European Grocery Retailing - Planet Retail
Transcript of European Grocery Retailing - Planet Retail
1 planetretail.net
European Grocery Retailing Change is the only constant
May 2014 Kelly Tackett Research Director
2
1. Market Overview
2. Leading Retailers
3. Key Trends
4. Takeaways
Agenda
1. Market Overview
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Economic recovery is not universal…
Serbia
Russia
Azerbaijan
Armenia
Georgia
Ukraine
Belarus
Moldova Romania
Hungary
Poland
Bulgaria
Greece
Cyprus
Macedonia
Albania
Bosnia & Herzegovina
Croatia Slovenia
Italy
Slovakia
Czech Rep Germany
Sweden
Lithuania
Latvia
Estonia
Finland
Norway
France Austria
Switzerland
Belgium
Netherlands
Spain Portugal
United Kingdom
Ireland
Denmark
+3.2%
+3.2% +5.8%
+4.2%
+8.9%
+3.1%
+3.1%
+1.3%
+1.2%
+0.4%
+0.7%
+0.5%
+0.3% +0.0%
-0.8%
-1.0%
-1.9%
-1.2%
-1.1%
-1.4%
-3.9%
Source: Planet Retail.
GDP Real Growth 2013 (%)
+2.5%
+2.0%
+1.8% +1.6%
+3.5%
+1.5%
+1.1%
+0.9%
+0.9%
+0.9%
+0.8%
+0.8%
+0.3%
+0.4%
-0.3%
-0.9%
-1.0%
-1.4%
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Spending power varies dramatically…
5.3
5.0
4.2
3.8 3.7
3.6 3.5 3.4 3.3 3.2
2.8 2.6 2.5 2.5
2.4
2.1 2.1 1.9 1.8 1.8
1.6 1.6 1.5 1.5 1.5
1.4 1.4 1.3 1.1 1.1
1.0 0.9 0.8 0.8
0.6 0.5
0.3 0.3 0.2 0.2 0.2
0.0
1.0
2.0
3.0
4.0
5.0
6.0
No
rway
Swit
zerl
and
Irel
and
Den
mar
k
Luxe
mb
ou
rg UK
Cyp
rus
Swed
en
Fin
lan
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Fran
ce
Au
stri
a
Ger
man
y
Net
herl
and
s
Bel
giu
m
Slo
ven
ia
Latv
ia
Icel
and
Po
lan
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Ital
y
Cze
ch R
epu
blic
Spai
n
Esto
nia
Slo
vaki
a
Po
rtu
gal
Cro
atia
Lith
uan
ia
Hu
nga
ry
Bu
lgar
ia
Mac
edo
nia
Gre
ece
Ro
man
ia
Ru
ssia
Serb
ia
Bo
snia
an
d H
erz.
Mo
nte
neg
ro
Ukr
ain
e
Geo
rgia
Aze
rbai
jan
Arm
enia
Mo
ldo
va
Bel
aru
s
MGD Grocery Spend per Capita 2013 (€ ‘000)
MGD Grocery Spend defined as sales of total grocery products (edible grocery, household & petcare, health & beauty and foodservice) from modern grocery distribution retailers and wholesale enterprises (MGD) per capita. Source: Planet Retail
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Consumers are very different…
15 Groups 67 Types
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Grocery retail markets have different heritages…
Positive retail sales do not necessarily reflect the full picture…
32.1%
9.1%
15.1%
12.6%
39.1%
27.8%
6.6%
32.2%
1.5% 1.5%
2.8% 6.8%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
France Germany
% o
f G
roce
ry S
ales
Grocery Market: Breakdown by Channel 2002 (%)
Cash & Carries & Wholesaleclubs
Convenience & Forecourtstores
Discount stores
Supermarkets &Neighbourhood stores
Superstores
Hypermarkets
‘Other’ comprises Department & Variety Stores, Non-store Commerce, Other Grocery formats, Other Non-Food Formats, Catering and Wholesale.. Source: Planet Retail.
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But ‘change’ is a common denominator…
Busy lifestyles
Increasing access to
technology
Changing Demographics
Two working parents
Hectic work/home schedules
Smartphone/tablet penetration
Home access to the internet
Increasing single person households
Commuting
Ageing population
Urban dwelling
Tech-savvy generations becoming key consumers
Shoppers becoming more informed
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And grocery channels are changing around this…
Positive retail sales do not necessarily reflect the full picture…
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Growth by channel – Western Europe…
0
50
100
150
200
250
300
350
400
450
Hypermarkets &Superstores
Supermarket &Neighbourhood
Discount Convenience &Forecourt
Drugstores Cash & Carries
Sale
s (E
UR
bn
)
Western Europe: Total Banner Sales by Channel, 2008-2018f (EUR bn)
2008
2013
2018f
Note: f – forecast; Source: Planet Retail
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Key Markets – Germany
25.7%
18.5%
16.0%
Top 3 Grocery Players by Total Banner Sales (2013e)
0 2 4 6 8
Hypermarkets
Cash & Carries
Convenience
Discount stores
Supermarkets
Drugstores
CAGR (%)
Germany: CAGR Growth by Channel, 2013-2018f (%)**
Note: f – forecast Source: Planet Retail
Top 3 Grocery Players by Food Retail Format Market Share
(2013e)
€50.2 bn
€36.9 bn
€34.1 bn
**Please note, hypermarkets includes superstores, convenience includes forecourts & supermarket includes neighbourhood stores.
3.2% GDP CAGR 2013-2018F
2.1% Grocery banner retail sales CAGR 2013-2018F
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Key Markets – France
18.7%
17.3%
12.5%
Top 3 Grocery Players by Total Banner Sales (2013e)
0 2 4 6
Supermarkets
Hypermarkets
Discount stores
Drugstores
Cash & Carries
Convenience
CAGR (%)
France: CAGR Growth by Channel, 2013-2018f (%)**
Note: f – forecast Source: Planet Retail
Top 3 Grocery Players by Food Retail Format Market Share
(2013e)
€45 bn
€42 bn
€31 bn
**Please note, hypermarkets includes superstores, convenience includes forecourts & supermarket includes neighbourhood stores.
3.0% GDP CAGR 2013-2018F
2.7% Grocery banner retail sales CAGR 2013-2018F
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Key Markets – UK
26.1%
14.9%
14.0%
Top 3 Grocery Players by Total Banner Sales (2013e)
0 2 4 6 8 10 12
Hypermarkets
Drugstores
Supermarket
Cash & Carries
Convenience
Discount stores
CAGR (%)
UK: CAGR Growth by Channel, 2013-2018f (%)**
Note: f – forecast Source: Planet Retail
Top 3 Grocery Players by Food Retail Format Market Share
(2013e)
€57.9 bn
€31.7 bn
€30.4 bn
**Please note, hypermarkets includes superstores, convenience includes forecourts & supermarket includes neighbourhood stores.
4.9% GDP CAGR 2013-2018F
4.0% Grocery banner retail sales CAGR 2013-2018F
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Key Markets – Italy
8.0%
6.4%
5.6%
Top 3 Grocery Players by Total Banner Sales (2013e)
-1 0 1 2 3 4 5
Cash & Carries
Convenience
Supermarkets
Hypermarkets
Drugstores
Discount stores
CAGR (%)
Italy: CAGR Growth by Channel, 2013-2018f (%)**
Note: f – forecast Source: Planet Retail
Top 3 Grocery Players by Food Retail Format Market Share
(2013e)
€13 bn
€10 bn
€9 bn
**Please note, hypermarkets includes superstores, convenience includes forecourts & supermarket includes neighbourhood stores. * Based on food retail format market share.
2.4% GDP CAGR 2013-2018F
2.1% Grocery banner retail sales CAGR 2013-2018F
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Key Markets – Spain
23.3%
14.3%
10.2%
Top 3 Grocery Players by Total Banner Sales (2013e)
0 2 4 6 8 10 12
Hypermarkets
Discount stores
Cash & Carries
Supermarkets
Convenience
Drugstores
CAGR (%)
Spain: CAGR Growth by Channel, 2013-2018f (%)**
Note: f – forecast Source: Planet Retail
Top 3 Grocery Players by Food Retail Format Market Share
(2013e)
€20 bn
€16 bn
€9 bn
**Please note, hypermarkets includes superstores, convenience includes forecourts & supermarket includes neighbourhood stores. * Based on food retail format market share.
1.9% GDP CAGR 2013-2018F
3.8% Grocery banner retail sales CAGR 2013-2018F
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Key Markets – Portugal
20.3%
19.4%
8.1%
Top 3 Grocery Players by Total Banner Sales (2013e)
-2 0 2 4 6 8 10
Convenience
Cash & Carries
Hypermarkets
Supermarkets
Discount stores
Drugstores
CAGR (%)
Portugal: CAGR Growth by Channel, 2013-2018f (%)**
Note: f – forecast Source: Planet Retail
Top 3 Grocery Players by Food Retail Format Market Share
(2013e)
€5 bn
€5 bn
€2 bn
**Please note, hypermarkets includes superstores, convenience includes forecourts & supermarket includes neighbourhood stores. * Based on food retail format market share.
3.0% GDP CAGR 2013-2018F
4.6% Grocery banner retail sales CAGR 2013-2018F
2. Leading Retailers
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Competitive Environment
65.0 64.6 61.0
51.6 50.2 49.2 46.6
44.5
39.0
32.8
0
10
20
30
40
50
60
70
Ret
ail B
ann
er
Sale
s (E
UR
bn
)
Western Europe: Top 10 Grocery Players by Total Banner Sales, 2013e (EUR bn)
e – estimate Source: Planet Retail.
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Competitive Environment
0
10
20
30
40
50
60
70
80
90
Ret
ail B
ann
er S
ales
(EU
R b
n)
Western Europe: Top 10 Grocery Players by Total Banner Sales, 2018f (EUR bn)
Note: f – forecast Source: Planet Retail
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Key Players – Carrefour
Turn around ailing hypermarket format
Improve its price image
Expand smaller formats under the Carrefour Express, City and Contact banners
Grow multi-channel via drive format
Carrefour is focussing on revitalising operations in core markets – with further disposals of peripheral operations a possibility.
#1 Carrefour
Multi-channel is a key priority for Carrefour with the expansion of the ‘Drive’ concept.
Carrefour is expanding it’s smaller format s such as Carrefour City above.
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Key Players – Schwarz Group
Aims to become the largest food retailer in Europe
Working to propel Lidl past Aldi as largest discounter in Europe
Introducing minimum turnover per outlet requirements
Investing heavily on the instore experience
Schwarz Group is one of the most aggressively growing companies, with a presence in 25+ European markets.
#2 Schwarz Group
Lidl has been rolling out instore bakeries across W Europe as it looks to attract a broader spectrum of shoppers.
Schwarz Group’s Lidl banner is seeing continued expansion albeit at a slower pace.
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Key Players – Tesco
Strategic shifting to EDLP with incremental EUR 245 million investment
Focusing on the refurbishment of big-box stores in 2014
Expanding convenience formats – will open 150 Express per annum
Will double the number of click & collect locations
Tesco has unveiled the next phase in its UK improvement plan with seven areas targeted - EDLP, product innovation, service, GM, destination stores, convenience, Clubcard and multi-channel.
#3 Tesco
Tesco is rapidly rolling out c-stores – Express and One Stop.
Tesco has successfully launched the Clubcard Fuel Saver programme.
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Key Players – Metro
Exiting non-core markets to focus on core and key emerging markets
Refining cash & carry concept in saturated markets of WE to boost attractiveness to business customers
Adapting to changing customer needs with diverse formats
Closing unprofitable hypermarkets
Undertaking a series of long-overdue store refurbishments
For some time now, Metro Group has been battling on all divisional fronts due to its portfolio of structurally troubled formats.
#4 Metro Group
The Real remodels feature a higher-quality service counter for fresh items, including bakery.
The Casa dell’HoReCa features easier customer navigation with colour-coded departments.
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Key Players – Edeka
Diminish the diversity of banners and regional and local idiosyncracies
Support its independent shopkeepers with the development of new supermarket concepts
Reassess and reposition its Netto discount chain
Strengthen national buying by bundling sourcing at the Hamburg headquarters
Edeka is reviving its co-operative roots as it refocuses on the strengths of its regional set-up and its thriving independent retailers.
#5 Edeka
Edeka’s Omega 3 sausages were developed in collaboration with the Frauenhofer Institute.
The Für Dich (For You) ranged supplied by candy manufacturer Katjes is available exclusively at Edeka.
3. Key Trends
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Death of the hypermarket?
Positive retail sales do not necessarily reflect the full picture…
Difficulty in finding / securing appropriate
sites
Increasingly restrictive planning legislation
Apparent ‘saturation’ in some markets
Lack of investment
Rising land and development costs
Online migration (esp in General
Merchandise)
Shifting consumer trend towards convenience
Less ‘one-stop’ shopping / ‘format
fatigue’
Difficulty in finding / securing appropriate
sites
Rising land and development costs
Online migration (esp in General
Merchandise)
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Countries most exposed to ‘Big Box’
31% 30%
29%
24%
22% 21%
20%
19% 19%
18% 18% 17%
15% 14% 14%
10% 9%
8% 8% 8% 7%
7% 6% 6%
4% 4%
3%
1% 1%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
Hypermarket (>5,000 sq m) Penetration of Grocery Market by Country (%)
MGD Grocery Spend defined as sales of total grocery products (edible grocery, household & petcare, health & beauty and foodservice) from modern grocery distribution retailers and wholesale enterprises (MGD) per capita. Source: Planet Retail
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Some perspective…
Hypermarkets are not dead, many will continue to prosper
Huge variations by location, generalizations are dangerous:
– Country / market
– Site / catchment
But we are likely to see an inevitable slowdown in development of new hypermarket space in some countries
Hypermarket sales will continue to grow, although at a slower rate than some other channels (discount stores, c-stores, E-commerce)
A large number of hypermarkets are very challenged and many have been subject to under-investment
A number are ‘over-spaced’ and are in need of a radical rethink…
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Selected options for ‘over-spaced hypermarkets’…
No single ‘catch all’ cure, but a number of options – employed in isolation or in unison, according to the needs of the individual
store and the catchment it serves….
Option 1
Option 2
Option 3
Option 4
Downsize or sub-let surplus space to 3rd parties
Re-allocate GM space to extend food offer
Re-think product mix of GM space
Improve in-store catering / foodservice
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Option 1 – downsize or sublet…
Nando’s
Wembley Park.
Sports Direct
Three UK sites.
Xercise4Less
Stockton-on-Tees.
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Option 2 – re-allocate GM to extend food offer…
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Option 3 – rethink product mix of GM space…
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Option 4 – improve in-store catering…
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0
50
100
150
200
250
300
350
400
450
Hypermarkets &Superstores
Supermarket &Neighbourhood
Discount Convenience &Forecourt
Drugstores Cash & Carries
Sale
s (E
UR
bn
)
Western Europe: Total Banner Sales by Channel, 2008-2018f (EUR bn)
2008
2013
2018f
Note: f – forecast; Source: Planet Retail
Flight to convenience…
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C-stores – a pan-European perspective…
25,442
11,940
8,286
6,585
4,023
3,034 2,370
1,931 1,907 1,808 1,340 1,308 1,187 1,178 1,161 1,071 980 921 781 696
0
5,000
10,000
15,000
20,000
25,000
30,000
No. of C-stores and Forecourt Stores 2013 – Top 20 European Markets
Source: Planet Retail
36
C-stores – the recipe for success…
A new business model, different from supermarkets and big box
More strategic location planning
A higher cost model
Requiring a higher margin product mix
Focus on fresh foods and food-to-go
Greater emphasis on private labels
Catering for a wide range of shopping visits and occasions: - ‘Top up’ shopping
- Breakfast and Lunch - Evening meal solutions.
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C-stores go hand-in-hand with e-commerce…
38
Discounters – the march continues (?)…
0
50
100
150
200
250
300
350
400
450
Hypermarkets &Superstores
Supermarket &Neighbourhood
Discount Convenience &Forecourt
Drugstores Cash & Carries
Sale
s (E
UR
bn
)
Western Europe: Total Banner Sales by Channel, 2008-2018f (EUR bn)
2008
2013
2018f
Note: f – forecast; Source: Planet Retail
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What exactly is a discounter?
Limited assortment, low prices and no services
“I am convinced that the two principles, that of small ranges
and low prices, cannot be separated.”
Karl Albrecht Aldi Founder & Owner
(1953)
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Discounters – the European Top 10…
Note: f – forecast; * part of Carrefour until 2011; ranked by 2012 sales. Source: Planet Retail
37.5 38.1
5.3
9.4 8.2
2.6 3.6 5.6
2.6 2.8
53.8
46.2
13.7 11.9
8.3 7.3 6.6 5.7 4.2 3.3
68.6
53.4
15.4 13.6
9.3
13.3
8.3 7.1
5.2 3.7
0
5
10
15
20
25
30
35
40
45
50
55
60
65
70
Schwarz Group Aldi Edeka Rewe Group Dia* JerónimoMartins
Reitan DanskSupermarked
NorgesGruppen Norma
Ban
ner
Sal
es (
EUR
bn
)
2007
2012
2017
Europe: Top 10 Discount Store Operators by Total Sales, 2007-2017f (EUR bn)
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A one-dimensional model is diversifying…
In the face of saturation and decelerating growth, discounters are having to change tact and adapt their business models….
Tactic 1
Tactic 2
Tactic 3
Shift in product mix towards freshness
Increased brand listings
Move towards convenience formats
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Shift towards freshness
Dia Fresh (Spain)
Penny (Germany, Czech Republic, Italy)
Instore bakery trial, Aldi Süd’s Hofer (Austria)
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Shift towards brand listings - Aldi
Rationale behind the brand additions:
Revitalising sales in saturated markets
Attracting more/new shoppers
Increasing average spend
Countering the success of its main rival, Schwarz Group’s Lidl
Part of a strategy to become a one-stop destination
Sales rank
FMCG brand company
Brand listings at Aldi*
Examples
1 Nestlé Nescafé in Switzerland
2 P&G Gillette in Austria
3 PepsiCo Pepsi in Slovenia
4 Unilever Lusso in Switzerland
5 Mondelez Toblerone in Germany
6 Coca-Cola Co. Römerquelle in Austria
7 ABInBev Stella Artois in the UK
8 Philip Morris Intl. Marlboro in Germany
9 L’Oréal Garnier Fructis in Hungary
10 Japan Tobacco Winston in Switzerland
Red: Recently added permanent listings (ca. 2010-2013) Broad brand portfolio, in most markets Limited brand portfolio, in selective markets Minor brand portfolio, in a small number of markets Ranking: OC&C Analysis for 2011, excluding regional meat companies. Source: Planet Retail.
Aldi: Brand listings of Top 10 FMCG brand companies
44
Move towards convenience formats – Aldi and Lidl
45
Grocery E-commerce – fad or the future?…
10%
7%
7%
27%
10%
8%
33%
31%
11%
13%
Source: Planet Retail’s Online Shopper Survey data.
Proportion of web shoppers who have made grocery purchases online.
46
The great unknown…
“We don’t know where the online train is going and how fast it is
running. I only know that we need to be on board.”
ALAIN CAPARROS CEO Rewe Group
Indicative of how many European grocery retailers currently feel.
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Still more questions than answers…
Who are the main key customer groups?
What are the geographic
implications?
What’s the impact on bricks and
mortar stores?
Am I just cannabilising
existing sales?
Can it ever be profitable?
Which is the best model –
store-picking or dedicated DC?
Home delivery or Click & Collect?
How do channels interract?
Am I just doing it because
everyone else is doing it?
48
Grocery E-commerce - ‘how not to do it’….
Grocery E-commerce may be high growth but it is not straightforward – it needs to be high profile and executed skilfully.
49
Grocery E-commerce – drive format…
The Drive concept is a blend between pure e-commerce and traditional bricks and mortar stores Click & collect, external to a store or as a free-standing unit.
50
Drives – different business models…. C
apit
al E
xpen
dit
ure
Order Capacity
Tesco operates “van sheds” on store car parks for shoppers to collect their groceries quickly by car.
Ahold in the US is experimenting with compact standalone Drives by their stores.
Metro Group’s Real integrated infrastructure alongside stores is the most common form of Drive to date.
Catalan retailer Bonpreu has invested heavily in a standalone Drive format, designed to secure a catchment area in its own right.
4. Key takeaways
52
Channel convergence…
C-STORES
HYPERMARKETS
DISCOUNTERS E-COMMERCE
Big Box servicing online home delivery, Click & Collect, Drive formats.
Hypermarkets opening dedicated discount areas and formats.
Discounters opening more convenience-based formats.
C-stores deployed as E-commerce fulfillment outlets.
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Change is the only constant…
• European retail markets are undergoing substantial change
• Suppliers need to evolve to move with retail change • Polarity of maintaining volumes and driving margin
• Different strategies for different channels (and markets, retailers)
• Retailers will be looking to suppliers to help them through change • Key watchwords – FLEXIBILTY AND COLLABORATION.
Thank You
55
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