers in the world remained the same in 2009 compared to the previous year. This group now accounts for more than 30 percent of total retail sales of the top 250 retailers. Wal-Mart remained the world’s largest retailer, ahead of Carrefour Group.

• In major markets such as the US and UK, retail spending is expected to decline, while emerging markets such as China and India should have strong growth in 2010. There are signs of improvement for US consumers, but the recent destruction of wealth is expected to limit consumer spending. Asia is believed to represent the best growth prospects for retailers and consumer-product companies in 2010.

Retail globalization• Among developed countries, the UK continues to lead the world

as the most international retail market. Europe maintains its ability to attract the world’s top retailers in 2009, with 58% of the world’s top 250 retailers having a presence in Europe. The UK outperformed other major European economies such as Spain, France, Germany and Italy, ranking first among the top 15 most international retail markets. European retailers are more prone to globalization than American retailers because they face restrictions on development in their home markets. In France, due to regulations, hypermarkets cannot open new stores in their home market easily. Consequently, they principally seek growth in other markets. This is why the lion’s share of global retailers is based in Europe. The US was 10th globally, with 39% of international retailers. This can be attributed, at least in part, to the size, maturity and strength of its domestic market. US retailers tend to penetrate their vast national market extensively before considering international expansion. Although Europe continues to dominate, with eight out of the top 15 most international retail locations, emerging economies such as China, Russia and the UAE have gained significant ground in the past 12 months.

• According to a recent survey of 60 retail executives from around the world3, the BRIC4 region remains the highest priority markets for retail expansion, with nearly 80 percent of respondents citing one of these markets as part of their firm’s plans for short-term international growth. Along with developed market players, emerging market-based local retailers have begun expanding outside their region. In a similar survey, 92 percent of respondents from emerging markets are looking to expand beyond their home market, with close to 30 percent of those saying a developed country is among their top three expansion targets. These emerging market retailers are using their unique insights into local business and culture to expand regionally in a trend that will impact the global retail landscape. In addition, retailers are looking for a shorter payback period of three years, compared to five to seven years in 2005.

1 EconomistIntelligenceUnit(EIU)2 Bloomberg3 Aspartof2010GlobalRetailDevelopmentIndex,A.T.Kearneysurveyed60retail

executivesfromaroundtheworldtoidentifyemergingcompetitivetrendsandconfirmtheGRDIrankings.

4 Brazil,Russia,IndiaandChinacountries

• Despite the global economic slowdown, many retailers such as cash-rich private companies have continued their expansion plans throughout the past 12 months. A survey of 280 retailers5 saw them expand their international presence by two more countries than in the previous year. This was primarily in clothing, footwear and accessories.

Multi-channel retailing• According to a consumer survey6, 78 percent of respondents

in the US used two or more retailing channels and 30 percent used three or more channels to research and then finally make their purchases. Similarly, in Europe, the population purchasing online increased from 32 percent in 2008 to 37 percent in 20097.

• To grab the benefits of multi-channel retailing, players are enhancing their capabilities.

- For example, in May 2010, Marks & Spencer announced the launch of a new version of its Web site, designed to be easily accessible from mobile devices. This will allow customers to conveniently browse and buy items by using their mobile devices.

- Similarly, Kroger, Safeway and ShopRite are sending “smart electronic shopping coupons” to their customers through wireless devices, television and computers. This option lets customers use these coupons to get discounts on their product purchases without going through the trouble of clipping and collecting paper coupons while helping retailers increase their distribution.

- Tesco, whose online retail sales during the year ending February 2010 grew 7.3 percent annually, has set up a consultancy named Task Retail, which will advise Tesco on its online clothing strategy.

Rise of online retailing• Global online retail sales grew by 14.5 percent in 2009 to reach

348.6 billion USD8. Electronics is the largest segment in global online retail sales, contributing around 22.6 percent.

• The US is the biggest market for online retail sales with 37.2 percent market share, whose total retail e-commerce spending reached 129.8 billion USD in 20099, marginally lower than the 2008 level of 130.1 billion USD. A high level of product differentiation together with low fixed costs and dynamic market revenue growth is seen in the US market. However, it also creates rivalry in the market as a large number of players are active along with the absence of consumer switching costs.

• Online retail sales still account for only 2.5 percent of total retail sales on a global basis. On an average, online sales account for 6.6 per cent of total sales for the top 100 retailers in the world10. Hence, most retailers have yet to make a strong online push through multi-channel retailing.

• By 2014, global online retail sales are expected to be 778.6 billion USD11, increasing at a CAGR of 22.2 percent. To sustain this level of sales, internet penetration in North America, Europe and Asia-Pacific is expected to increase by 10.6 percent, 7.6 percent and 12.7 percent12 on a y-o-y basis respectively.

5 CBRichardEllis6 SurveybycommercesolutionproviderATG,December20097 IDCRetailInsight8 Datamonitor,July2010.Theonlineretailmarketconsistsofthetotalrevenuesgener-

atedthroughthesaleofretailgoodsviaonlinechannels,valuedatretailsellingprice.9 TheUSDepartmentofCommerce10ForresterResearch,January201011Datamonitor,July201012StateofRetailingOnline

IMAP’s Retail Industry Global Report 2010: Appendix A-iii

Thumbnail summaries of top 50 retail companies

1: Wal-Mart Stores, Inc. (US)

Brief description Offers a full time supermarket and a limited assortment of general merchandise with operations in three business segments: Wal-Mart U.S., International and Sam’s Club.

Operational Format Cash & Carry/Warehouse Club, Discount Department Store, Hypermarket/Supercenter/Superstore, supermarket and online retail.

Financials (LTM)Revenue: $417 billion USD, year-over-year change: 0.95%Operating profit: $24.8 billion USD, year-over-year change: 5.1%Net income: $14.8 billion USD, year-over-year change: 7.0%

Expected capital expenditure (2011) $3.9 billion USDGeographic coverage (2010) US: 75%; Rest of the world: 25%Future plans Expects to add more than 600 stores during fiscal year 2011.

2: Carrefour S.A. (France)

Brief description Offers a range of food and non-food products. Carrefour SA's supermarket chains include, among others, Champion and Norte brands, which primarily offer food, clothing and household goods.

Operational Format Cash & Carry/Warehouse Club, Convenience/Forecourt Store, Discount Store, hypermarket, Supercenter/Superstore, Supermarket and online retail store

Financials (LTM)Revenue: $122 billion USD, year-over-year change: (1.14%)Operating profit: $2.4 billion USD, year-over-year change: (39.0%)Net income: $650 million USD, year-over-year change: (74.2%)

Expected capital expenditure (2010) NAGeographic coverage (2009) France: 45%; Europe(except France): 33%; Latin America: 14%; Asia: 8%

Future plansIn India, it is expected to set up 150 hypermarkets while in the global level it is planning to setup 50 supermarkets under the Carrefour Market banner and 30 convenience stores under the Carrefour express banner.

3: McKesson Corp. (US)

Brief description Distributes pharmaceutical products, medical surgical supplies, healthcare and beauty products and develops software to facilitate health enterprise. Also offers analytic, care management and patient solutions for payers.

Operational Format Drugs/medical-surgical equipment distribution.

Financials (LTM)Revenue: $109 billion USD, year-over-year change: 1.94%Operating profit: $2 billion USD, year-over-year change: 17.7% Net income: $1.3 billion USD, year-over-year change: 53.5%

Expected capital expenditure (2011) $81 million USDGeographic coverage (2010) US: 91%; Rest of the world: 9%Future plans Planning to expand through acquisitions

4: Cardinal Health. (US)

Brief description Specializes in health care supply chain services. Provides pharmaceutical and medical products and services to healthcare providers and manufacturers.

Operational Format Pharmaceutical distribution, distribution and consulting, retail pharmacy franchising and online store

Financials (LTM)Revenue: $99 billion USD, year-over-year change: 2.6% Operating profit: $1.4 billion USD, year-over-year change: (2.9%)Net income: $642 million USD, year-over-year change: (44.2%)

Expected capital expenditure (2011) $62.5 million USDGeographic coverage (2010) US: 99%; Rest of the world: 1%

Future plans Planning acquisitions to expand their role as a service provider in healthcare industry, along with investment in nuclear pharmacy business.

5: CVS Caremark Corp. (US)

Brief description Provides pharmacy services, sells branded and generic drugs, as well as household goods. Operates a chain of drug stores throughout the US.

Operational Format Drug Store/Pharmacy and online retail

Financials (LTM)Revenue: $98 billion USD, year-over-year change: 12.87%Operating profit: $64 billion USD, year-over-year change: 6.5%Net Income: $3.7 billion USD, year-over-year change: 15.1%

Expected capital expenditure (2010) $632 million USDGeographic coverage (2009) US: 100%Future plans Plans to enter in new markets such as Puerto Rico, Memphis, and St. Louis.

IMAP’s Retail Industry Global Report — 2010: Appendix A-iv

6: Metro AG. (Germany)

Brief description Germany-based trading and retail company which operates through retail stores and marketing of products over the internet. It acts as the holding company for the Metro Group.

Operational Format Apparel/Footwear Specialty, Cash & Carry/Warehouse Club, Department Store, Electronics Specialty, Hypermarket/Supercenter/Superstore, Other Specialty, Supermarket and Online retail.

Financials (LTM)Revenue: $92 billion USD, year-over-year change: (3.57%)Operating profit: $2.3 billion USD, year-over-year change: (15%)Net income: $644 million USD, year-over-year change: (4.5%)

Expected capital expenditure (2010) NAGeographic coverage (2009) Germany: 40%; Europe: 56%; Asia/Africa: 4%

Future plans Focus to grow in the region of Eastern Europe and Asia and also aim at a profit improvement potential of 1.5 billion Euro by 2012 with effective cost reduction methods.

7: Tesco Plc. (UK)

Brief description Tesco is an international retailer mainly dealing in food retailing. In addition it also provides retail banking and insurance services through its subsidiary Tesco Bank.

Operational Format Convenience/Forecourt Store, Department Store, Discount Department Store, Hypermarket/Supercenter/Superstore, Supermarket and online retail.

Financials (LTM)Revenue: $90 billion USD, year-over-year change: 5.59% Operating profit: $4.9 billion USD, year-over-year change: 5%Net income: $3.7billion USD, year-over-year change: 9.1%

Expected capital expenditure (2011) $5.5 billion USDGeographic coverage (2010) UK: 74%; Europe: 15%; Rest of the world: 11%Future plans Planning to invest in retail and in banking operations.

8: The Kroger Co. (US)Brief description A US based retailer which manufactures, processes and sells food products in its own supermarkets.

Operational Format Convenience/Forecourt Store, Hypermarket/Supercenter/Superstore, Other Specialty, Supermarket and Online retail.

Financials (LTM)Revenue: $80 billion USD, year-over-year change: 1% Operating profit: $2.1 billion USD, year-over-year change: (10.1%)Net income: $16 million USD, year-over-year change: (94.4%)

Expected capital expenditure (2011) $1.9 – 2.1 billion USDGeographic coverage (2010) US: 100%

Future plans Plan to invest in capital projects during 2010 with a strong focus towards remodels and infrastructure projects.

9: Schwarz Unternehmens Treuhand KG. (Germany)**Brief description A hard discounter, it offers lowest prices on privately sourced products and private label brands.Operational Format Discount Store, Hypermarket/Supercenter/Superstore

Financials (2008)Revenue: $79.9 billion USD, year-over-year change: NAOperating profit: NA, year-over-year change: NANet Income: NA, year-over-year change: NA

Expected capital expenditure (2010) NAGeographic coverage (2009) Pan EuropeFuture plans NA

10: Amerisourcebergen Corp. (US)

Brief descriptionA pharmaceutical services company, servicing both healthcare providers and pharmaceutical manufacturers in the pharmaceutical supply channel. The company provides drug distribution and related services.

Operational Format Retail and Online stores

Financials (LTM)Revenue: $77 billion USD, year-over-year change: 2.24%Operating profit: $1.1 billion USD, year-over-year change: 7.2%Net income: $626 million USD, year-over-year change: 101.0%

Expected capital expenditure (2011) $33.5 million USDGeographic coverage (2010) NAFuture plans Undertake cost cutting measures

11: Costco Wholesale Corp. (US)

Brief description Sells all kinds of food, automotive supplies, toys, hardware, sporting goods, jewelry, electronics, apparel, health and beauty aids and other goods

Operational Format Cash & Carry/Warehouse Club and Online store

Financials (LTM)Revenue: $76 billion USD, year-over-year change: (1.46%)Operating profit: $2 billion USD, year-over-year change: (9.1%)Net Income: $1.2 billion USD, year-over-year change: (15.3%)

Expected capital expenditure (2010) $542 million USDGeographic coverage (2009) US: 79%; Canada: 14%; Rest of the world: 7%Future plans Planning to expand its chain of wholesale depots

IMAP’s Retail Industry Global Report 2010: Appendix A-v

12: Rewe-Zentral AG. (Germany)**Brief description A food retailer & Co-operative in Europe owned by some 3,000 of its independent retail members.

Operational Format Cash & Carry/Warehouse Club, Discount Store, Drug Store/Pharmacy, Electronics Specialty, Home Improvement, Hypermarket/Supercenter/Superstore, Other Specialty, Supermarket

Financials (2008)Revenue: $73.2 billion USD, year-over-year change: NAOperating profit: NA, year-over-year change: NANet income: NA, year-over-year change: NA

Expected capital expenditure (2010) NAGeographic coverage (2008) Pan Europe Future plans NA

13: The Home Depot, Inc. (US)

Brief description A home improvement retailer which sells an assortment of building materials, home improvement, lawn and garden products and provides a number of services.

Operational Format Home Improvement

Financials (LTM)Revenue: $67 billion USD, year-over-year change: 2.9%Operating profit: $5.3 billion USD, year-over-year change: (7.1%)Net income: $2.9 billion USD, year-over-year change: 10.2%

Expected capital expenditure (2011) $366 million USDGeographic coverage (2010) US: 90%; Rest of the world: 10%Future plans Plans to open more stores.

14: Target Corp. (US)

Brief description An American retailing company which provides different products range with its discount chain and online business.

Operational Format Discount Department Store, Hypermarket/Supercenter/Superstore and Online store

Financials (LTM)Revenue: $67 billion USD, year-over-year change: 1.1%Operating profit: $5.0 billion USD, year-over-year change: 6.2%Net income: $2.7 billion USD, year-over-year change: 12.4%

Expected capital expenditure (2011) $1.1 billion USDGeographic coverage (2010) US: 100%Future plans Planning to open new stores

15: Aldi GmBh & co OHG. (Germany)**

Brief description Owns and operates a chain of discount grocery stores whose products include food, alcoholic drinks, electrical products, kitchenware, toys, clothing, and flowers.

Operational Format Discount Store, Supermarket and Online store

Financials (2008)Revenue: $66.1 billion USD, year-over-year change: NAOperating: NA, year-over-year change: NANet Income: NA, year-over-year change: NA

Expected capital expenditure (2010) NAGeographic coverage (2008) Europe, US, and AustraliaFuture plans NA

16: Walgreen Co. (US)

Brief description Offers health services, including primary and acute care, wellness, pharmacy and disease management services and health and fitness.

Operational Format Drug Store/Pharmacy and Online store

Financials (LTM)Revenue: $66 billion USD, year-over-year change: 7.3%Operating profit: $3.4 billion USD, year-over-year change: (5.6%) Net income: $2.1 billion USD, year-over-year change: (7%)

Expected capital expenditure (2010) $450 million USDGeographic coverage (2009) US: 100%Future plans Planning acquisitions for its growth strategy.

17: Groupe Auchan S.A. (France)**

Brief descriptionOperates as a food and general retailer. It provides a range of products, such as fresh produce, beauty and baby products, and wines. In terms of its diversified offering, it also provides financial products and services, and automated payment systems primarily to retail customers.

Operational Format Discount Store, Electronics Specialty, Hypermarket/Supercenter/Superstore, Other Specialty, Supermarket

Financials (2009)Revenue: $55.1 billion USD , year-over-year change: 0.5%Operating profit: $1.7 billion USD, year-over-year change: (0.8%) Net income: $918 million USD, year-over-year change: (6.5%)

Expected capital expenditure (2010) $2.1 billion USDGeographic coverage (2009) France: 47%; Western Europe: 29%; Central and eastern Europe and Asia: 24%Future plans Focus on developing its E-commerce activities and to open more shopping centers.

IMAP’s Retail Industry Global Report — 2010: Appendix A-vi

18: Edeka Zentrale AG. (Germany)**

Brief description Sells frozen foods, breakfast foods, cooking and baking products, nibbles and sweets, alcoholic beverages, pet foods, and household and cleaning products.

Operational FormatCash & Carry/Warehouse Club, Convenience/Forecourt Store, Discount Store, Electronics Specialty, Home Improvement, Hypermarket/Supercenter/Superstore, Other Specialty, Supermarket and Online store

Financials (2009)Revenue: $52.8 billion USD, year-over-year change: 18.7%Operating profit: NA million USD, year-over-year change: NANet Income: NA million USD, year-over-year change: NA

Expected capital expenditure (2010) NAGeographic coverage (2008) Austria, Denmark, GermanyFuture plans NA

19: Best Buy Co, Inc. (US)

Brief descriptionA multinational e-retailer of consumer electronics, home office products, entertainment software, appliances and related services.

Operational Format Electronics Specialty and Online store

Financials (LTM)Revenue: $51 billion USD, year-over-year change: 10.3% Operating profit: $2.4 billion USD, year-over-year change: 13.6%Net income: $1.4 billion USD, year-over-year change: 31.3%

Expected capital expenditure (2011) $221 million USDGeographic coverage (2010) US: 75%; Rest of the world: 25%Future plans Focus on international growth strategy

20: Seven & I Holdings Company Ltd. (Japan)

Brief descriptionIt is involved in electronic commerce services, Internet-related services, meal delivery services, publishing and property management businesses. Retail business is primarily based out of Japan and North America.

Operational Format Apparel/Footwear Specialty, Convenience/Forecourt Store, Department Store, Hypermarket/Supercenter/Superstore, Other Specialty, Supermarket and Online store

Financials (LTM)Revenue: $49 billion USD, year-over-year change: (10.7%)Operating profit: $2.4 billion USD, year-over-year change: (19.6%)Net Income: $481 million USD, year-over-year change: (51.4%)

Expected capital expenditure (2011) NAGeographic coverage (2010) Japan: 70%; North America: 28%; Rest of the world: 2%Future plans Plans to introduce new format stores and specialty stores.

21: Aeon company, Ltd. (Japan)

Brief description Operates general merchandise stores and also engaged in women’s and casual clothing store, business and development of commercial property, and financing services through property.

Operational FormatApparel/Footwear Specialty, Convenience/Forecourt Store, Department Store, Discount Store, Drug Store/Pharmacy, Home Improvement, Hypermarket/Supercenter/Superstore, Other Specialty, Supermarket

Financials (LTM)Revenue: $49 billion USD, year-over-year change: 3.47%Operating profit: $1.4 billion USD, year-over-year change: (4.7%)Net income: $333 million USD, year-over-year change: NA

Expected capital expenditure (2011) NAGeographic coverage (2010) Japan: 92%; Rest of the world: 8%Future plans Planning cost restructuring program and focus on China market development

22: Lowe’s Companies, Inc. (US)

Brief descriptionDistributes building materials and supplies through stores in the US. Offers a complete line of products and services for home decoration, maintenance, repair, re-modeling and property maintenance.

Operational Format Home Improvement and online store

Financials (LTM)Revenue: $48 billion USD, year-over-year change: (2.09%) Operating profit: $3.3 billion USD, year-over-year change: (17.8%)Net income: $1.9 billion USD, year-over-year change: (18.8%)

Expected capital expenditure (2011) $516 million USDGeographic coverage (2010) North America: 100%Future plans Plans to open some new stores

IMAP’s Retail Industry Global Report 2010: Appendix A-vii

23: Centres distribeutrs E. Leclerc. (France)**

Brief description A retailing private cooperative grouping with nearly of 500 members and has a dominant presence in the French market.

Operational Format Convenience/Forecourt Store, Discount Store, Home Improvement, Hypermarket/Supercenter/Superstore, Other Specialty, Supermarket and Online retail

Financials (2008)Revenue: $47.5 billion USD, year-over-year change: NAOperating profit: NA, year-over-year change: NANet Income: NA, year-over-year change: NA

Expected capital expenditure (2010) NAGeographic coverage (2008) France, Italy, Poland, Portugal, Slovenia, SpainFuture plans NA

24: Woolworths Ltd. (Australia)

Brief description Australia based retailer in the manufacturing, export and wholesale of processed foods. It also operates in hospitality business which includes hotels, pubs, F&B, and gaming operations.

Operational Format Convenience/Forecourt Store, Discount Department Store, Electronics Specialty, Other Specialty, Supermarket and Online store

Financials (LTM)Revenue: $46 billion USD, year-over-year change: 4.2% Operating profit: $2.7 billion USD, year-over-year change: 9.3%Net income: $1.8 billion USD, year-over-year change: 10.1%

Expected capital expenditure (2011) $1.8 billion USDGeographic coverage (2010) Australia: 92%; New Zealand: 8%Future plans Plans to open new stores

25: Wesfarmers Ltd. (Australia)

Brief descriptionOwns retail chains, operates mines, writes insurance, manufacture and distributes industrial products, manufacture fertilizers and chemicals, and distributes liquefied petroleum gas and medical and industrial gases.

Operational Format Supermarket and Online retail

Financials (LTM)Revenue: $45 billion USD, year-over-year change: 1.6%Operating profit: $2 billion USD, year-over-year change: (8.4%)Net income: $1.4 billion USD, year-over-year change: 2.8%

Expected capital expenditure (2011) $2.1 billion USDGeographic coverage (2010) Australia: 100%

Future plans Focus to improve margins, capital management, expenses, the operations and performance of individual stores.

26: ITM Développement International (Intermarché). (France)**Brief description A French co-operative and consortium of independent retailers

Operational Format Apparel/Footwear Specialty, Convenience/Forecourt Store, Discount Store, Home Improvement, Other Specialty, Supermarket

Financials (2008)Revenue: $44.5 billion USD, year-over-year change: NAOperating Income: NA , year-over-year change: NANet Income: NA year-over-year change: NA

Expected capital expenditure (2010) NAGeographic coverage (2008) Belgium, Bosnia-Herzegovina, France, Poland, Portugal, Romania, Serbia, SpainFuture plans NA

27: Sears Holdings Corp. (US)

Brief descriptionA broad line retailer with full line and specialty retail stores. Retails home appliances, as well as tools, lawn and garden products, home electronics, and other products. It also provides automotive repair and maintenance.

Operational Format Apparel/Footwear Specialty, Department Store, Discount Department Store, Home Improvement, Hypermarket/Supercenter/Superstore, and Online store.

Financials (LTM)Revenue: $44 billion USD, year-over-year change: (5.8%)Operating profit: $695 million USD, year-over-year change: 20.8% Net Income: $280 million USD, year-over-year change: 343%

Expected capital expenditure (2011) $125 million USDGeographic coverage (2010) US: 90%; Canada: 10%

Future plans Planning to add new product line with their Kenmore business and concentrate on international expansion.

IMAP’s Retail Industry Global Report — 2010: Appendix A-viii

28: Safeway Inc. (US)

Brief descriptionA food and drug retailer with a network of distribution, manufacturing and food-processing facilities, it owns and operates GroceryWorks.com, an online grocery channel doing business under the names Safeway.com, Vons.com and Genuardis.com

Operational Format Supermarket and Online store

Financials (LTM)Revenue: $41 billion USD, year-over-year change: (7.4)%Operating profit: $1.2 billion USD, year-over-year change: (27.4)%Net Loss: $1.2 billion USD, year-over-year change: NA

Expected capital expenditure (2010) $243 million USDGeographic coverage (2009) US: 85%; Canada: 15%Future plans Undertake cost cutting measures.

29: Koninklijke Ahold N.V. (Netherlands)

Brief description Deals in food articles and also retails health and beauty supplies, prescription drugs, and wine and liquor. Also retails food over the internet in Netherlands and the US.

Operational Format Convenience/Forecourt Store, Discount Store, Drug Store/Pharmacy, Hypermarket/Supercenter/Superstore, Other Specialty, Supermarket and Online store

Financials (LTM)Revenue: $40 billion USD, year-over-year change: 8.9%Operating profit: $1.9 billion USD, year-over-year change: 7.9%Net income: $1.4 billion USD, year-over-year change: (17%)

Expected capital expenditure (2010) NAGeographic coverage (2009) US: 58%; Netherlands: 36%: Rest of the Europe: 6%Future plans Plans acquisitions for the growth and undertaking cost cutting measures

30: SuperValu Inc. (US)

Brief description Deals in pharmaceuticals and also provides supply chain services, which includes wholesale distribution and related logistics support services

Operational Format Discount Store, Drug Store/Pharmacy, Hypermarket/Supercenter/Superstore, Supermarket and Online store

Financials (LTM)Revenue: $39 billion USD, year-over-year change: (8.9%)Operating profit: $1.1 billion USD, year-over-year change: (12.1%)Net income: $347 million USD, year-over-year change: NA

Expected capital expenditure (2011) $161 million USDGeographic coverage (2010) US: 100%Future plans Undertake cost cutting measures for effective pricing strategy.

31: Grazziotin S.A. (Brazil)

Brief descriptionSells clothes, shoes, accessories and home furnishing, among others. The Company operates in the Brazilian states of Rio Grande do Sul, Parana and Santa Catarina. Grazziotin SA sells its products through 257 stores divided into four networks of department stores.

Operational Format Department and Specialty stores

Financials (LTM)Revenue: $39 billion USD, year-over-year change: 5.7% Operating profit: $7.1 billion USD, year-over-year change: (3.0%)Net income: $5.5 billion USD, year-over-year change: (6.8%)

Expected capital expenditure (2010) NAGeographic coverage (2008) Brazil: 100%Future plans NA

32: Finatis S.A. (France)

Brief description A holding company with interests in the commercial property investment, food and sport goods distribution

Operational Format Retail stores and Online stores

Financials (LTM)Revenue: $38 billion USD, year-over-year change: (1.23%)Operating profit: $1.8 billion USD, year-over-year change: (2.4%)Net Income: $36 million USD, year-over-year change: NA

Expected capital expenditure (2010) NAGeographic coverage (2007) France: 72%; South America: 18%; Rest of the world: 10%Future plans NA

33: Rallye S.A. (France)

Brief description Presence in the food and specialized retail sector, through its majority interest in Groupe Casino and Groupe Go Sport.

Operational Format Hypermarkets, supermarkets, and convenience stores

Financials (LTM)Revenue: $38 billion USD, year-over-year change: (1.23%)Operating profit: $1.7 billion USD, year-over-year change: (3.0%)Net income: $109 million USD, year-over-year change: NA

Expected capital expenditure (2010) $0.124 million USDGeographic coverage (2009) France: 67%; South America: 24%; Asia: 6%; Rest of the world:3%Future plans NA

IMAP’s Retail Industry Global Report 2010: Appendix A-ix

34: Casino Guichard-Perrachon S.A. (France)

Brief description Distributes a range of products via a chain of more than 10,000 stores and also provides supplementary services such as restaurants and foodservice.

Operational FormatCash & Carry/Warehouse Club, Convenience/Forecourt Store, Discount Department Store, Discount Store, Electronics Specialty, Hypermarket/Supercenter/Superstore, Non-Store, Other Specialty, Supermarket and Online retail.

Financials (LTM)Revenue: $37 billion USD, year-over-year change: (1.2%) Operating profit: $1.7 billion USD, year-over-year change: (4.4%)Net income: $733 million USD, year-over-year change: 19.4%

Expected capital expenditure (2010) NAGeographic coverage (2009) France: 66%; Latin America: 24%; Asia: 6%; Rest of the world: 4%Future plans Planning to expand through new store concept and to restructure capital structure.

35: Sysco Corp. (US)

Brief description Distributes food and retailed products primarily to the foodservice industry. Also distributes personal care guest amenities, housekeeping supplies, room accessories, and textile to the lodging industry.

Operational Format Wholesale Distribution

Financials (LTM)Revenue: $37 billion USD, year-over-year change: 1.1% Operating profit: $2 billion USD, year-over-year change: 5.5%Net income: $1.2 billion USD, year-over-year change: 11.7%

Expected capital expenditure (2011) $176 million USDGeographic coverage (2010) US: 90%; Canada: 9%; Rest of the world: 1 %

Future plans Planning investment in new technology and a disciplined acquisition program along with cost reduction methodologies.

36: J Sainsbury Plc. (UK)

Brief description

Principal activities are grocery retailing and financial services. Its businesses are organized into three operating segments: Retailing (Supermarkets and Convenience); Financial services (Sainsbury’s Bank joint venture), and Property investment (British Land joint venture and Land Securities joint venture).

Operational Format Convenience/Forecourt Store, Hypermarket/Supercenter/Superstore, Supermarket and online retail.

Financials (LTM)Revenue: $32 billion USD, year-over-year change: 5.6%Operating profit: $1.1 billion USD, year-over-year change: 11.7%Net income: $934 million USD, year-over-year change: 102.4%

Expected capital expenditure (2011) $1.6 billion USDGeographic coverage (2010) UK: 100%

Future plans Plans to open more stores with the target to increase space by 15% by March 2011 and reduce net debt by $1.9 billion Euro.

37: The Ikea Group. (Sweden)**

Brief description A Dutch Corporation in home products business that designs and sells furniture, appliances and home accessories.

Operational Format Other Specialty

Financials (2008)Revenue: $31.7 billion USD, year over-year change: NAOperating profit: NA, year-over-year change: NANet income: NA, year-over-year change: NA

Expected capital expenditure (2010) NAGeographic coverage (2009) Global presenceFuture plans NA

38: Celesio AG. (Germany)

Brief description Deals in pharmaceuticals, operates in retail pharmacies, and provides logistics and transportation services for pharmaceuticals.

Operational Format Wholesale and Retail

Financials (LTM)Revenue: $31 billion USD, year-over-year change: 1.6%Operating profit: $703 million USD, year-over-year change: (11.6%) Net Loss: $41 million USD, year-over-year change: NA

Expected capital expenditure (2010) $211 million USDGeographic coverage (2009) France: 32%; Rest of Europe: 27%; UK: 22%; Germany: 19%Future plans Focus on improvement of EBITDA under Agenda 2015 program

IMAP’s Retail Industry Global Report — 2010: Appendix A-x

39: George Weston Ltd. (Canada)

Brief description Processes and distributes food throughout North America to grocer, wholesalers, warehouses and independent accounts. The company also processes and packages fish.

Operational Format Supermarkets and online retail

Financials (LTM)Revenue: $30 billion USD, year-over-year change: (1%)Operating profit: $1.2 billion USD, year-over-year change: (9.6%)Net Income: $317 million USD, year-over-year change: 24.4%

Expected capital expenditure (2010) NAGeographic coverage (2009) Canada: 98%; US: 2%Future plans Undertake cost cutting measures

40: Loblaw Companies Ltd. (Canada)Brief description A food distributor and a provider of drugstore, general merchandise, financial products and services.

Operational Format Cash & Carry/Warehouse Club, Discount Store, Hypermarket/Supercenter/Superstore, Supermarket and Online store

Financials (LTM)Revenue: $29 billion USD, year-over-year change: (0.22%)Operating profit: $1.2 billion USD, year-over-year change: 14.5%Net income: $634 million USD, year-over-year change: 19.3%

Expected capital expenditure (2010) $285 million USDGeographic coverage (2009) Canada: 100%Future plans Plans to invest in infrastructure and undertake cost cutting measures

41: Amazon.com, Inc. (US)

Brief description A US based multinational electronic commerce company, offers services to consumers, sellers, and developers through its retail Websites. It also manufactures and sells the Kindle e-reader..

Operational Format Online Store

Financials (LTM)Revenue: $29 billion USD, year-over-year change: 27.8% Operating profit: $1.4 billion USD, year-over-year change: 34.1%Net income: $1.1 billion USD, year-over-year change: 39.8%

Expected capital expenditure (2010) $266 million USDGeographic coverage (2009) North America: 52%; Rest of the world: 48%Future plans Focus on international online segment

42: Delhaize Group. (Belgium)

Brief descriptionA food retailer which operates in eight countries whose principal activity is the operation of food supermarkets. It also engages in food wholesaling to stores and in nonfood retailing of products such as pet products and health and beauty products.

Operational Format Cash & Carry/Warehouse Club, Convenience/Forecourt Store, Discount Store, Hypermarket/Supercenter/Superstore , Other Specialty, Supermarket and Online retail.

Financials (LTM)Revenue: $28 billion USD, year-over-year change: 4.8%Operating profit: $1.3 billion USD, year-over-year change: 4.2%Net Income: $704 million USD, year-over-year change: 10.1%

Expected capital expenditure (2010) NAGeographic coverage (2009) US: 68%; Belgium: 24%; Greece: 7%; Rest of the world: 1%Future plans Plans to open new stores

43: Système U Centrale Nationale. (France)**

Brief description Co-operative trader’s society engaged in retailing of groceries, apparels and other related products. It also offers several services, including rent a vehicle, mobile services and other related services.

Operational Format Discount Store, Hypermarket/Supercenter/Superstore, Supermarket

Financials (2008)Revenue: $25.1 billion USD, year-over-year change: NA Operating profit: NA, year-over-year change: NANet income: NA, year-over-year change: NA

Expected capital expenditure (2010) NAGeographic coverage (2008) France, Martinique, Mauritius, New Caledonia, Reunion, TahitiFuture plans NA

44: El Corte Inglés, S.A. (Spain)**

Brief description Operates a chain of departmental stores in Spain. It provides various articles and personal services to its customers. The company also operates a convenience store in Madrid.

Operational Format Department Store and online store

Financials (2008)Revenue: $25.1 billion USD, year-over-year change: NAOperating Income: NA, year-over-year change: NANet Income: $542 million USD, year-over-year change: NA

Expected capital expenditure (2010) NAGeographic coverage (2008) Belgium, Greece, Mexico, Portugal, SpainFuture plans NA

IMAP’s Retail Industry Global Report 2010: Appendix A-xi

45: Migros-Genossenschafts Bund. (Switzerland)**

Brief description One of Switzerland's largest enterprises, it is largest supermarket chain and largest employer in country.

Operational FormatApparel/Footwear Specialty, Convenience/Forecourt Store, Department Store, Discount Store, Electronics Specialty, Hypermarket/Supercenter/Superstore, Other Specialty, Supermarket and Online store

Financials (2008)Revenue: $23.8 billion USD, year-over-year change: NAOperating profit: NA, year-over-year change: NANet Income: NA, year-over-year change:NA

Expected capital expenditure (2010) NAGeographic coverage (2008) France, Germany, SwitzerlandFuture plans NA

46: Mercadona S.A. (Spain)**Brief description A Spanish family-owned supermarket company whose business model is based on low prices.Operational Format Supermarket and Online store

Financials (2009)Revenue: $20 billion USD , year-over-year change: 1%Operating profit: $513 million USD, year-over-year change: (13%)Net Income: $375 million USD, year-over-year change: (15%)

Expected capital expenditure (2011) NAGeographic coverage (2009) Spain: 100%Future plans Plans to invest in logistics

47: The TJX companies, Inc. (US)**Brief description An off-price apparel and home fashions retailer in the US and worldwide.Operational Format Apparel/Footwear Specialty, Other Specialty

Financials (2008)Revenue: $19 billion USD, year-over-year change: NAOperating profit: NA, year-over-year change: NANet income: $881 million USD, year-over-year change: NA

Expected capital expenditure (2010) NAGeographic coverage (2008) Canada, Germany, Rep. of Ireland, Puerto Rico, UK, U.S. Future plans NA

48: Coop Italia. (Italy)

Brief description It is a system of Italian consumers' cooperatives which operates the largest supermarket chain in Italy.

Operational Format Discount Store, Hypermarket/Supercenter/Superstore, Supermarket

Financials (2009)Revenue: $17.1 billion USD , year-over-year change: NAOperating profit: NA, year-over-year change: NANet income: NA, year-over-year change: NA

Expected capital expenditure (2010) NAGeographic coverage (2009) Croatia, ItalyFuture plans NA

49: Louis Delhaize S.A. (Belgium)**

Brief description Operates a chain of hypermarkets, supermarkets, and discount stores in Belgium, Luxembourg, France, the French West Indies, and Hungary.

Operational Format Cash & Carry/Warehouse Club, Convenience/Forecourt Store, Discount Store, Hypermarket/Supercenter/Superstore, Other Specialty, Supermarket

Financials (2008)Revenue: $16.1 billion USD, year-over-year change: NAOperating profit: NA, year-over-year change: NANet Income: NA, year-over-year change: NA

Expected capital expenditure (2010) NAGeographic coverage (2008) Belgium, France, French Guiana, Guadeloupe, Hungary, Luxembourg, Martinique, Romania, UKFuture plans NA

50: eBay Inc. (US)

Brief description Operates an online trading community. Their service is used by buyers and sellers for the exchange of products and services. It also offers through a subsidiary a secure online payment service.

Operational Format Online Store

Financials (LTM)Revenue: $9 billion USD, year-over-year change: 2.1%Operating Income: $1.6 billion USD, year-over-year change: (29.6%)Net Income: $2.5 billion USD, year-over-year change: 34.2%

Expected capital expenditure (2010) $157 million USDGeographic coverage (2009) US: 45%; Germany: 13%; UK: 12%; Rest of the world: 30%Future plans Plans to tap more international markets

Source:Bloombergandcompanywebsite**Thiscompanyisprivateandhencedataavailabilityislimited

IMAP’s Retail Industry Global Report — 2010: Appendix A-xii

Thumbnail summaries of retail activities in various regions

1: North America

Brief description Largest e-Commerce market with market value of more than 210 billion USD in 2009 combines a high ranking in various areas: online population, percentage of online buyers, and per-capita online spending.

Key countries US and CanadaNo. of listed retail companies 637

Top 5 domestic companies based on revenues

Wal Mart Stores: $417 billion USDMcKesson Corp: $109.4 billion USDCardinal Health: $98.5 billion USDCVS Caremark Corp: $98.2 billion USDKroger Co: $79.7 billion USD

Current scenario and outlook

- The base of Internet users in North America is 266 million users with 77.4 % penetration level, is expected to continue to increase at a steady growth rate of 3% over the next five years (as per internet stats, leading to good potential for online retail market. North America is the highest internet penetrated region in the world with 77.4% penetration rate followed by Oceania/Australia region with 61.3% penetration.

- Convenience, value, and selection will remain the primary drivers of growth. The online channel consistently outpaces store growth and withstands shockwaves in the economy because consumers value its low and transparent prices, convenience, and comprehensive assortment.

2: EuropeBrief description Second largest market for e-commerce sales with market value of nearly 200 billion USD in 2009.Key countries UK, Germany, and FranceNo. of listed retail companies 762

Top 5 domestic companies based on revenues

Carrefour SA: $122.1 billion USDMetro AG: $92.4 billion USDTesco PLC: $90.4 billion USDAhold NV: $39.7 billion USDFinatis: $38.3 billion USD

Current scenario and outlook

- The UK is the most mature market. France and Germany have much higher online sales and greater e-commerce activity among Web users than Italy and Spain, where the internet still represents a fraction of total retail volume. This can also be understood from the internet penetration rates which is higher in France (68.9%) and Germany (79.1%) as compared to Italy (51.7%) & Spain (62.6%).

- These business-to-consumer (B2C) online sales in Europe are continuing to rise at double-digit growth rate of 11 percent because most European countries’ online retail sales are still relatively immature. Major growth in Europe will come from the emerging markets of Southern, Central, and Eastern Europe.

- Meanwhile, those that are more mature like the UK are witnessing continued growth due to strong online value proposition.

3: Latin America and the Caribbean Brief description Emerging region Key countries Brazil and MexicoNo. of listed retail companies 55

Top 5 domestic companies based on revenues

Grazziotin-PREF: $38.7 billion USDPao Acuca- Pref A: $15.3 billion USDCencosud SA: $10.6 billion USDFalabella: $7.4 billion USDDistribucion SER: $5.3 billion USD

Current scenario and outlook- Growth is expected to be dominated by Brazil which is set to grow from an online spending perspective,

as its eCommerce landscape is better developed and per capita online spending tends to be on the higher side .

4: Asia-Pacific, the Middle East and AfricaBrief description Fastest growing region Key countries China, South Korea and IndiaNo. of listed retail companies 974

Top 5 domestic companies based on revenues

Seven & I holdings: $48.7 billion USDAeon Company Ltd: $48.6 billion USDWoolworths Ltd: $45.4 billion USDWesfarmers Ltd: $45.4 billion USDYamada denki: $21.7 billion USD

Current scenario and outlook

- By 2014, Asia Pacific will include almost half of the world’s online population, with China taking the clear lead with 42% of online users. Eventually, online spending in China will also continue to outpace across the region rendering it a far larger e-Commerce market overall.

- Another two e-Commerce giants in the region, Japan and South Korea, is expected to witness increase in online population by 1% to 2% on an average over the next five years. However, South Korea’s highly tenured users are big spenders on digital goods.

- The Middle East’s slow internet growth, low credit card penetration and the lack of online stores has left the region’s online retail industry lagging behind some of its global peers. However, it is gradually changing.

IMAP’s Retail Industry Global Report 2010: Appendix A-xiii

Thumbnail summaries of retail activities in various countries

1: AustraliaOnline Penetration 75% (2009)Percentage of online buyers 70% (2009)Average online spending $556 USD per capita in 2009Average online tenure (years) 6.5No. of listed retail companies 45Top 3 domestic retail companies based on revenues

Woolworths Ltd: $45.5 billion USDWesfarmers Ltd: $45.4 billion USDMetcash Ltd: $10.0 billion USD

Outlook

- Australia’s retail market size is estimated to be $236.6 billion USD in 2009 and expected to grow in the range of 2-3 percent for the next five years.

- Australia’s e-Commerce market will double in size over the next four years, growing from 12 billion USD in 2009 to $18 billion USD by 2014.

2: Brazil (Metropolitan)Online Penetration 48% (2009)Percentage of online buyers 19% (2009)Average online spending $98 USD per capita in 2009Average online tenure (years) 5.5No. of listed retail companies 19

Top 3 domestic companies based on revenues

Grazziotin-PREF: $38.7 billion USDPao Acuca- Pref A : $15.3 billion USDLojas-Americ-PRF: $4.9 billion USD

Outlook

- Brazil’s retail sales for 2009 rose nearly 6 percent in 2009 compared to just over 9 percent in 2008.Going forward, its retail sales is expected to continue at strong growth rate in the range of 8-10 percent.

- On online retail front, Brazil has the largest online user base in Latin America and is set to dominate from online business point of view.

3: CanadaOnline Penetration 72% (2009)Percentage of online buyers 48% (2009)Average online spending $535 USD per capita in 2009Average online tenure (years) 8.8No. of listed retail companies 73

Top 3 domestic companies based on revenues

Weston George: $30.3 billion USDLoblaw Companies Ltd: $29.4 billion USDAlimen Couche-B: $17.0 billion USD

Outlook

- Canada’s retail market size is estimated to be $285.1 billion USD in 2009 and expected to grow in the range of 1-2 percent for the next five years.

- Canada online retail managed to grow 6.8% in 2009 to reach $16.1 billion USD and is forecast to reach $28.7 billion USD by 2014.

4: China (Metropolitan)Online Penetration 64% (2009)Percentage of online buyers 37% (2009)Average online spending $191 USD per capita in 2009Average online tenure (years) 5.7No. of listed retail companies 114

Top 3 domestic companies based on revenues

Suning Applian-A: $9.7 billion USDGome Electrical: $6.8 billion USDLianhua Superm-H: $3.8 billion USD

Outlook

- China’s retail market size is estimated to be $184.1 billion USD in 2009 and expected to have robust growth rate of 10-15 percent for the next five years.

- China online retail market was valued at $26.0 billion USD in 2009 and is forecast to reach $60.3 billion USD by 2014. It is one of the key emerging e-commerce markets with rapidly growing internet population.

IMAP’s Retail Industry Global Report — 2010: Appendix A-xiv

5: FranceOnline Penetration 64% (2009)Percentage of online buyers 55% (2009)Average online spending $310 USD per capita in 2009Average online tenure (years) 5.2No. of listed retail companies 44

Top 3 domestic companies based on revenues

Carrefour SA: $122.1 billion USDFinatis SA: $38.3 billion USDRallye SA: $38.3 billion USD

Outlook

- France’s retail market size is estimated to be $519.8 billion USD in 2009 and expected to have a growth rate of 1-3 percent for the next five years.

- France online retail market was valued at $13.0 billion USD in 2009 and is forecast to reach $23.7 billion USD by 2014.

6: GermanyOnline Penetration 71% (2009)Percentage of online buyers 70% (2009)Average online spending $349 USD per capita in 2009Average online tenure (years) 6.8No. of listed retail companies 39

Top 3 domestic companies based on revenues

Metro AG: $92.4 billion USDCelesio AG: $31.4 billion USDPraktiker BAU-UN: $4.9 billion USD.

OutlookWith more than $82 million inhabitants, the German market is the largest in Europe; it is very competitive and segmented, with many sectors and products being saturated. Germany online retail market was valued at $24.1 billion USD in 2009 and is forecast to reach $37.7 billion USD by 2014.

8: India (Metropolitan)Online Penetration 18% (2009)Percentage of online buyers 7% (2009)Average online spending $71 USD per capita in 2009Average online tenure (years) 3.5No. of listed retail companies 37

Top 3 domestic companies based on revenues

Pantaloon Retail: $2.1 billion USDShoppers Stop: $305 million USDVishal Retail: $292 million USD

Outlook

- India’s organized retail market size is estimated to be $16.1 billion USD in 2009 and expected to have robust growth rate of 12-15 percent for the next five years.

- India online retail market was valued at $0.23 billion USD in 2009 and is forecast to reach $1.1 billion USD by 2014.

9: ItalyOnline Penetration 51% (2009)Percentage of online buyers 20% (2009)Average online spending $281 USD per capita in 2009Average online tenure (years) 5No. of listed retail companies 8

Top 3 domestic companies based on revenues

Gruppu Coin SPA: $1.9 billion USDMarr SPA: $1.5 billion USDCiccolella SPA: $493 million USD

Outlook

- Italy’s retail market size is estimated to be $550.8 billion USD in 2009 and expected to have a growth rate of 1-3 percent for the next five years.

- Italy online retail market was valued at $3.5 billion USD in 2009 and is forecast to reach $6.3 billion USD by 2014.

10: JapanOnline Penetration 79% (2009)Percentage of online buyers 88% (2009)Average online spending $500 USD per capita in 2009Average online tenure (years) 7No. of listed retail companies 379

Top 3 domestic companies based on revenues

Seven & I holdings: $48.7 billion USDAeon Company Ltd: $48.6 billion USDYamada Denki: $21.7 billion USD

Outlook Japan, the e-Commerce giant in Asia Pacific region, will see online population increases of 1–2% on average over the next five years.

IMAP’s Retail Industry Global Report 2010: Appendix A-xv

12: The NetherlandsOnline Penetration 81% (2009)Percentage of online buyers 70% (2009)Average online spending $321 USD per capita in 2009Average online tenure (years) 9.1No. of listed retail companies 7

Top 3 domestic companies based on revenues

Ahold NV: $39.7 billion USDMediq NV: $3.5 billion USDSligro Food Group: $3.2 billion USD

Outlook

- The Netherland’s retail market size is estimated to be $115.1 billion USD in 2009 and expected to grow in the range of 3-5 percent for the next five years.

- The Netherlands online retail market was valued at $4.3 billion USD in 2009 and is forecast to reach $7.2 billion USD by 2014.

14: South KoreaOnline Penetration 76% (2009)Percentage of online buyers 94% (2009)Average online spending $653 USD per capita in 2009Average online tenure (years) 7.7No. of listed retail companies 35

Top 3 domestic companies based on revenues

Lotte Shopping: $12.6 billion USDShinsegae Co Ltd: $9.0 billion USDDaewoo Motors SAL: $2.5 billion USD

Outlook

- South Korea’s retail market size is estimated to be $100.1 billion USD in 2009 and expected to grow in the range of 5-7 percent for the next five years.

- South Korea online retail market was valued at $18.3 billion USD in 2009 and is forecast to reach $28.2 billion USD by 2014. It is an emerging e-commerce powerhouse with highly tenured users and big spenders.

15: SpainOnline Penetration 58% (2009)Percentage of online buyers 31% (2009)Average online spending $307 USD per capita in 2009Average online tenure (years) 5.4No. of listed retail companies 5

Top 3 domestic companies based on revenues

Inditex: $16.2 billion USDAdolfo Dominguez: $246 million USDFunespana SA: $100 million USD

Outlook

- Spain’s retail market size is estimated to be $240.9 billion USD in 2009 and expected to grow in the range of 1-2 percent for the next five years.

- Spain online retail market was valued at $2.6 billion USD in 2009 and is forecast to reach $6.4 billion USD by 2014.

Source:Bloomberg,Frost&Sullivan,ForresterResearch

IMAP’s Retail Industry Global Report 2010: Appendix B-i

The retail sector saw 1409 deals valued at 17.1 billion USD in LTM ending September 2010, representing a downside of 33.6% in terms of deal value (25.7 billion USD during the previous period with 1,473 deals). Dollar volume in this period included two major deals (Kohlberg Kravis Roberts/Pets at Home and Lotte Shopping Co/GS Square and GS Mart); which represented 2.7 billion USD or nearly 15.8 percent of total dollar volume. During the previous period, the largest deal was the acquisition of Next Rx LLC by Express Scripts for 3.5 billion USD.

Particulars LTM ending September 2009 LTM ending September 2010Total number of deals 1473 1409

Deals with available transaction value 479 375

Total transaction value $25.7 billion USD $17.1 billion USD

Largest deal Express Scripts acquired Next Rx for $3.5 billion USD

Kohlberg Kravis Roberts acquired Pets at Home for $1.5 billion USD

Top 5 deals as a % of total deal value 32.4% 26.9%

In terms of business segment, specialty and distributors accounted for the highest in terms of value at nearly 56 percent of total dollar volume for the period.

Top Five Segments No. of transactions Value (USD bn)Specialty Stores 300 5.3

Distributors 692 4.4

Department Stores 50 2.4

General Merchandise Stores 28 1.6

Home Furnishing Retail 38 1.0

In terms of geography, UK had the highest transaction value of $3.9 billion USD with a total of 161 deals in the last 12 months. The US came in second with a value of $3.4 billion USD through 370 deals. Among regions, Europe was the clear leader at $7.3 billion USD with 688 deals.

Top Five Countries No. of transactions Value (USD bn)United Kingdom 161 3.9

United States 370 3.4

South Korea 3 1.2

France 87 1.0

China 66 0.9

Top Five Regions No. of transactions Value (USD bn)Europe 688 7.3

North America 412 4.1

Asia Pacific 245 4.1

Latin America and Caribbean 37 1.6

Middle East 13 0.2

1Onlymergersandacquisitionshavebeenconsidered.Source:CapitalIQ

Appendix B: Summary of M&A transactions1 in the retail sector

IMAP’s Retail Industry Global Report — 2010: Appendix B-ii

Summary of transactions1 in the retail sector in LTM ended September 2010

Source:CapitalIQM&ADatabase1OnlyMergersandAcquisitionshavebeenconsidered

Country

Argentina 3 3.0 - - -

Estonia 4 2.9 - 9.7 -

New Zealand 10 2.9 5.3 - -United Arab Emirates 2 2.5 - - -

Russia 43 1.7 - - -

Liechtenstein 1 1.2 - - -

Sri Lanka 1 1.0 - - -

Taiwan 3 0.6 - - -

Philippines 2 0.2 - - -

Cyprus 1 0.1 - - -

Finland 26 - - - -

Czech Republic 10 - - - -

Mexico 5 - - - -

Croatia 4 - - - -

Hungary 4 - - - -

Kazakhstan 3 - - - -

Romania 3 - - - -

Belarus 2 - - - -

Bulgaria 2 - - - -

El Salvador 2 - - - -

Latvia 2 - - - -

Slovenia 2 - - - -

Zimbabwe 2 - - - -

Burundi 1 - - - -

Chile 1 - - - -Dominican Republic 1 - - - -

Egypt 1 - - - -

Kenya 1 - - - -

Mauritania 1 - - - -

Mauritius 1 - - - -

Namibia 1 - - - -

Nigeria 1 - - - -

Panama 1 - - - -

Peru 1 - - - -

Portugal 1 - - - -

Slovakia 1 - - - -

Syria 1 - - - -

Total 1409 17054.3 2.9 13.3 29.7

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Country

United Kingdom 161 3895.7 0.8 12.9 12.0

United States 370 3373.9 1.4 15.9 29.9

South Korea 3 1153.4 1.0 - -

France 87 1071.6 0.6 11.7 11.5

China 66 899.1 1.1 37.6 73.0British Virgin Islands 6 557.0 0.8 - -

Canada 42 772.2 0.4 6.6 26.0

Japan 33 761.6 0.3 19.3 58.1

Australia 37 617.2 0.3 - 4.7

Bermuda 1 525.3 1.6 7.9 9.8

Greece 5 441.5 5.0 - -

Austria 13 321.3 - - -

Ukraine 20 310.5 - - -

Hong Kong 19 243.3 3.5 8.8 11.7

Malaysia 25 240.4 - - -

Colombia 3 240.0 - - -

Netherlands 27 223.3 - - -

Denmark 27 201.7 - - -

Switzerland 22 192.9 - - -

Italy 36 175.0 1.1 7.0 -

Spain 31 111.8 0.9 5.9 -

Belgium 9 109.1 0.6 5.8 10.3

Singapore 15 97.0 - - -

Ireland 6 86.7 - - -

Israel 5 80.5 1.8 - 17.8

Indonesia 5 74.6 - - -

Turkey 5 67.1 - - -

Germany 70 44.3 1.3 - -

Sweden 34 31.8 0.4 - -

Poland 16 25.9 0.1 3.5 0.6

Brazil 12 25.2 - - -

Norway 16 23.6 2.9 - -

India 14 13.5 0.2 - -

Lithuania 2 10.8 - - -

Vietnam 4 7.4 - - -

Thailand 5 6.3 0.2 - -

South Africa 6 5.4 - - -

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IMAP’s Retail Industry Global Report 2010: Appendix B-iii

Top 10 transactions in the retail sector (LTM)

1: Kohlberg Kravis Roberts / Pets at Home Announced/Initial Filing Date: 1/27/2010 COMMENTS:

KKR, a private equity firm and a leveraged buyout specialist, whose retail investments include Alliance Boots, the health and beauty group, has acquired the UK's largest pet supplies retail chain, Pets at Home, from rival buy-out firm Bridgepoint Capital. Pets at Home is the UK’s largest pet accessories retailer having over 240 stores, and operates 54 veterinary centers. The company had enjoyed rapid growth and has a significant potential to grow further, and was the key reason for the acquisition.

Target/Issuer: Pets at Home Ltd.Total Transaction Value ($mm USD) 1546.93

Buyers/Investors: Kohlberg Kravis Roberts & Co.Percent Sought (%): 100

Implied Enterprise Value/Revenues: 2.37Implied Enterprise Value/EBITDA: 13.64

Implied Enterprise Value/EBIT: -Headquarters-Country: United Kingdom

Primary Industry: Specialty Stores

2: Lotte Shopping Co / GS Square and GS Mart Announced/Initial Filing Date: 2/9/2010 COMMENTS:

Lotte Shopping purchased mega mart and department store units of GS retail, making room for expansion and growth in the already saturated industry. The acquired departmental stores will create synergy [in business] with existing stores, and Lotte will maintain its top position in the industry.

Target/Issuer: GS Square Co, Ltd & GS Mart Co, LtdTotal Transaction Value ($mm USD) 1153.25

Buyers/Investors: Lotte Shopping Co.Percent Sought (%): 100

Implied Enterprise Value/Revenues: 0.978Implied Enterprise Value/EBITDA: -

Implied Enterprise Value/EBIT: -Headquarters-Country: South Korea

Primary Industry: Department Stores

3: Advent International Corporation / DFS Furniture Announced/Initial Filing Date: 4/22/2010 COMMENTS:

Advent International is a global private equity firm. DFS has grown to become the number one brand in the UK sofa market with sales of more than three times its nearest competitor. Advent has been investing in the retail, consumer products and leisure sectors since 1984 and this is their strategic expansion model..

Target/Issuer: DFS Furniture Company plc.Total Transaction Value ($mm USD) 767.00

Buyers/Investors: Advent International Corporation.Percent Sought (%): 100

Implied Enterprise Value/Revenues: -Implied Enterprise Value/EBITDA: -

Implied Enterprise Value/EBIT: -Headquarters-Country: United Kingdom

Primary Industry: Home Furnishing Retail

4: Casino Guichard / Franprix and Leader price Announced/Initial Filing Date: 11/12/2009 COMMENTS:

By acquiring remaining 5% in Franprix and 25% in Leader Price, Casino Guichard now has full control of both companies. This transaction would allow the company to reduce its debt and will give increased financial flexibility.

Target/Issuer: 5% Franprix and 25% Leader Price.Total Transaction Value ($mm USD) 637.18

Buyers/Investors: Casino Guichard Perrachon & Cie SA.Percent Sought (%): 100

Implied Enterprise Value/Revenues: 0.102Implied Enterprise Value/EBITDA: -

Implied Enterprise Value/EBIT: -Headquarters-Country: France

Primary Industry: General Merchandise Stores

5: Sears Canada Holdings / Sears Canada Inc Announced/Initial Filing Date: 4/22/2010 COMMENTS:

Sears Canada Holdings purchased a total of 18,660,880 common shares of Sears Canada Inc. from Pershing Square, L.P., Pershing Square II, L.P. and Pershing Square International, Ltd. They now beneficially own an additional 18,660,880 common shares. The acquisition is considered to be an attractive investment.

Target/Issuer: Sears Canada Inc.Total Transaction Value ($mm USD) 559.16

Buyers/Investors: Sears Canada Holdings Corp.Percent Sought (%): 17.34

Implied Enterprise Value/Revenues: 0.423Implied Enterprise Value/EBITDA: 4.41

Implied Enterprise Value/EBIT: 5.67Headquarters-Country: Canada

Primary Industry: Department Stores

IMAP’s Retail Industry Global Report — 2010: Appendix B-iv

6: Dufry AG / Dufry South America Announced/Initial Filing Date: 1/10/2010 COMMENTS:

The merger of a parent company Dufry group with Dufry South America is basically to establish a simplified corporate structure with a unified shareholder base, allowing it the flexibility to seize growth opportunities.

Target/Issuer: Dufry South America Ltd.Total Transaction Value ($mm USD) 525.31

Buyers/Investors: Dufry AG.Percent Sought (%): 48.96

Implied Enterprise Value/Revenues: 1.55Implied Enterprise Value/EBITDA: 7.87

Implied Enterprise Value/EBIT: 9.82Headquarters-Country: Bermuda

Primary Industry: Specialty Stores

7: Esprit Holdings / Glory Raise Announced/Initial Filing Date: 12/17/2009 COMMENTS:

Esprit China Distribution Ltd (Esprit China), a wholly-owned unit of Esprit Holdings Ltd, acquired the entire share capital of Glory Raise Ltd from Tactical Solutions Ltd. Esprit Holding has acquired Glory Raise as its focus is on reinforcing its market leadership in its core consumer businesses, namely retail, beverage, food processing and distribution, wherein Glory Raise is a wholesaler and retailer of apparel.

Target/Issuer: Glory Raise Limited.Total Transaction Value ($mm USD) 500.25

Buyers/Investors: Esprit Holdings Ltd.Percent Sought (%): 100

Implied Enterprise Value/Revenues: -Implied Enterprise Value/EBITDA: -

Implied Enterprise Value/EBIT: -Headquarters-Country: British Virgin Islands

Primary Industry: Distributors

8: GSI Commerce / Retail Convergence Announced/Initial Filing Date: 10/27/2009 COMMENTS:

GSI Commerce Inc is the leading provider of e-commerce and interactive marketing services and Retail Convergence Inc is a Massachusetts-based company that operates RueLaLa.com, a leader in the private sale space and SmartBargains.com, an off-price e-commerce marketplace. Hence, this acquisition will give an innovative global e-commerce platform to GSI Commerce.

Target/Issuer: Retail Convergence, Inc.Total Transaction Value ($mm USD) 350.00

Buyers/Investors: GSI Commerce Inc.Percent Sought (%): 100

Implied Enterprise Value/Revenues: 4.22Implied Enterprise Value/EBITDA: -

Implied Enterprise Value/EBIT: -Headquarters-Country: United States

Primary Industry: Internet Retail

9: Warburg Pincus / Poundland Ltd Announced/Initial Filing Date: 5/4/2010 COMMENTS:

Warburg Pincus had bought Poundland, a British discount retailer, which holds the leading position in the high-growth, single-price discount-retailing market in the UK.Warburg has considered this deal looking at the immense growth potential expected of the discount stores in upcoming years.

Target/Issuer: Poundland Ltd.Total Transaction Value ($mm USD) 302.32

Buyers/Investors: Warburg Pincus LLC.Percent Sought (%): -

Implied Enterprise Value/Revenues: -Implied Enterprise Value/EBITDA: -

Implied Enterprise Value/EBIT: -Headquarters-Country: United Kingdom

Primary Industry: General Merchandise Stores

10: TNK-BP / Vik Oil Group Announced/Initial Filing Date: 12/31/2009 COMMENTS:

TNK-BP is a vertically integrated oil company with a diversified upstream and downstream portfolio in Russia and Ukraine.TNK group has consistently invested in the development of its retail network and the acquisition of Vik Oil is also part of their development plan.

Target/Issuer: Vik Oil Group.Total Transaction Value ($mm USD) 294.00

Buyers/Investors: TNK-BP Ltd.Percent Sought (%): 100

Implied Enterprise Value/Revenues: -Implied Enterprise Value/EBITDA: -

Implied Enterprise Value/EBIT: -Headquarters-Country: Ukraine

Primary Industry: Specialty Stores

IMAP’s Retail Industry Global Report 2010: Appendix C-i

Appendix C: Growth drivers of online retail industryThe Internet has evolved into an important retail channel, with millions of online consumers across the globe turning to it to make their purchases. Despite the financial crisis and recession, the In-ternet and other new channels continue to drive long-term shifts in consumers’ purchase behavior and the way products and services are distributed.

• Convenience, value, and selection – key catalyst for growth: The online retail channel has consistently outperformed in com-parison to store growth and weathered the recession well be-cause most consumers are valuing low and transparent prices, convenience, and comprehensive assortment of goods and services. As per the survey1 conducted in the North American region which is the largest market for online retail, 67 percent of online buyers find the products online that they cannot find in stores easily; 65 percent of the US-based Web buyers buy the products online as they save time by shopping online, and 63 percent of Web buyers find better deals online.

• Increase in global internet penetration: Between 2005 and 2009, the global Internet population increased from 1 billion to more than 1.6 billion and by 2014, it is projected to grow by another 42 percent, reaching a level of 2.3 billion2. While Internet penetration growth does not have a direct relationship with online retail market growth, online retail market dynamics change as the global internet penetration changes. Also, rapid expansion in online population boosts international expansion for most retailers.

- Most of the growth in online population is expected to come from Asia Pacific, Middle East and Africa regions, which has a very low internet penetration level of 19.7 percent as of June 2010. These regions will represent 54.9 percent of the online population in 2014. Compared to this, developed re-gions such as North America and Europe will represent 34.1 percent of total population in 2014 against their proportion of 41.3 percent in 2009.

- Other emerging Asian countries such as Vietnam and Indo-nesia are expected to have nearly 10 percent of global online users by 2014, but Apple is the only online retailer in the US which operates a transactional Web site for these countries.

- Furthermore, the level of adoption of online shopping does not always reflect the level of online spends. For example, North America has one of the highest online spending rates

1 NorthAmericanTechnographicsRetailOnlineSurvey,Q32009(US)2 ForresterResearch,September2010

per person, while the overall penetration of online buyers is relatively low compared with other markets. On similar lines, Asian e-Commerce giants such as Japan and South Korea are climbing the levels in online spending because of improved access through technology and wider selection of online stores. These new online shoppers today certainly enjoy a far richer e-Commerce experience than the consum-ers had 10 years ago.

- Altogether, the market potential is huge. Online retailers who want to capture the growing number of online users — and their growing funds spent online — will need to look beyond the markets of North America and Europe and think globally about their online strategies.

• Region wide/customized strategy: In simple words, localization is expected to boost the online retail market. Traditionally, there was a tendency among online retailers in terms of not changing content according to local requirements and languages. This strategy had its disadvantages in terms of repelling custom-ers who were not comfortable with the english language and standard layout across the globe. It catered largely to English-speaking markets. However, nowadays, online retailers are adopting the strategy of “Localization” i.e. websites into local languages along with regional customs — even if with a small amount of content at first. These retailers are better equipped to take the advantage of an increasingly diverse global online user base than their counterparts with English-only Web sites.

- There is a strong preference for local-language content in European markets like France, while more than 95% of online users indicate a preference for local-language content in Asian markets like Japan and Korea3. And while 5% of the global population speaks Arabic, just 1% of online content is estimated to be available in the language.

- Similar to local language preference, customer behavior and expectations also vary across countries. A more customized online strategy is required for regions like the Middle East or Latin America. Indeed, companies have started operating such online initiatives tailored to individual markets in the region along with a local office in the country.

- Strategies of localizing content and understanding online customer behavior and preference are likely to boost online sales.

3 AsiaPacificTechnographics®Survey,Q42009

IMAP’s Retail Industry Global Report 2010: Appendix D-i

Appendix D: Niche focus areas

M-Commerce (Mobile commerce)1 - A number of retailers and third-party developers have intro-

duced mobile applications that give consumers powerful new shopping tools and added convenience. But most retailers are either standing on the sidelines or in the midst of plan-ning their mobile commerce strategy2.

- m-commerce which began in the last decade, similar to mo-bile banking, has expanded very little. Despite the massive numbers of mobile users in the US and UK, those using their phones to make purchases is still few. Tepid demand among consumers, technological limitations and lack of standardiza-tion in application has constrained the widespread prolifera-tion of m-commerce. Currently, web-enabled mobile phone users are using their devices to get weather forecasts, read news, find movie times and bank online than to buy products.

- While m-commerce is still immature and the least commonly preferrred customer service channel, retailers are showing interest in this channel with the idea of getting support from mobile commerce and promotional efforts. As per a study by the National Retail Federation in the US, 74 percent of online retailers either have in place or are developing mobile commerce strategies, while 20 percent have already imple-mented their complete plans.

- Also, people who download mobile applications, including shopping apps, are a highly coveted consumer segment. Mo-bile buyers tend to be repeat purchasers with a higher order value than the average consumer, and it can be important for them to complete transactions with ease even if it means spending more. As per mobile payments firm Billing Revolu-tion, on-the-go consumers are happy to purchase small-ticket items like pizza and movie tickets through the mobile. According to Millennial and comScore research, there is a new retail audience that can only be reached through mobile and that means it is imperative to invest now in mobile for this holiday season or risk missing out on revenue that can only be tapped through mobile in 2010.

- Hence, a number of recognized retail brands have launched mobile commerce programs so they can be where their customers go. In m-commerce, eBay is the outstanding leader with their iPhone application launched in 2008, and Blackberry and Android applications that launched in 2009 and 2010. In 2009, the company saw more than 600 million USD in goods sold via the mobile application, which was a 200 percent increase from 2008. On new launch, MLB Advanced Media, the Philadelphia Phillies and Aramark have started allowing consumers to use their iPhone to order food and have the items delivered to their seat. Sears has effectively used mobile for customer service by sending text alerts to confirm that a Web order is ready for in-store pickup and allowing customers to contact customer service via their mobile device by SMS, phone, or email.

1 M-commerceisthebuyingandsellingofgoodsandservicesthroughwirelesshandhelddevicessuchascellulartelephoneandpersonaldigitalassistants(PDAs).Knownasnext-generatione-commerce,m-commerceenablesuserstoaccesstheInternetwithoutneedingtofindaplacetoplugin.

2 eMarketerResearch-MobileCommerce:AheadofItsTime

- Going forward, by 2015, shoppers from around the world will spend about 119 billion USD on goods and services bought via their mobile phones3. In the US alone, mobile shopping rose from 396 million USD in 2008 to 1.2 billion USD in 2009, and is forecast to reach about 2.2 billion USD in 2010.

Online grocery shopping

Online grocery shopping has continued to experience a rapid evolution in recent years, facilitated by the ongoing development of the internet and related technologies such as mobile communi-cations. From a consumer perspective, the convenience factor of placing an order online and having goods delivered to the door is perhaps the biggest appeal to consumers looking for ways to save time or have physical difficulty of carrying products.

- The UK is the most developed online grocery market global-ly, with 15 percent of adults who have shopped for their gro-ceries online in 2009. The UK market had grown at a CAGR of 24.9 percent during the period of 2004 to 2009, reaching a level of 7.8 billion USD in 2009 and with expectations of reaching 11.8 billion USD by 20144. Another major market is the US, which is also catching up with online grocery shop-ping habits. With its vast online population, the US tops the online grocery shopping arena with a total market size of 9.1 billion USD in 2009. However, the per capita spending is still less for US consumers when compared to the UK market.

- However, one key difference with grocery products is freshness: many consumers still prefer to see the produce before purchase, which remains a significant hurdle for the development of the online market. Furthermore, the time lag between placing the order and delivery means that online grocery purchasing only fits with regular, planned shopping rather than impulse or top-up shopping.

Online healthcare

• Online healthcare helps online consumers: Nowadays, healthcare consumers gather information online which includes healthcare related information and services, looking for doctors, researching medicines, sharing personal health details and tracking health conditions for themselves. While consumers are becoming more self-reliant and empowered, healthcare provid-ers are beginning to offer their services online and learning how to become more consumer-focused.

- Given this evolution, online healthcare marketers in the US have the opportunity to build a bridge between healthcare providers and patients. It is estimated that the market for Electronic Health Records will reach about 5 billion USD, by 2015, according to Kalorama Information. In order to capture this vast potential, Google and Wal-Mart have together invested significantly in online healthcare services.

3 StudybyABIResearch4 DatamonitorResearch

IMAP’s Retail Team

For a comprehensive list of IMAP advisors and to discover how IMAP can help you with your M&A transaction, go to www.imap.com.

BrazilLudimila Mangili ludimila.mangili@imap.com

FinlandSvante Degerth svante.degerth@imap.com

GermanyWolfgang Thiede wolfgang.thiede@imap.comMathias Weidner mathias.weidner@imap.com

Norway Asbjoern Myrlund asbjoern.myrlund@imap.com

Jens Langebrekke jens.langebrekke@imap.com

SpainJosé-María Alberú B. josemaria.alberu@imap.com

SwedenJan-Olof Svensson janolof.svensson@imap.com

United Kingdom Marc Gillespie marc.gillespie@imap.com

Gareth Iley gareth.iley@imap.com

Cross-border M&A requires local knowledge and experience. IMAP advisors located around the world have successfully completed thousands of M&A transactions. Let IMAP help you with your M&A project in 2010.

Other industry reports available from IMAP: Automotive & Components Global Report, 2010 Alternative Energy Industry Global Report, 2010 Computing & Internet Software Global Report, 2010 Food & Beverage Industry Global Report, 2010

For copies, visit the “Industries” page of www.imap.com.

www.imap.com© COPYRIGHT 2010 IMAP, INC. THIS REPORT AND THE INFORMATION HEREIN IS THE EXCLUSIVE DOMAIN OF IMAP AND MAY NOT BE USED OR REPRINTED WITHOUT PERMISSION. CONTACT INFO@IMAP.COM.