METRO Cash & Carry
METRO Cash & Carry is a leading international player in self-service wholesale trade. METRO GROUP’s largest sales line, which lent the company its name, celebrated its 50th anniversary in 2014. In 1964, founder Otto Beisheim opened the first METRO Cash & Carry wholesale store in Mülheim an der Ruhr. Its concept was revolutionary at the time: professional customers could select their own purchases all under one roof, pay for them in cash and take the items with them. Over the decades, METRO Cash & Carry has continually expanded this business model, adding new items and services geared to customer needs and local requirements.
50 years of METRO Cash & Carry
During the anniversary year of 2014, METRO Cash & Carry celebrated the occasion in every country where our sales line does business, organising numerous events and special activities for customers, employees and partners. Highlights in Germany included a mini-truck tour through approximately 100 cities. During the tour, customer managers from around Germany visited customers at their business locations and presented products from the new Mediterranean product assortment. Customers also stood at the centre of the anniversary campain “50 Super Deals – the Grand Anniversary Finale” that was launched exactly 50 days before the anniversary of METRO Cash & Carry on 27 October: for seven weeks in 24 different countries, METRO Cash & Carry sold a selected item at a very special price to thank customers for their many years of loyalty to the company.
METRO Cash & Carry’s countries also showed their creativity in devising original activities to mark the anniversary year: in Poland, for instance, employees gave an anniversary concert using instruments made from packaging materials. MAKRO Cash & Carry in the Czech Republic released an anniversary cookbook. And METRO Cash & Carry in Pakistan and China celebrated anniversary parties with the slogan “Young and Wild”. METRO Cash & Carry Germany invited employees, customers and suppliers to an anniversary party in Berlin. The anniversary was also celebrated in the headquarters of METRO GROUP.
New brand positioning YOU & METRO
METRO Cash & Carry also used the anniversary year 2014 as an occasion to reformulate its mission and focus for the future. The key to future success will be long-term, trusting and collaborative relationships with customers, employees, partners and suppliers. METRO Cash & Carry expressed this commitment with a new slogan: YOU & METRO. The sharpened brand profile enables the company to communicate the values for which it stands even more clearly. The wholesaler’s aim is to be the best partner possible for independent entrepreneurs. Using the new brand positioning as a starting point during the reporting period, METRO Cash & Carry also developed a uniform international employer brand based on the YOU & METRO slogan. This effort focuses on the company’s employees. They tell their own personal METRO story and thus bring the company’s brand promise to life.
Optimised approach to target groups
METRO Cash & Carry operates under the brand names METRO and MAKRO in 28 European and Asian countries. In Germany, the portfolio is complemented by the C+C Schaper brand. Every day, 117,255 employees around the world work to make their customers successful. Hotel and restaurant owners, catering firms, independent retailers, service providers and public authorities particularly value the comprehensive range of products offered by METRO Cash & Carry. For each of these customer groups, our sales line offers customised assortments and services at an excellent value for money. This offer is complemented by specific solutions such as retail concepts and professional consulting services to optimally support professional customers in their respective businesses and make them more successful.
In recent years, our sales line has further honed its approach to addressing target groups to better meet the special requirements of customers and to more systematically focus the product range on their needs. In one reflection of this effort, METRO Cash & Carry Germany is now concentrating on bakers and butchers, whose business fields are changing: Bakeries are taking on the characteristics of restaurants. Butcher shops are adding catering and party services alongside supplemental products and lunch offerings. A systematic review of customer visits and an analysis of sales figures, turnover and market research data have shown that these groups offer a high level of revenue and new customer potential for METRO Cash & Carry. In response, our sales line is making the changes it needs to serve these target groups – including special product ranges of snack food and supplemental items as well as special training for customer managers.
In the Czech Republic, METRO Cash & Carry is also taking an optimised and more focused approach to addressing its target groups: here, our sales line has identified the nearly 80,000 Vietnamese who live in the country as a separate target group. Their culture has been a major influence on the country since the 1970s: restaurants, bars and small businesses that sell a specialised line of products are found throughout the country. In 2010, MAKRO Cash & Carry began to support the approximately 3,000 Vietnamese retailers by offering customised product ranges and targeted training. A 20-member sales team now conducts this business. The work is paying off, too: the target group of these retailers now makes up 30 per cent of the trader business in the Czech Republic. Since 2010, MAKRO Cash & Carry Czech Republic has nearly doubled its sales with Vietnamese retailers.
Customer feedback as the basis for improvements
Customer satisfaction is a top priority at METRO Cash & Carry. It is a key indicator of how well products and services meet the customers’ expectations. Customer feedback also serves as an important basis for improvements. To measure customer satisfaction, METRO Cash & Carry launched the company-wide Customer Satisfaction Pulse Initiative in November 2013. Since then, an independent market research institute has conducted a quarterly customer survey in more than 750 wholesale stores in all METRO Cash & Carry countries. The key issues addressed in the survey include product assortment, availability, quality, price and employee contact. Drawing on the data, each wholesale store defines specific steps designed to increase customer satisfaction. At the same time, country headquarters devise programmes that can be used on the national level. The data collected in the following quarter are used to measure the success of these efforts. With the Customer Satisfaction Pulse Initiative, METRO Cash & Carry has created a regular process that it can use to fuel customer-focused improvements.
METRO Cash & Carry is committed not only to constantly improving its range of products and services, but also to communicating a more individual message to its customers. To this end, our sales line employs new customer communication formats such as targeted 1:1 marketing. The basic idea of this approach is to further develop print and mass communications like the printed publication METRO Post. In this work, METRO Cash & Carry aims to communicate with customers on a more digital and individual basis as well as to more closely dovetail the various channels. In the first element of this marketing program, METRO Cash & Carry has introduced 1:1 couponing on a test basis in Russia, Poland, Germany and the Netherlands. As part of this program, the sales lines identifies customers whose purchases at METRO Cash & Carry have declined. In another part of it, new offerings are created using customer-specific transaction data.
The introduction of 1:1 couponing and the individual METRO Post in additional countries are being prepared at the moment. METRO Cash & Carry is also working to improve its infrastructure and data mining options. As a result, it will be able to send personalised customer communications by e-mail, post and text message.
A broad product range designed to meet the needs of individual target groups, quality, freshness and tailored services – these are the compelling benefits METRO Cash & Carry offers to professional customers in 28 countries around the world. Our sales line markets products from renowned producers as well as own-brand products that combine high quality with attractive prices. The product assortment comprises about 50,000 items. METRO Cash & Carry emphasises local products: up to 90 per cent of its assortment is purchased from local producers and providers.
In financial year 2013/14, our sales line further expanded its assortment of local products. In addition, METRO Cash & Carry added more than 80 Greek and Turkish products to the Mediterranean assortment introduced in Germany in 2013, bringing the total number of products to 450.
International procurement strategy
METRO Cash & Carry supports independent businesspeople with a broad product range. In particular, the selection and composition of food products are critical to the company. The reason for this is clear: our sales line generates approximately 80 per cent of its sales from these products. To be able to offer a unique and attractive product range to customers in every country where it does business, METRO Cash & Carry employs a company-wide procurement strategy. The main objective of this strategy is to obtain products as directly as possible in order to have the greatest influence on such aspects as quality, price, availability and sustainability. Procurement category teams decide whether a category will be procured on a global or local level. The country organisations themselves handle local procurement. Up to 90 per cent of foods continue to be purchased locally. For products that are produced in a particular region but are sold in a large number of countries, such as Italian cheese and Spanish wine, METRO Cash & Carry bundles demand and purchasing.
To be able to procure goods directly where they are produced, our sales line opened international trading offices (ITO) in 2009. Today, METRO Cash & Carry has six such procurement centres located in Rotterdam, Boston, Concarneau, Valencia, Hong Kong and Düsseldorf. In 2013, the trading office in Valencia procured more than 200,000 tonnes of fruit and vegetables from producers in Spain, Italy, Morocco, Greece, Turkey and countries overseas for combined orders from METRO Cash & Carry countries. METRO Cash & Carry countries benefit from these structures in a number of ways: they lower product costs and result in a better purchase price. Furthermore, uniform quality and traceability standards are applied and a high level of reliability is assured. In financial year 2013/14, METRO Cash & Carry achieved a volume of €1 billion with the joint procurement of foods.
Strong own brands for professional customers
Since 2009, METRO Cash & Carry has been forging ahead with its own-brand strategy through a focused product portfolio: the six core own brands Aro, H-Line, Horeca Select, Fine Life, Rioba and Sigma offer excellent value for money and thus real added value, particularly for professional customers. The own-brand share of METRO Cash & Carry’s total sales rose to 17.0 per cent during the reporting period. This amounts to sales of €5.2 billion.
In particular, the own brand Rioba, which features special product solutions for cafés and bars, represents a success story. The product range includes professional espresso machines and a complete tableware assortment as well as various coffee varieties and baked goods. There are now a number of Rioba cafés that have been set up as part of a partnership between METRO Cash & Carry and coffee shop owners. Launched as complete solutions, the coffee shops exclusively use and sell own-brand products.
Flexible merchandising concept
From the very beginning, the merchandising concept of METRO Cash & Carry has been one of the strengths of the wholesale store operator: it is so flexible that it can be optimally adapted to meet the specific conditions and needs of the respective countries. METRO Cash & Carry varies its formats, particularly with respect to assortment depth and selling space, which covers anywhere from 2,500 to 22,000 square metres. Most of the stores have a selling space of between 6,500 to 8,500 square metres.
In addition, METRO Cash & Carry is increasingly adding new sales formats to account for different customer groups’ expectations and needs. Our sales line has developed a special store format especially for city centre locations in France. These city centre stores have been successfully introduced in Italy and Spain as well. With a selling space of up to 3,000 square metres, these stores systematically address the needs of the key target group of hotels, restaurants and catering firms, and primarily offer fresh foods. Thanks to city centre locations, METRO Cash & Carry can shorten trips made by suppliers and customers. This enables fast and comfortable shopping – and makes it easier for customers to meet urgent needs in a timely and cost-effective manner.
In response to tremendous competitive pressure and aggressive price policies, METRO Cash & Carry in Italy has introduced the new budget concept METRO Piazza Affari as a new format. The first pilot store opened in February 2013 in Abruzzo, a less-prosperous region of Italy. To increase productivity, the store’s inventory was reduced: the number of food products being sold was cut by 50 per cent compared with other stores, and the non-food assortment was even reduced by 70 per cent. At the same time, METRO Piazza Affari offers about 2,000 items whose individual prices are more than 10 per cent lower than those at other wholesale stores. The aim is to generate a large volume of sales as a way of gaining market share and generating profitable growth.
Expanded business model: delivery
Delivering goods to customers contradicted the original cash-and-carry concept for many years. The delivery service is now considered one of the most important successes in the sales concept’s transformation. By expanding its business model, METRO Cash & Carry aims to attract new customers, with a particular focus on hotel and restaurant owners as well as catering firms. This option, which was introduced in 2009, has become an integral part of the services offered in all countries where METRO Cash & Carry does business. Around the world, several thousand employees work to process customer orders, package products and then deliver them. With its delivery service, our sales line generated sales of €2.8 billion during financial year 2013/14 – a 13.6 per cent increase over the comparable period in 2012/13.
The delivery service also aims to create customer value: the simple ordering process enables customers to save time shopping. Professional customers can order goods in the same high quality they have come to expect at attractive prices, and they can do so by using a number of channels. Customers typically receive their orders within 24 hours. Additional services such as personalised order forms and pre-commissioning with in-store pick-up round off the sales line’s service range. In addition, online shops complement stationary stores in countries such as China, Poland, the Netherlands, Romania and Hungary. Customer service is also provided by the sales line’s sales force, which works with customers on site and serves as the first point of contact for customer requests. The aim is to optimise consulting and service options for customers, to better leverage the existing potential for expanding customer business through personal contact, and to generate greater sales. The specially trained sales employees have a unique range of products they can actively offer to their customers.
Further development: Food Service Distribution (FSD)
To provide even better service to customers and to continue to produce profitable growth, METRO Cash & Carry began to further professionalise and optimise its delivery service during financial year 2013/14. As part of this effort, our sales line is working to apply basic rules such as a focused product range, stable prices and a specialised sales force everywhere.
In China, Germany and Russia, METRO Cash & Carry is also restructuring its logistics operations. The aim is to gradually break away from wholesale store-based deliveries on an individual or national basis and to introduce a professional food service distribution concept. This approach is already being taken in Qingdao, China: in June 2014, METRO Cash & Carry opened a distribution centre in the Chinese port city and expanded the existing delivery service in the process. In the approximately 2,000 square-metre depot, the sales line is warehousing products that specifically meet the needs of local Horeca customers. Based on the success of the new distribution centre in Qingdao, METRO Cash & Carry China plans to introduce the FSD concept in other cities as well.
In Germany, the concept will be rolled out at the store in Weiterstadt. A delivery depot was integrated into the wholesale store in 2010 and was expanded in 2014. In the future, the centre will store fresh and ultra-fresh items, regional products and fast-moving items. For slow-moving products, METRO Cash & Carry will use its central warehouse in Hamm. In years to come, METRO Cash & Carry plans to introduce this concept in other wholesale stores.
During financial year 2013/14, METRO GROUP also acquired a 75 per cent stake in the Spanish food service distribution company MIDBAN. The aim of the transaction is to grow the food service distribution business at METRO Cash & Carry Spain and to sustainably secure the company’s excellent market position.
Network for independent retailers
The support of independent food retailers – especially in emerging markets – is also a key business area for METRO Cash & Carry. For this customer group, our sales line has developed specially tailored programmes. The key aim of these programmes is to bolster the competitiveness of small retailers, protect their independence and establish long-term business relationships with these customers. The programmes comprise country-specific measures that help to professionalise and modernise professional customers’ businesses. Together with the customer, METRO Cash & Carry analyses and assesses, for example, specific store parameters and operations. Drawing on the collected data, the sales line’s employees develop specific improvement measures with a view, for instance, to assortments, prices, store layout and marketing. In Russia, the Czech Republic and India, METRO Cash & Carry regularly organises seminars to impart specific trade knowledge to independent retailers.
Our sales line has now introduced the Trader Franchise Programme for independent food retailers and kiosks in nine countries. Here, METRO Cash & Carry acts as a kind of franchisor with an individual advertising campaign and offers the companies training, advice on assortments, marketing packages and professional price comparisons. The store owners manage their stores completely independently, but use standardised logos and the joint advertising campaign for their own purposes. METRO Cash & Carry provides the necessary expertise, offers professional support and delivers the products. In turn, retailers agree, among other things, to include a minimum number of own-brand articles and products in their assortments. In addition, the assortment of the small food stores is designed to ensure that consumers find everything to satisfy their daily needs – including fresh fruit and vegetables. More than 6,000 independent retailers have now joined the franchise network.
Focus on growth regions
METRO Cash & Carry has the largest global footprint of all METRO GROUP sales lines. It operates in 28 countries on two continents and faces different conditions in each individual market. While trade structures in the Western European markets are already fully developed, markets in Eastern Europe and Asia are in different developmental phases – this must be taken into account in the sales line’s daily work.
METRO Cash & Carry continued to expand its store network in financial year 2013/14. A total of 17 new wholesale stores were opened. The international share of sales declined from 84.5 per cent to 84.2 per cent. In line with our strategy, we first concentrated on improving like-for-like sales in markets where we already do business and accelerating expansion in selected countries where we already have stores. The focal areas of expansion are the growth regions of Eastern Europe and Asia, particularly China, Russia and Turkey. In financial year 2013/14, we also identified India as another country for the international expansion of METRO Cash & Carry. The aim is to have 50 wholesale stores in India in the year 2020. The company continues to sharpen its focus and is concentrating on stores and regions where market share can be gained. For this reason, METRO GROUP decided to give up its cash-and-carry business in Egypt and Denmark. In addition, an agreement to sell METRO Cash & Carry Vietnam to the Thai retail group Berli Jucker Public Company Limited was concluded.