1. Prepared by Planet Retail | April 2005 THE UK DISCOUNT SECTOR – TRENDS & IMPLICATIONS

2. | e-intelligence on global retailing - www.planetretail.net Source: M+M Planet Retail Ltd 2004-01 2 West European Outlet Trends

3. | e-intelligence on global retailing - www.planetretail.net Source: M+M Planet Retail Ltd 2004-01 3 Discount Stores Number of discount stores in Europe by country, 2004 (% of total) Number of discount stores in Europe by country, 1992 (% of total) 3 The UK has seen its status as a discount market increase in recent years

4. | e-intelligence on global retailing - www.planetretail.net Source: M+M Planet Retail Ltd 2004-01 4 Channel Development for Key Grocery Formats, 2004-2009 – Number of Outlets (W Euro) Growth will continue over the next five years 4

5. | e-intelligence on global retailing - www.planetretail.net Source: M+M Planet Retail Ltd 2004-01 5 181.8 Convenience & forecourt stores 179.9 Cash & carries 173.4 Hypermarkets & superstores 151.5 Supermarkets & neighbourhood stores 186.6 Discount Stores European Market Developments by Channel, Leading Retailers (indices) Leading retailers are planning to grow discount formats faster than others 5

6. | e-intelligence on global retailing - www.planetretail.net Source: M+M Planet Retail Ltd 2004-01 6 Discount Stores Discount store numbers in Europe, 1992 - 2008 (no. of stores) The European discount channel will continue to see growth in store numbers… 6

7. | e-intelligence on global retailing - www.planetretail.net Source: M+M Planet Retail Ltd 2004-01 7 Discount Sales Discount Store Sales in Europe, 1992-2008 (EUR mn; incl. sales tax) …with sales to approach EUR140 billion… 7

8. | e-intelligence on global retailing - www.planetretail.net Source: M+M Planet Retail Ltd 2004-01 8 Discount Share Discount Store Market Shares in Europe, 1992-2008 (% of modern grocery distribution sales) …and market share set to hit 11%. 8

9. | e-intelligence on global retailing - www.planetretail.net Source: M+M Planet Retail Ltd 2004-01 9 Number of New Stores, 2004-2009 Discount Stores The UK will continue to see reasonable discount channel growth, although it will be outpaced by more discount- centric markets. 9

10. | e-intelligence on global retailing - www.planetretail.net Source: M+M Planet Retail Ltd 2004-01 10 Discount Stores No. of discount stores in Europe by country (no. of stores, 2004) 14,407 Although it is home to a reasonable number of discount stores, the UK lags other markets by a massive margin. 10

11. | e-intelligence on global retailing - www.planetretail.net Source: M+M Planet Retail Ltd 2004-01 11 Discount Stores Food market share of discounters in Europe, 2004 (discounters’ food sales as % of modern grocery distribution, grocery sales) Due to slow growth and low consumer enthusiasm for discount stores, market share has remained lower than average in the UK. 11

12. | e-intelligence on global retailing - www.planetretail.net Source: M+M Planet Retail Ltd 2004-01 12 Discounting in the UK Key Trends & Major Players 12

13. | e-intelligence on global retailing - www.planetretail.net Source: M+M Planet Retail Ltd 2004-01 13 Key Trends  Hard discounting has been slow to take off in the UK, as mainstream grocery retailers have introduced economy private label ranges (benchmarked in price against the discounters)  The British shopper has been reticent in exploiting the discount channel, preferring instead the tidier supermarkets with their well- known brands  Consumer acceptance of discounters will increase over time  Immigration – from Eastern & Central Europe in particular – will drive traffic within the hard discount channel  Manufacturers are slowly being impacted by the channel as its key players demand shelf-ready or pallet-mounted product 13

14. | e-intelligence on global retailing - www.planetretail.net Source: M+M Planet Retail Ltd 2004-01 14 Key Trends  Soft discounter Kwik Save is set to continue its decline. Post-merger problems and ongoing portfolio rationalisation have seen it significantly shrink  Aldi and Netto are set for dramatic growth, actively seeking out hundreds of new stores between them  Future growth will focus on regions such as Scotland, Wales and Northern England  The growth of discounters will see product mix shift from brands towards private label products 14

15. | e-intelligence on global retailing - www.planetretail.net Source: M+M Planet Retail Ltd 2004-01 15 Growth Trends – Store Numbers Discount Store Numbers, 1999-2009 Store numbers to resume upward trend after Kwik Save slimming is complete 15

16. | e-intelligence on global retailing - www.planetretail.net Source: M+M Planet Retail Ltd 2004-01 16 Growth Trends – Total Sales Area Discount Store Sales Area (‘000 m 2 ), 1999-2009 Similarly, sales area will resume upward progress as rivals take up Kwik Save slack 16

17. | e-intelligence on global retailing - www.planetretail.net Source: M+M Planet Retail Ltd 2004-01 17 Growth Trends – Average Sales Area Discount Store Average Sales Area (m 2 ), 1999-2009 Average store size will increase to extend product offers and improve the instore environment 17

18. | e-intelligence on global retailing - www.planetretail.net Source: M+M Planet Retail Ltd 2004-01 18 Growth Trends – Retail Banner Sales Discount Store Retail Banner Sales (GBP mn), 1999-2009 Retail sales through the discount channel are poised to exceed GBP6 billion by 2009. 18

19. | e-intelligence on global retailing - www.planetretail.net Source: M+M Planet Retail Ltd 2004-01 19 Growth Trends – Market Share Discount Store Market Share (%), 1999-2005 Slow growth and Kwik Save downsizing has seen sectoral market share slide 19

20. | e-intelligence on global retailing - www.planetretail.net Source: M+M Planet Retail Ltd 2004-01 20 Leading Players - 1999 Leading Discounters by Stores, 1999 Kwik Save ended the 1990s with a clear advantage over its German/Scandinavian rivals. 20

21. | e-intelligence on global retailing - www.planetretail.net Source: M+M Planet Retail Ltd 2004-01 21 Leading Players - 2004 Leading Discounters by Stores, 2004 By 2004, Lidl had overtaken Aldi and had closed the gap on the shrinking Kwik Save. 21

22. | e-intelligence on global retailing - www.planetretail.net Source: M+M Planet Retail Ltd 2004-01 22 Leading Players - 2009 Leading Discounters by Stores, 2009 Growth plans suggest that Aldi will take top spot in outlet numbers by 2009. 22

23. | e-intelligence on global retailing - www.planetretail.net Source: M+M Planet Retail Ltd 2004-01 23 Leading Players - 1999 Leading Discounters by Sales (GBP mn), 1999 Kwik Save enjoyed clear market leadership in 1999. 23

24. | e-intelligence on global retailing - www.planetretail.net Source: M+M Planet Retail Ltd 2004-01 24 Leading Players - 2004 Leading Discounters by Sales (GBP mn), 2004 By 2004, Lidl had leapfrogged Aldi. 24

25. | e-intelligence on global retailing - www.planetretail.net Source: M+M Planet Retail Ltd 2004-01 25 Leading Players - 2009 Leading Discounters by Sales (GBP mn), 2009 Aldi is on track for sector leadership. 25

26. | e-intelligence on global retailing - www.planetretail.net Source: M+M Planet Retail Ltd 2004-01 26 Leading Players Top Discounters by Market Share, 2005 (% of MGD grocery sales) 26

27. | e-intelligence on global retailing - www.planetretail.net Source: M+M Planet Retail Ltd 2004-01 27 Leading Players – Kwik Save Website: www.kwiksave.co.uk Retail sales, 2004:GBP1,748 million No. of stores, 2004:520 Average sales area: 738 sq. m. Five-year growth rates, 2000/04  No. of stores:-29.2%  Retail banner sales:-11.5% Market share 2004:1.73% 27

28. | e-intelligence on global retailing - www.planetretail.net Source: M+M Planet Retail Ltd 2004-01 28 Leading Players – Kwik Save 28

29. | e-intelligence on global retailing - www.planetretail.net Source: M+M Planet Retail Ltd 2004-01 29 Leading Players – Lidl Website: www.lidl.co.uk Retail sales, 2004:GBP1,311 million No. of stores, 2004:330 Average sales area: 837 sq. m. Five-year growth rates, 2000/04  No. of stores:32.0%  Retail banner sales:48.5% Market share 2004:1.30% 29

30. | e-intelligence on global retailing - www.planetretail.net Source: M+M Planet Retail Ltd 2004-01 30 Leading Players – Lidl 30

31. | e-intelligence on global retailing - www.planetretail.net Source: M+M Planet Retail Ltd 2004-01 31 Leading Players – Aldi Website: www.aldi-stores.co.uk Retail sales, 2004:GBP1,080 million No. of stores, 2004:290 Average sales area: 800 sq. m. Five-year growth rates, 2000/04  No. of stores:20.8%  Retail banner sales:18.7% Market share 2004:1.07% 31

32. | e-intelligence on global retailing - www.planetretail.net Source: M+M Planet Retail Ltd 2004-01 32 Leading Players – Aldi 32

33. | e-intelligence on global retailing - www.planetretail.net Source: M+M Planet Retail Ltd 2004-01 33 Leading Players – Netto Website: www.netto.co.uk Retail sales, 2004:GBP536 million No. of stores, 2004:140 Average sales area: 650 sq. m. Five-year growth rates, 2000/04  No. of stores:13.8%  Retail banner sales:11.4% Market share 2004:0.53% 33

34. | e-intelligence on global retailing - www.planetretail.net Source: M+M Planet Retail Ltd 2004-01 34 Leading Players – Netto 34

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