Innovation management

As a retail company, METRO GROUP does not make its own products and therefore does not conduct research and development in the strict sense of the term. When it comes to innovation management, we concentrate more on pursuing the objective of fuelling our transformation within a world that is constantly reinventing itself.

After all, our industry is in the midst of a profound evolution that will especially be driven by digitisation. It is for this reason that devices such as smartphones and tablets have become fixtures in our lives. The resulting permanent accessibility of information about products and services generates a high level of price transparency, and online retailers have become serious competitors. In pursuing a successful repositioning, we are focusing on the continued improvement and optimisation of our stationary retail formats: proven practices will be enhanced with new elements to create innovative sales formats. When adapting strategy and technology from the digitised world, we see an opportunity for our company to reach existing and potential customers in new ways.

For this reason, METRO GROUP must leverage synergies between online and stationary retailing. Our sales lines began developing strategies at an early stage to tap the potential of the online business and digital technology, thus supplementing and supporting the stationary business. In November 2013, METRO GROUP created a new organisational unit called Business Innovation that systematically and intensely works with innovation and new business models in five focal areas (see graphic).

The five areas of innovation at METRO GROUP

The five areas of innovation at METRO GROUP (graphic)

The responsibility for the actual shaping of innovation lies with the sales lines. The new organisational unit’s primary task is to bundle and support existing activities and to fuel the implementation of innovation projects. This includes promoting discussions across sales lines among internal experts, external partners and universities. In addition, METRO GROUP plays a role in start-up companies by providing venture capital. Within our innovation management, we distinguish between evolutionary and revolutionary processes. The former describes the improvement and optimisation of existing sales formats; the latter describes the evaluation, testing and realisation of new business models.

In this way, our innovation management helps us to create advanced multichannel forms of retail. Generally speaking, the idea is to reach customers where they take purchasing decisions: sitting at the computer in the office, on the sofa holding a tablet, on the go with a smartphone or in the store, where our sales lines can be experienced and our employees can provide face-to-face assistance.

Our sales lines have already begun testing numerous new ideas in the five aforementioned areas of innovation and are successfully putting them into practice. Selected examples are outlined below.

At certain METRO Cash & Carry pilot stores, customers receive personalised deals tailored to their preferences in the form of coupons. This helps to minimise waste coverage in advertising. Since introducing targeted marketing in October 2013, numerous multi-step campaigns have been conducted in Germany, the Netherlands, Poland and Romania and have reached more than ten million people.

Media-Saturn is in the midst of a fierce battle with online competition and must measure up to these retailers’ fast delivery of goods in particular. Media Markt and Saturn have been testing a more customer-friendly delivery service since April 2014: Upon checkout, customers can now choose between an order that arrives within three hours (express delivery) or an order that arrives at a designated time of their choice. For now, express deliveries are being tested in seven selected German cities. After a successful test phase, the service is scheduled to be rolled out in other German urban centres. In September 2014, Media Markt opened the world’s first drive-thru store for electronics in the southern German city of Ingolstadt. Here, customers can simply drive up, present their order confirmation at the window and then pick up their purchase.

Real has introduced a new app. Customers can do more than just check current specials in a digital sales catalogue; they also receive detailed product information. The app also features a product search engine. In addition, the barcode on a product’s packaging can be scanned with a smartphone camera to access more detailed information. One important feature of the app is a digital shopping list that can be used and edited by several people at the same time. The related data are saved on an online server. Additional functions include a digital coupon organiser for Payback points and Real loyalty points as well as an option that allows users to rate the sales line’s own brands. With this approach, Real can take customer feedback into account in the development of new products and in the improvement of existing items.

To facilitate future growth, Galeria Kaufhof is rigorously forging ahead with its effort to dovetail its department store and online businesses; that is, integrating stationary and digital business concepts into customer assistance and sales. In mid-2014, employees in our sales lines began using tablets while advising customers. Using the device, they can access inventory information about products that are not available at the department store or are not part of the outlet’s usual product range. Employees can process orders right on the tablet. Delivery can be made to either the address of the customer’s choice or to the respective department store. Roughly 1,100 tablets are currently in use.

Other new technologies have also made their way into the stores and outlets of our sales lines. Both Galeria Kaufhof and Real offer their customers new payment systems. This includes self-checkouts and cash registers equipped with wireless near field communication (NFC) transaction technology. With NFC, contactless purchases can be made using compatible cards or mobile phones. METRO Cash & Carry, on the other hand, has installed electronic shelf labels at all of its wholesale stores in Germany. Future versions of these labels may even offer our sales lines an innovative way of providing customers with new obligatory consumer information.