Last year was a transformative one for Rewe Group’s Austrian business, with the finalising of a new company structure, Billa Merkur Österreich (BMÖ). As the head of its property division, Robert Nagele, tells ESM, more changes are on the way. This article first appeared in ESM Issue 1 2021.
Even through difficult times, the wheels of industry don’t stop turning, and while the year 2020 was an unprecedented one for Billa and Merkur – the two banners that, between them, comprise Rewe Group’s Austrian supermarket operations – it also saw the completion of a restructuring process that should leave the business better positioned to navigate the challenges of the future.
As of last summer, the business is now formally known as Billa Merkur Österreich (BMÖ), following three years of integration across purchasing, merchandising, property and other areas – with price reductions, a wider product selection, combined loyalty services, better regionality and faster decision-making among the benefits.
Rewe’s Bipa and Adeg remain as separate entities, as does the discounter Penny, which continues to operate autonomously.
The new organisation also has a new-look board. Rather than seven board members, as was the case in the past, there are now five, each with responsibility for a particular aspect of the business. Among these is Robert Nagele, who marks a quarter-century at Billa this year (he joined the retailer in 1996) and most recently served as executive board spokesperson.
Nagele heads up the property division at the new-look BMÖ, and, as he tells ESM, the restructuring has helped the business become more competitive.
Embracing Efficiency
“As often occurs when two companies merge, we have been streamlining a lot,” Nagele says. “We were basically operating as two companies within one company – we had two departments for this, and two departments for that – so we had to look for ways that would enable us to become more efficient. Also, rather than having two businesses that essentially competed against each other, how could we work collaboratively to take on our real competitors elsewhere in the market?”
With a broad store portfolio (more than 1,200 outlets, excluding Bipa, Adeg and Penny), as well as burgeoning online and digital businesses, Nagele admits that developing a more collaborative approach has been “quite a challenge”, although some benefits are beginning to materialise.
“At Billa, we have had to take advantage of the quality-focused approach of Merkur, and at Merkur, we have sought to build in the price-focused metrics of Billa,” he says. “In the grocery business of today, you have to offer both. We have to offer reasonable prices, but also good-quality products, fresh counters, bakery services, and so forth.”
While the COVID crisis added an extra frisson of complexity into the transition process, it did enable BMÖ to consolidate its focus on future growth areas, such as e-commerce.
“At the beginning of the crisis, we put people first – it was very important for us to ensure our customers and employees were safe in our stores,” says Nagele. “Of course, it was a new challenge for us to adjust to the new shopping habits, particularly hoarding activities, and there was a lot of pressure on some of our stock levels. We adapted our business plans accordingly during the pandemic. Of course, there were some specific fields that we had to adapt.
“It was important to expand the capacity of our delivery services, including expanding the number of stores that offered click-and-collect.”
The pandemic didn’t slow the pace of new-store openings and refurbishments either, with some 35 new stores opened last year, as well as 60 refurbishments. “Because of lockdowns, we lost about two months, so we had to try to squeeze all the projects into a tighter time frame to fulfil our targets,” Nagele says, “but we did quite well, and we’re on track to achieve the same targets this year.”
Updated Offer
One of the grandest new unveilings of the past year was a new flagship Billa store at Vienna’s historic Michaelerplatz, which opened on the site of the city’s former Café Griensteidl. An ambitious project set across two levels, the store incorporates a lot of design elements that it will seek to roll out across the rest of its store estate, such as a broader fresh assortment.
“The building once housed the most famous coffee house in Vienna, which was popular over the years with poets and other bohemians,” says Nagele, “so it was important to maintain this special atmosphere while also bringing in some new design elements.
“At Billa, as we refurbish our stores, we are looking to give more space to the really important departments, such as fresh produce and chilled, while also making them more convenient for shoppers. I think that the pandemic will make social distancing part of customer shopping habits – people will be more likely to visit stores where they have more space to move around, rather than stores that are really crowded.”
Sustainability is also a central pillar at BMÖ – the group has set a 2030 deadline to achieve carbon neutrality. Allied to this, another core focus area has been a ramping-up of the amount of product purchased locally, particularly meat products, something that has become “even more important” to customers due to the pandemic.
“When it comes to saving energy and reducing CO2 emissions, this is a very important part of what we do at the real-estate division,” says Nagele. “We only use green energy from Austria, both hydroelectric and wind power, and we have installed heat-recovery systems and LED lighting in our stores. About 10% of our stores are climate neutral, and, compared to 2008, we have reduced our CO2 emissions by around 50%. That’s a really big step in a short space of time.”
Shopping Habits
These factors, coupled with the additional benefits of BMÖ’s new collaborative mindset, leaves the business well positioned to transverse what is likely to be a challenging year or two ahead, as a pandemic-influenced ‘new normal’ emerges.
“As we went into the pandemic, consumer habits switched from one day to the next, and I think it will take a long time for them to switch back to the way they were,” says Nagele. “For example, one trend is that shoppers are visiting stores fewer times, but buying more. As we work more from home, there is less demand for food to go, and I think it will take a long time for the food-to-go market to be at the same level as it was in 2019, but, overall, I’m very positive and optimistic.
“I know that we will have challenges because of the economic situation – a lot of people and small businesses will be hit really hard. I think we will see a trend of more price-focused customers for a time, but I’m optimistic that it will be a really good year for us.”
© 2021 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: The European Supermarket Magazine.
