Aggressive Novus bought out the losing position of the oldest supermarket chain in Ukraine Billa


Aggressive Novus bought out the losing position of the oldest supermarket chain in Ukraine Billa

09/16/2020

To further expand its business, Novus needs to work on optimizing the procurement of vegetables and fruits to reduce the price level to a more competitive one.

As the Novus supermarket chain (Novus Ukraine) announced today in a press release, it has reached an agreement to acquire the business of Billa (Billa Ukraine) in Ukraine. So far, supermarket chains have just agreed on a deal and continue to operate as usual. How and when the takeover will take place will be announced by the parties later.

As a reminder, the Billa supermarket chain showed negative dynamics in the audit of the fruit and vegetable departments of supermarkets, conducted several times a year by the EastFruit team. In particular, according to the results of the audit in June 2020, the “Bill” chain for the first time got into the “unwanted” segment, which very well demonstrates the problems for the entire business of the retail network.

“The fruit and vegetable department is the main one for any supermarket chain. According to the Fresh Survey for Fruitlogistica Trend Report conducted by Oliver Wyman in 2019 in 14 countries (EU, US and Russia), 59% of consumers choose a supermarket for the quality of the produce department. In addition, they make 7% more visits to supermarkets with quality departments and spend 24% more money there. Therefore, in fact, the quality of the produce department allows us to assess the state of the entire business, as our experience in conducting audits of retail supermarket departments in five countries of the world shows, ”says Andrey Yarmak, economist at the Investment Department of the UN Food and Agriculture Organization (FAO).

Read also: Top 10 mistakes in planning the infrastructure of the produce market (wholesale markets, storage facilities, distribution centers, etc.)

“We evaluate the fruit and vegetable departments of the chain according to many criteria falling into four main categories: quality of fruit and vegetable products, quality of fruit and vegetable department, price level and assortment. Naturally, more buyers, including wealthier ones, will be able to attract chains that offer a wide range of high quality fruits and vegetables at a competitive price, if this department looks nice, is convenient for buyers and its employees are friendly and qualified, ”explains expert.

As we can see from the results of the June audit, in addition to Billa, the supermarket chains Fora and Furshet also fell into an undesirable segment in Kiev. But Novus found itself in the premium segment, next to Megamarket, Metro Cash & Carry and LeSilpo. Therefore, in order to further build up its business, Novus needs to work on optimizing the purchases of vegetables and fruits in order to reduce the price level to a more competitive one. Also, the network, according to EastFruit analysts, had a problem with the presence of different formats under the same Novus brand. As a result, the average assortment on the chain was frankly not impressive, although the large supermarkets of the Novus chain could quite compete with the leaders in assortment.

As a reminder, the Billa chain was a pioneer in the Ukrainian market. The first store of the chain opened in Kiev at the beginning of the 2000s on the left bank. “Billa”, unlike competitors, did not force development, preferring evolutionary growth. However, in recent years, she has closed her stores in the regions, and decided to focus on development in Kiev and the region. Billa belongs to the German Rewe International AG, which operates in many countries of the world and which also includes networks: Penny, Rewe, Toom, DER Touristik Germany, ITS Reisen and Lekkerland. The group’s global revenues in 2019 reached 62.7 billion euros.

At the same time, Novus is one of the youngest supermarket chains in Ukraine, but already at the time of buying Billa it had more stores and continued to actively develop.

EastFruit

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