adria retail & whole- sale operational and integration ......15% market sharestores population...
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Adria Retail & Whole-sale – operational and integration excellence across the region
Investor Days
Zagreb, September 2015
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Disclaimer
This presentation does not constitute or form part of, and should not be construed as,
any offer or invitation to subscribe for, underwrite or otherwise acquire, any securities
of the Company or any member of its group nor should it or any part of it form the
basis of, or be relied on in connection with, any contract to purchase any securities of
the Company or any member of its group or any commitment whatsoever.
This document may not be distributed and may not be reproduced in any manner
whatsoever. Any distribution or reproduction of the attached document in whole or in
part is unauthorized. No representation or warranty, express or implied, is made as to
the fairness, accuracy, or completeness of the information contained herein and no
reliance should be placed on it. None of the Company, their advisers, or any other
person accepts any liability for any loss howsoever arising, directly or indirectly, from
the issue of this document or its contents.
This presentation includes certain forward-looking statements. Actual results could
differ materially from those included in the forward-looking statements due to various
risks and uncertainties, including but not limited to changes in business and economic
and competitive conditions, regulatory reforms, foreign exchange rate fluctuations,
uncertainties in litigation or investigative proceedings and availability of financing.
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Mercator integration
The Adria Retail & Wholesale group that Konzum and Mercator
represent today has taken an impressive development path
Historical development
First store opening 1957
Entire Croatian market coverage
2000
Velpro C&C launch
2001
Private label & loyalty card launch
2002
Web shop launch
2006
180 stores 19,000 m2
3,000 employees 1994
Serbia and BiH market entry
2005
MultiPlusCard introduction 2010
2014
>1,900 stores
~1,000,000 m2
>40,000 employees
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3,491
2,428
4,374
3,151
2,873
3,303
3,917
4,365
2,824
9,044
6,025
4,736
With this impressive development, we have become a preeminent
retailer in Southeast Europe and the #1 in all our core markets
1 Based on estimated banner sales in 2013 owned or operated by the group including VAT,
franchised operations and partly owned stores / chains, with the exception of Mercator and
Agrokor Retail which are as reported; Source: Planet Retail
2013 sales in SEE1, EUR m
Metro Group
Tesco
Rewe Group
Delhaize Group
COOP Euro
Agrokor Retail + Mercator
Schwarz Group
CBA
Agrokor Retail
Mercator
SPAR
Carrefour
Southeast
Europe (SEE)
Core markets
Key features of core markets
Dynamic market with 18.5 m inhabitants
and GDP of EUR 137 bn
EU integration path driving growth
Fragmented retail market with further retail
grocery market growth expected
Common cultural heritage (consumption
trends, ex-Yugo consumer brands)
Tourism segment growth (Croatia,
Montenegro, in particular)
BOSNIA & H.
SERBIA
CROATIA
SLOVENIA
MNG
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In our core markets, we serve more than 1,200,000 customers
daily across our diverse retail and wholesale formats
BOSNIA & H. SERBIA
CROATIA
SLOVENIA
MONTENEGRO
EX
AM
PL
E
EX
AM
PL
E
EX
AM
PL
E
EX
AM
PL
E
EX
AM
PL
E
Data of full year 2014
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Retail – we are the leading retail player in the Adriatic region with
a strong footprint across all our countries of operation
BOSNIA & H. SERBIA
CROATIA
SLOVENIA
MONTENEGRO
#1
#1
#1
#1
#1
321 stores
15% market share
Population of 6.9 m
220,000 m2
99 stores
21% market share
Population of 0.7 m
30,000 m2
258 stores
22% market share
Population of 4.6 m
125,000 m2
476 stores
32% market share
Population of 2.1 m
230,000 m2
705 stores
30% market share
Population of 4.3 m
350,000 m2
Data as of June 30, 2015; market shares from GFK (Croatia, Serbia), Valicon (Slovenia) and internal estimates (other countries)
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BOSNIA & H. SERBIA
CROATIA
SLOVENIA
MONTENEGRO
Wholesale – our 55 cash & carry centers reach more than
17,000 customer sales points across the region
55 wholesale centers
17,000+ sales points (retail, HoReCa)
3,000+ dedicated PL products
130,000 m2 sales surface
14 mn Fleet km per
year
1,000,000+
Deliveries every year
350 Transport vehicles
Data as of 30 June, 2015
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Skilled and dedicated employees
Corporate social
responsibility
Customer service and
care
Innovative store
formats d
Leading customer
loyalty ma-nagement
Price perception
focus
Tailored local & regional products
Distinctive private label
Quality focus
CDIS/ logistics con-solidation in
region
Store integration excellence
Operational excellence Rich experience and
expertise, and leading
practitioners across all
core business areas
ensure superior
operations and a unique
customer experience
KEY SUCCESS LEVERS
Across the region, we pride ourselves in operational excellence in
several areas that are key success factors for our business
Leading manage-
ment competencies
Synergies with
Agrokor group
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Speed and professionalism with which Mercator stores were
taken over and integrated is best practice in European retail
Integration excellence
Speed and rigor with
which Mercator stores
were successfully
integrated is best
practice in European
retail
EXAMPLE
8/9/2014
9/9/2014, 9 am
Operational excellence
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Within just 3 weeks 73 stores have been rebranded and converted
to Konzum systems and operations successfully
Completed ▪ 73 stores
▪ 1 warehouse
▪ 2 wholesale centers
▪ 1.515 employees
▪ 133,953 m²
▪ Turnover EUR 250 m
Activities ▪ Rebranding – in-store
& external
▪ IT systems
▪ Central distribution
▪ Replacement of PL
products
▪ Customer loyalty data
base integration
▪ Education & mentoring
teams
EXAMPLE
Successful, smooth
transition of Pika user
base and loyalty
EXAMPLE
Welcome packs, employee
education, mentoring teams,
inventory teams, IT support teams
3 weeks Kick-off 9/9/2014
71% Users trans-
fered
92% Loyal
customers kept
Operational excellence
Data as of June 30, 2015
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Operational excellence
Aug
May
Apr
Jul
Jun
Jun-
Aug
Mar
Feb
Oct-
Dec
Jan
Performance of reflagged Mercator stores has seen substantial
lift under the new Konzum concept in Croatia
Turnover of ex-Mercator stores L-F-L
Before
integration
After
integration
Turnover uplift L-F-L
Store 1 ++++
Store 2 +++
Store 3 +++
Store 4 ++
Store 5 ++
Turnover uplift L-F-L
Store 1 ++
Store 2 ++
Store 3 ++
Store 4 ++
Store 5 ++
Refu
rbis
hed
Rearr
an
ged
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We have the highest share of central distribution in the region
and keep consolidating further across countries successfully
25,000+ SKUs
3,000+ employees
~7 million transport units picked
and delivered
700+ owned and partner transport vehicles
24+ million km with owned vehicles
~5,500 delivery points
85%
Central distribution
share
279,000 m2
Warehouse area
380 Transport vehicles
Operational excellence
Data of full year 2014
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Highest product quality and standards are our priority and are
continuously monitored and controlled
130+ Manufacturing plants audited
yearly
35,000+ Quality controls
every year
Operational excellence
Data of full year 2014
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We have the most innovative and highest product quality
standard private label assortment across the region
BOSNIA & H. SERBIA
CROATIA
SLOVENIA
MONTENEGRO
600+ New products
developed every year
7,000+ Private label
products across the region
21%
17%
PL share of turnover
20%+ cheaper than A-brand
Controlled & constant quality
Guaranteed satisfaction
Declaration that can be trusted
Local/regional
Innovative & inspirational
11% 12%
Guaranteed satisfaction
and controlled quality
EXAMPLES
Highlighting benefits
Operational excellence
Data of full year 2014
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We cater to the distinct tastes and requirements of our diverse
local markets through local and regional assortment
BOSNIA & H.
69 Cities covered
across 10 administrative
units
~9,600 Local traditional
SKUs
Example Bosnia &
Herzegovina
Operational excellence
Data of full year 2014
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5,000 products are on
promotion every
day, delivering
high customer
value
Price perception is one of our key focus areas and supported
through well-designed and targeted customer promotions
Very high brand awareness
across the region (Konzum,
Mercator, Idea, Roda)
Aggressive leaflet distribution
75% of shoppers use leaflet as
primary source of information
Operational excellence
Data of full year 2014
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Our distinctive loyalty card offering is our comparative advantage
vs. other retailers in the region
2,900,000+ Members to our loyalty system
Great source of insight about
our customers
63% turnover covered by
loyalty card
12,000,000+ mailings every year
Strong coalition partners
1m
1m
+180%
2014 2012
0.4m
3m
Thereof
awarded
per quarter
Operational excellence
Data of full year 2014
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We continuously innovate new store formats and features to
ensure continuously improving experience for our customers
Operational excellence
▪ Regular screening of global
format trends and best practices
▪ Ongoing customer research for
format demands
▪ Cross-country co-operation in
new format development
Example small store
format "Neighbour"
(Slovenia)
Cross-country
Format innovation and development
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We offer distinctive customer service and care, adding to
innovative service models for our customers
Self-check-out
Gas stations
Utility fees payment
Web shop
Cash advance
Lottery service
Konzum app
2,800+ Customers talked to every day (by phone, e-mail,
Facebook) 5 hours
Average reaction time to customer’s
complaints
Operational excellence
Data of full year 2014
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Operational excellence
We take responsibility in the well-being of our local environments
and use unique approaches of local co-operation and support
30+ CSR
initiatives across the
region
Initiatives Covering local &
regional development, and social,
environment and sports
Examples Slovenia Example Serbia
Belgrade, new
town IDEA
Niš in your
heart
At the heart of
Banata
Sports – Red
Star
Basketball Federation of Serbia
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Skilled and dedicated employees are our strength, so we coach
and develop several thousand employees every year
Operational excellence
▪ Business
aligned hard &
soft skills training
▪ Succession
planning through
talent pool man-
agement tools
▪ Test store,
IT lab
35.000+ Participants
trained in 2014
THEY
DEVELOP
THEY
DEPLOY
THEY
DELIVER
Knowledge Challenge Execution
How our
people
learn Best business
schools
IMD IEDC
Best partners
and consultants
Internal know-
ledge academy
How our
people
operate
Our employees are the most
valuable part of our company.
They are our key market
advantage and the main initiators
of all our achievements
Ivica Todorić
President, Agrokor Group
We encourage
our teams in taking chances & making opportunities and
mistakes, not to wait and watch for outcomes
Every year we onboard high potentials & give
them opportunities to learn and trust to develop and
execute
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Continuous improvement We continuously develop
our product and service
offering further,
leveraging cross-country
talent, innovation, and
best practices
KEY FOCUS AREAS
Across the region, we continuously strive for excellence and
operational improvements
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Continuous product and service improvements –
Project “Vukovarska”
▪ New „business & family center”
in Zagreb
▪ 5.100m² sales area refurbished in
line with highest world standards
▪ Innovative interior design and a
completely new shopping experience
▪ Integrated pharmacy in retail space
▪ Largest toy department in Zagreb
along with playground
& diaper change room ▪ Sushi bar, pizza bar, pasta
bar, grill bar, fish bar,
coffee bar, salad bar,
dessert bar
▪ Shop & Touch buying
system
▪ New assortment range
▪ Attractive center tenants
Continuous improvement
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▪ Food & near food assortment
▪ 5.400m² of warehouse area
▪ Developing new webpage
design
▪ Customer satisfaction
– Freshness
– Service level
– Ordered – delivered
– On time
Continuous product and service improvements –
Project “Konzum Online”
Continuous improvement
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Adria Retail & Whole-sale – operational and integration excellence across the region
Investor Days
Zagreb, September 2015