You can also listen to the interview in the audio version.
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Czechs are starting to save money and, for example, they are increasingly turning to cheaper private labels in food. The online retailer Rohlik.cz is also responding to this trend, which has significantly expanded its own brands and will continue this trend.
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“Every second milk that customers buy is our private label, every third ham is our private label,” says Rohlik.cz boss Olin Novák, adding that the company has so far focused mainly on fresh goods and will now expand its portfolio of own brands. also for durable foods. “We started with fresh goods, where the customer is most bothered, and we will add other categories,” adds Novák.
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The company, which earned CZK 11 billion in the Czech Republic last year, is now preparing large investments in innovation and automation. Thanks to this, it has already managed to make the operation of the warehouse more efficient by 40 percent, thus mitigating the effects of inflation on customers.
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Rohlík is also preparing for a lawsuit with Tesco over their recent comparative campaign. “A good name is one thing, another thing can be lost profits,” says Novák, adding that the company could have lost hundreds of thousands to millions of crowns.
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Rohlík received a record 5.4 billion crowns in investment round D. How hard was it at a time when belts were tightening and technology companies were writing off billions of their value?
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This is more of a question for Tomáš Čupr, who went through the investment round. But it is a huge success for us and for the Czech Republic. There are companies that operate in a similar range of services and which, on the contrary, are now laying off employees and closing markets. We are in the opposite situation, we managed to convince investors that what we do has a future and will grow in the long run. Of course, it gives us another wind in our sails to keep growing.
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The investment is to be for foreign expansion, will the money be used in the Czech Republic as well?
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They will be used for the whole group and one of the things is innovation. We invest in automation. We are now building a new fully automated warehouse in Chrášťany, which is an investment in the order of tens of millions of euros, and partly from this investment. We are also looking at innovations in current warehouses. We talk about robotics, we solve automation also because we do not want to pass on the problem of inflation to customers and we are looking for savings. In the last three months, we have streamlined operations in warehouses by 40 percent.
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Will you also expand to other cities in the Czech Republic?
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We are looking at southern Bohemia. This was unbelievable for me even before the crisis, southern Bohemia is far away and we have never been able to do it economically. Thanks to better efficiency in warehouses, we have now come up with a new model that could work.
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Will the delivery be from southern Bohemia?
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No. We will leave Prague and use Rohlík Points. We’ll see how many customers we hire. If it is successful, we can start driving to households there as well. With this concept we can then serve the rest of the republic. We promise a lot from that.
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I believe that in the autumn at the latest.
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Aren’t you afraid that there will be misery, people will start saving and they won’t buy? You are already saving everywhere…
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We have the advantage of being in an environment that is essential. Food customers will buy.
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But marketers are already saying that baskets are shrinking, that people are moving to cheaper private labels…
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That is definitely true. We went in the opposite direction, although probably no one expected the situation in Ukraine, but it was possible to assume that when the covid ended, people would change their behavior, and we prepared for it. When you look at our product portfolio, we have incredibly expanded our portfolio of our own products.
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Every second milk sold is a private label
And will you continue to expand private labels?
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Yes, but we do it in a roll. Every second milk that customers buy is our private label, every third ham is our private label.
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We have eight brands that we would call private. But each brand has its own specifics. Milk is not only the cheapest, it also has more fatness, it is of better quality. This is how we look at it for every product. We started with fresh goods, where the customer is most bothered, and we will add other categories. Now we have added coffee and we will continue to durable food.
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What percentage of sales are now private labels and what will it be at the end of the year?
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It’s different. Overall, it’s on double digits and it’s going to grow. However, we still give enough space to products from other brands, but also to specific products.
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Which are farm products that you also sell. But will their share not fall at the expense of private and cheaper brands?
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As for the risk that local and farm products will be pushed out, we have worked a lot with farmers to enable them to function better and cheaper. Thanks to this, we are able to offer farm and local products at the price of conventional ones. I’ll give an example. Most chains import strawberries from abroad, which have gone 10 to 15 percent. We sell strawberries from Vraňany 10 percent cheaper than how much we sold strawberries last year. There are more efficient processes, you don’t pay for expensive logistics – this year we have already sold three times more strawberries than last year.
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1500 crowns for each purchase. A total of 11 billion
What is the average value of the cart?
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In our country, the average value of the basket is relatively stable and it is 1500 crowns.
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Last year, Rohlík earned a total of 490 million euros in all countries. How much was it in the Czech Republic?
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The Czech Republic made 11 billion crowns. Last year, we grew by almost a third compared to the previous year.
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And what are you counting on this year?
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We are at the start, our financial year started in May. After that first month, however, it looks promising and we will grow in double digits again.
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When will Rohlík be profitable in Vienna and Germany?
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This is a question for colleagues who lead these countries. I believe very soon. We take all the steps we take to be more efficient and to continue to operate in those markets for a hundred years, for example, and for customers to love us. It is not about the headless acquisition of new customers, for example in the Czech Republic we have given all our investments to customers who have been with us for a long time.
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A case with couriers? Lessons learned
You said “to make us happy”. How much has your reputation with Rohlík been damaged by your courier case?
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I don’t know. We measure it as customers recommend it, and this number has basically not changed. We have a Net Promoter Score, a number that measures customer satisfaction, across all countries over 70, and this has not changed. What saddened me more was the bitterness, the aftertaste that remained.
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On the other hand, I firmly believe that in that six months we have changed many things in relation to couriers and have been able to straighten them out. We’ve made a few changes since then, and it hasn’t been discussed anywhere. We did better, we were able to test those things first, have fun with them, and only then did we implement it.
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It was a lesson for us and we also never had as great customer reviews of couriers as we have now.
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If it’s not because customers are afraid that couriers are paid accordingly…
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They are not only evaluated accordingly, but it is certainly an important element. And again, each of those couriers is well aware of this. The progress there has been enormous. Although it was painful and I’m not proud of it.
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Would you communicate it differently today?
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Yes. We’ve made a lot of changes since then, and nothing like that has happened. We were able to learn from it.
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How many couriers do you have? And will you get another one?
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We have 1,500 of them in the Czech Republic and that number is evolving with the number of orders. Now we have relatively enough people and it is also a reflection of the style in which they are rewarded in our country.
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Lawsuit against Tesco
Tesco recently came up with an ad “Don’t get drunk with a croissant”, which you objected to and went to court and consumer protection authorities. How did it end up?
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We defended ourselves, because this really came to our edge. We applied for interim measures, but Tesco withdrew the campaign within two weeks and replaced it with another. As a result, we have also withdrawn the application for interim measures and we will defend ourselves in court, which will be long-term. So for two or three years.
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We are processing that now. By downloading it, we didn’t want to rush it. We are not in a hurry, on the other hand we were quite sorry about this. When was the last time you bought a kilogram of sliced eidam…
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Are you suing for damage to your reputation? Or what is the subject of the lawsuit?
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We’re working on this. Reputation is one thing, lost profits can be another.
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How much could a two-week campaign deprive you of?
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It could be hundreds of thousands, maybe millions. This is not important to us, the principle as such is more important to us, and whatever we judge, we would give to charity anyway. We are talking about the principle. It is not fair to compare a pear to an apple and say that this costs so much and this is different. It’s not fair to put a product in action the day before and say: Look, I have it cheaper.
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Won’t you go in the form of a counter-campaign?
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We decided, when we gave the precautionary measure, not to react to it. In retrospect, I think we are so funny that we could.
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You yourself were in Tesk when it had its first campaign against Rohlík…
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I like to be on the edge. I think my campaign was on the right edge then. Here, all the experts agreed that this was over the edge. Comparative campaigns have absolutely strict rules, and they have not followed any of them.
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Tesco’s response:
As expected, Tesco’s Municipal Court in Prague concluded that it had not been proven that Tesco’s campaign could be considered unfair.
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The advertising slogan “Don’t get drunk” with a depiction of a croissant cannot be considered lightening in relation to VELKÁ PECKA sro (behind the Rohlik.cz brand, note by the court) in the given circumstances to the extent that it fulfills the sign of violation of unfair competition. – Conflict with the good morals of the competition.
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Tesco’s comment on the above
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“We welcome the fact that the Municipal Court in Prague, although in an invalid resolution, stated the compliance of our campaign with legal regulations and confirmed how we thought that Rohlík’s proposal to issue a preliminary injunction and stop the campaign was out of place.”
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Agenda
A quarter of an hour of business first hand. Interviews with top leaders of Czech business, company founders, experts.
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Every weekday at SZ Business and in all podcast applications.
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