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Valora Leads Seven-Year Transformation

Michel Gruber shares how Valora evolved to a convenience retail and foodservice provider at this week’s NACS Insight Convenience Summit–Europe.
June 14, 2017

​By Chris Blasinsky

ZURICH, Switzerland – This year’s NACS Insight Convenience Summit–Europe wrapped up its Zurich programming on June 13 with a presentation from Valora, a leading convenience retailer in German-speaking European countries. 

Michel Gruber, managing director food service Switzerland at Valora, shared insights on the driving forces that are leading Valora’s nearly seven-year transformation, from a highly-diversified company to a focused convenience retailer. Today, the retailer’s 2,500 c-stores’ brands and formats are mostly located in areas with heavy customer traffic, such as train stations, airports, city centers and shopping centers, in Switzerland, Germany, Austria, Luxembourg and France. Valora is also the largest pretzel manufacturer in the world. The company purchased United States-based Pretzel Baron in January 2017 to expand its pretzel manufacturing globally.

Gruber, a team member who is leading Valora’s transformation into the foodservice space, explained that most of the company’s sales today are derived from its retail businesses: about $2.3 billion from retail and $250 million from foodservice. In terms of gross profit, foodservice is about one third of Valora’s growth contribution. “With foodservice, we’re much more vertically integrated and thus have a higher profit margin,” he said.  

In 2010, 25% of Valora’s gross profit came from the print (or press) category (i.e., books, newspapers) and its own press distribution in Switzerland and Austria. “The problem was that [press] was declining at 8% volume per year, so from 2010-2014 we lost about 40% of that gross profit,” said Gruber. Early on in its transformative process, Valora accelerated its acquisitions and shedded its non-profitable entities. “The selling was among the non-core businesses,” he said, including the press distribution. Valora acquired brands that would help strengthen its core business: Cigo and Ditsch in 2012, Naville in 2014 and Pretzel Baron in 2017.

Also in 2010, Valora established five key initiatives that would lead its transformation:

  1. Divest non-core businesses quickly and successfully. “The emphasis was very much on quickly,” said Gruber. By selling quickly, Valora could shift attention to the core business operations and growth opportunities instead of trying to turnaround a business that was eating up time from management and resources. 
  2. Launch an efficiency program for the core businesses. Specifically, for the K Kiosk convenience brand in Switzerland, Gruber explained that the company focused on processes and automation, but also on store closures. In other words, “Cutting the long tail and getting rid of the small stores” that the company could no longer invest in, he said, adding that some of those sites were also creating a negative brand perception.
  3. Target acquisitions in the new core business to gain critical size and momentum. Valora expanded in a new foodservice business by acquiring Ditsch/Brezelkönig. “It was small but quite profitable,” said Gruber. “This helped us revamp our retail business and bring a foodservice competency into our stores.”
  4. Create a new entrepreneurial unit to develop its digital initiatives. In doing so, Valora can attract new talent, which Gruber said “has been quite interesting and stimulating for the company.”
  5. Initiate international expansion early. “Looking back, we probably should have started the process early because it takes a lot of time, especially if you want to do it organically,” he said.

Since kicking off its transformation in 2010, Valora’s learnings continue to be valuable, said Gruber, noting the importance of management to have conviction early in the process. In doing so, Valora built awareness and transparency both internally and externally. Next, the leadership team set KPIs for change, such as focusing cash and returns on capital expenditures. Culturally and organizationally the company remained small, but became more agile. This also meant team members could be more empowered to make decisions, as well as mistakes, which were then talked about early to identify where improvements need to be made. “This helps [us] move toward our goals much faster,” he said.

In closing, Gruber shared trends that Valora believes will impact its business: digital will continue to influence retail, tobacco and press will continue to decline, regulations will increase labor costs, impulse shopping will help drive consumer demand for food, and changes in mobility like automation will affect how consumers move from point A to B.

Now in its fourth year, the NACS Insight Convenience Summit–Europe brings together convenience and fuel retailing industry professionals from around the world to discuss new ideas and gain new commercial connections. This year’s event kicked off in Zurich on June 10 with education sessions and store tours, and will end on June 15 in London.

Chris Blasinsky is the NACS director of editorial projects and can be reached at cblasinsky@convenience.org