Eurocash SWOT and PESTLE Analysis

Strength

1. Strengthening franchises through Eurocash tools: Eurocash has supremacy in FMCG distribution across Poland with almost 1/3rd of market share. The Group uses this advantage to scale in the retail chain circuit. It empowers small and mid format retailers as franchise of Eurocash. Asides supplies, Eurocash also provides the knowledge and various tools to grow as business so that it can create the largest retail chain with over 2400 outlets by empowering the traditional retailers and greenfield stores (with real state developers) thus, empowering Polish entrepreneur through low investment model. The Group imparts knowledge through four pillars to its partners through the Eurocash academy, where both entrepreneurs and their employees could be trained. The first pillar consists of e-learning portal www.akademiaeurocash.com.pl. The second pillar consists of hands-on training in workshops. The third pillar involves educational conference in September every year. The fourth pillar involves postgraduate study in business management in retail trade in collaboration with Warsaw School of Economics. Besides, the Group has also tied up with Education Development Center to provide skilled employers to not only its partners but to the whole Polish business fraternity. Apart from that, Eurocash provides CRM tool so that entrepreneurs can sync consumer demands with Eurocash distribution and thus, remain a trusted local supplier. The Group has a dedicated platform for fresh product distribution. The Group operates a e-grocery store, Frisco.pl, through which end users may place orders and they would be allocated to the nearest Eurocash powered store.

2. Building the business through mergers and acquisitions: Eurocash works in the format of mergers and acquisitions to create a highly scalable business across Poland. The largest business of Eurocash is wholesale distribution, where the company has 100% proprietary rights over the distribution of 4Vapers (e-cigarette distribution), Cerville Investments (alcohol distribution), ECA Detal (alcohol distribution), Polska Dystrybucja Alkoholi (alcohol distribution), AMBRA (alcohol distribution), DEF (food wholesaler unit). Eurocash also has 75% stake in Eurocash Serwis (tobacco products' distribution). It owns brands, which execute in the model of providing franchiseships to independent retailers. Such brands are Lewiatan and its merger groups, EURO SKLEP, Groszek, ABC and Partnerski Serwis Detailiczny (50%). Other retail chains of Eurocash include Innmedio (50%), EKO, Delikatesy Centrum, Mila, etc.

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Weakness

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Opportunity

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Threats

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Political

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Economic

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Social

1. Covid-19 compelling Europeans to change food habits: The year 2020 saw the outbreak of a global pandemic Covid-19. Disruption of normal life, lockdowns, economic slowdown and changes in eating behavior of Europeans was a snowball effect. Certain surveys conducted by Industry Europe found drastic changes in the eating habit of Europeans amidst the pandemic. Being a developed society, 81% of Europeans are more inclined towards health and it's wellness during pandemic. 72% Europeans prefer to eat and drink healthier so that they could remain immune to the virus. 57% have increased intake of fruits and 41% consumers prefer to intake more vegetables. Due to the expected recession in Europe, 51% of Europeans expect to even reduce spending on food. Eurocash had to make changes in its supply chain to align with the changing demand of the present day consumer; however, the company has not estimated the impact of Covid on its business. Still, the company expects negative impact of Covid due to disruption in supply chain to access supplies from the suppliers and increase in retail segment sales but massive decline in HoReCA segment. However, the group booked losses in the 1st quarter of 2020.

2. Price conscious Polish consumers preferring discounters: The Polish consumers are tagged as the most price conscious ones in Europe. Most residences are located in smaller cities with substantial share of retail segment lying with traditional trade. But, due to the intrinsic behaviors of consumers being price sensitive, discount format retail chain is poised to thrive. Among all formats of stores, specialized recorded highest growth of sales by 9.3% in 2019 and convenience stores (40 to 100 sqm) recorded growth of 7.2%, followed by small supermarkets (2.7%). Small format stores declined in numbers (5.3%) and sales both. Discounters recorded increase in sales by 9.2% y-o-y. Market share of large format stores, which also include discounters, is 60% and small format stores has grip of 40% of the retail chain. Eurocash is highly dependent upon small format stores through its model of franchises. However, in collaboration with real estate developers, Eurocash would operate supermarkets under the banner of Delikatesy Centrum, which could be leveraged as discounters.

Technological

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Legal

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Environmental

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