ESSA Group, a local player in the trade marketing and sales services segment, owned by the entrepreneur Eugen Saulea, recorded a turnover of approximately 19.8 million euros in 2022, as it had previously estimated since the beginning of last year. All forecasts made annually by company representatives are based on the number of active contracts and the potential of key services while taking the economic context into account.
“For 2022, our growth objective of at least 20% has been achieved. We recorded a similar result in 2021 compared to 2020, which means that, in the last two years, ESSA’s business has increased by 40%”, Eugen Saulea says. These figures have been achieved even though ESSA has been faced with several challenges. For example, due to price pressure in 2022, the company had to sell cheaper. Moreover, within the active contracts at the time of the increase in utility and fuel prices, and also with the increase in bank interest rates, ESSA tariff indexation was not accepted in all contracts. At the same time, the lack of revenue – due to declining sales – led the beneficiaries of services similar to those sold by ESSA to put quality second and focus on the lowest tariff.
We are in a phase where all service providers are fighting on price, forgetting about performance. Moreover, in 2023, our expectations are primarily aimed at a fair price for the requested services, so that the providers remain fiscally sound. A lot of pressure is put on them to offer the lowest price, and in the medium and long term the low prices will translate into the lack of solvency of the suppliers, their elimination being done on creditworthiness criteria”, says Eugen Saulea.
In other words, declining sales or boosting them only through price offers remains a top concern for 2023. Why? Because, in Eugen Saulea’s opinion, both have the same effect: the lack of budgets for the purchase of sales-related services. And if you don’t have sales, the collection money is also diminished. Basically, without these budgets, you have nothing to invest in marketing programs or other types of programs appropriate to the business. So what will happen next? Suppliers will seek to remain profitable by streamlining existing budgets, namely: reducing the norms for commercial workers, accessing a flexible work schedule based on store traffic, or abandoning BTL programs.
“There will be multiple effects, we will have a job hunting situation. Specifically, employees will constantly migrate for better wages. We will have to deal with restructuring and layoffs from programs that want to be closed urgently or resized in a short period. In addition, there will be cash flow blockages for service providers because the beneficiaries will intentionally delay the due date for service payments”, points out Eugen Saulea. According to his information, an increase in payment terms is already being tried, but without accepting a financing commission. “We have double financing fees compared to the first quarter of 2021, the impact being consistent in monthly budgets.”
In other words, the cargo handling and administration service for the large international chains, from the ESSA portfolio, depends a lot on the volumes physically sold by the partners.
“The year 2022 was marked by numerous increases in food prices, especially those that form the basic consumer basket. From the second quarter until the end of the year, some suppliers even tripled the delivery price of products, reaching to a shelf price up to 60% more expensive compared to a similar period in 2021. Unfortunately, consumer incomes have not increased proportionally to the prices”, details Eugen Saulea.
Non-EU staff, the answer to fill a gap
Also at the level of the current year, the entrepreneur has certain expectations regarding staff recruitment. According to him, without competitive salaries, it will be very difficult to attract valuable personnel to the team and motivate them to stay. Currently, there are many financial packages available in this market sector, and among those who apply for a job, there are few Romanians. In general, the offers are chosen according to net income, working hours, proximity, and much less about career and training programs. Eugen Saulea believes that the alternative is represented by non-EU personnel.
In ESSA Group’s particular case, an important optimization of the invested resources was implemented within the personnel leasing division, with an emphasis on the “commercial worker” and the “online order picker” segments. As a consequence, ESSA has even called on non-EU staff to implement its partners’ projects, particularly for commercial worker orders.
“Non-EU staff, referring to commercial worker positions, in this case, represent about 68% of ESSA’s human resources. All those who are part of the non-EU staff are very involved at work, flexible with the schedule, motivated by the assigned activities, and available to learn”, says Eugen Saulea.
In context, the salary increase in 2023 is also an essential condition to have a team with stable and motivated employees. The entrepreneur believes that, in this regard, “the needed increase of the current salary is at least 37%”, to be able to cover the two gaps: inflation and the minimum wage.