You are on page 1of 16

INTRODUCTION TO

METRO
METRO Cash & Carry – this name stands for one of the great
success stories in modern commerce. The unique wholesale
business-to-business model of METRO Cash & Carry is focused only
towards professional customers such as hotels, restaurant, and
caterers as well as small and mid-sized retailers. METRO Cash &
Carry offers this target group a greater efficiency than the
multilayered supply chain thus helping them to improve their
business: By offering them a one-stop solution for their purchases, by
helping them to improve their assortment, by offering them high
quality products at reasonable and transparent prices and by offering
them a consistent supply source.

What does METRO offer?

METRO Cash & Carry is a reliable partner for more than 20 million
professional customers worldwide. It gives them a clear competitive
advantage in their own markets. Professionals can purchase
everything they need to run their business: A restaurant owner, for
example, can buy food like fish or vegetables as well as kitchen
equipment and office supplies.

METRO Cash & Carry offers an exceptionally wide range of high-


quality products under one roof. Depending on the size and type of
wholesale center, the assortment includes up to 20,000 items in the
food range and 30,000 items in the nonfood sector. As the name
implies, METRO Cash & Carry customers select their own items and
take them with them to their restaurants and shops. With this unique
business-to-business concept, the company has grown to become a
leading international player in self-service wholesale.
Company History
METRO Cash & Carry is a leading international company in self-
service wholesale and operates more than 600 outlets in 29
countries. With over 100,000 employees worldwide, the company
achieved sales of € 31.7 billion in 2007. By generating almost 50
percent of the total sales, METRO Cash & Carry is the top-selling
sales brand of the METRO Group. Assortment and service of
METRO Cash & Carry’s unique business-to-business model are
targeted only towards professional customers such as hotels and
restaurants as well as small and mid-sized retailers or institutions.
The company offers these special groups a high level of assortment
competency both in food and nonfood as well as attractive wholesale
prices. An efficient and internationally conferrable concept ensures
success in entering new markets.

METRO Cash & Carry – A story of expansion

The self-service wholesale trade came to Europe in the year 1964


when METRO SB-Großmärkte GmbH & Co. KG was founded in
Mülheim/Ruhr. The initiator and driving force behind this concept was
Prof. Dr. Otto Beisheim. In 1967 the Franz Haniel & Cie. company
became a partner in the new venture. Prof. Dr. Otto Beisheim, the
Franz Haniel & Cie. GmbH company and the Schmidt-Ruthenbeck
family then each held one third of the shares in the German METRO
activities and thus constituted the “original group of partners”.

As from the year 1968 the concept was extended beyond the
German borders, with the Dutch company Steenkolen
Handelsvereeniging N.V. (SHV) as a new partner. The two sides
jointly established Makro Zelfbedienigsgroothandel C.V. with the
original group of partners holding 40 percent of the shares in this
activity. Within the framework of a first major expansion drive
METRO/MAKRO Cash & Carry entered the market in nine Western
European countries by 1972. In the nineties, METRO Cash & Carry
expanded its activities to Portugal, Turkey, Morocco and to Eastern
Europe.
In July 1996 METRO Cash & Carry merged with Kaufhof Holding AG
and Asko Deutsche Kaufhaus AG and the METRO Group was
founded. That year also saw the group’s going public. The Metro
stock is the only retail stock listed in the German blue-chip index
“DAX 30“.

The first step into Asia was taken when METRO Cash & Carry moved
into China in 1996. Today the company is present in 5 Asian
countries: China, India, Japan, Pakistan and Vietnam. The METRO
Cash & Carry business is going to be further internationalized and
expanded with the focus on Eastern Europe and Asia. Already by
today, more than 80 percent of the staff is working outside of
Germany. In many countries the company is on of the major
employers.

METRO in Pakistan
METRO Cash & Carry announced its operations in Pakistan in
January 2006. Since then, it has established itself as a potential
market leader in wholesale.
Under the supervision of Managing Director Mr. Giovanni Soranzo,
METRO Cash & Carry Pakistan has opened its first store in the city
of Lahore in October 2007.
The company’s country head office is also based in Lahore and
currently employs over 400 people in two offices.
.
METRO Cash & Carry’s
commitment to Pakistan is
also echoed in its donations to
the President’s Earthquake
Relief Fund.– The company
donated €100 000 in January
2006 towards
President's Earthquake Relief
Fund. It also has plans to fund
development activities in the country in association with the German
Investment and Development Company. Such activities have
successfully been carried out in other countries. A recent example in
Vietnam and a similar program for fishermen and sheep farmers in
India where more than 900 fishing crew and 18,500 sheep farmers
were trained about the best practices.

METRO Cash & Carry plans to invest in Pakistan on a sustained and


reliable basis in the years to come. The company’s unique business
model offers potential for a decrease in market prices and promotion
of local goods and personnel.

10 METRO Cash & Carry principles

The success of the company is based on the following principles:


• Focus on professional customers
• One-stop shopping
• Efficient store concept designed for professional needs
• Advanced customer service
• Enhanced customers’ competitiveness
• Excellence in supply chain and quality management
• Strengthening of local suppliers
• Development of national infrastructures
• Career opportunities
• Internationally transferable concept
SERVICE & QUALITY

The goal of METRO is to efficiently handle thousands of orders,


shipments and deliveries and ensure that goods arrive at the right
place at the right time.
Supply Chain Management plays an important role in our high-
performance logistics system and enhances our capacity to supply
food and non-food products on a daily basis with consistent high
quality, diversity and freshness.

The distribution of products that are temperature-sensitive is a huge


challenge. Quality and freshness can only be assured if the goods
are constantly kept under a temperature controlled environment, right
from the time they leave the producer till they reach the customer.
At METRO Cash & Carry Pakistan, the warehousing and transport for
frozen and chilled products is ensured at a constant temperature (in
minus or plus degrees), according to product requirement.
Temperature monitoring is done manually and by computerized
mechanisms, both during transportation truck and in cold storage.
A) Fruits & Vegetables:
For the first time in Pakistan, METRO Cash & Carry offers a platform
for Fruit & Vegetables equipped with modern accessories for product
processing. This ensures hygienic, temperature-controlled, clean and
packed fruit and vegetables as per international standards of Hazard
Analysis of Critical Control Points (HACCP).
B) Live Fish:
METRO Cash & Carry Pakistan offers live fish at Metro
centers. Now you can choose live fish of your choice and enjoy the
taste of freshness.

Food

1. Fresh

The Fresh department comprises fresh meat, fish, fruit and


vegetables and dairy section.

Special care is taken in handling, storage and maintaining


freshness of products throughout their shelf life.

Freshness of food products is checked on a daily basis to make


sure that no product is left on the shelf that does not fulfill
standard requirements of quality and freshness.

2.DryFood

The Dry Food department comprises edible grocery, canned goods, beverages,
sweets, confectionery, as well as detergents and toiletries.

Special attention is given to the storage of high quality grocery items such as rice,
pulses, lentils, spices, etc., to maintain their colour, texture, and aroma. A separate
area has been designated for spices and nuts for the ease and comfort of
customers. They have their Halal certificate for verification.

3.Hygiene&Sanitation

Metro is extra cautious about the hygiene and sanitation conditions to be ensured by
theirr suppliers especially for fresh food items.
Not only that we ask our suppliers to follow the quality standards, we also apply strict
hygiene and sanitation requirements in the day-to-day operations of our stores.

We only buy products that are hygienically prepared and properly handled at source
by suppliers. We ensure that sanitation measures are a key part of their production
and processing procedures.

“Internal Environmental Analysis


of Metro”
LAYOUT PLANNING

“Layout planning is determining the best physical


arrangement of resources within a facility.”

 This definition of layout planning is clearly visible in Metro


Store.
 As they have proper segmented each and every department
and people can freely move between from one place to another
and products can easily be located from a far distance.
 All products are placed in a systematic manner as there is no
wastage of resources.
 Landscaping was done professionally

LAYOUT OF DEPARTMENTS
Metro has designed their departments in such a way that all the
products of the same kind like fresh food, non-food & dry-food etc.
are grouped together. For the convenience of the customers
currently they have 16 departments and they are:

• Fruits & Vegetables


• Spices & Pickles
• Fish
• Dairy
• Meat
• Grill
• Bakery
• Tobacco
• Beverages
• Beauty Solutions
• Office, Media
• Home Electronics
• Toiletries, Detergents
• Edible Grocery
• Household/Clothing
• Sports & Seasonal

High volumes of food items generate greater profit and to balance


them Detergents are considered a part of Food Department.

This kind of a department layout shows that customers can move


between food & non food items easily.

LAYOUT PLANNING IN METRO


The pattern of layout Metro is the same for all Metro Stores over
the world. They are following the “Merchandizing Principle” i.e, it is
in the form of blocks and is vertical.

We have observed two types of layouts in Metro which are the:

• Process Layout
• Fixed-Position Layout
PROCESS LAYOUT
In this kind of layout, one has to group similar resources together

• Any new brand introduced in the market is placed in front of the


existing Brand, based on their unique needs.
• Any pair of work centers that has a large number of goods
moved between them should be placed in close proximity to
each other (like food items and non food items).
• Their main challenge is to arrange resources to maximize
efficiency and minimize the waste of movement

1. Lower capital intensity & automation


2. Higher labor intensity(Shelf placement)
3. Resources have greater flexibility
4. Processing rates are slower(everything is manual)
5. Material handling costs are higher(They have to replace the
defective one)
6. Scheduling resources & work flow is more complex(More than
300 Employees)
7. Space requirements are higher(Due to inventory but in vertical
way)

FIXED POSITION LAYOUT


• Racks on which products are being placed is not
moveable and building is also a fixed layout

• The challenge is scheduling different work crews and jobs


and managing the project.
TYPES OF STORES
• Classic
• Junior
• Echo

CLASSIC
This kind of layout is above 10,000 sqm

JUNIOR
This kind of layout is equal to 10,000 sqm i.e 120 kanals

ECHO
This layout is between 5000-6000 sqm

TYPE OF LAYOUT BEING USED IN


PAKISTAN
Metro Pakistan is using the “junior” Layout

Advantages of Proper Layout Planning


• Proper Layout is it self Marketing of products.
• Critical in building good working relationships
• Increasing the flow of information
• Improving communication
• Promoting the visibility of key items in retail business
• Contributing to customer satisfaction
• Customer convenience
WAREHOUSE LAYOUT

• Metro has its warehouse at Sharakpur which is known as the


“Metro Platform”
• They use the “Proactive approach”
• Metro itself is a of kind ware house
• To locate the inventory & order placement, Metro has a
software known as GMS

Suppliers
 Metro is outsourcing this service by hiring “Logistic Company”
for transportation services

 Metro has its own suppliers who supply directly to its


warehouse from all over the world & local suppliers supply both
to Metro & its warehouse

Customers
Metro is catering not only for the customers of Lahore but also
outside areas like Gujranwala, Sheikupura & Sargodha

Labor
In metro, most of the work is being done by the labor. So it is
important for Metro to choose such a location in which labor
supply is adequate

Site considerations
Metro also considers the following factors while choosing the
location, they have local zoning & taxes, access to utilities, utility
cost, soil conditions, climate, adequate drainage, approach roads,
parking and etc.

METRO DEFINING QUALITY


 Value for price paid
People who purchase products from Metro feel that they charge
the right amount for goods that they usually buy.

 Support services
Metro gives warranty depending on the type of product purchased.
Example it gives warranty on its electronics.

 Psychological
It has a good ambience, staff is friendly & responsive.

“Continuous Improvement & Metro”

 Proper shelf placement & training of staff


 Metro trains its staff by two process:
o Process
o System

 It has its own in-house training organization called


HOT (House of Training)
 They also send their staff abroad for proper training
 They use “train the trainer” approach

Team Approach

They have a team of more than 300 employees working as a team


Quality Awards and Standards

Metro maintains their quality by the standard of ISO 9000

“COMPARATIVE ANALYSIS
Regarding competition”
There is one major competitor in pakistan’s whole
sale industry and that is Makro.
• Both use News papers, internet, pamphlets and book lets
because it contains detailed introduction about the business
and its products.
• Both Metro and Makro are in a wholesale business

• Both Spent not much on Marketing campaigns

• Metro believes in the concept of insource while Makro


outsources its food production

• They both have teams for customer service

• Metro has trained staff while Makro has just hired sales person

• Metro has proper shelf placement of products whereas Makro


does not

• Metro follows the same layout all over the world and Makro
does not
• Metro places its inventory in its store and warehouse, while
Makro places inventory only in store it does not has any
warehouse

• Metro hire logistics for transportation

• Metro focus on proper shelf placement of products while Makro


has not practicing this.

SWOT Analysis of Metro

Opportunities:
1. Changing trend of shopping, people prefer to go the place where they
can find maximum variety under one roof.
2. Metro is planning to open new stores at different locations.
3. Company name itself is an opportunity as “Metro” itself is a very
popular name and they can expand business with any company they
like to.
4. People are coming more towards hygienic food.

Threats:
1. Launch of Wal-Mart in Pakistan.
2. Inflation
3. Government instability
4. Terrorism

Strength:
1. Largest whole seller platform.
2. They are selling few products with their own brand name.
3. Metro don’t spend money on advertisements through electronic
media.
4. Metro is operating their business according to the buying pattern of
the customers.
5. Metro Values its Employees and Customers.
6. Defined format adapted to local market needs
7. Efficient and low-cost operations

Weakness
1. Not providing goods on credit bases.
2. Location of the store is quite far away.
3. Only deals in wholesales.
4. Relatively poor security check and balance on few items.
5. High priced imported items.

4 P’s at Metro
Product:
They give more attention on Fast moving consumer goods but they don’t
give service after sale because they follow such standards which cause 0.2
% error occurrence ratio regarding defected products

Price:

if we observe the prices of Metro then we come to know that they are
providing unique prices as compare to their competition ,they give quantity
discount to their customer most of the time and which is their core
competency with respect to Industry of whole sellers.

Promotion:
when we observe their Promotion strategy then we see that most of the time
they promote their name with the following promotions.

• News Papers
• Magazines
• Bill board
• Pamphlets
• Catalogs
Place or Placement:
When metro came in Pakistan it observe that Makro its major competitor was operating
in that area where people face so much traffic problem so they chose the place in Lahore
near Thokar Niaz baig road which was less traffic area customer have motorway
(highway) to reach here even from other cities. And they place some products to
customers at their desired place but it requires specific amount and distance regarding
shopping.

Tactical issues & queues

Metro faces many tactical issues because they have to change their
inventory after every 14 days on Thursdays. They need very active
workforce which shifts inventory from the top into the shelf space for
this. On the cash counter they face problem of queues.

Positioning or segmentation Issue

Metro position it self as a wholesaler brand in Pakistan


but people who don’t have retail stores they also come here
and do shopping ,according to our analysis and their
advertisement the target only businesses and they should
position their brand also for ordinary customers who use
products in their homes.

Competition’s Prices issues


If we analyze the prices of makro and other whole sale markets then
we can see that metro prices are almost less than all so in order to
maintain prices metro face problem during setting customer prices
because customer select those whole sale markets who offer
maximum discounts on quantity and transportation.
-- --------