Adria Retail & Whole- sale – operational and integration excellence across the region Investor Days Zagreb, September 2015 0
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. 1
The Adria Retail & Wholesale group that Konzum and Mercator represent today has taken an impressive development path Mercator integration >1,900 stores ~1,000,000 m 2 >40,000 employees Private label & loyalty card launch 2002 180 stores 2014 Web shop 19,000 m 2 launch 3,000 employees 2006 1994 Velpro C&C launch 2001 MultiPlusCard First store opening introduction 1957 2010 Serbia and BiH Historical Entire Croatian market entry market coverage 2005 development 2000 2
With this impressive development, we have become a preeminent retailer in Southeast Europe and the #1 in all our core markets 2013 sales in SEE 1 , EUR m Southeast Europe (SEE) 9,044 SLOVENIA Schwarz Group CROATIA 6,025 Agrokor Retail + Mercator BOSNIA & H. 4,736 COOP Euro SERBIA 4,374 Rewe Group Core MNG 4,365 Tesco markets 3,917 Metro Group 3,491 Delhaize Group Key features 3,303 CBA of core markets 3,151 Agrokor Retail 2,873 Mercator Dynamic market with 18.5 m inhabitants and GDP of EUR 137 bn Carrefour 2,824 EU integration path driving growth Fragmented retail market with further retail SPAR 2,428 grocery market growth expected Common cultural heritage (consumption trends, ex-Yugo consumer brands) 1 Based on estimated banner sales in 2013 owned or operated by the group including VAT, Tourism segment growth (Croatia, franchised operations and partly owned stores / chains, with the exception of Mercator and Montenegro, in particular) Agrokor Retail which are as reported; Source: Planet Retail 3
In our core markets, we serve more than 1,200,000 customers daily across our diverse retail and wholesale formats SLOVENIA EXAMPLE EXAMPLE CROATIA SERBIA BOSNIA & H. MONTENEGRO EXAMPLE EXAMPLE EXAMPLE 4 Data of full year 2014
Retail – we are the leading retail player in the Adriatic region with a strong footprint across all our countries of operation 32% market share #1 476 stores 15% market share 321 stores 230,000 m 2 SLOVENIA 220,000 m 2 Population of 2.1 m CROATIA #1 Population of 6.9 m #1 SERBIA BOSNIA & H. #1 30% market share MONTENEGRO 705 stores #1 350,000 m 2 Population of 4.3 m 21% market share 22% market share 258 stores 99 stores 125,000 m 2 30,000 m 2 Population of 0.7 m Population of 4.6 m 5 Data as of June 30, 2015; market shares from GFK (Croatia, Serbia), Valicon (Slovenia) and internal estimates (other countries)
Wholesale – our 55 cash & carry centers reach more than 17,000 customer sales points across the region SLOVENIA 130,000 m 2 sales surface CROATIA 55 wholesale centers SERBIA 17,000+ sales points (retail, HoReCa) BOSNIA & H. 3,000+ dedicated PL products MONTENEGRO 350 Transport vehicles 1,000,000+ Deliveries every year 14 mn Fleet km per year 6 Data as of 30 June, 2015
Across the region, we pride ourselves in operational excellence in several areas that are key success factors for our business KEY SUCCESS LEVERS CDIS/ Store logistics con- integration solidation in excellence Skilled and region dedicated employees Quality focus Corporate social Distinctive responsibility private label Operational Customer service and Tailored local excellence care & regional products Innovative Rich experience and Leading Price store perception customer expertise, and leading formats d focus loyalty ma- practitioners across all nagement core business areas ensure superior Leading manage- Synergies with operations and a unique ment competencies Agrokor group customer experience 7
Speed and professionalism with which Mercator stores were taken over and integrated is best practice in European retail EXAMPLE Integration excellence Speed and rigor with which Mercator stores were successfully 8/9/2014 integrated is best practice in European retail Operational excellence 9/9/2014, 9 am 8
Within just 3 weeks 73 stores have been rebranded and converted to Konzum systems and operations successfully 92% EXAMPLE Loyal customers 71% Activities kept Users trans- ▪ Rebranding – in-store fered Completed & external Successful, smooth ▪ IT systems ▪ 73 stores transition of Pika user ▪ Central distribution base and loyalty ▪ 1 warehouse ▪ Replacement of PL ▪ 2 wholesale centers products EXAMPLE ▪ Customer loyalty data ▪ 1.515 employees base integration ▪ 133,953 m² ▪ Education & mentoring ▪ Turnover EUR 250 m teams Welcome packs, employee education, mentoring teams, inventory teams, IT support teams Operational 3 weeks Kick-off 9/9/2014 excellence 9 Data as of June 30, 2015
Performance of reflagged Mercator stores has seen substantial lift under the new Konzum concept in Croatia Turnover of ex-Mercator stores L-F-L Turnover uplift L-F-L Refurbished Store 1 ++++ Before After Store 2 +++ integration integration Store 3 +++ Store 4 ++ Store 5 ++ Turnover uplift L-F-L Rearranged Store 1 ++ Store 2 ++ Jun- Oct- Jan Feb Mar Apr May Jun Jul Aug Store 3 ++ Aug Dec Store 4 ++ Store 5 ++ Operational excellence 10
We have the highest share of central distribution in the region and keep consolidating further across countries successfully 700+ owned and partner transport vehicles 24+ million km with owned vehicles ~5,500 delivery points 25,000+ SKUs 3,000+ employees 380 ~7 million transport units picked and delivered Transport vehicles 279,000 m 2 Warehouse area 85% Operational Central distribution excellence share 11 Data of full year 2014
Highest product quality and standards are our priority and are continuously monitored and controlled 130+ Manufacturing 35,000+ plants audited yearly Quality controls every year Operational excellence 12 Data of full year 2014
We have the most innovative and highest product quality standard private label assortment across the region 21% PL share of turnover 7,000+ EXAMPLES Private label products across 600+ the region SLOVENIA New products CROATIA developed Highlighting benefits every year 17% BOSNIA & H. SERBIA 11% 12% MONTENEGRO Guaranteed satisfaction and controlled quality 20%+ cheaper than A-brand Controlled & constant quality Guaranteed satisfaction Operational Declaration that can be trusted excellence Local/regional Innovative & inspirational 13 Data of full year 2014
We cater to the distinct tastes and requirements of our diverse local markets through local and regional assortment ~9,600 Local traditional 69 SKUs Cities covered across 10 administrative units Example Bosnia & Herzegovina BOSNIA & H. Operational excellence 14 Data of full year 2014
Price perception is one of our key focus areas and supported through well-designed and targeted customer promotions 5,000 Very high brand awareness products are on across the region (Konzum, promotion every Mercator, Idea, Roda) day, delivering high customer Aggressive leaflet distribution value 75% of shoppers use leaflet as primary source of information Operational excellence 15 Data of full year 2014
Our distinctive loyalty card offering is our comparative advantage vs. other retailers in the region Great source of insight about 3m our customers 63% turnover covered by loyalty card +180% 12,000,000+ mailings every year 1m Strong coalition partners Thereof awarded 1m per quarter 2,900,000+ 0.4m Members to our 2012 2014 loyalty system Operational excellence 16 Data of full year 2014
We continuously innovate new store formats and features to ensure continuously improving experience for our customers Example small store format "Neighbour" (Slovenia) ▪ Regular screening of global Cross- format trends and best practices country ▪ Ongoing customer research for Format innovation format demands and development Operational ▪ Cross-country co-operation in excellence new format development 17
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