How Valora became a focused convenience and food service provider

Customer footfall is particularly affected at the usually busy public transport hubs. Demand for snacks when on the move falls at the same time. On the other hand, Valora’s high level of competence in the tobacco and press categories emerges as a strength in the crisis. Valora’s balanced business model proves resilient and strict cost management helps the company post a positive result for the entire year despite the crisis.

In 2020, Valora prioritises new projects while also investing more in the conversion and upgrade of the sales outlets won in the prior year's SBB tender and in its digitalisation initiatives. Valora is ideally positioned on the digital front as the crisis accelerates the advance of digitalisation into all areas of life. Notably, Valora opens the cashier-free, open 24/7 avec box in Wetzikon (Canton of Zurich). The operation of the avec box at ETH Zurich Hönggerberg, opened in the prior year, is being extended several times in response to high customer demand.

A mobile self-checkout solution test via avec app is ongoing at the two avec stores in Zurich Oerlikon since December 2020 in addition to the normal checkout service. Valora is also working on the launch of avec 24/7 with a hybrid model. It opens in January 2021. During the week, the avec store is a regular shop with staff, on Sunday – and soon during the night – it turns into an autonomous operation. Finally, the own online store www.avecnow.ch begins operations. It delivers smaller convenience purchases to the home within a good hour.

Another core competence of Valora, food, is positioned to exploit the trend of customers’ higher nutritional awareness. Various innovations are being introduced. At Brezelkönig, Valora is launching products with plant-based meat substitute, while the fresh vegan and vegetarian selection is being expanded at avec and k kiosk. In addition, BackWerk even develops its entire range of filled products.

At Ditsch USA, the last pretzel production line becomes operational in the first quarter of 2020. Valora now has a total of 16 production lines in Germany, Switzerland and the US.

The integration of the B2C Ditsch and BackWerk formats into the new Food Service DE business unit leads to synergies in the food area, including for products and processes. The capacity expansion in pretzel production is concluded successfully: in the fourth quarter of 2019, two of the three new product lines become operational in the US and Germany.

The launch of the first cashier-free convenience stores avec box and the future store avec X in April 2019 at Zurich main station represent a major milestone in the implementation of Valora’s digital strategy. It also underlines Valora’s pioneering role in Switzerland as far as self-checkout solutions are concerned.

In the Food Service division, Brezelkönig sales outlets get a makeover. The new BackWerk concept is also adapted for Switzerland and the store in Winterthur reopens. Valora continues to invest in expanding pretzel production facilities to strengthen its leading position in this market. At Ditsch USA Valora manages to double capacity on the existing production line. A further line is also under construction in the USA and two more in Germany.

Valora achieves a strong operating profit in 2018, demonstrating its resilience despite the decline in the print media business in Germany. By permanently renewing its formats and range of offerings, including new services and digital solutions, the dense network of outlets and B2B business for pretzels mean Valora is very well positioned. On this basis it will continue to implement its growth strategy successfully in future.

This is helped from 1 January 2019 by the new organisation with the market and customer-focused Retail and Food Service divisions and Group-wide Shared Services. The new structure allows Valora to better capture synergies and ensure expertise is shared across the Group.

Following the successful capital increase by CHF 166 million in autumn 2017, a bonded loan for EUR 170 million is placed on the market with attractive conditions in January 2018. This is a significant step by Valora towards the implementation of its long-term financing strategy.

In addition to various growth and investment activities, Valora continues to expand its offering of products and services. This includes new launches in the area of e-smoke and other tobacco alternatives, the introduction of the award-winning k kiosk app focusing on promotions and loyalty offers, the consolidation of the digital financial offers through the bob Finance brand, and the modernisation of Caffè Spettacolo and the avec sales outlets. Valora also plays an active role in digitisation topics as a partner of Digital Day 2017 in Switzerland and exploits new technological opportunities to improve its internal processes. In addition, Valora concludes a new Collective Labour Agreement with the Swiss Association of Commercial Employees stipulating higher minimum salaries for employees and other improvements in working conditions.

Valora makes operationally and strategically significant progress in 2017 and is on a growth path. The international expansion of Valora continues to progress and the company is even better positioned in a market shaped by a growing trend towards “foodvenience”.

At the same time, we expand the integrated value chain with our own brands ok.– in Germany, Caffè Spettacolo in Switzerland and Germany as well as the increasing use of Ditsch bakery products in our own convenience stores. We also push ahead with the expansion of production capacities for pretzel and bakery products for third-party customers.

The selection of food and beverages on offer is also expanded across the entire kiosk and convenience business. For example, around 100 sales outlets in Switzerland receive Starbucks coffee machines and approximately 650 Caffè Spettacolo machines.

At the same time, various new digital offers are launched, including the Caffè Spettacolo app that allows customers to place orders while on the move and to pay via the app, the scan&go pilot project aimed at increasing transaction speeds during rush hour periods, and the establishment of a Retail Analytics team. The objective is to tailor new offers better to customer needs with simple and practical digital solutions and to increasingly position Valora as a service partner.

These numerous initiatives lay a good foundation for our medium to long-term growth plans. The strategy provides a clear focus: growth and expansion, efficiency, a performance-driven culture and innovation.

The sale of the Trade division and the outsourcing of warehouse logistics in Switzerland are the last major steps of the focusing strategy. This involves Valora concentrating on the convenience and food service business with a major stake in pretzel production.

Moreover, the already large network in Switzerland is successfully expanded through Naville. Operating efficiency is improved across all core processes in Retail Switzerland and Group management as part of the Naville integration.

In Retail Germany, we succeed in strengthening the organisation and laying the foundation for future growth. The founding of the fintech company bob Finance AG is another milestone. The Valora Lab is another new creation – a digital innovation team developing digital products and services, such as the Caffè Spettacolo app.

The press wholesale operation was sold last year and the Valora Trade division classified as a disposal group. These are two important milestones in the transformation. The acquisition of the small-scale retailer Naville in French-speaking Switzerland is an important step within this process. It enlarges the location network, which now covers the whole of Switzerland. This opens up exciting new opportunities for Valora.

At Valora Services, key decisions are taken to pave the way for handing over control of the business. The division also expands its logistics services. Valora Trade begins to reap its first rewards from the initiatives taken to improve its profitability.

These activities enable Valora to further enhance its leading position in Europe’s German-speaking markets, establishing the Group as a leading retailer with more than 3,000 outlets in four countries. The “Valora 4 Growth” strategy programme is successfully concluded. In the future, the primary objective of the “Valora for a fast moving world” programme will be to achieve a sustained increase in profitability by focusing on Valora’s core areas of retail expertise and exploiting the Valora Group’s outstanding potential.