Despite the challenges presented by COVID-19, Romanian retailer Profi continues to diversify and grow its business to the benefit of consumers.
DIVERSIFY AND THRIVE
“Profi is like the agile yacht that can easily change course when opportunities arise and, even more importantly, can sail to treasures in shallow waters that aren’t accessible to large cruisers.”
Those are the words of Pawel Musial, CEO and Chairman of Profi. His shipping analogy showcases how highly his organisation values operating with a flexible approach, particularly during challenging times such as those that the year 2020 has thrown at the world.
Profi is a chain of supermarkets and convenience stores with more than 1,000 locations in Romania owned by Mid Europa Partners.
“At Profi, we’re different,” explains Musial. “We’re a Romanian network managed locally and despite our financial strength not being level with many international competitors, our key strength is that decisions can be made locally and very quickly.”
Having worked in retail since the early 1990s, Musial has worked in several different organisations across numerous countries. Originally a native of Poland, Musial holds a degree in Technology of Nutrition Engineering from the Warsaw University of Life Sciences. Now in his second stint as CEO at Profi having left in 2017, Musial’s passion for retail is evident.
“Retail is probably one of the most dynamic lines of work and this why I just love it,” he explains. “There is certainly no time to become bored in retail, decisions must be clear, swift and pertinent.”
At the start of his career, he created his own poultry wholesale firm before moving onto work for modern retail networks across Poland, initially in marketing, before climbing the professional ladder to Tesco Polska as a Regional Director. In 2004, Musial moved out of Poland to become the Chief Operating Officer, then the CEO of Perekriostok chain in Russian Federation, which later became X5 Retail Group; Musial also became Vice-President and CCO for X5 Retail Group Holding until 2008, then remained a member of the supervisory X5 board until 2018. In 2008, he held the position of CEO of Eko-Market, Ukraine, becoming its Chairman in 2009 until 2010, when he joined Profi as CEO.
“There is a lot of room for experimenting with new ideas at Profi,” says Musial. “In general, I love people and thoroughly enjoy working with them, meeting both employees and clients. I like visiting stores, talking to people as well as with top decision makers, continuously adapting the business to the sudden changes in people’s tastes and purchasing decisions can be very exciting.”
Profi’s journey has been significant. In 2002, the organisation operated just over 67 stores but its network has now become the widest geographically in Romania. Today, Profi counts more than 1,400 stores in around 600 localities, with over 21,000 employees making it one of the country’s top private employers. To scale this further, Profi has set its sights on becoming the leader of the Romanian grocery retail market within the next few years.
At first, all its stores were in one standard format, however, as a result of successful trial and error experiments, the network has developed new formats.
“The City format came along as a smaller urban store, right near one’s home, where one would just slide into their slippers to go shopping to meet immediate needs,” he explains. “A really bold move was the creation of the Loco format that serves people in rural areas which was previously considered a no-go zone for modern retail because the countryside was considered to be too poor to sustain consistent trade.”
Indeed, Profi’s bid to expand has shown no signs of slowing and along with opening new stores, it is even taking control of already-existing networks.
Back in January 2020, the organisation acquired 18 supermarkets from local peer Pram Maya. At the time, Daniel Cirstea, General Director of PROFI Rom Food, commented: “The acquisition is part of PROFI’s integrated long-term strategy and we are thrilled that this is the most important move within our history. As per customer’s expectations, at the beginning of next year, the new stores will be aligned within PROFI standards. These new supermakets will enter the network in the most appropriate formats for our clients from Prahova and Dambovita, bringing them closer to our interesting promotions and good-quality products.”
A Profi store consists of over 5,000 food and non-food products at any given time. Musial believes that his firm’s consistency makes them the supermarket of choice for consumers across the country: “Proximity, good promotions and particularly a consistent every-day-low-prices policy make the Profi stores count as one of the first options for the client with a low-to average income, a category that describes a vast majority of people in Romania.”
However, despite all its success, the impact of COVID-19 added a different proposition to the usual day-to-day challenges that Profi faces.
“It’s certainly been hard for us,” admits Musial. “Days before the pandemic was officially recognised, we organised a task force to initiate emergency preparations with two priorities in mind: to protect clients and employees alike, and to keep the stores supplied for business as usual in order to prevent any outburst of panic. No-one had previously experienced such a situation; it was all unprecedented.”
As stocks of masks became unavailable, Profi produced its own plastic protective visors.
These were rolled out firstly for employees, and then donated to hospitals and police departments at the frontline of the COVID-19 battle. Profi also introduced protective gloves and plastic separators at the cash register in order to prevent the spread of the virus. These implementations cost Profi over €4 million during the first two months alone.
“It was money that no-one ever dreamed of in terms of budgeting,” Musial explains. “In order to ensure that no store or warehouse closed down if employees became infected with the virus, 12-hour shifts were organised so that people could work on a day on/day off basis, with the stores preventively disinfected between shifts. These changes continue to be in operation at Profi today.”
With Profi’s stores covering the whole of Romania, Musial admits always keeping them supplied with fresh products can be particularly challenging.
“We address this issue with a network of our own warehouses located in a way that optimises routes for the approximately 600 trucks that carry goods to our stores on a daily basis,” he explains.
“We encourage local suppliers to join us in offering shoppers more products with the local taste and flavours they prefer, while shorter routes to our warehouses is an incentive suppliers do appreciate. The picture is completed by a vast network of hubs scattered around the country, where products are transferred from large trucks to smaller ones that can easily access stores in crowded localities.
“In addition to that, last month we opened our first warehouse with below zero capabilities so now a larger number of frozen products can be added to our assortment. Gradually, all of our warehouses will have such capabilities.”
However, during the pandemic, the demand for some products increased rapidly overnight. With consumers worried about items such as bread going out of stock, Musial confirms it was one of the hardest tasks to keep their stores fully stocked at all times.
“Wheat flour sales went up fivefold within days and our usual suppliers couldn’t produce the required amounts of flour so we had to start looking abroad for extra quantities,” explains Musial. “In the meantime, transporters weren’t initially allowed to cross international borders so new suppliers and new routes had to be found. However, with a considerable effort, we succeeded in keeping the stores supplied and after a couple of days people realised they could just continue shopping as usual and didn’t need to panic.”
Sustainability is another key pillar to Profi’s strategy.
The organisation has LED lights to illuminate stores, warehouses, offices and exterior alleys while store-top solar panels and other proactive measures contribute to a more efficient use of the network’s resources and have helped cut the electricity bill by 13 percent in 2019 versus the previous year.
The use of natural gas dropped by 25 percent, the cost of heating fell 34 percent and the water consumption was down by a considerable 56 percent.
“All in all, we curbed our greenhouse gas emissions by 13 percent,” explains Musial. “Besides, we recycle 94 percent of the waste generated by the network and capitalise on 95 percent of all the used packaging, while the amount of food waste decreased by 17 percent.”
Over the past 10 years, Profi has also invested millions of euros in corporate social responsibility (CSR) activities with a particular focus on children.
Initially, the programmes were conducted by Profi alone, and donated hundreds of laptops to schools in the communities around its stores. However, as the network expanded, Profi started to enlarge both the geographical area and the domains of action by becoming associated with NGOs with a proven track record of success in supporting health, culture, education, sports and social causes.
Looking to the future, Musial is optimistic about what the next few years could hold for his organisation and is keen to put a challenging 2020 behind him.
“We have lots that we want to achieve,” he notes. “We want to grow the network to more than 2,000 stores in the near future. Meanwhile, there are hundreds of old stores that need full or partial refitting for alignment to current standards.”
However, Musial affirms that despite challenging circumstances, his team have worked together well.
“This year has been hard for us all,” he says. “But, I have to merit our great team for getting through all the difficulties and managing the expansion and renewal of the network as planned. This year, we worked out our strategy for the next four years and with an important new vision in almost every department, 2021 is the first year of changing Profi for the even better.”