“PB”: Why did you decide to take control of Empik?
Ewa Szmidt-Belcarz, president of Empik Group: Let’s start with the fact that I’ve never been a “regular” hire manager. I have the soul of an entrepreneur and when I get involved in something – that’s 500 percent. I treated Empik like my child from the very beginning. We laugh with my management team that this child is a bit outgrown, but we treat this company as our own 75-year-old start-up. Today’s Empik Group, as well as the transaction itself, is the result of many years of work by me and my people. I decided to take this risk because Empik is a unique organization with enormous potential. I understand and know this business inside out, and at the same time for over seven years I have been constantly fascinated by the multitude and variety of its possibilities. In my opinion, it is one of the strongest brands in Poland. It has a strong consumer sentiment, built on a 75-year history and an important social mission, and at the same time it is modern and presents values relevant to today’s generation Z. It is a large-scale business in the digital and analog world, based largely on subscription relations, not only transactionality. Co-creating such a capacious ecosystem and a strong brand, having an amazing team on board – I could not help but consider such an option.
How did you finance such a large transaction? Managers earn well, but not that well …
We do not disclose the details of the transaction. The transaction is carried out on the company’s market value, is subject to standard financing rules and includes an element that depends on future performance.
Empik is a long-term investment for you, potentially a “life project” that you will pass on to your children, or a financial investment that is to bring a high rate of return within a specific time horizon?
The development of the Empik Group is a long-term project, and I am a long-distance runner, so our development plans are also long-term. The growth potential of this business is enormous because we can develop on a multi-faceted and multi-directional basis. This business has no expiry date, just unlimited possibilities, so I’m going to build it boldly and consistently.
Can Empik potentially, in better conditions, go to the stock exchange with you as the main shareholder, or will you be looking for another financial partner after Penta who will be able to support the expansion?
Currently, we are focusing on the implementation of the group’s strategy and dynamic growth in the medium and long term, creating real value for both shareholders. Financial markets are changing dynamically, we will observe them and, depending on the needs of our group and shareholders, use emerging opportunities. It is possible that in the coming years – with better economic conditions and after the next stage of development – we will consider an IPO, but I certainly cannot say that decisions in this area have already been made.
What is your idea for the development of Empik? You can see that you put a strong emphasis on online presence and attracting independent sellers, but in this market it is not easy …
The development opportunities for the Empik Group are enormous, despite the fact that in the last seven years we have already doubled the scale of operations and business results, and we have achieved our strategic goals. Empik Group’s strategy has not changed – together with my team, I want to strengthen our leading position in the culture, entertainment and lifestyle segment and continue building Empik Group as a leading multi-channel ecosystem. Today, half of the group’s revenues come from the digital and e-commerce area – in a few years it will be the vast majority, while our network of physical stores is growing. Our dynamically growing marketplace – EmpikPlace will play a key role in this growth. Today it accounts for 20 percent. turnover of empik.com and even in the face of the slowdown of the entire e-commerce in Poland, it can grow in three digits. We have over 3.5 thousand. sellers and over 5 million offers – this is a very large scale, but we are still gaining momentum. We are constantly investing in technology and developing the team, as we expect a multiplication of revenues in the next three years.
What is to be the driving force behind this growth?
An important element of our strategy is building a multi-channel subscription-based system. We have over 7.7 million users of our Empik Premium programs, who generate more than half of the transactions. This is a huge potential for us to build more value for our users, including by offering them additional digital services. We focus both on the development of subscriptions based on digital content, including our EmpikGo streaming platform, and on the gradual addition of additional services, also in cooperation with other partners.
The foundation of Empik is still the stationary network. The pandemic didn’t make you change your approach to it?
We are one of the few retail formats on the market that continues the dynamic development of the network of physical outlets. Annually, we open 30-40 stores under the Empik and Papiernik by Empik brands, and we will maintain this pace. A unique feature of our network is the possibility of development in any format – in shopping malls, retail parks, as well as in the convenience format, i.e. in a local, neighborhood version. We strongly focus on the latter and we want to open at least 100-150 such stores within three to four years. Mały Empik works great in street locations – the economics of these formats is attractive to us, an additional advantage is the possibility of increasing the availability of our offer and expanding the empik.com collection points network. They strongly support the development of our e-commerce – it is not only the favorite form of customer delivery, but also our competitive advantage in terms of last mile costs. At the same time, it is the form of delivery with the smallest carbon footprint.
How will the company finance investments and what is the investment budget for the coming years?
We plan to maintain the pace of investments, which means that we will spend about PLN 350-400 million by 2024. For many years we have been financing investments from our own resources, that is from the results we have generated. We do not rule out financing from other sources, if it is justified.
In which business segments is Empik not present, and potentially it could be? Do you see the potential for expansion outside Poland?
We are active in managing our assets, and we are not afraid to take advantage of acquisition opportunities – in recent years we have bought the distribution company Platon and the start-up Going, which, after the takeover, increased their revenues by leaps and bounds. In the case of Plato, we increased his revenues by 130% in four years, and Going grew 10 times and will significantly exceed PLN 100 million for GMV this year. We are focused on organic growth, but we do not rule out acquisitions in the segments in which we already operate. When it comes to foreign expansion, we plan to further develop EmpikFoto, which is already present in the Czech Republic, Slovakia and Romania. In the case of other companies, including digital ones, we do not rule out development outside Poland in the future.