Today, German retailer Metro set out its vision for the future. By focusing more than ever on wholesale and e-commerce, there is potential for a lot of growth after a few lean years. Technology gets a lot of attention, R&D explicitly not.
Growth strategy
Metro is currently active in 34 countries and “belongs to the top three in almost every country we operate in”, says CEO Steffen Greubel. He expects a major consolidation – in many countries, the top three do not even account for a third of total sales, he says – and sees significant growth opportunities for his company in this area. Delivery and digitalisation should drive that growth: “Our multichannel business model connects stores, delivery and digital.”
COO Rafael Gasset speaks of a “well-balanced store portfolio”, in which the stores can also serve as logistical hubs for online deliveries. That will be an essential element in the expected future growth, given Metro recorded a fourfold increase in online sales in the last financial year – and wants to continue that trajectory for as long as possible.
To increase profitability, the retailer also aims for a larger share of private labels, a smaller choice per type of article and a simpler display in the stores. For example, more than half of the products would simply be displayed on pallets. In Romania, a project with “reduced complexity” in the product range already yielded very good results.
Innovation
Metro also wants to focus on technology to unburden consumers and make employees work more efficiently. A striking innovation is an experiment with a sort of Google glasses for order pickers, allowing the staff to find products much more quickly.
Through a series of apps, salespeople should also be able to waste less time on administrative tasks in order to assist customers better. For achieving the latter, an average sales assistant only has 7 per cent of their time to spend, was mentioned during the presentation by CIO Timo Salsieder.
Like Delhaize in Belgium, Metro is also going for electronic receipts: this should reduce paper waste (a bonus in the fight for sustainability!) and make the checkout process much faster. One of the main reasons for delays at the cash register is waiting for a physical receipt to be printed, says the Düsseldorf-based company.
However, one of the most striking innovations presented by Metro during the Capital Markets Day was the ‘Wave’. This is a kind of self-scan with fraud control: customers can scan their shopping themselves and then walk through a dedicated checkout area. A machine weighs the shopping trolley and uses a camera to check whether all items have been scanned correctly. If everything is in order, the entire checkout process takes just three to five seconds.
Sustainable ties
Another focus of the hour-long presentation by as many as seven board members was the creation of sustainable ties. This can be done in many ways: providing the right product mix so that professional customers use Metro as a ‘one-stop shop’, unburdening customers by offering less choice in the stores and a loyalty programme that has yielded good results in Spain and is now being rolled out internationally.
In addition, there is also a subscription programme for customers from the hospitality sector, who can now call on the German retailer to organise the delivery or collection of meals. That project is currently running in sixteen countries and has delivered more than 12 million successful orders to more than 22,000 subscribers. Metro, for its part, is reaping a premium and a lot of data from the programme.
Metro’s webshop is also increasingly open to external sellers: the total turnover of the retailer’s online marketplace should grow to more than three billion by 2030, according to CEO Greubel. The pan-European approach makes it easier for external sellers to reach customers all over Europe: the platform is the same everywhere, even though it is being rolled out country by country. This year, after Germany and Spain, Italy and Portugal will be the next to follow.
Time for the fat years
The time for investment and growth is now, says CFO Christian Baier. Over the past ten years, he has seen his company grow from a massive conglomerate to a focused wholesaler – witnessing, for example, the divestment of the department store chain Galeria Kaufhof and the hiving off of the Media Markt and Saturn chains to form Ceconomy.
Now the investments have to move up a gear, Baier believes. Over the next four years, Metro will invest up to 2.5 per cent of its annual turnover back into technology, infrastructure and sustainability (the retailer wants to be carbon neutral by 2040 and has already reduced its emissions by 37 per cent this year). Nevertheless, the CFO is adamant that net debt will also drop to 2.5 times the company’s EBITDA.
After 2025, the largest investments should be completed. Then, Metro will reap the rewards of its new approach and, above all, upscale – its turnover should increase to 40 billion euros by 2030, management confirmed in unison. If all goes according to plan, the combination of lower investments and much higher sales will ensure that the fat years will come…
