While the competition is growing, Konzum’s turnover is declining.
Although the retail sector in Croatia grew by about eight percent year-on-year in August, in the first seven months of the year, Konzum’s turnover declined by at least six percent. On the other hand, its competition has recorded a double-digit sales growth, reports Jutarnji List on November 3, 2017.
In an attempt to attract new customers and keep the old ones, Konzum has instituted new customer loyalty programme, offering top quality kitchenware at as much as 76 percent lower prices. This is just the latest attempt by Agrokor's retail chain to increase or at least maintain its current market share of about 20 percent. “In addition to making significant savings when purchasing new kitchenware, by participating in the new loyalty programme Konzum's customers now also have the opportunity to win free kitchenware worth 4,899 kuna,” announced the company in one of its most recent advertising campaigns.
In addition to a more general crisis with the Agrokor group, which has led to problems with liquidity and relations with suppliers, the stiff competition in the retail sector in Croatia has forced Konzum to try to reduce the cost of traditional retail business and attract customers through restructuring.
The most significant competition for Agrokor's retail business is Lidl, which has come close to Konzum. When viewed together with Kaufland, which is also owned by the Schwarz group, it already holds the leading position. Another serious competitor is Spar, which is currently the third largest retail chain in Croatia.
According to Agrokor's sustainability plan, the goal is to reduce the number of Konzum retail shops to two-thirds of medium-sized stores, with the goal of achieving business stability. Within the framework of the restructuring process, a total of 105 non-profitable stores are expected to be closed throughout Croatia by the end of the year.
In the first eight months, Konzum recorded revenues in the amount of 6.13 billion kunas, with 18 million kuna in negative EBITDA (earnings before interest, taxes, depreciation and amortisation). In 2016, Konzum had a negative equity of up to 7.6 billion kuna and posted a loss of 1.85 billion kuna, according to the company's revised financial report.
Translated from Jutarnji List.
