November 28th 2019

Retail disruption.

As part of the MCI Alumni & Friends Distinguished Guest Lectures, the Entrepreneurial School® had the honor to welcome Gerhard Drexel, CEO, SPAR Oesterreichische Warenhandels-AG.

Dr. Gerhard Drexel mit MCI Rektor Dr. Andreas Altmann in der MCI Aula.


Disruption in the retail trade: "Be the disruptor, not the disrupted"
Constant change and transformation as the basis for success - empathy for the demands of society.

In his lecture at MCI, Gerhard Drexel, CEO of SPAR Österreichische Warenhandels-AG, explains that transformation in the retail trade is a permanent process, and only those who continually reinvent themselves can successfully survive on the market. Those who cannot prepare for change run the risk of being eliminated from the market. Formerly successful Austrian companies such as Baumax, Sport Eybl, Schlecker, Konsum Meinl and many more had to pay dearly for their failure to adapt; they were taken over by competitors or - even worse - slid into bankruptcy.

Yet, it should not be that difficult to navigate successfully through turbulent times, says Gerhard Drexel: "The recipe for success is knowing the laws of evolution, where it is not the strongest species that survive, but rather those that can adapt to change: Be the disruptor, not the disrupted". This change is part of Spar’s corporate history and philosophy and is visible on several levels.

The transformation of business formats takes place by evaluating all locations and verifying their future viability. This way, stores are continuously modernized, enlarged and made more consumer-friendly; while of course, the topic of parking spaces plays a major role too.

What consumers experience on a daily basis at all stores is the transformation of the product range: Right from the start, Spar actively addressed the needs of its customers and proactively identified trends such as premium, organic, regional, convenience, ready-made meals, discount prices and much more. On this basis, the company has developed a pyramid of own brands in which almost every consumer trend can be found. The distinctive own brands are now part of Spar's success strategy. Around 5,000 articles in the food and near-food sector feature in this range. Compared to the own brand industry average of 22 %, Spar's own brand share is 45%, ensuring independence for the company.

Another area that is subject to a constant transformation process is sales territory: SPAR is in the process of "developing from an Austrian retail company into a Central European retail group". Constant growth is therefore part of the corporate strategy, with market development being a controlled and focused one. With 82,700 employees at 3,174 locations in Austria, North-East Italy, Slovenia, Hungary and Croatia, the company generates annual sales of 15 billion Euros. Gerhard Drexel describes the ideal route to successful transformation: "You have to free yourself from being average. There are two ways of doing this: Either you do ordinary things exceptionally well, or you do extraordinarily good things."

It is fitting that Spar sees itself as a value-oriented company. This is expressed through its attitude towards employees, where their appreciation takes number one priority. In addition, in an active approach to the demands of society, Spar sees itself as an advocate for consumers, which is not afraid to raise its voice in the event of worrying developments, and is even prepared to develop countermeasures within the scope of its own possibilities. For example, Spar is taking the lead in the area of healthy nutrition and has declared war on high sugar consumption, among other things. It tackles this by means of an information campaign on the one hand, but also with the consistent revision of food recipes for its own brands on the other. Since 2017, 56 truckloads of sugar have been eliminated from Spar own brand products. Another example is the company's struggle against the planned free-trade agreement between the EU and South America (Mercosur).

Gerhard Drexel: "Fundamentally, we do not oppose free trade agreements of this kind. However, it must be ensured that our existing standards are upheld, in order to protect our economy and to protect the global climate. "