La Transformación del Retail | La Visión de los CFOs | Guillaume Gras | Grupo Dia

Good morning, Adriana. Thank you.

Yes, it's true. Private label first has a very strong strategic role. It defines a strategic role in defining our value proposition, which consists of offering a quality product with a price difference of 30% less compared to national brands, and it is a very strong competitiveness tool, especially in the context of inflation, which produces an effect of lowering the average price of units sold and at the same time increasing volume. That said, the development of private label can change the financial balances of the company, I would say mainly in sales and margin, and very little in logistics, personnel, and working capital. Why does it have little impact on working capital? First, payment terms are the same between private label and national brands. Second, there are two effects that offset each other: private label has a much higher turnover, which favors capital, but at the same time with a price 30% lower, it makes you lose part of that benefit, and in the end we can say the impact is almost neutral. Now, in terms of budget and forecasting, what can change? I would say it mainly impacts the assumptions we make regarding sales and margin. Regarding sales, because as I said, the average price drops but volumes increase, and it impacts the margin type, knowing that the margin type is lower than that of national brands, and that each additional point of private label penetration slightly lowers our margin type.

I agree that innovation is key for future revenue generation, and there are several types of innovation. The first I would mention is product innovation, to also connect with the first question about private label. Innovation in private label for us is a growth lever because it strengthens our value proposition, the attractiveness of the banner, and also customer loyalty, remembering that a loyal customer spends twice as much as a non-loyal customer. When we talk about innovation here, it involves new products—new flavors, or gluten-free products (wheat, oats, barley, rye), or new products that adapt to market trends, such as protein products, products like pizza (hamburger pizza, carbonara pizza, unusual pizza), new desserts. This contributes a lot to enriching our value proposition, reinforcing the attractiveness of our brand, and loyalty. The second lever I see, the second type of innovation, is digital. Although it's not very new, when we think digital, we obviously think of e-commerce, omnichannel, quick commerce. These are not new concepts, but they are underdeveloped. When we look at e-commerce penetration in Spain today, it is very low—around 4% to 4.5%—and the growth prospects for omnichannel in the food sector are 15% to 30% per year over the next five years. Here there are two main axes we need to develop: improving service and improving experience. Improving service is obviously through omnichannel, delivery speed, the perfect order, product availability when the customer places the order. On the experience side, I see more personalized offers, loyalty within an app with new mechanisms like gamification, and remembering again that a loyal customer spends twice as much, but a loyal customer who uses the app spends 10 to 20 times more than a loyal customer. So there is a very strong growth lever there. Then, of course, AI, which dramatically improves productivity, changes the relationship with the customer, and data management. And finally, retail media, which is a market growing very rapidly. We foresee that retail media will capture almost 25% of digital media, representing a market value of 100 million—sorry, 100 billion dollars—in the next five years. So there is value to capture. For those who are not familiar with this concept, retail media consists of using our sites and e-commerce spaces as advertising spaces, using our data to reach the customer throughout the purchasing process, and then commercializing these advertising spaces to suppliers.

Well, I think about it first as an impact on efficiency through the automation of transactions, risk assessment, fraud detection. That allows multiplying the efficiency of the financial function by two, three, or ten times. Second, thanks to data processing capacity, it also allows us to greatly improve our forecasting ability very quickly, with more reliability, and that reinforces decision-making. Then, I would say that AI allows us to expand the scope of the financial function. I can illustrate this through three things: risk management, investment management, and expense management. In risk management, AI algorithms allow detecting anomalies and fraud, and thus evaluating financial risks. Second, on investments, thinking about expansion—because we are a proximity network, the number of openings is much higher than supermarkets and hypermarkets—how AI can help us choose a site, evaluate sales potential and profitability. AI would help us a lot there. And finally, in expense management, this involves tracking expenses, how we collect and classify them, how we can prevent errors, and AI also allows checking compliance of expenses with contractual conditions. There is also the compliance part, checking that the expense complies with internal expense policy. I think these are all dimensions that allow strengthening the financial function within the organization. I don't know if you want to talk more about the impacts that AI brings in terms of change management, which can be another important challenge. Actually, in terms of privacy and confidentiality of information, AI processes a huge amount of information that can later be leaked, and we need to monitor this a lot. Second, the issue of skills, training teams to understand and exploit these new technologies, and especially the reorganization and restructuring that AI implies. Here there is a topic of reorganizing all processes and internal policies, and that then implies a very important internal communication to announce the initiatives, what changes they bring, with what benefit, and to engage all stakeholders, I would say, very early in the process. Also to train people to use this technology. I see partnership with solution providers as very important, because they are experts with experience and can share best practices on this topic. And there is another point: how we evolve AI as the company's objectives change, for example, changes in expense policy or expansion policy. We need to monitor this change, which is important.

Adriana, it was a pleasure.