SUSTAINABILITY-LINKED FINANCING FRAMEWORK
Duesseldorf, 21st June 2024
A. OVERVIEW OF CECONOMY
Retail of consumer electronics and related product categories is the core of the business and is complemented by margin-boosting business models - consisting of services in direct relation to the product purchase, but also product independent services.
The basis is the retail core business - i.e., in-store and digital retail of consumer electronics products. The focus is on a well-curated and increasingly sustainable offering. CECONOMY regularly expands the range with high-growth categories such as gaming, health, and electric mobility.
CECONOMY is an international omnichannel consumer electronics retailer with over 1,000 stores supported by a team of approximately 50,000 employees. CECONOMY operates in eleven countries across Europe and Turkey under the retail banners MediaMarkt, MediaWorld and Saturn. In the financial year ended September 30, 2023,
CECONOMY achieved sales of €22.2 billion, a growth of
2.2% compared to the previous financial year, with an adjusted EBIT of €243 million, a growth of 16.8% compared to the financial year ended September 30, 2022.
CECONOMY operates an omnichannel service platform with a reach of around 2 billion customer contacts a year. The platform offers customers and partners a broad spectrum of opportunities to get in touch with consumer electronics and to make use of relevant services. The aim is to turn satisfied customers into
loyal customers. This stickiness is the basis for the
continuous growth of the various platform business models.
The Services & Solutions business offers a constantly growing portfolio of services such as repairs within a category specific architecture. This not only maximizes customer benefit but is also an important lever for profitability. Based on the recent enhancement of billing and self- service capabilities, new and existing services are increasingly being sold as subscription models, resulting in long-term customer relationships with recurring cash flows.
MediaMarktSaturn's Marketplace offers an extensive product range in addition to its own retail business. Customers can seamlessly access a manufacturer's full range as well as complementary offerings from third parties. CECONOMY benefits from commissions without taking on inventory risk.
The private label business offers attractive value-for-money alternatives in the main product categories and thus increases the relevance of the assortment for customers. CECONOMY can generate higher margins thanks to the greater vertical integration. To fully utilize the potential, the focus is put on optimizing and integrating the assortment.
> | < |
"Omnichannel | ? | ||||
touchpoints" | Stores | Online | App | Direct Contact centre | Social Media "Next Big Thing" |
Retail core | ||||||||||
Services & | Marketplace | Private label | Space-as-a- | Retail media | ||||||
Solutions | Service | |||||||||
Omnichannel Supply Chain | Tech Stack | People | Sustainability
The space-as-a-servicebusiness offers industry partners access to store space, allowing them to benefit from CECONOMY's reach. Here, leading manufacturers can present their brand and product innovations embedded in a unique shopping experience. CECONOMY thus increases the value of retail space, generates recurring cash flows, and deepens its relationship with the industry.
Retail media enables manufacturers and advertisers to use the wide reach of CECONOMY's digital channels for their own marketing activities. For end customers, this means an enhanced shopping experience thanks to more relevant offer communication, while CECONOMY taps into a highly scalable business that it will expand with additional products.
The targets of the individual business models for financial year 2025/26 are clearly defined, and the capital markets are informed about the progress at regular intervals with complete transparency.
CECONOMY places its customers at the centre of its strategy and consistently gears its activities towards meeting their needs. This central strategic principle is also embedded in its purpose: "We create experience electronics to enrich people's lives." As a Euro- pean market leader in the creation of "experience electronics", CECONOMY sets new standards for customer experience, the
conscious discovery of technology and the provision of support to
customers in their day-to-day lives, thereby increasing customer satisfaction and loyalty, while remaining focused on significantly higher profitability and cash generation with strict cost discipline.
CECONOMY's four key pillars to this customer-centric transformation:
CECONOMY's approximately 50,000 employees offer in- person advice every single day as part of a convenient and seamless customer experience, thereby setting it apart from pure online retailers and ensuring both employee and customer engagement. Service quality is ensured through
systematic training, enhancements to the process landscape
and the upholding of a strong service culture. The employee experience has been significantly enhanced: an international upskilling program prioritizing the customer and the provision of services have been completed by more than 60% of all employees in the financial year ended September 30, 2023, alongside the provision of digital training opportunities and the implementation of leadership and talent program and diversity and inclusion projects.
CECONOMY takes a mobile-first omnichannel approach to building a unique value proposition, which integrates personalized customer experiences into the digital and in-store worlds as seamlessly as possible, from a better user experience in the app to modernized stores with "experience zones" that offer the opportunity to experience technology at first hand. The curation of a product assortment with the customer's needs and wishes in mind is also crucial. An optimized supply chain, including centralized procurement and continuous improvements in logistics, ensures greater availability of goods
and faster delivery times.
CECONOMY's strict focus on its customers is paying dividends: Its net promoter score ("NPS"), a leading indicator for measuring customer satisfaction, is at a record high of 53 (financial year ended September 30, 2023). International campaigns aimed at repositioning the brand are underway. CECONOMY has achieved better functionality in digital channels such as the MediaMarkt app, a much wider range of products on the Marketplace (1.4 million stock-keeping units with a gross merchandise value ("GMV") in excess of €135 million in the financial year ended September 30, 2023) and speedier modernization of the
store portfolio, with 55% of stores having already been modernized and 36
stores being run in new, innovative formats as of March 31, 2024.
CECONOMY's strategy defines new standards for the customer experience along the entire lifecycle with a view to creating stickiness. It is increasingly common for a typical customer experience to start with the trade-in of an old product and then be enriched by means of category-specific
services - designed to support such sales (e.g., through
financing), offer peace of mind (e.g., insurance), and facilitate the use of the products in question (e.g., repair, coffee capsule subscription) throughout the product lifecycle. To this end, CECONOMY is also entering into more strategic partnerships to offer customers the best services on the market.
Sustainability - in the form of a climate-neutral shopping experience and a broad range of sustainable products and services - is a core element of CECONOMY's strategy and operating business, giving customers easier and more holistic access to the circular economy. CECONOMY is significantly accelerating the decarbonization of its business activities and focusing on its social engagement. The share of products certified as sustainable under its own "BetterWay" label increased to 11.5% in the financial year ended September 30, 2023, with energy efficiency and refurbished products playing an increasingly important role in the curation of the product assortment. The trade-in service was rolled out internationally and scaled up to more than 200,000 transactions. At the same time, internal CO2 emissions from Scope 1 and 2 were reduced by 39% to 42.9 thousand tons of CO2 equivalents compared to the base financial year (2018/19).
Sustainability at CECONOMY is giving customers easier and more holistic access to the circular economy.
In financial year 2023/24, CECONOMY continues to work on innovations to improve omnichannel customer experiences, for example the continuous updating of the product range, the opening of new store concepts and the development of the subscription insurance business with MyMediaMarkt+. In addition, the business will be further improved through the targeted use of new technology and artificial intelligence applications - from chatbots to
the generation of content or automation of processes. Consumer electronics
products powered by artificial intelligence are expected to enhance the user experience through innovative features, in the areas of smart home, creativity and productivity. Further growth opportunities have been identified in the context of sustainability, premium and new categories, i.e., sustainable and energy efficient products. Introducing more eco-friendly products like those labelled under the "BetterWay" brand, along with refurbished items, demonstrates CECONOMY's commitment to sustainability and customer-centric innovation. By expanding the assortment to include these environmentally
conscious options, CECONOMY not only addresses growing consumer demand
for sustainable products but also contributes to reducing environmental impact through product lifecycle management.
The incorporation of services like trade-in, allowing customers to exchange their used devices for vouchers, is another strategic move. This service not only promotes customer engagement but also supports circular economy principles by encouraging the reuse and recycling of electronics. By facilitating trade-ins, CECONOMY enhances customer loyalty and provides a more sustainable
alternative to traditional disposal methods.
B. SUSTAINABILITY STRATEGY & MANAGEMENT
Introduction of repairs
and SmartBars Introduction of manufacturer obligations and start of supplier audits by IMTRON
Launch of first gender | First non-financial | Reporting on Scope 1 | First steps towards direct emission savings |
diversity initiative | statement for FY 2017/18 | and Scope 2 emissions | (Scope 1 and 2) through green electricity |
Sustainability becomes an established pillar of the corporate strategy and organization
Big companies should do big things. This applies not only to economic | ||||
success, but also to taking responsibility. Sustainability is counted as one | ||||
of the corner-stones of CECONOMY's strategic development. The company | First groupwide | Introduction of BetterWay | Signing of the European | |
pursues a far-reaching sustainability strategy with clear goals. The reduction | employee survey | logo for sustainable | Commission's Green | |
of green-house gas emissions, the preservation of resources and compliance | product categories | Consumption Pledge | Appointment of a | |
with the law, combined with the view that sustainability is an integral part in | Human Rights Officer | |||
the company's growth, mean higher minimum standards for CECONOMY | ||||
in connection with business operations and ESG transparency. |
To meet these demands, CECONOMY works constantly to implement its sustainability strategy. This also ensures that business operations are in line with the expectations of all stakeholders.
First complete reporting of all Scope 3 | Introduction of refurbishment |
categories | as a new business model |
Approval of
SBTi targets
CECONOMY set itself ambitious climate targets in order to reduce its emissions (Scope 1 to 3). Through the ongoing optimization of business processes, increasingly stringent demands on suppliers, and carbon-neutral delivery, CECONOMY enable its customers to protect the climate when buying at CECONOMY.
Approved Science Based targets (SBTi) and participation in the EU Sustainable Consumption Pledge
Net-zero carbon emissions for scope 1 & 2 by 2024, | Scope 1 & 2 (our operations) | Scope 3 (upstream / downstream) |
scope 3 by 2040 | Net-zero by 2024 | At least absolute target reduction |
of 33% by 20331 | ||
Renewable electricity use in 100% of our stores, head- | ||
quarters, central hubs and warehouses since January | ||
2024 |
CECONOMY will engage 74% of its retail suppliers by emissions to set climate targets until 2028
0,3% | of our carbon footprint | 99,7% |
1 in private label, external brands, transport and distribution, baseline 2022, SBTi targets
CECONOMY supports the circular economy thanks to energy-efficient, sustainably produced, and packaged products as well as offerings that make products more attractive to customers and usable for longer. The product lifecycle is extended through repairs and other resource-conserving services, and products are made available for secondary and tertiary use. At customer level, CECONOMY aims to help customers lead a sustainable lifestyle and
enable them to consume in a responsible way that conserves resources -
from purchase and the longest possible usage to the proper disposal and recycling of their products.
CECONOMY targets to double the number of BetterWay products in its assortment to c. 7,000 in FY 25/26 and to increase the number of refurbished devices sold to 220,000 by 2025/26. The services established by CECONOMY such as repairs and product trade- ins and new, sustainable business models relating to financing, including options to return products, are also making an effective contribution to the circular economy. The number of products traded in is expected to reach 600,000 by 2025/26.
To this end, CECONOMY is continuously increasing the share of sustainable and energy-efficient products as well as the number of refurbished products in its assortment. A product is considered sustainable and labelled as a 'BetterWay' product if:
A. It is certified with a Type 1 ecolabel.
Type 1 ecolabels (based on the standard ISO 14024) are recognized internationally as labels with the highest standards:
Independently awarded, often with the involvement of the government.
Only awarded to the best products and services and thus indicate a special level of environmental quality. The entire service life of the product is taken into account during the assessment.
Clearly defined, publicly accessible environmental criteria and verification rules.
Criteria are developed during a transparent process with the involvement of stakeholders.
Award criteria are also regularly revised.
The labels are very credible and are usually well-known.
B. The product meets the internal "BetterWay Criteria".
For large household appliances like washing machines and freezers no third-party ecolabels are commonly used. Therefore, MediaMarktSaturn developed in collaboration with TÜV Rheinland own BetterWay criteria to be able to highlight the most sustainable products for domestic appliances. As
a rule of thumb, the sustainability of domestic appliances is
mostly determined by the energy use of the product during its lifetime. The larger and more energy consuming the product is, the more this is true. That is why, the BetterWay criteria always consider the energy label of a product. When other criteria also determine the energy use or lifetime of a product, these criteria are also considered. Examples are a "no frost" function for freezers improving energy use or a cleaning program for coffee machines improving lifetime.
CECONOMY's business is based on social responsibility to its own employees, to suppliers throughout the supply chain and in the communities CECONOMY touches. This includes fairness, transparency, and diversity.
Emphasis is placed on appreciating the work of all employees and on their targeted development, motivation, and empowerment. The focus here is on employee involvement and talent development, as well as promoting diversity, for example in the form of bias training and ensuring diversity in talent pools. At the same time, CECONOMY undertakes to uphold labor laws and human rights, both in its own companies and in the supply chain. For example, CECONOMY is working continuously to develop its own risk management approach to uphold human rights and cooperates closely with suppliers to tackle potential human rights risks in the supply chain. To this end, CECONOMY has established a concept for sustainable supply chain management and continues to refine this on an ongoing basis.
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CECONOMY AG published this content on 24 June 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 June 2024 07:53:46 UTC.