Mercator revealed its business plan for 2018, targeting revenue of €2.4bn, but reduced investment year-on-year by almost 45% to €37.7 mn. Mercator will continue to focus on its core business as it divests in real estate and reboot the retained Bosnia-Herzegovina (BiH) operation.
Mercator will focus on profitability in 2018
Mercator forecasts a slight growth in 2018 sales to reach €2.4 bn and it anticipates to return to its 2016 revenue level of €2.5 bn by 2021. Focus will then shift to improving profit earnings with plans to increase them by 27% by 2021.
Investment will focus on store upgrade and category management
Mercator announced that 47% of total investment will go toward expansion retail sales area across all operations, and 20% in the refurbishment programme. Although 65% of the investment will go to the Slovenian operation. A new store design will be introduced that will accommodate a new category ratio restructure and place emphasis on fresh produce department, especially local produce.
Varied focus across formats
Store upgrade across the formats will vary slightly. Supermarkets are expected to focus on enhancing shopper experience with fresh layouts and higher concentration of value for money products. Convenience units will mostly be refreshed. Hypermarket upgrades will focus the most on category management with the restructure of relations and ratio between product categories, and emphasis on fresh food.
Reboot BiH business
Mercator retained the BiH operation in Q4 2017, and paying off the BAM80 mn (€41 mn) debt to suppliers accrued under the tenure of Agrokor (Konzum). Now Mercator holds 83 units in the country that it will reboot in 2018 with the new store design and under the Mercator banner.
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Amin Alkhatib, Retail Analyst CEE, IGD International: based in London, UK, Amin is responsible for shaping IGD's research in Central and Eastern Europe; as well as contributing to IGD's broader European research programme. Follow me on Twitter @Amin_IGD for further insight on the region’s retail landscape.