Czech online grocers are looking east and west beyond their market | – #Czech #online #grocers #east #west #market
PRAGUE, March 1 (Reuters) – Two Czech online grocers – one a startup ‘unicorn’, the other a billionaire businessman supported by – takes on Europe’s biggest supermarkets to cater to the growing appetite for home delivery.
Market leader Rohlik Group is focusing on Germany, while local competitor Kosik is moving east.
Founder and CEO Thomas Cupr said Rohlik was focused on making a profit in Europe’s largest economy after delaying expansion plans in Italy, Spain and other markets because inflation and Ukraine war overshadowed the economic landscape.
“We will go deeper into the markets in Germany than we wanted a year ago,” Cupr told Reuters, where the company plans to launch in Cologne, Essen, Berlin and Düsseldorf. execution He added that he signed contracts for the centers.
“Europe 1 trillion euros in the grocery market. You are looking at the blue ocean.”
Last June, Rohlik raised 220 million euros in a Series D funding round led by Belgian investor Sofina ( SOF.BR ), bringing the company to 1 billion euro (1.06 billion dollars), making it a rare “unicorn” among startups.
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Rohlik, backed by Czech billionaire Daniel Kretinsky, and rival Kosik are both trying to implement successful models at home.
Despite its small size, the Czech food delivery sector is fragmented, according to Statista Europe 121 from the current 73 billion dollars of this sector over the next four years billion It is expected to increase to USD.
HUGE POTENTIAL FOUNDED IN 2014 Rohlik leads the Czech market, targeting customers mainly in big cities through its distribution warehouses. It operates under the Knuspr.de brand in Munich and Frankfurt.
Last year, the private company increased its revenue by 33% to 574 million euros. Cupr said it made a profit in its domestic market but posted an overall operating loss as it continues to expand.
He said success in Germany over the next two years would help raise capital for a further push by the grocer, which has operations in Hungary and Austria and a small pilot program in Italy. It also set the stage for opening in Spain.
“Once we prove Germany, we’ll probably make money for other markets,” he said. “We will continue to build that infrastructure and profitability and then accelerate. Three years is the time to start selling everywhere.”
According to data cited by McKinsey, the proportion of shoppers who use online groceries in most of Europe 10less than %, and only 4% in Germany. This, according to analysts, has great potential for growth in a market with no dominant players.
McKinsey estimates that 18-30% of grocery sales in Europe could be online by 2030 – a huge boon for companies that can overcome the costs and logistical challenges of providing quick service at prices competitive with brick-and-mortar supermarkets.
“The online grocery market opportunity is obvious, but the key question is whether companies should focus on being a clear leader in one market or focus on more,” said Ingmar Wegel, director of investment bank Clipperton in Germany.
“Competition still comes primarily from brick-and-mortar retail, but a small number of online grocery players are poised to become the leading e-grocery platforms in each market.”
KOSIK TURNS EAST
While Rohlik is betting on Germany, Kosik is looking east, entering the Slovakian market and expanding in Bulgaria.
Chief Executive Ivan Utesil said the company would also seek to reduce Czech market share by capitalizing on its relationship with German wholesaler Metro ( B4B.DE ) in some regional areas.
Metro, in which Kretinsky also has a major share, january announced the acquisition of a 25% stake in Kosik in order to become a stronger partner and improve online grocery shopping opportunities.
“Infrastructure is a great opportunity for us to expand,” Utesil told Reuters. “This model (use of Metro stores in the regions) enables quick sales. It does not require capital.”
Germany is not yet on Kosik’s radar, he added, although he will eventually focus on other central and eastern regions Europe will direct to their countries.
“Bulgaria and Slovakia are in focus for the end of this year and the beginning of next year,” Utesil said. “With our strategy, we are confident that we will be able to grow at least 30-40% per year, partly organically and partly through expansion.”
Many large supermarket chains do not have distribution centers, which analysts say limits their ability to expand their delivery networks, favoring companies like Rohlik and Kosik that focus on building infrastructure.
Rohlik already has a distribution deal with Marks & Spencer, and Cupr said the company could potentially partner with other retailers.
Tomas Karakolev, a senior expert at McKinsey, said companies that can scale quickly to cut costs and cover more delivery territory will succeed in the emerging market.
“Central Europe’s leading e-grocers are trying to win through a series of local city-level games, each starting with the biggest cities and growing until the country is covered,” said Karakolev.
($1 = 0.9411 euros)
Reporting by Michael Kahn and Jason Hovet Editing by Catherine Evans
Our standards: Thomson Reuters Trust Principles.
2023-03-01 11:29:59
Source – reuters
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