Bosnian supermarket chain Bingo has increased its profitability over the past year despite sustained high levels of investment. As Bosnian business portal Akta disclosed, supermarket chain Bingo closed 2016 with a net profit of BAM67mn (EUR34mn), while main competitor Agrokor’s Konzum ended up with a net loss of BAM42mn (EUR21mn) – falling into the red for the first time in its history. Bingo has already posted results several times higher than Konzum’s over the past few years.
Tuzla-based Bingo is known for its sustained capital expenditures, be it in manufacturing – as demonstrated with the acquisition of detergent manufacturer Dita last week – or shopping centre projects such as the acquisition of two shopping malls in Sarajevo a few months ago. In this way, Bingo has gained the reputation of protector of the Bosnian food industry, while simultaneously earning the status of local hero through strong charitable support of local communities.
Bingo in Bosnia has succeeded in not only taking market leadership from the number one Balkan food-to-retail conglomerate Agrokor, but has also continued to growth in terms of profit. Surely with more than 3,000 stores on the Balkans and massive production facilities, rival Agrokor should have had the momentum to outpace the little more than 150 Bingo supermarkets. So, what is the secret behind Bingo’s success?
Bingo has heeded the basic retailer rules, ‘retail is detail’ and ‘all business is local’. In a country marked by the lowest purchasing power in the region, Bingo has put the basics first – assortment and price – rather than losing itself in fancy upscale supermarket designs aimed at a consumer segment which is not fully developed yet. At the same time, it has anchored itself economically – through its production backbone and local private label ranges; as well as politically – through community charity work – in a country characterised by growing patriotic awareness.
Where will we see Bingo in the medium term? With Agrokor deeply self-absorbed in avoiding bankruptcy, the Tuzla-based retailer will be the top dog for the near future at least. It might even be possible that Bingo could take over part of its ailing competitor’s store network; considering the comparatively low market share – which stands at around 15% for each company according to LZ Retailytics. Even if we disregard this possibility, we are still convinced that Bingo will grow its market presence steadily. At the same time its production arm could provide a low-cost base to strengthen own brand development, with the option to reinforce the bottom line by exporting into the wealthier neighbouring countries.