Goals and strategy
As a leading international specialist in the food wholesale and retail industry, METRO sees itself as a responsible partner along the entire value chain committed to its customers’ success and satisfaction every day. Our strategy aims to achieve long-term stable growth in like-for-like sales and earnings. To ensure that we remain relevant to our customers and successful in the long term, we have set ourselves the goal of differentiating us from our competitors in the food and hospitality industries by continuing to develop our business model and by strengthening our focus on the customer. Our sustainability principles play a major role in this endeavour. We do not limit our actions to merely ensuring the transactional satisfaction of our customers while they are shopping: to intensify all aspects of our relationship with our customers, we continue to expand our range of comprehensive services designed to assist our customers in achieving success. The opportunities that emerge from the digitalisation also play a major role.
Customer focus and customer satisfaction are essential elements of our strategy. The Net Promoter Score has now been introduced across all stores and allows us to continuously measure and resolutely improve our customers’ satisfaction. Besides the purely quantitative measurement of the current satisfaction values, suggestions from customers can be systematically recorded and evaluated. These data can be used to identify additional potentials for improving the shopping experience which are then reflected in, among other things, the design of our stores or assortments.
In order to exploit the opportunities derived from the progressing digitalisation and to realise synergies, we are bundling our digitalisation initiatives with the Hospitality Digital business unit and the service company METRO-NOM. Hospitality Digital develops customer- and user-oriented solutions, for example systems that improve the payment process, online ordering systems or other digital solutions especially for the catering sector, such as the creation and operation of internet presences. In addition, innovative start-up companies are supported by initiatives like the METRO Accelerator powered by Techstars.
METRO-NOM also drives the development and internal deployment of digital solutions in order to further increase the efficiency of our organisation. The implementation of cost-saving measures also continues. These include procurement cooperation projects with other international retailers which increase METRO’s competitiveness while creating added value for its customers. One example of this is the new procurement alliance Horizon International which includes METRO, Auchan Retail, Dia Group and Casino Group.
Our reinforced sustainability approach METRO SUSTAINABLE emphasises the fact that sustainability at METRO means more than merely focusing on environmental and social issues. METRO SUSTAINABLE is a fixed component of our corporate strategy and shows how we aspire to do business as a responsible company. It encompasses every single aspect of our actions. In concrete terms, this means: we want to make our product range more sustainable and reduce our economic footprint, for example by implementing energy-efficient solutions. Our actions are guided by the Sustainable Development Goals (SDGs) postulated by the United Nations. Contributing to their achievement is a firm commitment of our core business.
METRO is shaped by our more than 150,000 highly motivated employees worldwide. They fill our open culture with life and combine passion, a partnership approach and outstanding performance in our core business. With courage for new ideas they challenge the status quo time and again and drive our business forward.
METRO essentially consists of the METRO Wholesale and Real sales lines, which are in charge of our operational business, and the Others segment, which includes the Hospitality Digital business unit, the real estate company METRO PROPERTIES and a number of service companies, among others. The METRO Wholesale sales line comprises the wholesale stores operated under the METRO and MAKRO brands, as well as the delivery sales. It primarily targets business customers (B2B) and is characterised by trusting relationships with more than 24 million customers across 35 countries. The Real sales line focuses on the retail industry in Germany and thus on end consumers (B2C). Real is one of the leading hypermarket companies in Germany. The decision of the METRO AG Management Board to initiate the sales process for the hypermarket business and focus its operative activities on wholesale means that the Real sales line no longer constitutes a strategic activity in our portfolio.
As an omnichannel operator, METRO Wholesale combines a wide network of modern wholesale stores with a delivery service (Food Service Distribution, FSD) and digital services, such as an online ordering system. Our customers can choose between shopping in a store,having their products delivered to them, or – for example in France – they may take advantage of the click-and-collect online shopping service which allows them to pick up their pre-packed products directly from their preferred store. Our wholesale business is distinguished by a strong international presence: METRO Wholesale can be found in 35 countries across Europe and Asia. We operate 769 METRO and MAKRO wholesale stores with a comprehensive delivery service in 25 countries. In the remaining 10 countries, the business is limited to delivery services. In the FSD area, our dedicated delivery specialists Classic Fine Foods, Pro à Pro and Rungis Express make a substantial contribution to the success of our business. METRO Wholesale’s workforce stood at more than 100,000 employees in financial year 2017/18.
Focus on customer benefits
The objective of METRO Wholesale is to strengthen the competitiveness of its customers – not only to make them and their business model more successful, but also with the aim of increasing customer retention over the long term.
Most of our wholesale customers are small and medium-sized companies and sole traders. We want to assist them in better mastering their business challenges by supplying long-term solutions with superior added economic value. To achieve this, we leverage our knowledge, our resources and our global presence. We consistently align our business model to customer value and strengthen our local organisations to establish a closer relationship with our B2B customers.
Our B2B customers can be broken down into 3 core customer groups: HoReCa, Traders and SCO (service companies and offices). HoReCa includes hotels and hospitality businesses, restaurants, bars and cafés, as well as catering companies and canteen operators. The Traders section includes small grocery stores, kiosks, street food retailers, petrol stations and wholesalers. SCO are professional service companies and organisations, such as offices and institutions.
Our markets are divided into core customer groups and regions. Depending on our main customer focus in the respective countries, we offer a tailored product range that matches the specific preferences and requirements of our customers. We increase the satisfaction of our customers by gearing our products, services and sales channels to the local requirements. This allows us to exploit the local market opportunities in the best possible way.
Our interpretation of customer orientation and the way we bring it to life is exemplified in the new METRO Wholesale brand campaign ‘We don’t work for METRO. We work for ...’ and the closely related METRO Own Business Day. The Own Business Day was established to assist our customers in what matters most for them: the marketing of their own business. Our website allows business owners to publish their campaign offers to acquire new customers and advance their business. The new brand campaign also puts our customers centre stage and illustrates how METRO assists them in their daily business operations.
Value enhancers for the business
Based on our business model, our local companies develop and implement their individual value creation plans that enable transformation and growth according to local conditions. The central organisation supports local value creation and actively manages the portfolio. Based on the country-specific and locally generated value creation plans, we have identified 5 major strategic value enhancers for our wholesale business (see also the wholesale strategy chart):
- We exploit the full potential of our markets across all customer groups. We accomplish this by distinguishing the wholesale stores, for example by designing stores that are specifically tailored to the different customer groups and their respective needs. Good examples are the Compact Store concept in France or the revamping of our wholesale stores in Germany, for example in Düsseldorf and Krefeld. Moreover, we are replacing our centrally managed, unified growth model, which is based on the opening of new wholesale stores, with a distinguished, sustainable model focused on like-for-like sales growth.
- We continue to expand our Food Service Distribution and the delivery business because they represent an attractive business that is complementary to our core business in the wholesale stores. Delivery is an important procurement channel for HoReCa customers in most countries. By expanding our delivery services, we strengthen relationships with these customers and their commitment to us.
- We are expanding the trader franchising model in countries such as Poland, Romania and especially Russia. METRO Wholesale operates in a similar way as a franchisor with its own-brand identity. It provides products and offers additional services to the participating independent grocery stores, such as training courses and assortment consultancy. The expansion of the model helps open up new growth opportunities in relevant markets.
- We are increasing operational capacity to reduce our cost base. We aim at reducing our procurement costs and in turn improve our competitiveness by conducting cooperation projects with international retail and wholesale companies, such as the international procurement alliance Horizon International with Auchan Retail, Dia Group and Casino Group as partners.
- We share our know-how with our customers by offering them training courses, tutorials and professional advice. We develop digital solutions and applications for our customers, such as our free service for creating a website, online reservation systems for hospitality operators or efficient personnel management systems. These activities allow us to assist our customers in their business processes and to make their relationship with us more efficient.
With more than 34,000 employees and 279 stores, Real is one of Germany’s leading hypermarket operators. Real stores offer a wide assortment that includes both food and several non-food product categories.
Real’s declared goal is to sustainably increase its customer relevance in the coming years. Real is pursuing the strategic repositioning of its business model with full force. One key area of the overall strategy for Real is the continued development of promising sales channels, for example the online marketplace and the click-and-collect service. Another key area is the extensive optimisation of Real’s existing store network.
- Customer orientation: The product range and services offered by Real are systematically geared to the preferences and requirements of its customers. This is accompanied by the modernisation and redevelopment of the hypermarket stores with the aim of increasing the productivity per square metre. This also includes Real continuing to drive the implementation of the ‘Markthalle’ concept which is a hybrid-store concept that combines customer focus with the benefits of large floor plans and is geared to the specific requirements of retail customers today and in the future. The vision is to present customers with a unique shopping experience. This is why the successful concept implemented at Markthalle Krefeld will be rolled out in additional stores, for example the completely redeveloped Markthalle Braunschweig which reopened in October 2018. The concept takes into account both emotional and rational customer wishes and is very well received by the customers.
- Selected investments: Real is making selected investments to establish itself as an omnichannel retailer, strengthen its ultra-fresh categories and further expand its procurement partnerships and joint venture projects. One of them is the RTG Retail Trade Group which is utilised by Real, one of the project’s founding members, to significantly improve its competitiveness. Tegut became the 7th member of RTG in June 2018.
- Omnichannel presence: Following the integration of Hitmeister, Real.de has developed into a successful online marketplace that offers its customers a huge selection from among more than 12 million products. The platform can also be used by external retailers to market their products online.
Customers also have the opportunity to use the click-and-collect service at Real’s online grocery store and pick up their online purchases from one of 16 stores. Customers in 15 cities can also have their shopping delivered directly to their homes. This prepares the company for an expected growth in demand concerning the e-commerce segment.
- Increase of cost efficiency: Real has streamlined its management structures, utilised synergies within the group and repositioned its core functions. The company is also restructuring its administration and relocating certain functions to concentrate them at the head office in Düsseldorf. The objective is to establish structures that are efficient and offer good working conditions, including competitive salary structures. In mid-2018, Real created the prerequisites for a new collective bargaining partnership outside the HDE structures (association of German retailers) by terminating the future collective agreement concluded in 2016 with Verdi. The effect of spinning off the business of Real SB-Warenhaus GmbH to real GmbH is that new collective agreements negotiated between DHV – Die Berufsgewerkschaft e. V. and AHD – Unternehmensvereinigung für Arbeitsbedingungen im Handel und Dienstleistungsgewerbe e. V. are now in place. This strengthens the future viability of Real’s business model.
The Others segment comprises, among others, the centralised activities of METRO, the procurement organisation in Hong Kong, which also operates on behalf of third parties, as well as logistics services and real estate activities of METRO PROPERTIES which are not attributed to any sales lines. These include, for example, speciality stores, warehouses and head offices.
METRO owns an extensive portfolio of real estate assets comprising more than 1,000 operating sites, 279 of which form part of the Real’s hypermarket business. METRO PROPERTIES concentrates the real estate know-how of METRO and has established itself on the market as a reputable real estate company. The real estate segment makes a sustainable and significant contribution to the overall business success of METRO.
METRO PROPERTIES operates, develops and markets an international portfolio of properties. Its activities cover the entire life cycle of METRO’s real estate assets: from future-oriented investments, economic property operation/maintenance to sustainable and creative development of the real estate assets as well as the realisation of capital gains when disposing of a real estate asset at the right point in time. In the reporting year, METRO PROPERTIES sold an administration building at Albertussee in Düsseldorf which had been continuously upgraded over time to a project developer who converted the office areas into residential space. Other successful development projects and sale-and-leaseback transactions include projects in Spain and other European countries. METRO PROPERTIES also created post-urbanisation concepts for sites in India and China.
METRO PROPERTIES is continuously developing the property portfolio of METRO. METRO also benefits of opportunities for bolt-on businesses, such as sub-licensing of its comprehensive market expertise, and the excellent reputation of METRO PROPERTIES.