Interview with Olaf Koch, Chairman of the Management Board of METRO AG

Olaf Koch, Chairman of the Management Board of METRO AG (photo)

OK The new METRO is much more clearly aligned. We are now a retail company which has a strong focus on food and is firmly established in wholesale at an international level. As a wholesaler, we want to be the partner of choice for the many small and medium-sized companies out there. Our aim with this is to make our customers even more successful. In Germany, food retail is also an important pillar of our business. We offer an extremely extensive, varied, high-quality product range in this segment.

You want to be your customers’ partner 100%. What exactly is behind this objective?

OK We want to continuously become more relevant for our customers. To achieve this, we have to further sharpen and expand our focus on our selected target groups for each business unit and constantly optimise our offerings with them in mind. This includes top-quality, tailored product ranges, effective sales channels and delivery models, but also services such as advanced training, courses and innovative IT solutions which make small businesses in particular more efficient. We have already made a great deal of progress here over the last few years, but we know that we still have enormous potential to further enhance our relevance.

Two Asian women on a market (photo)
Creative light source (photo)
Olaf Koch, Chairman of the Management Board of METRO AG (photo)

In other words, tailoring your offerings to specific countries and customer groups is the key to success?

OK You could say it is our elixir of life. For many years, standardisation was very successful in the wholesale sector. Nowadays, however, it is virtually impossible – and often serves no useful purpose – to define product ranges or formats at an international level. Building up the business so that it caters for local needs as well as possible is far more important. We need to have a very keen understanding of the relevant country’s specifics and then concentrate on the most important target groups there. For example, do we want to focus on the food service industry or small, independent retailers? We also need to further improve the way in which we analyse which challenges our customers face, what their concrete support requirements are and how we can meet these.

Wholesale, including delivery, accounts for approximately 80% of revenue at METRO. What role does Real play?

OK Real is well on the way to serving a growing need in Germany’s food retail sector. We already offer a unique level of variety. This strength needs to be supplemented with service and inspiration. The Food Lover concept, which we have implemented in Krefeld, reflects this very strongly. It places an even stronger emphasis on quality and service, while the various food offerings impress and inspire customers. The Food Lover concept clearly shows that it is possible to turn our stores’ substantial size into a strategic advantage. I am impressed with what the team at Real has achieved since summer last year and believe that converting other stores to the Food Lover concept offers bright prospects for bricks-and-mortar retail. Quite a lot has happened online over the past year too – for example by integrating the Hitmeister marketplace into the Real online store. As a result, Real is well placed as a modern, future-proof, multichannel retailer.

Are you worried about new online competitors in food retail?

OK When it comes to wholesale, direct and personal customer relationships, innovative offerings and services, plus trust and customer centricity are key success factors. We are extremely well placed here, both nationally and internationally, and will hold our own as a leading wholesaler in the future too. We will further strengthen our customer centricity over the next few years by taking various steps to cultivate and intensify customer relationships, such as the Own Business Day. On top of this, we are also offering our customers a range of digital solutions, of course. Online food retail is currently a very dynamic area. However, it remains questionable whether it will be possible to implement this cost-effectively. After all, the marginal costs are substantial but customers are reluctant to pay extra and loyalty is very low. We will not ignore the issue though. At present, customers in selected towns and regions can place food orders online at real.de and have their shopping delivered to them at home by one of our partners. This shows that we are following developments here closely, but in a very restrained fashion.

Olaf Koch at a lecture about India (photo)

By contrast, delivery orders have been on the rise for years in the wholesale segment. Are stores becoming less important here?

OK Not at all. In many countries, we are seeing a twofold trend: Firstly, delivery is increasing, especially for pre-packed goods and beverages. Secondly, restaurateurs still really like visiting us in-store. Especially when they are buying fresh and ultra-fresh products, they want to see and experience the goods. They want to be given advice and find out about the latest trends, receive suggestions or meet colleagues from the industry. Our stores are increasingly becoming meeting places for industry insiders and sources of inspiration.

Do you believe there are still more areas where the new METRO can grow in this segment?

OK There are all sorts of opportunities for growth. On one hand, we still have lots of options for expanding our physical presence. We are increasingly making use of innovative formats here, such as our new compact store in France. In addition to this, we will considerably ramp up delivery and offer new solutions here too, like the express service in Austria. There is potential for growth in specially defined products too, such as ready-sliced food packaged in single portions, which makes our customers’ day-to-day work easier. This is an ideal opportunity for own brands. We will do much more in this field in particular over the next few years. However, there is huge potential in another area too: offering digital solutions.

Speaking of digitisation: you are mainly working on solutions for the food service industry. Why is that?

OK Food service is a fantastic industry. Millions of independent entrepreneurs give us access to a wonderful variety of dishes, inspiration and experiences with their passionate dedication. The vast majority of companies currently use next to no digital solutions though – and yet the number of available solutions which could make their businesses even more successful has increased rapidly over the last few years. We have been analysing this market since 2014 and supporting selected start-ups with the METRO Accelerator since 2015. Since 2016, we have also been validating the advantages of various digital applications with the help of pilot customers. The outcome of all this is clear: we can take a big step closer to being the ideal partner for independent entrepreneurs by providing and marketing innovative solutions. There are lots of benefits for customers. A good website increases the number of visitors, for example, while a digital HR management system makes it easier to record the time worked and plan both rosters and leave. Business owners who manage their stock digitally can also monitor their store cupboard more easily, enabling them to significantly reduce waste. All of these solutions help to reduce operating costs and administrative expenses and make time for more important things.

Olaf Koch, Chairman of the Management Board of METRO AG (photo)
We want to help make our customers even more success­ful. Olaf

The advantage for your customers is obvious. But how does METRO stand to benefit?

OK The principle is simple: we want to help make our customers even more successful and simplify their day-to-day work. Their success is our motivation. Taking this strategy to the next level also means investing in digital products and services. However, it is not about quick profits or immediate sales growth. Our aim is to position ourselves as a strong partner and solution provider over the long term and gain additional market share in this way.

How important are innovations within METRO in this regard?

OK METRO has a long-standing tradition of developing innovative solutions, for example in the field of checkout systems or merchandise management. We have developed a host of new solutions in the last few years. 1 example of these is the delivery process, which has now been fully digitised and is being rolled out internationally. Thanks to new tools, our drivers can plan their routes much more efficiently. We have also succeeded in significantly reducing the amount of time spent on paperwork and documentation. On top of this, we have developed a new sales tool which allows contacts to be managed systematically and internal weaknesses to be identified. This enables our staff to cater for individual customers’ needs even better and offer tailored solutions.

‘METRO unboxed’ was held in autumn. What was that all about?

OK The effective demerger of our company and its listing on the stock market in July 2017 marked the beginning of a whole new chapter in the history of our company. Our company has an incredible range of business models, innovations and cultures and we wanted to make it possible for our colleagues along with our many different partners, the media and the capital market to experience this in an entertaining way. During a 3-week exhibition, each business unit showcased itself with a representative story from the relevant country. The preparations alone involving all the different teams were incredibly impressive. When the exhibition started, there was a great sense of enthusiasm and fascination: for the first time, we could make the wonderful diversity of our company tangible in a single place. In addition to this, we invited METRO delegates from 25 METRO countries to symbolically mark the launch of our new company together. ‘METRO unboxed’ generated incredibly positive momentum. We intend to further develop formats like this in the future. It is all about fostering and making the best possible use of our wealth of knowledge and people.

What impresses you most about the staff at METRO?

OK Their passion is what impresses me most. We should consider ourselves very lucky to have so many co-workers who are enthusiastically looking for new means of making their field of work better for customers, business partners and colleagues. There is a great openness about treading new paths. I think that is fantastic and it makes me very confident. We still have so much we want to do together.

Woman reading an information brochure (photo)

Metro unboxed

We would like to thank about 30,000 visitors to the experience exhibition.

2,000 Square meters of exhibition area
About 30,000 visitors
Hand helds information brochure (photo)