Letter to shareholders
Dear shareholders,
Over this last year, our business model has demonstrated that it can also hold its own in a challenging, fiercely competitive retail market, thus enabling us to achieve ambitious economic objectives.
During 2016, we completed the integration of Naville by incorporating some 180 Naville outlets into our Swiss retail network and successfully selling the company’s logistics and distribution business. As a result, Valora is now a pure retailer, able to focus its attention solely on its core business and its future growth.
Last year, besides further optimising our excellent network of prime locations, we also added a number of new outlet sites. These improvements, coupled with the product-range and cost-cutting initiatives we also carried out, resulted in a marked improvement in our overall margins.
We are particularly pleased that by systematically implementing our strategy of focusing on our core business we have been able to regain the confidence of investors and analysts. Our policy of clearly communicating our ambitious objectives for profitability, growth and operational excellence, and then achieving those targets, has manifestly paid off. The CHF 72 million of EBIT we generated in 2016 enabled us to outreach our earnings goals. As projected in 2015, we also succeeded in raising our return on capital employed to more than 8 %. In addition, 2016 saw a further improvement in our EBIT margin, and we are now making progress towards the 4 % target we plan to achieve from 2018. This positive operational performance strengthens our capital base, thus enabling us to finance the additional growth we aim for in the years ahead. Given these growth plans, we expect future annual investment spending to be slightly higher than in recent years.
We plan to increase revenues by opening new outlets and further extending our food and services offerings. At Food Service we are investing in the expansion of both our pretzel production capacity and our international network. By adding new service offerings, we also plan to raise our profile as a service provider, thus responding to the new customer needs and societal trends that characterise the digital age. This requires innovation, an area in which our Valora Lab is making an important contribution by developing digital solutions that are both simple and practical. Thanks to our digitalisation projects, we intend to focus our offerings more closely on the needs of our customers.
Every day, these major dynamic processes place considerable demands on our entire organisation. We, the Board of Directors and Group Executive Management, are well aware of this and would like to express our heartfelt thanks to our employees for the enormous commitment they bring to their work. We are delighted to see the energy that everyone involved is putting into these projects and the active part they are playing in shaping Valora’s future. That energy is exactly what we need, because in order to compete successfully and to expand our business, we need to be both flexible and fast. Faster than our competitors.
Alongside all these initiatives to grow our existing business, we also regularly evaluate possible acquisitions. We were able to realise one such opportunity in early 2017, when we acquired Pretzel Baron in the United States. This aspiring young pretzel producer will further add to our output capacity in this growing business area, thus enabling us to focus more closely on the potential offered by the US market.
In 2016, we initiated numerous projects which will provide an excellent basis for our expansion plans over the medium and long term. With the strengthened organisational structures we now have in place, we are well placed to implement these plans, thus positioning ourselves as a powerful, agile retailer and convenience store operator. That is what keeps Valora attractive, both for our shareholders and our employees.
We would also like to take this opportunity of thanking our customers who visit us every day for their loyalty and to express my thanks to our business partners for their valuable collaboration with us. We appreciate your support and we will continue to do everything in our power to remain a reliable and committed partner in the years to come.
Our thanks also go to you, our esteemed shareholders, for your support and for the substantial trust you have placed in us. We are pleased to be able to recommend a dividend of CHF 12.50 per share at the 2017 Annual General Meeting.
We would also like to advise you of the forthcoming Board changes. As previously announced, Rolando Benedick will be relinquishing his office as Chairman. The Board of Directors recommends that Franz Julen, who has been a Board member since 2007, be elected as its new Chairman. His election, and that of a new Board member, will be recommended to the Annual General Meeting on March 30, 2017.
Rolando Benedick
Chairman of the Board of Directors
Michael Mueller
CEO
A message from the Chairman
Rolando Benedick, Chairman of the Board of Directors
Dear shareholders,
I took office as Chairman of Valora’s Board of Directors in late January 2008. Back then, Valora was going through a turbulent time, both with regard to its people and its business. The company was a conglomerate and practically all its divisions were facing major challenges. The main problems were saturated markets which were often contracting, fundamental structural changes affecting the wholesale and retail sectors, a number of businesses operating at sub-critical mass and underinvestment in some business units. Meanwhile, consumer needs were evolving ever more quickly, partly as a consequence of increasingly widespread digital communication.
To address this situation, we decided to concentrate all our efforts on strengthening our core areas of expertise and enhancing our market position. That meant focusing on small-outlet retail at heavily frequented locations and adapting to the changing needs of our customers. To achieve that focus, we sold units such as press wholesale, the Trade division and, more recently, Naville Distribution, none of which were part of our core business. Conversely, we bought Convenience Concept in Germany, Ditsch and Brezelkönig and the Naville kiosk chain – acquisitions which have enhanced our opportunities for growth and have demonstrably improved our profitability. We are also, thanks to our own output, one of the world’s leading pretzel producers. The production facility we acquired a few weeks ago in the United States will provide us with further potential for expansion in this exciting market. While this list is not exhaustive, it demonstrates the unmistakable direction our business has taken in recent years. Today, Valora has two clear attributes, a strong retail distribution network and increasing vertical integration.
In parallel to its decision to change the focus of the Group’s business the Board also resolved to make the complex structure Valora then had fundamentally simpler. In order to achieve sustainable economic success, a lean, efficient organisation focused on its customers is every bit as important as pursuing the right strategy. That was true in 2008 and it is equally true today. Over the years, the Board, our management and our many committed employees have worked together to change Valora, fundamentally and forever. Today, our company is more agile, more entrepreneurial and more innovative and it has a corporate culture which is both open and direct.
During my time as Chairman I have been able to rely on very good managers. Every day, they and their teams have achieved impressive results, transforming Valora into a modern, customer-oriented company. Thanks to their efforts, Valora is now clearly focused, profitable and able to look forward to exciting prospects for future growth. Our persistent pursuit of business focus and the organisational changes we have made have proved worthwhile and I draw much satisfaction from that.
I have carried out my duties at Valora with great enjoyment and passion. Now, with this transformation complete, I am pleased to entrust the company to my designated successor at the forthcoming Annual General Meeting. This is the right time for me to leave the Valora Board and to observe its future business success as a shareholder. I am also convinced that with his substantial expertise in international retail and franchising, my designated successor Franz Julen will prove an excellent Chairman of Valora’s Board of Directors. I wish him much success and satisfaction in his new duties. I would also like express my gratitude to my other Board colleagues. Over the years we have had many intense and constructive discussions and we have worked together very well, for which I am extremely grateful.
I would like to express my special thanks to you, our shareholders, for the continuing confidence you have displayed in me personally. My sincere thanks also go to all our employees, business partners and customers for their commitment, trust and loyalty. Valora is very well placed for the next phase of its expansion.
I wish you all the very best for the future. Above all, I wish you much joy in your company.
Yours sincerely,
Rolando Benedick
CEO Interview
Michael Mueller, CEO Valora
“We have completed the process of transforming the Group into a focused convenience and food service provider.”
Michael Mueller, did Valora definitively complete its transformation process in 2016?
I am now convinced that the work we have done in recent years has created what from many points of view is an excellent basis on which we can now build for the future. The results we achieved last year already exceeded expectations. That reflects the substantial progress we made in implementing our focused business strategy and the fact that the transformation process at Valora is now largely complete. And, most importantly of all, during this period we have delivered what we promised. However, we will also need to continue developing in the year ahead, so that we can keep pace with the evolving needs of our customers.
So you are pleased with Valora’s performance in 2016?
In an environment where all retailers are finding the going tough, we raised our external sales by + 0.9 % to CHF 2,574 million thanks to good operating performance in all our businesses. Retail Switzerland achieved a further significant increase in earnings, despite slightly lower Sales. Retail Germany again raised its earnings, partly thanks to a positive 2.3 % increase in same-store sales. Our Food Service business also grew its revenues substantially, most notably at Brezelkönig. Given the adverse impact of increased factor cost, Food Service’s operating results can also be seen as satisfactory.
What do you see as the milestones in 2016?
We measure our progress along four strategic dimensions; efficiency, growth, innovation and performance oriented culture. In 2016, we achieved progress in all four of those dimensions, most notably by raising our efficiency levels. By selling Naville Distribution we were able to complete the process of transforming the Group into a focused convenience and food service provider.
Last year, we focused on the further optimisation of our outlet network in Switzerland and Germany, the expansion of our Ditsch/Brezelkönig retail formats. At the same time we have strengthened our integrated value chain with our ok.– brand in Germany, our Caffè Spettacolobrand in Switzerland and Germany as well as the growing use we are making of our Ditsch bakery products at our convenience stores. We have also continued to expand our production capacity of pretzel and other bakery products for third-party customers. And that is not all. We have also enhanced our culture and our organisation significantly.
Has the Naville acquisition now definitively been completed?
On the one hand we have successfully incorporated Naville’s retail business into our organisational structure. On the other hand by selling Naville Distribution to the 7Days Group and disposing of the Naville building in Geneva we have successfully completed the rest of the transaction. Given our focused business strategy, the sale of Naville’s logistics and distribution unit was a logical step. Thanks to the Naville acquisition and the reorganisation of our existing Swiss retail business which we had already initiated in 2015, we were able to capitalise on useful synergies in 2016, such as operating from one single platform and being able to carry out the same promotions at significantly more outlets.
You often mention synergies and increased efficiency and synergies. Does that mean that Valora’s principal focus in 2016 was on costs?
Obviously it is important for us to be very aware of costs. We aim for high levels of operating efficiency in all our businesses in order to perform successfully in the face of tough competition. To achieve that we also intend to make increasing use of a uniform platform for all our businesses. As an organisation, we want to combine our energies so that we can be more dynamic, decisive and innovative. An important observation for me has been that our employees are putting a lot of motivation and commitment into moving in this direction and that signs of positive change are already apparent. We have become more agile and are more open to new ideas.
In the past you have said that you would like Valora to be perceived more as a service provider. How exactly do you see that expressing itself?
In 2016, we already launched a number of new service offerings which will help us achieve that goal. These include the mobile phone battery rental service we operate with battere and the option we offer our customers of paying for Air Prishtina tickets at our kiosks. We are also expanding our existing offerings, such as our package service, and creating new loyalty programmes for our customers. Our objective is to enhance the Valora shopping experience and to use the direct contact we have with our customers to offer new services. As part of these endeavours, we are also focusing intensely on the possibilities opened up by digital communication. There is still plenty of potential in our other markets, particularly Germany, as not all the new services we currently offer in Switzerland are yet available elsewhere.
Can you give some examples of new digital offerings that have been introduced recently?
New digital solutions are always about generating added value for the customer. We have realised initial projects in a number of areas. There is a pilot project in Zurich analysing customer footfall, we introduced the Caffè Spettacolo app for remote ordering and payment, we have a scan&go pilot project running at some outlets, which speeds up transaction volumes during the rush hour, we have created a Retail analytics team and our bob Finance subsidiary now provides consumer loans.
How are Valora’s new financial services performing?
In its first year of operation, bob Finance achieved positive life time value, which means that the present value of the projected interest payments on the loans it has granted is greater than its current operating costs. The other financial services we offer are also performing well. More than 220 000 of our customers now use our ok.– prepaid Visa and Mastercard service. The possibility of being invoiced for services and paying for them at our kiosks is also very popular, because it meets a specific customer need. Currently, this service is available for providers such as Starticket and Air Prishtina.
How is the traditional kiosk business doing?
It is part of the core business of our Convenience and Food Services network. Over the last three years we have shown that we can achieve successful results with this business despite the pressure especially on our press products. That success is also demonstrated by the extremely positive margin trends we are achieving.
Where do you see the main potential for growth?
There is very clear potential in further expanding our food and beverage offering across our kiosk and convenience-store network. That is why we equipped some 100 outlets in Switzerland with Starbucks coffee machines last year and set up Caffè Spettacolo machines in some 650 outlets. The Caffè Spettacolo machines will be rolled out to German outlets in 2017.
“New digital solutions are always about generating added value for the customer.”
Coffee at a kiosk? Does that work?
Although the roll out was not fully completed until the end of the year, in December alone we increased the quantity of coffee we sold by 27 % and raised our coffee revenues by an even more impressive 35 %. Moreover, as with all our other new offerings, the coffee attracts new customers, who generally buy something else as well.
What formats does the Retail division’s market presence comprise?
Our five formats – k kiosk, avec, Press & Books, Service Store DB and Cigo – operate in four countries, with Germany and Switzerland being the most important markets. In Germany, we successfully launched our ok.– energy drinks in 2016, selling more than 6 million cans. Our private label ok.– brand is already well established in Switzerland, and we intend to deploy it more actively in Germany in future. We also fine-tuned our existing German formats. This included placing further emphasis on Cigo’s role as a specialist tobacco retailer and introducing a new fresh-produce concept for our avec. convenience stores.
So, Valora is now growing again in Germany?
Both in terms of its results and its qualityof organisation. We have strengthened the management team, our structure and processes are more clearly defined and our new financial controlling arrangements mean that we can steer the business more precisely and immediately. Our core food and tobacco ranges performed very successfully in 2016, thus more than compensating for the decline in press turnover on a same-store basis.
How are things in Switzerland?
With increased earnings and a + 0.9 % improvement in its EBIT margin, our Swiss business is well on track. This is principally attributable to increases in operational efficiency, lower cost, the improvement in gross margins resulting from the higher revenue generated by promotion campaigns.
Did the huge lottery jackpot in late 2016 help the Swiss business?
Lottery tickets are still an important part of our business, partly for the footfall they create and partly for their margins. The staff at our kiosks can always gauge how big a jackpot is. However, the record jackpot in late 2016 did also mean much more work for our staff and longer waiting times for our customers.
In Switzerland, Valora also encountered criticism last year, with the Syna trade union repeatedly describing kiosk staff pay as being too low.
Pay is only one of many factors contributing to employee satisfaction, as our employee survey clearly demonstrated. After Syna terminated our existing general employment contract at the end of 2016, we found a competent and constructive new partner in KV Schweiz, the Swiss Association of Commercial Employees.
Valora’s agency partner model was also criticised by the trade union.
For many years, Valora has been operating a very successful agency and franchise system at many of its outlets in both Switzerland and Germany. We have long-term working relationships with a lot of agency and franchise partners and are attracting new partners to our network every year. Syna took the view that our independent agency partners as well as their collaborators should qualify as Valora employees. That contention was clearly refuted by an arbitration court in early 2016. We remain committed to this model, because it provides motivated people with an opportunity of becoming entrepreneurs and to establish a business of their own with the support of a strong partner.
Alongside Retail, Food Service is the second pillar of Valora’s business. How did that perform in 2016?
We need to distinguish here between the B2C and B2B businesses. Our B2C business, where we sell directly to end customers, mainly comprises our Ditsch formats in Germany and our Brezelkönig and Caffè Spettacolo networks in Switzerland. In all, we opened 34 new outlets in 2016. In Switzerland, our food business expanded particularly well, so that we now have 36 Caffè Spettacolo and 56 Brezelkönig outlets. We believe there is scope for our Food Service networks to expand further in both countries. What is particularly pleasing is that our existing outlets achieved very positive performance in 2016, both in Germany and especially in Switzerland.
“Our strategy covers four dimensions: growth and expansion, efficiency, a performance oriented culture and innovation.”
How important is the B2B business for Valora?
The B2B business is an important part of the Valora Group. It has achieved impressive growth over the last years. As a result, some 90 % of our output now goes to third-party customers, principally in Germany, Austria and Switzerland, but also in the United States and Japan. Given the strong performance of our B2B business, we decided to expand our Oranienbaum production facility further in 2016. Production expertise has an important part to play in the enhanced value generation we plan to achieve through to increased vertical integration.
International expansion is one of Valora’s key objectives. Were you able to make progress on that in 2016?
Pretzel production and the export business that goes with it are clear growth priorities. In January 2017 we announced our acquisition of Pretzel Baron, a young, aspiring pretzel producer in the United States. This not only adds to our output capacity but also means we can produce pretzels in the US. In future, that will enable us to be more focused in leveraging the potential offered to us by the US market. Beyond that, we now have six Brezelkönig outlets up and running in France and Austria. The Brezelkönig format is working very well at heavily frequented locations in those markets. Having thoroughly tested both the concept itself and the logistic chain supporting it, we are now looking for franchising partners. The foundations for a successful international expansion drive are thus in place for the years to come.
Are acquisitions still on the agenda?
We regularly evaluate possible acquisitions, both large and small, as a means of tapping into new markets or developing new formats. However, our future expansion will be driven by a combination of organic growth and acquisitions in our two existing business areas, Retail and Food Service.
No doubt you expect your international business to benefit from insights from the designated Board Chairman?
Certainly. He has significant international experience, an in-depth knowledge of franchising concepts and, of course, he knows Valora very well. Franz Julen was involved in developing our business focus strategy and has sustained its implementation in the Board over the years. He is also very receptive to new ideas and supports our growth strategy.
You mentioned earlier that Valora had achieved all its financial objectives in 2016. What do you find most pleasing about the results?
The performance of our two most important financial metrics. We raised our return on capital employed (ROCE) to 8.2 %. That shows that Valora generated significant value for its owners. Our free cash flow of CHF 72.6 million confirms that Valora is able to generate sufficient free cash to pay an attractive dividend while still maintaining adequate financial flexibility. I would also mention that our gross-profit margin rose to 41.5 % and our EBIT margin increased to 3.4 %, so that we are now closer to the targets of 42 % and 4 % which we plan to reach. Finally, the CHF 72.3 million of EBIT we generated in 2016 was actually slightly above our guidance target range of CHF 65 million to CHF 70 million.
And what about Valora’s investment capabilities?
They are very good. On the one hand, with a leverage ratio of 1.6 x we are in a strong position as far as financial stability is concerned, on the other hand our long-term liabilities are very well-balanced. We are thus well-placed to continue developing our existing business and to finance the growth we plan to achieve. Having invested just under CHF 50 million annually for the last two years, we now expect annual higher investment volumes. Our focus will be on expanding our pretzel and other bakery product output and on achieving further growth in Germany.
What do you think are the major challenges Valora will face in the future?
Competition is increasing across the board and factor costs are tending to rise. Our core product ranges continue to evolve. Food and beverages for immediate consumption are a major trend, as are fresh food offerings. Finally, customers have high expectations when it comes to quality, availability and transparency.
How is Valora responding to all this?
We have a clear, focused strategy and we made significant progress last year in raising our efficiency levels. We have an excellent network of retail outlets at heavily frequented locations and we are concentrating our efforts on developing our convenience-store and food offering further and on making the best possible use of our platform. In so doing, we can ensure that our product ranges are better calibrated across formats, and achieve even greater cost efficiency. We will need to continue making major investments in gaining a better understanding of our customers and their needs, so that we can generate greater added value for them.
How, specifically, do you intend to expand your convenience business and where?
We have created an solid basis for growth in Germany, where we have a effective organisation. Thanks to the clearly defined profile of our tobacco retail specialist Cigo and the extended fresh-produce range we have introduced at avec, we are very well-positioned. We see plenty of opportunities for growth in Germany, because the market there is not yet as consolidated as it is in Switzerland. Competition for attractive locations has intensified further and we therefore see limited scope for organic growth there. That is why we are focussing on optimising and continuing to develop our existing outlets.
What are the prospects for the food business?
Here, we believe that consumer appetite for food and beverage on the go will continue to grow and that we will be able to develop our Food Service networks in our core markets further. Additional expansion of the Ditsch/Brezelkönig outlet networks, extending the food and fresh-produce offering at all our formats. Furthermore, continuing our expansion abroad with Brezelkönig International and increasing the production capacity of our pretzel and bakery products are key elements of our growth strategy for 2017.
“My thanks go to all our staff for their commitment and motivation they have shown in helping to shape our transformation process.”
So you look to the future with optimism?
Yes, I do. But we cannot afford to relax. The market is constantly evolving. That is a challenge for us all. My thanks go to all our staff for their commitment and motivation they have shown in helping to shape our transformation process and in keeping it moving forward. By systematically pursuing this path in the future, we will continue to achieve our objectives and deliver on the promises we make.
Board of Directors
Rolando Benedick
Chairman
Markus Fiechter
Vice-Chairman
Franz Julen
Member
Bernhard Heusler
Member
Ernst Peter Ditsch
Member
Cornelia Ritz Bossicard
MemberManagement
Michael Mueller
CEO
Tobias Knechtle
CFO
Thomas Eisele
Ditsch/BrezelkönigSustainability
SUSTAINABILITY AT VALORA – LONG-TERM, FORWARD-LOOKING AND ENDURING
This report details the work carried out by Valora in 2016 to keep its activities sustainable. Given the many individual initiatives taken, it has only been possible to present a limited number of them here. In the field of social sustainability, Valora has focused its efforts on employee development and on nurturing its relationships with its customers and business partners. As far as economic sustainability is concerned, the emphasis has been on ethical behaviour, as exemplified by adherence to the Valora Code of Conduct, observance of the laws on the protection of minors and compliance with hygiene standards. In the case of environmental sustainability, particular attention has been paid to the careful husbandry of resources.
SOCIAL SUSTAINABILITY
FOCUSING ON EMPLOYEE SATISFACTION
An important objective for Valora is to ensure that it provides its employees with opportunities for ongoing development and that they feel happy and motivated in their work.
To gauge employee satisfaction, Valora commissioned an experienced external service provider to carry out an initial employee survey in the second quarter of 2016. These will be repeated at regular intervals in the future. The survey encompassed employees at Retail Switzerland, bob Finance, Brezelkönig, Ditsch in Mainz and the Group’s head office in Muttenz. Topics covered included employee satisfaction and the organisational framework. In all, 59 % of the 2 396 employees invited to give their views took part in the survey. Once evaluated, the responses were openly shared with all staff across the entire organisation.
The results showed that Valora employees set particular store by professional and personal development, a good flow of information and systematic customer focus.
A series of team discussions was then held, enabling their participants to work together on defining appropriate measures and initiating their implementation. One such measure involved the establishment of platforms to host regular exchanges of ideas across all hierarchical levels. To that end, in 2017 Valora organises so-called Inspiration Lunches for its employees. These provide an informal environment for identifying and discussing business topics currently relevant to Valora. The first Inspiration Lunch, which attracted some 150 registrations, was devoted to the digital developments at Valora Retail. Valorapublishes details of the outcome of all these initiatives on its intranet site. In the spring of 2017, Valora Retail Germany will be using the same setup to conduct a survey among its employees. The next employee survey at Group level is planned for 2018.
SUPPORTING EMPLOYEE DEVELOPMENT
Valora offers a wide range of internal training and continuing education opportunities to further the development of its employees. In 2016, Valora Germany made coaching an important part of its leadership culture, with more than 20 managers attending a seminar on “The manager’s role as a coach” over a period of several days.
To reinforce Valora Germany’s team of trainers and to ensure that the courses are of high quality, in October 2016 ten Valora colleagues working in the company’s specialised departments also enrolled for a five-month continuing-education course at the Hamburg Chamber of Commerce, attending classes alongside their regular working duties. In addition to introducing them to creative learning techniques and methods for managing group processes, the course focused on methodological and didactic aspects of seminar design.
“Well-trained employees are the key to our success. The coaching we provide, our “train the trainer” courses and the Valora Campus have enabled us to create an environment that supports the professional development of our employees, thus enabling them to gain additional qualifications in their specific disciplines, to learn new self-management skills or to progress in their management of others”, explains Peter Obeldobel, Chairman of the Executive Board of Valora Retail Germany. In Switzerland, Valora holds regular management courses for sales staff and leadership weeks for experienced executives. These courses, which are taught by external specialists, make a significant contribution to their participants’ ongoing personal and professional development. In addition, each of the Valora retail formats holds an annual conference for all its outlet managers. These kiosk, agency partner and franchise partner events provide their participants with an opportunity of finding out more about their business, sharing ideas with each other and, above all, developing and maintaining their own personal networks.
The dissemination of knowledge through e-learning is becoming an increasingly important part of Valora’s training and continuing-education activities. This is a logical consequence of the Group’s strategy of promoting the use of innovative platforms and implementing new digital initiatives. For its e-learning activities, Valora uses the Avendoo learning management system. The system makes it possible to provide all sales staff working at retail outlets with a uniform set of knowledge more or less simultaneously. Avendoo also helps to ensure that staff are aware of the statutory requirements relating to money transfer and the prevention of money laundering. This information can be made available to employees irrespective of where and when they work or whether they work full time or part time. Based on the substantial positive feedback it has received regarding these e-learning initiatives, Valora has decided to develop them further in the years ahead.
FIT FOR THE FUTURE
For more than 15 years, Valora has been committed to the development of young retail talent. In Switzerland alone, 20 apprentices are currently training with Valora. Of these, 13 are working towards their Federal certifications as retail assistants or as kiosk, food, beverage and tobacco professionals. Of the remaining seven, one apprentice is training as a system catering professional and six are engaged in commercial apprenticeships. The Ditsch pretzel bakery is equally committed to providing its staff with continuing training opportunities. Every year, more than 40 apprentices receive training at the company’s Mainz and Oranienbaum facilities. The overarching objective is to ensure that these young people acquire the skills they need during their apprenticeships, so that they can find suitable employment with the company once they have successfully completed that phase of their careers.
2016 also saw a continuation of Valora’s successful one-year trainee programme for university graduates in Switzerland. In addition, Valora also offers a twin-track programme for university students in both Switzerland and Germany. Once they have successfully graduated, participants in these programmes will have the opportunity of taking up attractive longer-term positions at Valora either in corporate management or as junior sales managers. “Both programmes have proven highly effective in attracting young talent to Valora and we therefore plan to continue with them in the years ahead”, Christa Heinke, Head of Staff Development at Valora Switzerland, is keen to emphasise.
WORKING SUCCESSFULLY WITH AGENCY AND FRANCHISE OUTLETS
Valora maintains collegial working relationships with its agency and franchise outlets. In Switzerland, the company holds regular committee and working-group meetings with outlet representatives to ensure that important issues can be discussed in detail. Valora and its agency and franchise partners work together to develop training courses on issues such as employment law, business administration and pension plans. The company also hosts a three-day introductory training course, which was held a total of four times during 2016. Valora offers these courses to all its new agency and franchise partners to familiarise them with key aspects of their future day-to-day duties. These include tasks such as business administration, stock taking, inventory discrepancy management, staff leadership and pension-plan arrangements. These courses are very much appreciated by Valora’s future agency and franchise partners.
As Ankul Lal, who has been a Valoraagency partner since 2014, puts it, “The support Valora gave me from day one has proved a huge help to me in getting my own business started”. Baidullah Naroei, who has been running his own k kiosk since March 2015, takes a similar view. In his words, “Thanks to the professional introduction Valora provides, agency partners are well prepared for every aspect of their future work.” He also appreciates the opportunity Valora has given him of running his own outlet, adding that “I think it is great that Valora enables people from outside the company, like myself, to set up their own business. Besides, working with a strong partner like Valora opens up a range of possibilities, as well as providing additional security.”
Valora also maintains an active dialogue with its agency and franchise partners in Germany. Once a year, all agency and franchise partners are invited to attend a three-day conference. The theme of last year’s conference, held in May 2016, was “Valora – A Customer Company”. In addition to reviewing numerous industry trends, the meeting also focused on Valora’s new strategic direction. Customer orientation was a common feature of all aspects of the programme. Having spent the day attending interesting presentations and workshops, the participants were then able to enjoy an attractive series of evening events which also gave them the opportunity of exchanging ideas with their peers, establishing new contacts and maintaining existing ones. These events are very popular with agency and franchise partners and Valora will be hosting a similar conference in 2017. The programme for this year’s event, which will again take place in May, features a range of renowned external speakers who will be making presentations on “generating customer enthusiasm”. An established part of each year’s programme is the eagerly awaited announcement of the franchise partner or store manager of the year. This provides recognition to partners whose superb work and exemplary commitment has enabled them to excel.
Cooperation based on mutual trust and fair dealings between both parties are equally important to Ditsch, which now has more than 200 agency partners. Providing them with training courses to support their ongoing professional development is a key element of this collaboration.
To ensure an even more effective flow of information between its head office and the retail outlets, Valora will be introducing a new system for communicating with its outlets from the summer of 2017. Its objective is to help ensure that information can be shared more simply, more efficiently and in a more structured manner.
PROMOTING SAFETY AT WORK
The health and safety of its employees at their place of work is an important concern for Valora. That is why Valora Retail Germany regularly has its premises visited by safety-at-work professionals, company doctors and occupational physicians. An assessment is made of each individual workplace, requirements with regard to factors such as ergonomics and lighting are recorded and the necessary modifications made where possible.
Valora also sets great store by providing its employees in Switzerland with a healthy working environment. Since 2011, a group solution has been in place for Valora Schweiz AG to ensure that employees work in safe conditions and that their health is not put at risk. Swiss law requires that these group solutions are periodically reviewed and submitted to the authorities for recertification. Working in collaboration with a health-and-safety professional with extensive experience of the Swiss retail industry, Valora joined forces with occupational physicians, work hygiene experts and its own qualified specialists to prepare for the forthcoming group solution review. Recertification by the health-and-safety authorities is scheduled for March 2017.
Employee health is also a key priority for Ditsch. Through external partners, the company offers occupational health services to all its employees. Reintegration arrangements are also in place to help employees who have suffered from long-term illness to resume their working lives. In cases where an employee is not able to return to his or her original job, the company doctor, representatives of the relevant authorities and the employee’s superior will determine alternative ways of enabling the employee to resume work with Ditsch.
PARTNERSHIPS FOR THE LONG-TERM
Long-term collaborations are important to Valora. Its partnership with Swiss Federal Railways goes back decades, as do those with Swisslos and the Loterie Romande, Switzerland’s two main lottery operators, Selecta, Europe’s premier vending-machine company, and the leading German wholesale supplier Lekkerland.
Valora’s cooperation with Swiss Federal Railways takes the form of a professional partnership which goes beyond the usual ties linking tenant and landlord. While the two organisations’ day-to-day dealings with each other generate focus on topics such as expansion and contract management, their shared and overarching goal is to meet customers’ needs. The combination of Valora’s retail know how with Swiss Federal Railways’ expertise in station management generates substantial added value for the customers they both serve.
Selecta is Valora’s chosen coffee partner for all its Swiss retail formats. The collaboration between the two companies is the result of their shared history. This is a partnership based on each party’s substantial respect for the other’s core areas of expertise, which enables them to communicate efficiently and openly with each other to ensure that their shared long-term objectives are achieved.
The close and successful partnership Valora has established with Swisslos began back in 1937, when Swisslos was founded. Valora’s extensive retail distribution network makes a significant contribution to Swisslos’s overall sales. The net profit generated by the Swisslos Federation flows back to the cantonal lottery and sports funds, enabling them to support some 12 000 projects in the fields of sport, culture, the environment and social welfare. By distributing lottery tickets through its Swiss retail network, Valora makes a substantial contribution to these efforts.
Valora has also been working with the Loterie Romande for over 30 years. With the enhanced presence in French-speaking Switzerland resulting from Valora’s acquisition of Naville, that partnership has been significantly intensified. The two companies’ numerous joint lottery projects are testimony to the long-term innovative vision they both share.
In Germany, Lekkerland has been a trusted partner of Valora’s for many years. In addition to supplying the company’s German outlets, this wholesaler also shares valuable category management expertise with Valora. The success of this collaboration can be attributed to Lekkerland’s high-quality door-to-door logistics and its lean administrative processes.
Long-standing cooperation also play an important part in Ditsch’s business. The company sets particular store by establishing a high degree of trust with its business partners. It also places strong emphasis on ensuring that the companies it does business with provide their employees with working conditions that comply with all applicable legislation and that they adhere to recognised welfare and environmental standards.
VALORA PROVIDES HELP WHERE IT IS MOST NEEDED
At Caffè Spettacolo, food which is of perfectly acceptable quality but which can no longer be sold because it has passed its sell-by date is donated to Schweizer Tafel and Tischlein deck dich, two charitable organisations providing free meals to the disadvantaged.
As part of the charitable cooperation established between ok.– and the FC St. Pauli football club in Hamburg, Valora makes a charitable contribution of € 1 000 for every team plays in home matches and for every goal it scores during extra time. In 2016, recipients of such donations included the St. Pauli cold-weather protection scheme (Anti-Kälte-Hilfe St. Pauli) and the NoBorder-Kitchen in Hamburg.
ECONOMIC SUSTAINABILITY
RESPONSIBLE BEHAVIOUR BASED ON INTEGRITY
The Valora Code of Conduct sets out the standards of behaviour the company expects from its employees and other stakeholders. The Code is based on eleven principles which define the high standards of moral conduct and personal integrity which Valora expects all its partners to observe. To support this initiative, the company publishes a compliance handbook for its employees, providing them with guidance on how to conduct themselves correctly. Valora staff also have access to an ethics hotline, which enables them to contact the compliance officer anonymously to report any irregularities or criminal activities and to lodge complaints.
QUALITY ALWAYS COMES FIRST
Valora is constantly reviewing its processes for quality assurance, crisis management and product recall. The focus here is on verifying the manufacturers’ own quality-assurance procedures, en suring that product information and the products themselves comply with the law and checking delivery conditions. “Large manufacturers and suppliers operating on an industrial scale must have certification from either the BRC, the IFS or the ISO, and preferably from more than one of these. Their HACCP self-monitoring procedures must also be no more than two years old”, explains Michel Vaucher, the projects manager at Valora Retail Switzerland. Smaller-scale regional suppliers and manufacturers must also comply with these same HACCP standards, which require a risk-analysis, the definition of critical monitoring points, a defined range of acceptable values for risk-monitoring results and a risk-monitoring system. Specific corrective actions and working instructions for adherence to good manufacturing practice also form an integral part of the HACCP concept.
Suppliers are required to provide product specifications for every item in the Valora product range. Swiss food producers must supply written confirmation that their products meet Swiss food-law requirements. Foreign food producers must submit a certificate of conformity issued by a specialised laboratory in Switzerland. Swiss package-labelling requirements, on matters such as sell-by dates, apply to both food and non-food articles. Sell-by dates and storage requirements must also be observed while goods are in transit.
Valora’s private-label ok.– brand products also adhere to strict quality requirements. Every new ok.– product is tested for its conformity with all applicable regulations, with further tests being conducted for every packaging change. Suppliers are also required to carry out regular laboratory tests. “Additionally, every ok.– energy drink is also subject to regular internal and external testing in a certified laboratory”, adds Michael Betschart, Brand & Product Management Retail Switzerland.
In order to ensure that it only accepts ingredients that have been produced in the most environmentally sustainable conditions possible, Ditsch became a member of the Roundtable on Sustainable Palm Oil (RSPO) back in February 2015. The RSPO organisation is committed to supporting sustainable palm-oil production across the globe. To that end, it ensures that palm-oil can be tested and certified at every stage of the supply chain.
In 2016, Brezelkönig again successfully obtained ISO 9001:2015 certification. “For a company producing and distributing bakery products, this certification guarantees that its processes are sound and reliable”, as Michel Gruber,Brezelkönig’s Managing Director, explains. As further proof of their quality, Brezelkönig pretzels have also earned the right to carry the SUISSE GARANTIE label. To qualify for this seal of approval, a product must be made from ingredients which have not only been produced in Switzerland but which have been processed there as well.
THE PROTECTION OF MINORS IS AN ADULT RESPONSIBILITY
SALES OF TOBACCO AND ALCOHOL
Valora takes its duty to protect minors very seriously. That is why all staff receive regular training to ensure that they are aware of the issues involved. An e-learning programme is carried out every year covering topics such as the sale of tobacco or alcohol to young people and employees’ understanding of its content is tested. Participation in this programme is mandatory for all outlet staff, whether they are employed by Valora, an agency partner or a franchisee. Sales managers also work with their outlet sales staff to raise awareness both of the importance of protecting minors and of their statutory obligation to do so.
In addition, notices are displayed behind each counter in Germany and Switzerland to remind staff of the local rules. Management, sales managers and outlet staff are all aware of the importance of these checks and it is in their interest to ensure adherence to the law by improving the protection of minors and clamping down further on violations.
FINANCIAL SERVICES
Like any other organisation that lends money, bob Finance is assuming a responsibility towards its borrowers. bob Finance’s services are designed for digitally adept customers looking for an efficient, online loan application process. bob Finance carries out comprehensive and detailed credit assessments based on information from the Centre for Credit Information (in German “Zentralstelle für Kreditinformation” or ZEK), the Consumer Credit Information Service (in German “Informationsstelle für Konsumkredit” or IKO), other credit reference platforms and the details supplied by the loan applicant. This enables it to ensure that the amount of the loans it grants is in line with the affordability parameters defined by Swiss consumer-finance legislation. With regard to the financial-markets legislation governing the prevention of money-laundering and terrorism, bob Finance is directly regulated by FINMA, the Swiss financial-market supervisory authority.
In the case of its ok.– cash product, Valora has deliberately and voluntarily chosen to require a minimum age of 25. Here too, the approval process involves information being obtained from a number of database sources, such as the Centre for Credit Information referred to above. In addition to excellent creditworthiness, applicants must also be resident in Switzerland and have both a private e-mail address and a mobile phone number.
Because security is of paramount importance to Valora, all data is protected by the most up-to-date security software. The data-transmission processes comply with a variety of certification standards, including EV SSL, the most stringent bank standard for the transmission of encrypted data.
ENVIRONMENTAL SUSTAINABILITY
REDUCING THE VOLUME OF RUBBISH
For a number of years, Valora has been a member of the Basel anti-littering working group, which brings together representatives of business and local government to develop initiatives aimed at curbing the incidence of littering.
Since 2014, all Valora outlets in Switzerland have been equipped with containers for collecting empty PET bottles. In the same spirit, all Valora outlets in Germany have a policy of systematically avoiding products with single-use packaging wherever possible. As an example of this, preference is always given to beverages in bottles on which a deposit is payable, so that these are returned and can thus be re-used. These bottles can be returned to any Valora outlet in Germany, where they are collected and returned to the bottlers. Valora outlets also collect and recycle all their scrap paper.
For the last two years, Caffè Spettacolo has been serving its beverages in multi-use mugs as well as single-use beakers. In taking this initiative, this Valora-owned coffee-bar chain aims to reduce the amount of waste generated by paper beakers. To encourage adoption of the multi-use approach, Caffè Spettacolonow provides all customers who bring their own mugs with a free upgrade of their coffee order to ‘Grande’ size.
PROTECTING THE ENVIRONMENT BY USING ENERGY EFFICIENTLY
Since 2016, all Valora outlets in Switzerland have been supplied with electricity generated from renewable sources. At Valora Retail Germany in Hamburg, all electrical power used is now environmentally sustainable. At Group level, Valora has also formulated an action plan with specific energy-saving initiatives. These include timing systems which automatically switch off individual machines at the outlets at specific times overnight.
In order to achieve a constant reduction in its environmental impact, Ditsch is focusing its efforts on using resources as efficiently as possible. As part of that initiative, the company already installed heat pumps at its production facilities back in 2009. These enable the calorific energy generated by the production plants to be recycled for heating the premises and providing them with hot water.
Following a Group-wide inventory of all lighting installations, LEDs are now installed as a matter of course whenever outlets or other facilities are rebuilt. In Germany, for example, all rebuilds and new outlet installations use LEDs exclusively, thus reducing both energy usage and maintenance costs. Every outlet that is rebuilt is also being equipped with energy-efficient class A+ cooling cabinets, coffee machines and ovens. Because these generate less heat, the food and beverages in nearby chill cabinets do not require as much cooling.
