Faster food

Metro Group bolsters grocery delivery in strategy shift

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Revvin' up. Source: Metro/Picture alliance

Metro Group is investing heavily in delivery services, renovating its own facilities and making targeted acquisitions. It’s part of a push by the global chain of wholesale and retail grocery outlets to lift deliveries to 20 percent of sales by 2020. Right now, that number is less than 16 percent.

“The behavior and expectations of customers have changed dramatically in the last few years,” Pieter Boone, chief operating officer, said in an interview with Handelsblatt. “They don’t want to come to the store every day, because time is money for them.”

After concentrating for years on international expansion, Metro has now shifted its focus to deliveries to meet customer demand and to keep up with competitors. The Düsseldorf-based company also completed the spinoff of its consumer electronics units into Ceconomy. By marshaling its resources now, the restructured Metro hopes to make up for lost time in adapting to a shifting market.

Delivery expansion is a core strategy in all 25 countries with Metro stores.

On the one hand, Metro is carving out delivery hubs in some of its bigger stores. These are meant to supplement delivery from individual stores with greater selection and more cost-efficient service. This type of conversion enables Metro to increase productivity, Bankhaus Lampe analyst Peter Steiner said. It also reduces the sales area in stores where it is too big.

On the other hand, Metro is buying up specialized delivery services such as Classic Fine Foods in Asia, Rungis Express in Germany and Pro à Pro in France. “With those we have acquired additional sales of more than a billion euros in less than two years,” Mr. Boone said. The company is on the lookout for further such acquisitions, he added.

Along with expanding delivery services, Metro is upgrading other stores to meet customer demand for fresher food and greater selection. A million-euro renovation of its Krefeld wholesale store near Düsseldorf made space for 2,000 wine choices, 700 fish products, and a restaurant that can also serve as a cooking studio. The renovation is targeted at the core clientele of hotel and restaurant operators. Last year, Metro undertook investments to convert its Real chain of retail stores into chic market halls with expanded produce sections.

The wholesaler also is spending money on systems and personnel with specialized know-how. Two years ago, it hired Thomas Storck, a digital expert with Silicon Valley experience, as its new head of German operations. Mr. Storck introduced a new IT system. Metro can now track goods through its entire logistics network. Customers, sales reps and drivers are all connected through state-of-the-art apps.

The delivery expansion is a core strategy in all 25 countries with Metro stores, Mr. Boone said. “France, Italy, Spain and Austria are a special focus,” he said. “But we also want to expand delivery in China, for instance, which is a very interesting market for us.”

In the meantime, Metro is changing tactics in its long-running dispute with the Verdi labor union in Germany over wages at the Real retail chain. In a memo to employees which Handelsblatt has seen, the company said it will transfer the operations of Real to its Metro Services unit. The move will enable the firm to harmonize labor relations and employment terms throughout the entire company.

Florian Kolf covers retail and consumer goods markets for Handelsblatt. Darrell Delamaide adapted this story into English for Handelsblatt Global. To contact the author: kolf@handelsblatt.com.

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