From Bulgaria to Hungary - Retail International has a strong presence in Europe with BILLA, ADEG, PENNY, BIPA and IKI, among others. In the one_Interview, the responsible REWE Group Management Board member Jan Kunath talks about Agenda 2025, sustainable growth and the top priorities for his department in 2023.
one: Mr Kunath, you are responsible for international business - Retail International - on the REWE Group Management Board. How important is Retail International for REWE Group?
Jan Kunath: Retail International is an essential pillar of our Group. With REWE International, based in Austria, and eight other national companies, we have extremely powerful units that make an important contribution to earnings. In recent years, Retail International has accounted for around 23 per cent of Group turnover and 33 per cent of earnings - and the trend is rising.
Our national companies are innovative and try out a lot. This often works well in smaller organisations because they can get up and running more quickly with less complexity. Or take a look at how diverse the management team is, with a significantly higher proportion of women and different nationalities. Against the background of these intercultural influences and the economic importance for the Group as a whole, Retail International is an indispensable part of the Group.
one: Then let's categorise this again: Can you give us an overview of Retail International?
Jan Kunath: Gladly: We currently have 95,000 employees in nine countries. Our 4,500 locations generate net revenue of around 17 billion euros - we have countries that generate over four per cent EBITA. Retail International is active in nine EU countries. So much for the pure figures. We have a very long tradition in some of these countries. Austria is REWE Group's second home market. The Czech Republic - where we have been operating for 30 years - is the third home market. As you can see, we are also deeply rooted there.
We manage our international business with three operational business units: Full-range Austria is responsible for BILLA, BILLA PLUS, ADEG, the specialist drugstores BIPA including BIPA Croatia. The full-range CEE business unit combines BILLA in the Czech Republic, Slovakia, Bulgaria and IKI in Lithuania. PENNY International is responsible for the international discount business in Italy, Austria, Romania, the Czech Republic and Hungary. We have combined the administrative units, such as IT, Logistics, HR, Finance, Business Administration, Project and Process Management, in the "International Business Solutions" unit.
one: The overall strategic direction of Retail International has been summarised under "Agenda 2025" - what can we expect from this?
Jan Kunath: We are also pursuing a long-term, sustainable growth strategy in our EU markets. To this end, the first step we took a few years ago was to streamline our portfolio to include the markets in Ukraine and Russia.
In addition, the maximum customer focus is also at the centre of all our considerations internationally. We always adapt our strategy, for example with regard to our brands, to the needs of the respective country. In practice, this means that we do not have a standardised concept that we impose on the markets in our national companies. Instead, we take a close look at what consumers want in each country and tailor our product ranges and activities accordingly. At the same time, we leverage synergies wherever possible and scale up wherever possible in order to utilise potential parallels to our mutual advantage.
one: Sustainability means growth in concrete terms?
Jan Kunath: We have established a good market position in every single country. We cannot and must not rest on our laurels. We will base our focus on customer needs on three pillars: Brand strengthening, growth in our core business and organic growth through targeted acquisitions.
We are well on the way to strengthening our brand: the first BILLA stores managed by retailers have been launched in Austria. This is a major step forward and will strengthen our position there. In the Czech Republic, we have really stepped on the gas with PENNY and have now established the broadest store network there with more than 400 shops and thus a strong brand. We are pursuing this goal in all countries in which we are active with PENNY. The BILLA and IKI brands have already all been repositioned on a country-specific basis.
By growth in our core business, I mean our activities in food retailing, food wholesaling and specialised drugstore retailing. The Czech Republic is also a good example here, as we will now be launching a delivery service there thanks to our investments in digitalisation. These are business area expansions that will strengthen our core business in the long term.
In Romania, on the other hand, we will grow organically, invest in our store network and double our stores by 2029 with the aim of exceeding the three billion sales mark there - 30 new stores will be opened in 2023 alone. In Lithuania - an incredibly interesting country in terms of digitalisation and start-ups - we will invest in a platform that offers solutions for the last mile of delivery. So we are taking a very close look at how we can invest and develop in which national company and, incidentally, we are also investing a considerable amount of money for this with a total investment volume of five billion euros from 2020 to 2025.
one: And what goals are you pursuing in international business?
Jan Kunath: Our goal is to break the 20 billion euro revenue barrier by 2025. This does not yet include the results of the independent ADEG retailers. And we also want to strengthen our international result: Each of our countries should achieve above-average EBITDA growth of two and a half to three per cent. The average in the European food retail sector is around two per cent. Our aim is to achieve, maintain or even expand a qualified market position in every country in which we operate. We want our international business to continue to make a substantial contribution to Group earnings in the future.
one: 2022 was a challenging financial year with inflation, the energy crisis and much more. How did Retail International fare in this environment?
Jan Kunath: Despite all the challenges, we reliably stayed on course in all countries and responded to customer concerns and market conditions on a country-specific basis. In Austria, for example, we have taken an important strategic step towards maximising our customer focus with the BILLA merchant model. PENNY International and BILLA CEE should also be emphasised, as they achieved very good results last year.
one: And what are your department's top priorities for 2023?
Jan Kunath: The challenges won't get any smaller this year either, but we will continue to consistently pursue our goals in our international business and continue our investment offensive. We want to continue to fly the international flag for the Group, as well as for toom Baumarkt DIY store, a sometimes underestimated "exotic", but an important part of the Group as a speciality store. toom makes a decisive contribution to a significant non-food volume in procurement. 80 per cent of the business in Asia is generated from the DIY store volume. Therefore, contrary to some speculation, this division is certainly not for sale. That's why it's important for me to strengthen toom Baumarkt DIY store as a relevant part of the Group again in the coming years.
one: A good keyword - what advantages do you expect from the new departmental structure of the REWE Group Management Board for the international business?
Jan Kunath: The new structure enables us to work together more closely across the board - in both directions. At the same time, we have to be careful not to further increase complexity within the Group. Overall, the new structure offers many advantages and opportunities for international business and for Germany. The exchange benefits everyone. Retail International can now make even greater use of the know-how and expertise of specialist groups in Germany in the new structure - and the same applies the other way round. We are now creating the structures for closer dialogue on an equal footing and will learn a lot from each other.
one: Thank you very much for the interview!
Episode 2
"Frankly speaking" - the talk with the Management Board
In January, our newly formed Management Board took over the management of REWE Group in what continue to be turbulent times. Ines Schurin, Head of Corporate Communications, spoke to the Management Board members about their strategy, what it takes to work together and how we can remain competitive despite all the challenges in the new video format "Offen gesagt" over a hot drink of their choice.
And this is the last episode:
- 22. March Telerik Shishmanov, Management Board member for Finance
All previously published episodes of "Offen gesagt" are now available in the one_Mediathek.
Both German and English comments appear here.
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