Tomislav Jukić

Agrokor: The New Age in Grocery Retail

Croatia on the map

Agrokor Retail business

KonDOR over time

OR Competency Center

Recent Developments

Agenda

Croatia on the map

Agrokor Retail business

KonDOR over time

OR Competency Center

Recent Developments

4

‘A Small Country for a Great Holiday’ #CroatiaFullOfLife

5

The Mediterranean As It Once Was

Croatia on the map

Agrokor Retail business

KonDOR over time

OR Competency Center

Recent Developments

7

Strategic decision to cover the entire Croatian market

180 stores

19.000 m2

3.000 emp

1.000 stores

520.000 m2

19.000 emp

First store opening

2014

Mercator integration

1.900 stores

950.000 m2

39.000 emp.

Historical Development

8

1 Market share excluding hard discounters (Hofer, Lidl) 2 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 Konzum which are as reported. SEE defined as Albania, B&H, Bulgaria, Croatia, Greece, Macedonia, Montenegro, Romania, Serbia, Slovenia. 3 Includes Croatia, Slovenia, Serbia, Bosnia, Montenegro

#1

#1

#1

#1 #1

2013 sales in SEE2, EUR m

Key features of the Adria market

▪ Dynamic market with GDP of EUR 137 billion3

▪ EU integration path driving acceleration in growth

▪ 18,5 million inhabitants3

▪ Fragmented retail market

▪ Retail grocery market growth expected

▪ Common cultural heritage, i.e. consumption trends, ex-Yu consumer brands

▪ Tourism segment growth – Croatia, Montenegro....

Metro Group 3,917

Tesco 4,365

Rewe Group 4,374

3,303

Delhaize Group 3,491

CO OP Euro

Konzum + Mercator

6,025

4,736

Schwarz Group 9,044

2,873

CBA

3,151 Konzum

Mercator

SPAR

2,824 Carrefour

2,428

Slovenia Mercator

Croatia Konzum + Mercator

Bosnia & Herzegovina Konzum + Mercator

Montenegro Mercator

Serbia Konzum + Mercator

Market share

33%/40%1

31%/35%1

23%

13%

14%

Total sales, EUR bn

1.7

2.5

0.5

0.1

1.1

The Largest Retailer in The Adria Region

9

More than 1.200.000 customers daily!

Multibrand & Multichannel

Floor space in m2 934.000

Number of stores 1.894

Total

10

Innovative services

Croatia on the map

Agrokor Retail business

KonDOR over time

OR Competency Center

Recent Developments

12

WHY? Legacy Supply Chain Management system

• Heavily customized

• Weak support

• Impossible to improve/develop

• Old technology – mainframe, green on black

Motivation and Goals

WHAT? HOW? • Get the basics first – master data, transactions

• Wholesale – custom development

• Vanilla approach – avoid modifications

• Change/improve business processes

• A small SI, for a personal approach

• KNOWLEDGE TRANSFER & ENABLEMENT

13

Oracle Retail Footprint

Business Operations Merchandise Operations Cost & Deal

Mgmt Pricing Mgmt

Purchasing Import & Trade

Mgmt

Sales Auditing Invoice

Matching

Inventory Mgmt & Valuation

Promo Price Optimization

Markdown Price Optimization

Space Profiling Regular Price Optimization

Item Planning Category Mgmt Macro Space Space

Compliance

Merchandise Financial Planning Assortment Planning

Store & Multi-Channel Operations

Supply Chain Planning

Point-of-Service Store Inventory

Mgmt

Returns Mgmt Workforce Scheduling

Order Management

Warehouse Mgmt Transportation Mgmt

Home Delivery

Inventory Planning Value Chain Collaboration

Demand Forecasting Allocation

Supply Chain Execution

Replenishment Replenish Optimization

Sourcing & PLM

Mfg

PLM

Sourcing

14

Discovery

2008-2009

• GAP Analysis

• Modules evaluation

• Legal requirements

Phase 1:

2010-2011

• Master Data

• Retail

• Items, stores, item ranging, prices, promotions

• Wholesale

• Customers, contracts, pricelists

Phase 2:

2012-2014

• SOH & Transactions

• Retail

• Oracle Retail Sales Audit, Oracle Retail Invoice Match, Retail Trade Mgmt, RMS for SOH and transactions from stores

• Wholesale

• Customer orders, shipments, invoices, credit/debit notes

Phase 3:

2015-2017

Konzum Deploys Oracle Retail

• RDF

• AIP

• CatMan

• RO

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• If it's vanilla – it works! (most of the time)

• If it's a modification – patching and bug fixing (will never end)

• Change Management – the most important part of the project

• An SI will NOT solve your problems – you have to do it yourself

• Project team – only take the best (NO BUTS!) and cherish them!

• Manage expectations (Design vs. Reality)

Lessons Learned

Paper documents

Phone

Mail Archiving

Legacy system

Paper documents

Phone

Mail Archiving

Oracle Retail Paper

documents Phone

Mail Archiving

Oracle Retail

Design

Reality

Croatia on the map

Agrokor Retail business

KonDOR over time

OR Competency Center

Recent Developments

17

mStart – A Digital Transformation Partner

• ERP

• Analytics, DWH/BI

• DMS

• CRM

• EDI

• eCOMM/mCOMM

• PSP

• Cloud/SaaS

• Datacentre/PaaS

Initially: A Consolidated Shared Services Center

Revenue FTE EBITDA

18

ORCC Organization and Competencies – AS IS

Competency mStart Konzum SI

RMS (Phase I)

RMS (Phase II)

RPM

ReIM

ReSA

KWS

Modifications

(incl. Legal)

Weblogic

OSB

Interfaces (incl. RIB)

System monitoring

& night chain

Database

Hardware & OS

Ap

plic

atio

ns

Inte

grat

ion

Ho

use

keep

ing

Proficiency

level / capacity

Good

Medium

Poor

19

ORCC Organization and Competencies – TO BE

Proficiency

level / capacity

Good

Medium

Poor

Competency mStart Konzum SI

RMS (Phase I)

RMS (Phase II)

RPM

ReIM

ReSA

KWS

Modifications

(incl. Legal)

Weblogic

OSB

Interfaces (incl. RIB)

System monitoring

& night chain

Database

Hardware & OS

Inte

grat

ion

Ho

use

keep

ing

Ap

plic

atio

ns

Don’t forget to

them!

20

Roll-out Plan

2016 2017 2018

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

▪ RDF

Croatia

▪ CatMan

▪ RO

▪ AIP

Serbia

▪ Phase 3

▪ Phase 2

▪ Phase 1

SCM Slovenia

Bosnia

1.3.

10.4.

▪ Phase 3

▪ Phase 2

▪ Phase 1

Croatia • Total Budget 20,0

• SI 85% (= 17,0)

Bosnia • Total Budget 3,0

• SI 30% (= 0,9)

Croatia on the map

Agrokor Retail business

KonDOR over time

OR Competency Center

Recent Developments

22

Main activities

► IT systems

► Rebranding - in-store and external

► Mentoring teams - support for each store

Kick-Off - first inventory 09-09-2014

► Customer loyalty database integration

► Replacement of PL products

► Central distribution

Week 1 Week 2 Week 3

29 STORES

22 STORES

22 STORES

1 warehouse

1.515 employees

133.953 sqm

TURNOVER - 250 mil EUR

73 stores 2 wholesales

Integration of Mercator in Croatia (9/2014)

‘Think Fast, Talk Fast, Act Fast!’

23

KonzumKlik (11/2015)

24

KonzumKlik (11/2015)

25

Abrakadabra.com (4/2016)

The 1st 9 months

• Non-food

• Retail and Marketplace models

The next 9 months

• Regional expansion

• C2C model

• ENABLEMENT

26

The Big Question…

Can a € 5 Bil. Company beat a € 100 Bil. Company?

27

The Answer…

I don’t know, but I know it can fight!

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Thank you…

On Your Future Projects…