Index. In the first person. Our reality: the DIA World. The present: a year of great achievements. The future: unveiling new projects.

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3 Index Index In the first person Our reality: the DIA World Committed, Attentive and Positive 08 We are always close to you 10 The Carrefour Group 12 Executive Committee 14 Corporate Structure 16 The present: a year of great achievements Increased sales worldwide 20 More than 1,200 DIA Market and DIA Maxi stores in Spain 20 International transformation to the new formats 21 More than 2,000 franchises in 7 countries 21 A success: 1,000 DIA franchises in Spain 22 New packaging for DIA Brand products 22 Success of the new DIA Brand in different markets 23 Fruit and vegetable, the true protagonists 23 DIA wins an award for its security measures 24 Logistic excellence in the current economic climate 24 Club DIA opens the way in France 25 DIA s new home delivery service 25 The future: Consolidating DIA Market and DIA Maxi 28 The franchise: a key factor in the evolution of the business 30 Behind the DIA Brand s success 34 The new image reaches DIA Brand products 36 Moving forward with the fresh food offer 40 The commitment to efficient, sustainable logistics 44 Club DIA, a world of great advantages 52 DIA, always at the customer s service 54 ANNUAL REPORT 2010 DIA, S.A. 03

4 In the first person I am pleased to present the DIA Group s new Annual Report, a document in which we wish to reflect the main milestones, achievements and projects we worked for during As has become customary over the last few years, I am pleased to present the DIA Group s new Annual Report, a document in which we wish to reflect the main milestones, achievements and projects we worked for, and not without a significant effort, during I feel proud to make you participants in the initiatives undertaken in our company during a year which, as we expected, turned out to be very hard, with weak consumption in the European countries. But we know how to weather the storm, and our solidity and capacity to innovate have proven, once more, that we are here to stay, that we know how to maintain the confidence of our customers, and that they, once more, chose our stores as their trusted supermarket. In 2010, DIA continued offering the most competitive prices in the market without forgetting the need to keep evolving and improving so that a greater number of customers emerge satisfied from our stores. With a commitment to a larger presence of fresh products, we inaugurated the new greengrocer s concept, and we began to update the packaging of our DIA Brand products to adapt to the new image with which we are modernizing the whole company. We similarly continued updating our establishments, converting them to the DIA Market and DIA Maxi formats while, time after time, reviewing whether our assortment is best suited to provide a complete shopping basket with the best quality-price relationship. We have also come closer to the small businessman, backing the entrepreneurial spirit and providing innovative financial support measures for franchisees. And all this has yielded results: we have already transformed 2,116 stores in all the countries in which we have a commercial presence; our gross sales have increased 4.3% worldwide; we have reached 2,000 franchised stores in our network; 1,000 of these franchises are in Spain, where our leadership as a franchiser has been imperturbable for years. In addition, this leadership was recognized and reinforced in 2010 by the Best Franchise award in the retail sector category of the XVth Best Franchise Business Concept awards presented by the Spanish Franchises Today magazine. But these are only some of the projects that we pursued throughout last year. I invite you to become acquainted with these, in addition to the many other initiatives that have made us better and more competitive. Of course, I must not forget to express my gratitude to the over 45,000 people throughout 7 countries who work for the DIA Group, and who, on three different continents, share the illusion and the values of a company that has the satisfaction of its more than 40 million customers as its main mission. I wish to be optimistic about the times to come and trust in the DIA Group s strength to take on all the challenges that the future presents. In the years to come we will continue working on the modernization of our company, on its development in emerging markets, on adapting our brand to new market requirements, on the optimization of our processes and the search for efficiency, without ever forgetting the support for our franchises. Ricardo Currás de Don Pablos General Manager DIA Group 04 ANNUAL REPORT 2010 DIA, S.A. ANNUAL REPORT 2010 DIA, S.A. 05

5 Our reality: the DIA World Committed, Attentive and Positive 08 We are always close to you 10 The Carrefour Group 12 Executive Committee 14 Corporate Structure ANNUAL REPORT 2010 DIA, S.A. ANNUAL REPORT 2010 DIA, S.A. 07

6 Our reality: the DIA World Committed, Attentive and Positive Our values unite to promote a positive, committed culture throughout the organization whose ultimate and main objective is the best attention for our customers. The DIA Group s strategic principles are summed up in its mission and values as a means of establishing an acceptable form of conduct for the whole organization, always beginning with the main objective: the commitment to quality and innovation for our customers, the true prescribers of everything we do. Embracing the Carrefour Group values, every one of our employees carries out their work respecting the values that unite and encourage us to compete to become a company that is recognized and appreciated by our customers, ensuring that our activities in each and every area of the organization s structure are oriented towards the consumers complete satisfaction so that they choose us as their trusted store. However, all of this is without forgetting that these common values should, at the same time, contribute to giving the necessary answers to all the factors related to our activity. Taking our values as a starting point (Committed, Attentive and Positive) our mission is also to respond to society s new demands, minimizing the environmental impact of our activity and developing the same on social criteria as a fundamental part of our responsibility. Every one of our employees carries out their work respecting the values that unite and encourage us to compete to become a company that is recognized and appreciated by our customers Irene Sánchez, baker. DIA Market Puerto de Santa María, Cádiz. Mission To offer consumers solutions to their nutritional and consumer product requirements, with a commitment to quality and price which is unique in the market, and also to satisfy our employees, suppliers and shareholders, as well as the society in which we carry out our activity. Values DIA, Quality and Price, always We are Committed, this is our strength and our valour: Being committed means putting all our energy into serving our customers, offering them our wide range of quality products at a competitive price. We are Attentive, this is our strength and our valour: We must be attentive. Being attentive is being eager to please our customers with the products and services that we offer them, and always being close to them. We are Positive, this is our strength and our valour: Being positive implies recovering optimism, being constructive, overcoming difficulties and always being open to change. 08 ANNUAL REPORT 2010 DIA, S.A. ANNUAL REPORT 2010 DIA, S.A. 09

7 Our reality: the DIA World We are always close to you With more than 6,000 stores and over 45,000 employees in the 7 countries where the company is present, DIA is currently one of the main supermarket chains in the world. The group is working so that it is day by day closer to its customers in all the different markets in which it operates, and that it continues to grow and gain market share, showing itself to be a strong, secure company. France Activity commenced: stores. 176 franchises. Banners: ED and DIA. 8,403 employees. 9 logistic platforms. Turnover in 2010: 2,736 million Euros. Activity commenced: stores. 327 franchises. Banners: DIA and DIA Market. 3,502 employees. 3 logistic platforms. Turnover in 2010: 416 million Euros. As an energetic company in constant movement, and after more than 30 years solid growth, the DIA Group today is a consolidated chain that offers its customers a store network that is spread throughout 7 countries on 3 continents. Activity commenced: stores. 186 franchises. Banners: Minipreço. 4,003 employees. 3 logistic platforms. Turnover in 2010: 917 million Euros. Portugal Turkey Activity commenced: stores. 149 franchises. Banners: DIA and DIA Market. 5,770 employees. 3 logistic platforms. Turnover in 2010: 1,107 million Euros. Brazil Spain Activity commenced: ,766 stores. 1,005 franchises. Banners: DIA, DIA Market and DIA Maxi. More than 19,000 employees. 18 logistic platforms. Turnover in 2010: 4,469 million Euros. China Activity commenced: stores. 85 franchises. Banners: DIA, DIA Market and DIA Maxi. 3,704 employees. 4 logistic platforms. Turnover in 2010: 698 million Euros. Argentina Activity commenced: stores. 142 franchises. Banners: DIA (Asian Discount) and DIA Market. 3,200 employees. 2 logistic platforms. Turnover in 2010: 188 million Euros. 10 ANNUAL REPORT 2010 DIA, S.A. ANNUAL REPORT 2010 DIA, S.A. 11

8 Our reality: the DIA World Carrefour Group: Worldwide In fifty years, Carrefour has become a worldwide leader in the distribution sector. It is the second distributor in the world and the first distribution group in Europe, and today principally operates 4 store formats: hypermarkets, supermarkets, the discount format and neighbourhood stores. The Carrefour Group currently has more than 15,900 establishments including own-stores and franchises. An international distributor 33 countries leader in A pioneer on its arrival in countries such as Brazil (1975) and China (1995), Carrefour currently operates in four large markets: France, its original market, Europe, Latin America and Asia. distribution With more than 15,900 stores and over 472,000 employees, the company is the second distributor in the world and the first distribution group in Europe. Present in 33 countries, in 2010 Carrefour obtained more than 58% of its turnover outside France. The discount format represents almost 11% of the Carrefour Group s sales. In 2010, the company obtained a turnover of 101,018 million. Its ambition: to become the preferred store Carrefour has an ambition which is, at the same time, simple and strong; the ambition to establish itself as the consumer s preferred store wherever the Group is present. To become the establishment that knows its customers, which anticipates their wishes and inspires confidence in the quality of its products, its prices, and its commitment to responsibility. In short, the establishment in which a better quality of life can be enjoyed every day. centres and rural areas in the markets where the company operates. With more than 4,500 neighbourhood stores, Carrefour boosts the local economy and the social obligations in the heart of local communities and villages. In addition, it works on economic development through its business initiatives, promoting the creation of local employment and purchasing from local suppliers. In fact, almost 90% of the company s employees in each case come from their local area. The strategy of purchasing from the Group s suppliers also follows this approach. Thus, the purchase of fresh products from local producers, such as in France or China, similarly contributes to economic dynamization in the territories in which the company is present. Three values unite Carrefour s employees Committed /Attentive / Positive Stores for all lifestyles Hypermarket. Supermarket. The discount format. Neighbourhood stores. As a result, the almost 472,000 employees who make up the company unite throughout the world to attain this ambition. Their greatest reward? To see their customers return to the Carrefour Group s stores. Nº 2 worldwide The Carrefour Group trademarks, their true potential Every year, Carrefour Group stores attract more than 100 million customers who generate almost 3 thousand million operations at the checkouts. The Carrefour trademark is appreciated in all its products, in its banners and in its services throughout the world. In the eyes of everyone it is, without doubt, a strong trademark but also a sign of innovation and the differentiation for those that continually work for the company. A player in local economic development The Group s stores are, independent of their locality, places that help to revitalize and energize the urban 12 ANNUAL REPORT 2010 DIA, S.A. ANNUAL REPORT 2010 DIA, S.A. 13

9 Our reality: the DIA World Executive Committee Ricardo Currás de Don Pablos General Manager DIA Group Diego Cavestany de Dalmases Executive Director Operations DIA Spain Antonio Coto Gutiérrez Executive Director DIA America and DIA Group Partnerships 4 Juan Cubillo Jordán de Urríes Business and Merchandize Director DIA Group 5 Francisco Javier La Calle Villalón Executive Director DIA Portugal, Turkey and China 6 Bruno Pertriaux Executive Director DIA France ANNUAL REPORT 2010 DIA, S.A. ANNUAL REPORT 2010 DIA, S.A. 15

10 Our reality: the DIA World Corporate Structure Carrefour S.A. NORFIN HOLDER, S.L. DIA, S.A.U. DISTRIBUIDORA INTERNACIONAL DE ALIMENTACIÓN, S.A. (100% NORFIN HOLDER, S.L.: head of the Group in Spain) FINANDIA, E.F.C, S.A.U. 100% DISTRIBUIDORA INTERNACIONAL DE ALIMENTACIÓN, S.A. TWINS ALIMENTACIÓN, S.A. 100% DISTRIBUIDORA INTERNACIONAL DE ALIMENTACIÓN, S.A. PE-TRA, SERVICIOS A LA DISTRIBUCIÓN, S.L.U. 100% TWINS ALIMENTACIÓN, S.A.U. DIASA DIA SABANCI SUPERMARKETLERI TICARET, A.S. 59,93% DISTRIBUIDORA INTERNACIONAL DE ALIMENTACIÓN, S.A. 40% HACI ÖMER SABANCI HOLDING ANONIM AS 0,02% CARREFOUR NEDERLAND BV 0, 02% CRFP 10 0,02% CARREFOUR SA 0, 02 CRFP 11 DIA TIANTIAN (SHANGHAI) MANAGEMENT CONSULTING SERVICE CO. LTD. DIA ARGENTINA, S.A. DIA PORTUGAL SUPERMERCADOS, SOCIEDADE UNIPESSOAL LDA FINANDIA, E.F.C., S.A.U SHANGHAI DIA RETAIL CO. LTD. DIA BRASIL, S.L. DIASA DIA SABANCI SUPERMARKETLERI TICARET, AS PE-TRA SERVICIOS A LA DISTRIBUCION, S.L.U. TWINS ALIMENTACION, S.A.U. S.A.S. ED 100% DISTRIBUIDORA INTERNACIONAL DE ALIMENTACIÓN, S.A. DIA PORTUGAL SUPERMERCADOS, SOCIEDADE UNIPESSOAL LDA. 100% DISTRIBUIDORA INTERNACIONAL DE ALIMENTACIÓN, S.A. BEIJING DIA COMMERCIAL CO. LTD. S.A.S. ED FRED 1 (THEIX) SAS GAP DISCOUNT SAS ST BONNET DISCOUNT SAINTE ANNE DEVENOS DISTRIBUTIONS SOLERDIS SARL PHOENIX CALLIAN DISTRIBUTION LDA NARBODIS SAS INMOBILIER ERTECO SAS ED FRANCHISE DIA BRASIL S.L. 99,99% DISTRIBUIDORA INTERNACIONAL DE ALIMENTACIÓN, S.A. 0,001% DIA ARGENTINA, S.A. DIA ARGENTINA, S.A. 99,9999% DISTRIBUIDORA INTERNACIONAL DE ALIMENTACIÓN, S.A. 0,0001% ANTONIO COTO GUTIÉRREZ DIALOMBARD EUROPA DISCOUNT SUD OUEST SNC PLERIDIA NORMANDIS DESCHA SARL SHIVA SARL PODIS 105 SARL MARAUSSAN DISTRIBUTION VOIRON DISTRIBUTION DIAMONT SARL JALADIS SAS PROVED SODEXED CAMPUS DIA DIA TIANTIAN (SHANGHAI) MANAGEMENT CONSULTING SERVICE CO, LTD. 100% DISTRIBUIDORA INTERNACIONAL DE ALIMENTACIÓN, S.A. SHANGAI DIA RETAIL CO, LTD. 100% DISTRIBUIDORA INTERNACIONAL DE ALIMENTACIÓN, S.A. BEIJING DIA COMMERCIAL CO., LTD 100 % DISTRIBUIDORA INTERNACIONAL DE ALIMENTACIÓN, S.A. 16 ANNUAL REPORT 2010 DIA, S.A. ANNUAL REPORT 2010 DIA, S.A. 17

11 The present: a year of great achievements Increased sales worldwide 20 More than 1,200 DIA Market and DIA Maxi stores in Spain 20 International transformation to the new formats 21 More than 2,000 franchises in 7 countries 21 A success: 1,000 DIA franchises in Spain 22 New packaging for DIA Brand products 22 Success of the new DIA Brand in different markets 23 Fruit and vegetables, the true protagonists 23 DIA wins an award for its security measures 24 Logistic excellence in the current economic climate 24 Club DIA opens the way in France 25 DIA s new home delivery service ANNUAL REPORT 2010 DIA, S.A. ANNUAL REPORT 2010 DIA, S.A. 19

12 The present: a year of great achievements Increased sales worldwide More than 1,200 DIA Market and DIA Maxi stores in Spain International transformation to the new formats More than 2,000 franchises in 7 countries Despite the economic climate and the difficult situation which many markets are experiencing worldwide, DIA has retained the confidence of its customers who, in a difficult environment, have once again continued choosing the company s stores as their trusted supermarket. The fact is DIA has continued to offer the most competitive prices in the market. During the last financial year, the company s combined gross sales totalled 10,531 million Euros in all the countries where it is present which means, by comparable countries, the turnover grew by 4.3% (it must be remembered that DIA left Greece last year) with respect to The ease and rapidity of adapting to changes once again in 2010 became one of DIA s main assets. Thanks to this commitment to investing in the modernization and dynamization of its store network in Spain, the company closed the year with 1,273 stores operating under these new formats, a number which means that more than 70% of all DIA s own stores in Spain have already been converted. In addition, it is worth emphasizing that the company also transferred this effort to its own network of franchised stores, closing the year with more than 350 franchises transformed to the DIA Market model. Given the progressive and, overall, consolidated implantation of the new formats in Spain, in 2010 DIA continued working and carrying out major investments in the process of modernizing and transforming its store network throughout the world to the new DIA Market and DIA Maxi formats. As a consequence of this important impulse towards the process of modernization of DIA stores, which has allowed the company to adapt itself to all the markets in which it is present, DIA closed last year with a total of 2,116 stores transformed in all the countries in which it has a commercial presence, which means that more than half of the own-store network that DIA operates throughout the world have already been converted. In November 2010 in the DIA Group s Headquarters in Madrid, Spain, the company s General Manager announced a significant international milestone for the Group: the opening of the 2,000th franchise in the world, a store situated in Izmir, Turkey (Soke Merkez). However, this store is only one of the 2,070 franchised establishments with which the company closed last year. This number of stores currently makes up a network which extends across 7 countries and positions DIA as the third largest franchiser in its sector in Europe (Source: Ranking Franchise Europe Food sector: Supermarkets & Convenience). 20 ANNUAL REPORT 2010 DIA, S.A. ANNUAL REPORT 2010 DIA, S.A. 21

13 The present: a year of great achievements A success: 1,000 DIA franchises in Spain New packaging for DIA Brand products Success of the new DIA Brand in different markets Fruit and vegetables, the true protagonists Coinciding with the announcement of the 2,000th franchise in the world, the company opened the 1,000th store in Spain, a DIA Market franchise located in Puebla de Guzmán (Huelva). Furthermore, following this momentous opening the company continued this rate of growth to close the year with a total of 1,005 franchised stores in Spain, a fact which establishes DIA as the leading franchiser in its home country. As a result of this notable expansion in DIA franchising in Spain and the rest of the world, the company received the Best Franchise award in the retail sector category of the XVth Best Franchise Business Concepts Awards organized by the Spanish Franchises Today magazine, a reference publication for the sector. Framed within the process of continuous renewal and modernization being carried out by the DIA group, the company took another step and, in 2010, began revising the packaging of all DIA Brand products. As a result, with effect from mid-2010, DIA Brand products have been progressively reclothed with new, colourful, more modern and innovative packaging which, in turn, seeks to offer customers a simple, clearer, more transparent image of all the products. At the close of 2010, DIA s customers in all the company s stores throughout the world were already able to find a total of 2,424 DIA Brand references in the new packaging. The DIA Brand is one of the company s strategic pillars and, as could not be otherwise, during 2010 it continued to be treated as a priority in all the countries in which DIA is present. During 2010, the DIA Group continued to innovate and widen its offer with new products to satisfy its customers and cover the tastes and necessities of the consumer. With a three-way action (widening the offer, innovation in the assortment and improving the quality), combining all the countries in which it has a commercial presence, the company achieved DIA Brand product sales valued at more than 5,000 million Euros*. * All DIA Brand references excluding National Brands. Continuing the tendency of the last few years, in 2010 DIA continued firm in its commitment to promote and improve the offer of fresh food products in its stores and, last year, with special relevance to improvements in the Fruit and Vegetables offer. Within the plans developed by the company in this area last year, DIA Spain worked on a new project to redesign the structure of the fruit and vegetables sections in DIA Market stores. This project, which involves implicit improvements, such as the commitment to a much bigger section, better display of products, a considerably wider assortment and an increase in promotional activities was, by the end of the year, already implanted in 32 stores. 22 ANNUAL REPORT 2010 DIA, S.A. ANNUAL REPORT 2010 DIA, S.A. 23

14 The present: a year of great achievements DIA wins an award for its security measures Logistic excellence in the current economic climate Club DIA opens the way in France DIA s home delivery service In addition to the activities that the DIA group carries out in its daily endeavours to improve the various services provided in its stores, the company is also conscious of the necessity to offer both its customers and employees the confidence to be able to count on a safe environment in which to carry out their work or do their shopping. For this, the company s security teams actively work to install the best solutions with respect to security in all the company s establishments and workplaces. As a result of these efforts, the company won an award in the Innovative Project of the Year category of the IVth ADT Club Retail 2010 Awards for the promotion and implantation of new technologies and contributing integrated security solutions. In the DIA Group s continuous search for operational excellence, 2010 was characterized by the development and consolidation of distinct projects which have allowed DIA s logistic operations to evolve towards more agile and efficient processes. The use of more efficient technologies has meant a significant reduction in the company s logistic costs. A strategy which, in addition, has been complimented by the ever present commitment to form teams with a high level of quality and service. New technologies, optimization of costs, reengineering of processes and a greater level of service, all of which have resulted in better quality, both in products and services, which the company offers in its stores every day. Since May 2010, the company has offered its customers in France the opportunity of joining Club DIA to enjoy its innumerable advantages. Supported by an insuperable launch promotion - more than 250 articles with the most advantageous prices for new customers joining the club - last year the company initiated its loyalty program in all its ED and DIA stores operating in the French market. At the close of 2010, and as a result of the successful implantation of the system in all DIA s establishments in France, the company had already issued more than 2.5 million cards with almost 13 million coupons per month being distributed to the customers in this country. Another innovation within the improvements that the company is implanting in its establishments to provide a shopping environment which is every day more comfortable and adapted to the necessities of today s consumers, was the 2010 launch of the Home Delivery Service. At the close of 2010, the company already had 74 DIA Market and DIA Maxi stores offering this new service to their customers. This service is available by request (subject to a minimum purchase of 40 Euros) and, for a fee of 3 Euros, customers can have their shopping delivered to their homes. 24 ANNUAL REPORT 2010 DIA, S.A. ANNUAL REPORT 2010 DIA, S.A. 25

15 Capítulo: Capítulo The future: Ut wisi enin ad minim Ut wisi enin ad minim Consolidating DIA Market and DIA Maxi 28 The franchise: a key factor in the evolution of the business 30 Behind the DIA Brand s success 34 The new image reaches DIA Brand products 36 Moving forward with the fresh food offer 40 The commitment to efficient, sustainable logistics 44 Club DIA, a world of great advantages 52 DIA, always at the customer s service 54 Ut wisi enin ad minim. Quis nostrud ad nostris pro amat Ut wisi enin ad minim. Quis nostrud ad nostris pro amat. Sed aliquo ut nisi alter ego qid propter anno et cetera. Ullam venit cum permissio, alter ego cum frater et familias. Vel illum dolore eu feugiat nulla facilitis ad vero eros. Mimimum veniami ex ea con dolor nisi ut aliquip. Consequat Duis autem vel eum iruire dolor in endrerit. 26 ANNUAL REPORT 2010 DIA, S.A. ANNUAL REPORT 2010 DIA, S.A. 27

16 The future: Consolidating DIA Market and DIA Maxi Implantation of the DIA Market and DIA Maxi store models has once again been a clear example of the capacity to adapt to market requirements that DIA has demonstrated during the last few years. In 1979, DIA premiered in the Spanish market with its first store, located in Madrid, offered consumers a concept which was pioneering and innovative in Spain: the discount format. However, more than 30 years have now passed, and the company, which has always wished to offer its customers an innovative concept adapted to their necessities, has also known how to adapt itself to the evolution that has occurred over the years and has grown with the consumers themselves, consumers who now demand concepts and services which are totally different to the stores of those times. Retaining this original simplicity, which led to constant immersion in a process of renewal and innovation, two years ago the company initiated one of the most important projects in its history: the transformation of the entire DIA store network to the new DIA Market and DIA Maxi formats. Thanks to the ease and rapidity of adapting to change acquired over the last three decades, implantation of the DIA Market and DIA Maxi store models has once again been a clear example of the capacity to adapt to market requirements that DIA has demonstrated during the last few years. At the end of 2010, the company had already transformed a total of 2,116 stores in the countries where it has a commercial presence, which means more than half of the own-store network that DIA operates in the world. Noelia Pérez, Noelia Hurtado and Ana Belén Rodríguez. DIA MAXI. Avilés, Asturias. Although the implantation of these formats is more significant in Spain, where this project was initiated and where DIA already operates 1,273 stores under these new formats (744 DIA Market and 529 DIA Maxi stores), these models are also being exported at a vertiginous rate to the other countries in which the Group is present thanks to the company s great commitment to modernizing and energizing its store network worldwide. A new store concept The new DIA stores respond to a more up-to-date vision of the modern consumer s tastes and preferences. For this, these formats seek to offer customers pleasanter surroundings where they can do their shopping, offering a renewed image which, at the same time, reinforces the modernity of the commercial offer. DIA Market: Neighbourhood format Based on practical stores that are well sited in towns and cities, the neighbourhood store format allows consumers to find one of the company s establishments close to their home. It is the initial format with which DIA established itself in all the countries (the classic store or urban store ) and located in town or city centres with a sales area of approximately 500m 2. However, from the beginning right up to the present day, progress has always been important with emphasis on the inclusion of fresh food products and evolution of the assortment, and always focused towards simply and economically fulfilling the customer s basic requirements. DIA Maxi: Attraction format A concept located on the outskirts of towns and cities with car parking facilities so that customers can drive to the store. A comfortable, extensive store with a wide range of fresh food products at very competitive prices to satisfy all the customer s shopping requirements. International Expansion The development of both types has always been adapted to the characteristics and requirements of each country. Thus cases such as China can be highlighted where, in 2010, the company continued modernizing the Asian Discount model and had already opened the first 20 DIA Market stores, establishments with a new, more attractive design, with a wider assortment and a greater offer of fresh food products. Other notable cases are Portugal which, in 2010, transformed 38 of its Minipreço stores to the new Market concept; Turkey, which renewed the format of 33 of its establishments and increased sales by up to 20%, and France, which having inaugurated the DIA Market concept, closed last year with 47 establishments operating with this format. 28 ANNUAL REPORT 2010 DIA, S.A. ANNUAL REPORT 2010 DIA, S.A. 29

17 The future: The franchise: a key factor in the evolution of the business In a financially difficult climate, DIA has made a commitment to franchising as a formula to generate self-employment, helping the franchisee to run their business with all the guarantees and security of a trusted banner. In all the countries, DIA closed 2010 with a turnover to franchisees in excess of 1,700 million Euros Surpassing 2,000 franchises worldwide In 2010, DIA exceeded two significant numbers: the 2,000th franchise in the world, and the 1,000th in Spain. The first milestone was reached on 13th October with the franchise opening in the Turkish locality of Izmir (Soke Merkez). The second took place with the inauguration in Puebla de Guzmán, in the province of Huelva. The franchise network has maintained a high annual expansion rate, exceeding 114 net stores incorporated in 2008, and 292 in 2009, to 447 net stores incorporated in In this way, DIA s franchise network grew by 18% with respect to the previous year, reaching 2,070 stores by the end of the year. By countries, one of the most significant cases was France, where DIA practically doubled its franchised store network, reaching 176 franchises, when at the end of the previous year it had just 93. Also worthy of mention is the case of Turkey, a market in which DIA has passed from operating with 238 franchises, to closing the year with 327, which means an increase of almost 40% in its franchise network. In Spain, DIA closed the year with 1,005 franchises. In the remaining countries, the situation was equally positive, reaching 186 franchises in Portugal, 85 in Argentina, 149 in Brazil and 142 in China, with very significant net growth. DIA s net turnover to franchisees in 2010 experienced a growth of more than 38%, highlighting the growth of 163% experienced by China, 159% by Brazil, 102% by Argentina, 50% by France, and Turkey which experienced a growth of 39%. The association between DIA and the franchisee is a close relationship in which the company provides continuous counselling services for the franchisee 30 ANNUAL REPORT 2010 DIA, S.A. ANNUAL REPORT 2010 DIA, S.A. 31

18 The future: Hand-in-hand with the franchisees The association between DIA and the franchisee is a close relationship in which the company provides continuous counselling services for the franchisee, while the franchisees in turn bring DIA the shopping experience of customers in common, sharing ideas and impressions about the evolution of the business and proposing possible joint development action plans. For this purpose, in 2010 DIA paid special attention to relationships with franchisees, instigating various systems to reinforce these relationships through carrying out surveys, individual interviews, focus groups, etc. However, without doubt, the Franchise Web, an Intranet exclusively for use by franchisees which provides them with a means to contact the company directly, is the tool which has helped to make communications between DIA and its franchisees much more fluid. In this respect, Portugal deserves a special mention as it is especially proactive in the use and optimization of this tool. Without doubt, DIA s internal teams, for the most part formed by supervisors who, from the regional or national franchise centres, offer the franchisee continuous support, constitute an asset for DIA in its relationships with franchisees. In fact, the figure of the supervisor attains special importance through accompanying the franchisee and assisting them with the support that DIA provides for the development of their business. In Francia a significant effort is being made towards the gradual transition of ED stores to the DIA banner It is appropriate to highlight that individual activities have been undertaken in Brazil and Argentina to revitalize sales in some franchises, actions which, through a review of the commercial model applied and according to analyses jointly undertaken by the franchisees and DIA teams, achieving notable increases in sales and customer inflows. Another aspect of utmost importance last year was the modernization of a large part of the DIA franchise, a task that will continue during 2011, and which will continue its firm commitment to the DIA Market and DIA Maxi models. In this respect, it is emphasized that, in Spain, more than 350 franchises have adhered to the DIA Market model, making an investment which, in the short-term, is compensated for by a significant increase in sales and influx of customers. Similarly, in France a significant effort is being made towards the gradual transition of ED stores to the DIA banner, to which own-stores are also being transformed with excellent results. Similarly, in China work is continuing and a study is being undertaken into opening larger franchises in line with that occurring in the new own-store models. The significant efforts with respect to financial support given to franchises in 2009, both for the opening of new stores and for refurbishments or extensions to already existing ones, were continued during last year. As a result, these measures are allowing a large number of entrepreneurs to have the opportunity of running their own business with all the guarantees offered by a company such as the DIA Group. Specifically, in Argentina, one of the fundamental points to boost the strong growth experienced by this commercial model was the turnkey project, an initiative through which DIA offers the franchisee all the support with respect to searching for suitable premises, recommending the equipment as well as other distinct aspects right up to the opening of the store which, added to the continually improved financial support measures, greatly simplifies the business start-up procedure. In Turkey, it is fitting to highlight the opening of the country s first 3 franchises managed by ex-dia employees, who received the company s help to transform them into entrepreneurs. This measure, which is exclusively reserved for employees with a certain length of service and a high level of commitment and performance, is having extremely positive results as, without doubt, nobody knows DIA stores as well as the company s own ex-employees. This same idea is already being tried with success in other countries such as Spain and France. Raquel Sabaté and Vanesa Berenguer. Store Supervisor and Sales Chief. Barcelona. In addition, work has continued in Spain on the implantation of the new Cada DIA franchise format, a commercial model which is aimed towards small population centres, offering a system which is more open with respect to the business opportunities imposed by the population density. DIA closed last year with 32 Cada DIA franchises. Supervision Meeting. Logistic Platform. Puerto de Santa María, Cádiz. DIA Group, awarded Leading Retail Franchiser The company was awarded the Best Franchiser Award in the retail sector of the XV th edition of the Best Franchise Business Concept Awards organized by the Franchises Today magazine, one of the principal publications in the sector in Spain Franchisee training is another aspect in which DIA has focused its efforts. During 2010 the company worked on revising and improving the training process while, at the same time, centralizing its efforts on adapting the duration of the training to the franchisees real necessities. 32 ANNUAL REPORT 2010 DIA, S.A. ANNUAL REPORT 2010 DIA, S.A. 33

19 The future: Behind the success of the DIA Brand Currently, DIA supermarkets in Spain, as well as in the majority of the countries, count on more than 2,000 DIA Brand references, which is approximately 50% of the complete product assortment that can be found in the company s stores. In Spain, the DIA Brand is produced by almost 400 Spanish suppliers The assortment which the DIA Brand offers in all the company s store chain is one of the key aspects of the success of the offer to customers. Conscious of this, the company has continued to bestow maximum priority with respect to all matters related to its own brand and, last year, worked towards improving and increasing the said assortment. Similarly, as another means of strengthening the DIA Brand, the company has begun the process of renewing its packaging to make it more attractive and recognizable. The aim is to create an assortment which will satisfy the demands of consumers in all the markets where DIA is present and also maintain DIA s identifying signs: an unbeatable quality-price relation. The evolution of the offer, innovation in the assortment and the quality of the products are the bases of the company s commercial philosophy. Therefore, in Spain, as well as in all the other countries, DIA has maintained a policy of constant innovation and renewal of the products offered on the shelves. Cases, such as in Spain, where nearly 200 new references have been introduced, Portugal, with more than 60 new products, or Argentina, where 75 new references have been added, have allowed the company to continue it commitment to its own brand which, in 2010, achieved sales of more than 5,000 million Euros* in all the countries where DIA has a commercial presence. Sales of DIA Brand products throughout the world accounted for 53%** of the entire Group s sales during * All MDD references with the exception of National Brands. ** Mass market products. Thro roughout the world, the DIA Grou oup turn rnover amounts to more th an for th e production of DIA Bran d prod uc ts. Of the hese, 85% are loca l su ppli lier s with thin each of the markets in which the company operates 34 ANNUAL REPORT 2010 DIA, S.A. ANNUAL REPORT 2010 DIA, S.A. 35

20 The future: The new image reaches the products Since mid-2010, the company s own-brand products have been progressively re-clothed in new, more colourful, modern, innovative packaging. In 2008, the company initiated a process to change and update the entire DIA banner which, among different organizational applications, and as a first, fundamental step in the country s modernization, became especially manifest in an intense undertaking to transform the traditional DIA Store formats to the new DIA Market and DIA Maxi models. In this global renewal, the new DIA image brings consumers modernity and freshness, at the same time as presenting an appearance which is more in line with their current expectations. However, this process of change also included the revision of all DIA Brand product packaging. And since mid-2010, the company s own-brand products have been progressively re-clothed in new, more colourful, modern, innovative packaging. On 31 st December 2010, a total of 2,424 DIA Brand references in all the DIA Group countries had been updated with new Packaging Cartography. This relooking, added to the innovation in own-products, means that the DIA Brand has been comprehensively reinforced and enlarged. Comprehensive DIA Brand energizing The new packaging has been carefully worked on to: Energize the brand image Increase the quality of the product Invigorate product shelving with appealing images Provide the consumer with the expected amount of information with respect to the origins of the product, content, nutritional values, suggested use, etc. The revision of the DIA Brand packaging goes further than a simple relooking, and is considered to be energizing the brand in all its aspects. It was necessary to adapt the presentation of the brand to the quality of the products as well as make them highly visible and easily recognisable on the shelves. For this reason, aspects such as the position and form of the logo, the visibility of the trademark, coherence with the store appearance, and another very important element which responds to customers demands: the quality of the information offered to the consumer. On 31 st December 2010, a total of 2,424 DIA Brand references in all the DIA Group countries had been updated with new Packaging Cartography 36 ANNUAL REPORT 2010 DIA, S.A. ANNUAL REPORT 2010 DIA, S.A. 37