Case NetAnttila HUT, ICTEC 05.04.2006

Case NetAnttila HUT, ICTEC 05.04.2006

Case NetAnttila content: Net Anttila facts Department store mail order (catalogue) - web store History of NetAnttila Customer behaviour Web store architecture Future plans 18.4.2006

ANTTILA OY Anttila is the largest consumer goods chain in Kesko Group founded 1952 employees 2 750, of which 2 200 in department stores Anttila has four concepts: Anttila department stores (27) Kodin Ykkönen home department store (8 kpl) Anttila mail order (Finland, Estonia and Latvia) Anttila web store NetAnttila Revenue of Anttila Oy is approx. 500 m (2005) 18.4.2006

NetAnttila Over 80 000 visitors per week Average purchase 100 Assortment consist of 15.000 products 100 % availability of goods Various payment methods Delivery in a week from purchase

Web store ranked by brand awareness % of internet users recognise the brand September 2004 - September 2005 100 90 80 70 60 50 40 83 82 7271 68 67 68 65 65 62 74 56 57 5352 5251 52 50 49 5049 50 48 43 39 4140 49 38 40 37 37 33 30 20 10 0 Net Anttila Huuto. net Ellos Hobby Hall Online Kelt. Pörssi huutok. Syksy -04, n=795 83 72 68 68 65 74 53 52 52 57 50 50 39 41 49 40 33 Syksy -05, n=1184 82 71 67 65 62 56 52 51 50 49 49 48 43 40 38 37 37 Ikea Lippupalvelu Veikkaus Finnkino Verkkokauppa Biltema.com Akateeminen Elisa Shopit TNS Gallup Oy / Online Shopping syyskuu 2005 Ifi PC Superstore SSKK H&M Rowells

Web stores ranked by visits % of internet users have visited the site September 2004 - September 2005 60 50 5354 50 50 40 30 20 37 37 3536 3132 32 32 3031 28 28 27 24 37 23 23 19 23 19 19 17 23 21 17 17 18 16 1516 10 0 Net Anttila Huuto. net Hobby Hall Online Ellos Lippupalvelu Veikkaus Finnkino Verkkokauppa.com Ikea Kelt. Pörssi huutok. H&M Rowell Shop Biltem a Ifi Akatee minen PC Superstore Suomalainen. Hairsto re com Syksy -04, n=795 53 50 37 35 31 32 30 28 24 37 19 23 17 23 21 18 15 Syksy -05, n=1184 54 50 37 36 32 32 31 28 27 23 23 19 19 17 17 16 16 TNS Gallup Oy / Online Shopping syyskuu 2005

Web stores ranked by buying from web % internet users have bought at the web store September 2004 - September 2005 30 25 20 15 10 5 25 23 21 21 21 19 19 18 18 16 19 17 15 15 14 12 12 10 9 9 8 7 7 6 6 6 7 6 6 6 5 5 0 Net Anttila Hobby Hall Online Ellos Lippupalvelu Veikkaus Finnkino Verkkokaupp a.com H&M Rowell s Syksy -04, n=795 21 21 21 18 16 19 14 12 10 9 6 6 6 7 5 5 Syksy -05, n=1184 25 23 19 19 18 17 15 15 12 9 8 7 7 6 6 6 Ifi Josefs sons SSKK CDON Hairstore Suom Akateeminen alaine n.com TNS Gallup Oy / Online Shopping syyskuu 2005 Lippup iste

Web store compared to department stores and mail order business Gross margin (sales price buying price) No difference or competitive advantage compared to other channels: department stores or mail order Fixed costs: labour, locations etc Fixed costs / sales is smaller in web store than in other channels Marketing costs Marketing costs /sales is at the same level as in department stores, much lower than in mail order Investments Same level as in one department store 18.4.2006

History of NetAnttila Small site already in May 1996 Purpose was to test the concept and get experience Concentrated mainly to CDs and some special items on sale Assortment of couple of hundreds products After a test period Anttila decided to further invest in web business in the end of 1998 based on defined strategy and business case. 18.4.2006

NetAnttila strategic direction in 1998 Customers Young families Brand NetAnttila Offering Broad offering Business model Use understanding from similar web stores abroad Utilise Anttila Oy product and purchasing knowledge Utilise Anttila Oy consumer logistics capabilities Utilise Anttila Oy back end systems NetAnttila was organised as separate entity to gain momentum 18.4.2006

Major changes between 1999-2005 Growth in customer volumes 5/2000 60 000 visitors 5/2003 200 000 5/2005 350 000 Changes in customer profile 1999 2002: early adapters, tech oriented men 2003 2005: white collar, married, 60% are women Change in assortment 1999-2002: much the same than in mail order business: music, movies, special offers... 2003-2005: essentially broader based on the needs of web customers. The assortment is larger than in department stores in some categories. Change in layout towards coherent Anttila brand Perception of customers towards web shopping in general

Web store architecture and partners Credit card companies Customer Banks Asiakastieto credit information Image repository VRK National Personal register Supplier s web sites Anttila s operative systems product data, inventory, order processing 18.4.2006

NetAnttila s mission 2006: Make buying easy Web store is only one part of NetAnttila s electronic store concept Reasons to complement web store with other channels: Not everyone has an internet connection Consumers use different media at different time of the day Each channels have different role in consumers lives Not all customer buy from internet TV and mobile handset are emerging channels Digital television and mobile handset complement well web channel

Not everyone has internet connection 2001 2000 1999 TV at household 96 % 95 % 95 % Computer at household 45 % 44 % 42 % Internet connection (household) 31 % 27 % 22 % Mobile phone (household) 90 % personal mobile phone 69 % Source: Finnpanel Oy, TV-taloudet Suomessa 1998-2001 Ficom; Tilastokeskus (02/2002)

Not everyone has internet connection 2001 2000 1999 TV at household 96 % 95 % 95 % Computer at household 45 % 44 % 42 % Internet connection (household) 31 % 27 % 22 % Mobile phone (household) 90 % personal mobile phone 69 % Source: Finnpanel Oy, TV-taloudet Suomessa 1998-2001 Ficom; Tilastokeskus (02/2002)

Consumers use different media at different time of the day 8-10 10-12 12-14 14-16 16-18 18-20 20-22 22-24 8-10 10-12 12-14 14-16 16-18 18-20 20-22 22-24 8-10 10-12 12-14 14-16 16-18 18-20 20-22 22-24 Source: NetAnttilan Web Traffic Monitor- Mittaus Source Tv-mittaritutkimus/Finnpanel Oy Mobiile usage estimate only Web Digital TV Mobile

Each channel has a different role in consumers lives Television Mobile phone Computer entertaining leasure time activity information, educations passive unplanned usage joint usage, social public always with you mobile personal getting things done impulsive, unplanned, emergencies up to date work, activities planned usage personal, private confidential Souce: Tekes, Teknologiakatsaus 118/2001

Successful store gives its customer options Household: Household: disposable disposable income income Share Share of of women women in in workforce workforce (%) (%) 350 000 300 000 296 806 300 081 322 152 340 427 357 895 10 % 8 % 100 % 90 % 80 % 250 000 70 % 200 000 6 % 60 % 50 % 150 000 4 % 40 % 100 000 30 % 50 000 2 % 20 % 10 % 0 1995 1996 1997 1998 1999 Käytettävissä oleva tulo (FIM) Säästämisaste (%) 0 % 0 % 1993 1994 1995 1996 1997 1998 1999 Lähde: Suomen tilastollinen vuosikirja, 2000. Emplyees work longer hours than ever Number of housewifes has declined 15 % in past 5 years Value of leisure time is increasing

NetAnttila mobile pilot: objectives Combine various technologies to one seamless operations Promote secure and easy mobile buying options to customers Gain experience from mobile commerce mobile commerce is typically order handling payment is a separate event required pre-registering uses language/codes unfamiliar to customers implementations store specific no industry standards

In-store kiosks complement department stores Extended selection Complete product information available for shoppers More payment options (invoice and payment in instalments) Option for home delivery

WAP gateway WAP-store 1 2 10 Choose product Fill in payment card info (Wallet) Payment accepted NetAnttilan delivery process 4 5 Request for confirmation 3 IBM WebSphere Commerce Suite & Payment Manager, system integration Sign order (PIN) 9 Confirmation NOKIA Wallet & WIM phones LUOTTOKUNTA Digital payment terminal RADIOLINJA (Elisa) SIM/WIM & Certificates NETANTTILA Commerce site Certificate datebase 7 Get certificate Card confirmation 6 8 Check certificate and sign Digital payment terminal

NetAnttila s mission 2006: Making buying easy usage in active time white collar workers students usage at the office usage in leisure time traditionalists available for everyone usage from home families together youngsters "early-adaptors status-oriented students usage at leisure time usage outside home or office Web store Digi-TV store Mobile store NetAnttila s basic services Product information Payment options Delivery Customer service

NetAnttila s mission : Making buying easy Tervetuloa NetAnttilan mobiilikauppaan!