Man of the Match

Vincent Roussel believes that large projects must be prepared well.
The 38-year-old president-CEO of both supermarket operator Csemege-Match Trade Rt and discount store chain Profi Food Retail Rt says this year will see its company fully preparing for the fusion of its Match and Profi chains. This pending project will take full speed next year.
Roussel says his priority this year is to eliminate all possible difficulties of the IT and logistics integration of the two chains. Csemege-Match will put a special emphasis on training the two companies’ staff for the transition process, he says.
He also predicts that by the end of the transformation project, in 2006, Csemege-Match will no longer be making losses.
“I expect that Csemege-Match will break even in 2006,” he says.
As for press reports that Csemege-Match’s cash & carry chain, Alfa, is to be sold, he waves these aside. He says the chain of seven stores operates profitably and there is no plan to close or sell it.
Csemege-Match’s owner, the Belgian Louis Delhaize Holding, took over the Hungarian stores of the former Julius Meinl Rt in June 1999, and also controls discount chain Profi. Csemege operates the Match and Alfa chains, numbering 200 and 7 outlets, respectively. Profi has 65 outlets countrywide.
Roussel previously headed another local Delhaize daughter, Provera Kft, the joint purchasing company for Csemege-Match, Profi and Hungarian Hypermarket Kft (Cora), which also belongs to the Belgian group.
Roussel has been with the Louis Delhaize group for 17 years, of which he has spent eight years in Hungary. Two of his three children were born during his time in Budapest. He is also vice president of the French-Hungarian Chamber of Commerce and Industry.
Roussel talked with reporter Péter Oláh last week at the company’s headquarters in the Lurdy Ház office and retail center, District 9. This is a translated and edited transcription of their conversation.


Q: At a press conference last year, you detailed Csemege-Match’s plan to unite the Profi and Match chains. When will you start?
A: Last year we said that all Profi and Match stores will be transformed and re-branded under one brand. The plan has not changed.
For logistics and IT reasons, the project will take full speed next year and we expect to finish it in 2006. So far, we have transformed four Profi stores into Match ones – two in Budapest and two in the provinces.
Along with the ongoing developments in the fields of IT and logistics, we are spending this year on training our employees and identifying and eliminating the difficult points of the transition. Currently, a ten-member team is working on the training project.

Q: What will be the most difficult part of the transition?
A: It is quite visible that the integration of the two chain’s IT and logistics systems will be the most challenging part of the transition. Data security is another key area of the process.

Q: How would you describe the fundamentals of the uniform store concept? What will the typical features of the merged chain be?
A: We will introduce fundamental changes to the current pricing, assortment, marketing communications and service concept. We intend to create a uniform, nationwide network, and put emphasis on low prices and availability.

Q: Is the new concept partly a response to German discount store operator Lidl’s upcoming entry to the Hungarian market?
A: The prime objective of our plan is to create a uniform chain and concept from the existing two chains. We are professionals in running proximity stores – stores that are close to one’s home – so we would like to specialize in and focus on this segment of the retail market.
It has been reported that Lidl will enter the market with around 30 stores in the near future. We know this operator very well and we know that its activity should not be underestimated. On the other hand, I believe Lidl’s entry will primarily force discount store operators to make adjustments to their current strategy.
You already know our plan. We will unite the Profi and Match chains under one logo, in a proximity store chain.

Q: How much do you think the transformation project will cost?
A: I cannot come up with a precise bottom line figure today.

Q: Despite the upcoming fusion, Csemege-Match recently announced that it will open five new Profi stores this year. Why?
A: We are planning to open new Profi stores in locations where the discount concept and image is still more attractive to shoppers [than a supermarket].
In addition, the operational environment and background at Profi is entirely stable, which is not always the case at Match. The new Profi stores will target west and east Hungary, so more than one store will open around Debrecen.
Otherwise, Profi and Match are run by the same management team, which helps the fusion of the chains.

Q: How many Match stores will you open this year?
A: We are planning to open five new Match stores annually.

Q: Five out of the 12 Alfa cash-and-carry stores of Csemege-Match closed at the beginning of this year, and there have been reports in the press anticipating the sale or final shutdown of the Alfa chain. What will happen to the existing cash & carry stores?
A: I am pleased to hear this question, and to quickly take the opportunity to say that we have no plans whatsoever to sell or to shut down the existing units.
Closing the stores would simply be a bad business decision. Following last year’s rationalization process, the Alfa stores – especially the one in Kondoros – have been operating profitably. The Alfa chain accounts for about 10% of the total revenues of Csemege-Match.
As I mentioned earlier, as of last fall, Alfa has been separated from the other assets of Csemege-Match and is managed by a new executive, under my supervision.
Following the closure of five stores at the beginning of this year, we currently operate a chain of seven stores. One of the Alfas is a paint store and another is an outlet selling discounted items.
However, I plan changes to the current retail concept of the Alfa chain, and I expect that the cash & carry feature of the stores will gradually fade away. We have no real expertise in operating cash & carry stores, and about 50% of the shoppers are private individuals, anyway.

Q: How much did Profi and Match collect in revenues last year? When do you expect to restore the profitability of Csemege-Match? What are your turnover plans for this year?
A: The net turnover of Csemege-Match totaled Ft 70 billion, while Profi was profitable with a total turnover of Ft 35 billion in 2003.
I expect that Csemege-Match will break even in 2006. In 2004, I expect a modest 5% like-for-like increase in revenues.
In addition, we also hope to fortify our positions and increase our market share in various provincial locations this year.

Q: Have you experienced any technical difficulties due to Hungary’s recent accession to the European Union?
A: In some areas, the situation was never thoroughly transparent, and there are certain issues that need to be clarified. We expect official statements from authorities about various important issues.

Q: How will EU accession affect the pricing and assortment strategy of local retail operators?
A: It is difficult to make predictions about prices at this point.
I believe there will be an upward adjustment in retail prices due to the accession, as part of the process that will bring prices to a balance in eastern and western Europe.
As for the assortment strategy, I expect up to 50% of the current assortment to change, partly driven by the increasing amount of imported goods.
Q: Following two capital increases last year by Csemege-Match’s owner, the Belgian Louis Delhaize group, will the company get fresh equity from its parent in 2004?
A: The owner actively supports the ongoing development projects and changes at the company, and the necessary amounts will be available this year, too. It is not finalized when, and in what form, we will receive those sums.

Q: What do you consider to be the biggest threat to fair competition in the local retail market?
A: The most disturbing thing is that some players seem to operate under laws that differ a lot from the ones that we know. It is difficult to work with competitors that play the game according to a different set of rules.

Q: As the vice-president of the French Chamber of Commerce, what can you do to address such problems?
A: I believe it would be worthwhile setting up an interest coordination committee with the participation of retail operators in Hungary. There is a letter on my desk that announces the establishment of the chamber’s trade workgroup, which is planning to launch such a retail forum.

Q: What kind of development projects will you complete at the existing logistics bases of Csemege-Match and Profi, in Vecsés, Monor and Mályi?
A: In 2004, we will complete the construction of a new 9,000 square-meter fresh food, fruit and vegetable warehouse in Vecsés. We will also finalize a Ft 30 million development project in Mályi and Monor.

Q: Following EU accession, are you looking at other new EU countries with expansion in mind?
A: We are not planning yet, but we are definitely looking around.
We are primarily interested in markets that hypermarket operator Cora [which belongs to the same parent] is interested in, such as Romania. But other countries may also come into the picture in the long run.




by Péter Oláh

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