July 17, 2009 - Metro Cash & Carry Germany has presented a turnaround programme, which will sustainably improve its earnings development and open up additional sales potential of a triple-digit million Euros amount in the medium term.
The wholesaler has thus stepped up the speed of its repositioning course.
"This comprehensive programme will enable us to achieve in the next two years a sustainable turnaround of the German business", says Frans Muller, Management Board member of METRO Group and CEO of Metro Cash & Carry International. "We expect to see an end to the earnings erosion in 2009 and from next year on return step by step to profitable growth. Assuming stable economic conditions, we see earnings potential of up to €150 million by 2012 and want to expand this in the following years."
Metro Cash & Carry Germany’s turnaround programme is an important part of METRO Group’s efficiency- and value-enhancing programme Shape 2012. "We are Germany’s leading wholesaler, operating 61 stores and employing more than 15,000 people. This market position will be systematically strengthened until 2012 and further extended thereafter", says Harald Fraszczak, Managing Director of Metro Cash & Carry Germany.
"The repositioning of our Cash & Carry format is accelerated by this turnaround programme", says Fraszczak. "Whilst the focus in 2009 is on saving costs, from next year on productivity gains and revenue-enhancing measures will take effect. In light of the challenging environment in Germany, we will position ourselves as an even more reliable partner for our professional customers. Metro Cash & Carry is changing from a pure supplier of goods to a competent partner for professional clients with bespoke solutions to support their day-to-day businesses."
Turnaround already commenced
The comprehensive programme began already last year. It comprises more than 200 specific measures to reduce costs in total by €150 million until 2012. The programme defines three core targets:
1) Target: Growth offensive
With this turnaround programme Metro Cash & Carry Germany is addressing the needs of professional customers more consistently. To this end, the company has made considerable assortment changes, extended its full-services offering, started nationwide delivery, and permanently reduced prices of more than 5,000 core-demand articles. As part of a large-scale fresh campaign, daily supply as well as systematic controls provide high quality products. The improved private label ranges are to increase the share of private label sales by roughly a third to 20 per cent of total sales by 2012.
Furthermore, the customer relationship management will be restructured. The objective is, on the one hand, to provide an extensive customer support both in-store and at the customer's premises, and on the other hand to optimise the acquisition of new customers. In addition, the company is investing several million Euros for staff training in customer relationship management.
2) Target: Restructuring
Metro Cash & Carry Germany is to reduce personnel cost by €75 million until the end of 2012. The company started already last year to reduce the number of FTE in the stores by 1,200 and in headquarters by 140. This reduction is near to completed and has been achieved mostly through natural staff turnover. Operating cost savings will total €50 million until 2012. Here material costs, travel expenses and energy consumption will be systematically analysed and reduced according to central targets. In addition, ten underperforming Metro restaurants will be closed down in the course of this year. Management sees further savings potential by merging select departments of its sister company C+C Schaper.
The objective of the turnaround programme is to optimise internal and external processes – an important requirement to maximise our customer focus in all areas. Also logistics costs will be reduced by €25 million. For example, the measures aim to reduce out-of-stocks. Furthermore, Metro Cash & Carry Germany analyses systematically inventory levels and provides regular reports to the suppliers. By doing so, items of high demand can be re-supplied in a timely manner. Regular customer surveys will continuously monitor the initiated measures.
3) Target: Innovation
In order to differentiate itself from competition, Metro Cash & Carry Germany opened the first three so-called concept stores in the first six months of 2009. Here the company can test under market conditions new assortment adjustments, sales approaches and service offers. The assortments have been streamlined and are targeted to meet professional customer needs even more. In addition, the company is trialling a pre-picking service, whereby Metro employees pick the customer’s order, which can then be collected by the customer in the check-out area. Following the concept stores in Siegen, Neu-Ulm and Augsburg, this year will also see the remodelling to the concept format of the stores in Bremen and Erfurt.