Valora leverages global convenience trend
Swiss retail company Valora’s strategy is aligned with the global mega trends for convenience and out-of-home consumption and it’s reaping the rewards. Fiona Briggs reports
Valora is enjoying its time in the sun. The Swiss retail company has evolved from a conglomerate of formats and services to become a focused convenience and food service player.
“We have a clear direction and strategy as a retailer with small outlets in the convenience and food service area in high frequency locations,” explains Christina Wahlstrand, head of corporate communications & branding at Valora. “The global mega trends for convenience and out-of-home consumption fit in with our strategy.”
Valora runs a network of approximately 2,800 convenience and food service outlets in mainly Switzerland, Germany, Austria, Luxembourg and the Netherlands.
It operates a portfolio of strong retail brands including k kiosk, Brezelkönig, BackWerk, Ditsch, Press & Books, avec and Caffè Spettacolo. Valora is also one of the world’s leading producers and wholesalers of pretzel products and operates a highly integrated bakery-products value chain in Germany, Switzerland and the United States. Around 15,000 people are employed within Valora’s network. The Group, which is headquartered in Muttenz, Switzerland, is listed on the SIX Swiss Exchange and generates external sales in excess of CHF 2.7 billion per year.
Valora’s positioning is spot on. As in other worldwide markets, households in the German-speaking part of Europe are getting older and smaller. “As the population gets older, consumers don’t need to do big shopping trips, while younger consumers eat out of home more often, so that really drives the convenience sector,” says Wahlstrand.
Factor in Valora’s sites at high traffic locations and transport hubs, then the picture gets even rosier.
“Rail, air and bus travel will continue to grow and we are right at those locations with our point of sale,” states Wahlstrand.
In September 2017 Valora strengthened its presence in the food service arena with the acquisition of BackWerk, Germany’s leading self-service snacking concept.
Valora billed the move as a landmark acquisition in out-of-home snacking. BackWerk operates over 340 stores with over 300 sites in Germany across all 16 states. According to Wahlstrand, the acquisition has bolstered Valora’s presence in Germany to more than 1,500 retail and food service shops and created Germany’s number one snack provider.
BackWerk is one of the leading franchise platforms in Germany with sites at diverse locations including rail and inner city locations, which Valora plans to leverage. The brand has also travelled. BackWerk has 21 stores in six cities in Austria, 13 stores in eight cities in the Netherlands, four stores in Slovenia and two in Switzerland.
Each of the before mentioned brands enjoys a unique positioning and there’s a clear focus for each of the retail and food service formats, Wahlstrand reports. Behind the scenes, however, various back office functions take responsibility for multiple formats across retail and food service in order to maximise synergies. “There’s potential there to become even more efficient,” Wahlstrand adds.
Retail and Food Service pillars
Valora’s value proposition is founded on two key pillars: Valora Retail and Food Service. The Retail pillar spans small retail outlets, selling convenience products through a network of standard format sales points, at high traffic locations and transport hubs; while the Food Service pillar is focused on an out-of-home food consumption offering, modern outlet networks and a broad customer base.
What also sets Valora apart is its strong focus on value chain ownership and vertical integration, says Wahlstrand.
For Valora Retail that includes own brands such as ok.- plus financial services offers.
On the Food Service side, besides the out-of-home food offering Valora is focused on the production and sale of pretzel products – it produces approximately 600m pretzels per year across four production facilities. The company’s pretzel factories, meanwhile, increasingly also produce products for Valora’s other formats, strengthening the value chain and providing further competitive edge. And these products are also sold to other clients worldwide via Valora’s wholesale channel.
In the meantime, Food Service has become Valora’s actual area for growth, both organically and through acquisitions, Wahlstrand says and continues: “The convenience market across Europe is consolidating and we are an active player in that consolidation. However, core business in traditional retail categories like press and tobacco is challenging, Wahlstrand reports. Consequently, there’s a fresh focus on driving efficiencies and innovation such as leveraging the company’s vertical integration and own brands. As an example Valora is utilizing its expertise in coffee and has introduced coffee modules into retail formats. In Switzerland, for instance, it has rolled out coffee modules to 700 of its stores and is beginning a similar initiative in Germany. Similarly, Valora is leveraging its ok.- own brand, which spans a range of products including energy drinks, water, muesli bars, nuts and small snacks as well as umbrellas. “It’s a range of products that are very handy and targeted at younger people. It provides a competitive advantage because you can only get it in our own stores so it differentiates us from other formats,” explains Wahlstrand.
Digitalisation improves customer experience
Innovation increasingly revolves around digital, Wahlstrand adds. Recent initiatives include the launch of the k kiosk mobile loyalty app, which won Valora the NACS 2017 European Convenience Retail Technology Award
“The whole digital aspect is key and we need to make use of the digital opportunities to make operations more efficient and to enhance the shopping experience for our customers,” Wahlstrand-Hartmann says. “Digital plays a key role for consumer analytics, she adds. They help to drive customer benefits.”
Innovation is underpinned with a dedicated lab team located in Switzerland and at an outpost in San Francisco, which enables Valora to focus on digital opportunities that are new to the market. Recent developments include a new app, which provides customers with a pre-order, pay and pick up solution for coffee for the Caffè Spettacolo coffee shops.
In addition, Wahlstrand reveals Valora has just launched the beta test on a auto-replenishment button for energy drinks, under its ok.- own brand. Similar to the Amazon Dash concept, the button will enable users to bulk purchase a large number of energy drinks for delivery to an office location, for example.
In Food Service, meanwhile, the Valora lab has launched a chatbot for its pretzel brand in Switzerland, which gives consumers access to nutritional facts and ingredients etc.
Network of over 2,800 stores
With its significant store network, Valora is capitalising on its accessibility too. “We are looking to create partnerships with other companies to make use of this strong network,” Wahlstrand says. Once again, digital is providing a helpful solution. Stores can provide a ‘pay at kiosk’ solution for online orders and services like concert tickets. Plus customers can use Valora locations to pick up and drop off parcels.
Valora has been fine tuning the avec format too. According to Wahlstrand, the company has worked on the concept and made it much fresher. Sandwiches are made locally at avec stores, for instance. “There’s a consumer trend to have healthy and fresh food,” she reports. In Switzerland Valora has just opened two stores with an enhanced fresh product offer. “That’s the direction we are going in with this format,” Wahlstrand reports.
The requirement for freshly prepared food is a Europe-wide one and can be seen in the development of the BackWerk business, which has transitioned from being a discount bakery to a business with a strong out-of-home focus providing ‘feel good food’ and innovative, trendy out-of-home products; which can either be eaten in the shop or on-the-go.
Integrating the BackWerk operation and maximising the growth potential the acquisition has brought will be key for Valora going forward, reports Wahlstrand.
The business is also expanding its production capacity in food service in tandem in order to meet the growing demand for pretzel products.
It seems as though Valora has a lot of plates spinning but critically they are either retail or food service focused.
“We are well positioned as a business by focusing on these two areas – the direction is very clear,” Wahlstrand concludes.
Within Retail and Food Service, Valora has a wide-ranging portfolio of brands.
The Retail division comprises:
• k kiosk, the leading kiosk and convenience operator at heavily frequented sites in Switzerland, Germany and Luxembourg. It is the market leader in tobacco, print and lottery products with an expanding take-away and food offering.
• Press & Books, which features a broad press and book offering, complemented by a range of traditional categories such as tobacco, lottery, confectionary; as well as food and beverages.
• avec, a convenience format with a growing range of fresh and regional products.
• ServiceStore DB, convenience stores sited at German railway stations providing commuters with a range of daily staples.
• Cigo, a specialist tobacco retailer with complementary offering of press titles and relevant services.
The Food Service division comprises:
• Ditsch, the leading manufacturer of pretzel specialties and fast food snacks in Germany for the B2B and B2C markets, as well as an operator of its own B2C network.
• Brezelkönig, a dedicated outlet network selling a unique range of high-quality pretzel products in Switzerland
• Brezelkönig International, the brand established for international expansion of the Brezelkönig format through a franchise network
• Caffè Spettacolo, an Italian-themed coffee-bar concept operating dedicated outlets plus modules within other Valora formats.
• BackWerk, Germany’s biggest self- service bakery with a broad and flexible food assortment in snacking.