Italian regional cooperative and retailer Coop Alleanza 3.0 closed 2018 with losses of €289 million, a significant increase on the €37 million loss the retailer posted a year earlier.
The result was impacted mostly by the negative performance of the group’s hypermarkets, which account for more than 50% of sales.
In the same period, revenues totalled €4.8 billion, in line with the previous year.
Action Plan
In an attempt to tackle flagging sales at its hypermarket operations, the management of Coop Alleanza 3.0 last year adopted a four-year Action Plan (2019-2022), which will see store numbers reduce, as well as the cutting of 700 administrative roles.
New store openings will focus on the formats most requested by consumers, primarily smaller neighbourhood stores (of between 200 and 250 square metres). In addition, there will be a restructuring of the hypermarket format, including subleasing some surface area to other tenants.
Coop Alleanza 3.0 operates 64 hypermarkets, out of a total of 459 stores across 12 regions) and the largest new stores that the group plans to open (4,000 to 5,000 square metres) will be much smaller than the existing hypermarkets (10,000 to 12,000 square metres).
Rethinking Hypermarkets
In general, the trend is to focus on the sale of food and reduce the non-food offering in the group’s larger stores. Priority will be given to private label, while gradually reducing the promotional leverage to offer the best quality-price relationship.
Also, the assortment will be simplified to make the purchasing process easier for both members and customers, with the intention of increasing the productivity and efficiency of the stores.
The implementation of the strategy should bring the group's EBITDA back to positive levels already in 2019, with the group eyeing profits of €100 million by 2023, while turnover should reach €5.3 billion.
This will be possible due to an increase in productivity, a reduction in the incidence of head office costs, an improvement in the commercial margin and an increase in the efficiency of the sales network, Coop Alleanza 3.0.
© 2019 European Supermarket Magazine – your source for the latest retail news. Article by Branislav Pekic. Click subscribe to sign up to ESM: The European Supermarket Magazine.
