As a retail and wholesale company, METRO GROUP does not make its own products and hence does not conduct research and development in the strict sense of the term.
Nonetheless, we do see ourselves faced with the challenge of addressing the structural changes occurring in the shopping behaviour of private and professional customers. The main drivers of these changes are the trends towards increasing digitalisation and enhanced mobility. These trends are not just shaping shopping behaviour. They are also influencing how customers inform themselves about products, services and deals and share this information with others. Against this backdrop – and to meet our customers' changing expectations of us – we have defined business innovation as a central subject area for our company. Our objective is to first ensure that our existing sales concepts remain relevant to private and professional customers for years to come and continuously create added value for our customers. One example of this is the delivery service operated by METRO Cash & Carry. Secondly, we also intend to establish new sales concepts related to these trends. This includes the pure Internet sales channel operated by the Redcoon sales brand, in which Media-Saturn increased its stake to 100 per cent during the period under review.
You will find examples of the innovative products and services offered by our sales lines in the chapter “Strategic positioning of METRO GROUP”.
Business innovation: focus and organisation
To ensure effective innovation management, we regularly analyse and evaluate current trends in retail and related sectors. We also identify promising developments and assess how we can increase added value for customers with new technologies, processes and concepts, make our processes more efficient and adopt more sustainable business practices. As part of our business innovation activities, we are focusing on
- cultivating a dialogue with innovative partners to tap external know-how and new expertise for METRO GROUP;
- launching our own projects and initiatives within METRO GROUP;
- defining innovation focal points that are relevant to our current and future customers and facilitate additional growth;
- boosting METRO GROUP’s innovative strength in order to systematically and quickly turn ideas into real-world concepts.
Dialogue with external partners
One example of the dialogue with external partners described above is the METRO GROUP Future Store Initiative that was launched in 2002. Today, this alliance includes nearly 70 companies and organisations from the consumer goods industry, the information and communication technology sector, the service sector and the scientific community. The partners jointly test innovative solutions designed to meet the challenges of operational business.
During the period under review, we also began to lay the foundation for a globally unique initiative promoting the traceability of fresh foods. As part of this work, we are collaborating with GS1, a service provider of global standards for the optimisation of value added chains. We took the first step by launching a pilot project in the product group fresh fish in the spring of 2013. GS1’s globally valid standards allow a broad range of application across retailers, product categories and borders. In this process, decentralised data storage and a centrally available data-search function facilitates the provision of information by business partners along the process chain all the way to the end customer.
Projects and initiatives
In the area of radio frequency identification (RFID), a technology whose potential we identified very early on, Media Markt in Russia introduced additional applications to the Moscow pilot market in November 2013. In addition to applications to optimise inventory and boost productivity, the possibility of employing this technology to provide customers with a better shopping experience was tested. In the central warehouse, CDs, DVDs and Blu-ray discs are outfitted with RFID transponders. At the store, customers can use specially installed terminals to not only preview the titles, but also see the item's current location within the store. As a result, customers can quickly and easily find the desired item among the department's broad range of products.
xplace GmbH became part of METRO GROUP in 2012. The company, in which METRO GROUP holds a majority stake, is specialised in the development and marketing of multimedia customer-information and customer-retention systems for retailers. These are used, for example, in digital displays and so-called kiosk terminals in stores. xplace supplies the soft- and hardware for these systems and also maintains their digital content. The company has been installing in-store solutions for sales promotion at Media Markt and Saturn stores since 2008. Media-Saturn now employs solutions from xplace GmbH in 14 countries. These solutions include touch-screen entertainment terminals with barcode scanners, printer cartridge terminals and in-store TV. The introduction of in-store TV, in particular, into stores in other European countries is also planned. With its investment in xplace, METRO GROUP has not only secured a role in the company’s development and a long-term strategic partnership with it. We also profit from direct access to technical know-how and the future innovations created by xplace GmbH.
The topic of mobile shopping has gained strategic importance for all sales lines. Innovations in this area are driven, for example, by the Cologne-based company MobiLab Solutions, in which METRO GROUP holds a stake. MobiLab Solutions is one of the leading providers of software solutions for mobile shopping and payment via smartphone. Mobile payment is one of the company’s core products. It provides customers with several payment options and methods for their mobile purchases. The applications from MobiLab Solutions could thus play a key role in the future expansion of shopping options for smartphones and tablet PCs in our sales lines. In addition to MobiLabs, we supported the creation of a retail-wide initiative for the introduction of a payment system for retailers in Germany.
An additional milestone in the work to strengthen the dovetailing efforts of METRO GROUP is represented by solidifying its participation in the “High-Tech Gründerfond II” in December 2012. Now in its second generation, this fund has been providing capital to technology start-ups since 2005. We believe our partnership with the fund will help us identify relevant market trends at an early stage and give us direct access to innovative companies.
Definition of innovation focal areas
In today’s world, being able to choose between various sales channels – stationary and online – for their shopping needs has become a matter of course for customers. From the perspective of METRO GROUP, operational retail activities are especially being shaped by the increasing transfer of information and communication processes to the Internet. This means: retailers’ ranges of products can be quickly and easily compared today. This high degree of transparency complicates companies’ efforts to maintain such singular value propositions as the largest selection or the lowest price over the long run. The increasing prevalence of devices that facilitate mobile Internet access is accelerating this trend.
As part of our business innovation activities, we are therefore forging ahead with our effort to dovetail stationary business with our online shops and mobile offers in order to bolster our companies’ competitive position over the long run. No-line shopping is the name of this goal: we intend to optimally link all sales channels in order to create a shopping experience that is consistent throughout all customer touch points and raises confidence in our sales brands. Additional focal areas are marketing and logistics.
Boosting innovative strength
The topic of business innovation was anchored in our corporate structure in April 2013 as the newly created “Business Innovation” area of responsibility within the Management Board of METRO AG. Within the holding company, specialised teams identify and evaluate trends, and work with the sales lines to test new ideas in stores using appropriate resources and to determine if they are mature enough to be launched in stores. Successful ideas are then introduced on a large scale under the direction of one of our sales lines.
Research and development at METRO GROUP in figures
In the short financial year 2013, METRO GROUP capitalised development costs for intangible assets totalling €67 million (9M 2012: €67 million). In addition, costs of €32 million (9M 2012: €33 million) were generated in research and non-capitalisable development costs. The capitalisation ratio amounted to 68.1 per cent (9M 2012: 66.7 per cent). Amortisation of capitalised development costs totalled €71 million (9M 2012: €78 million).