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 highquality 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 selfservice 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 highperformance 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 arrangement of resources within a facility.”
best physical

 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. 2. 3. 4. 5.

Lower capital intensity & automation Higher labor intensity(Shelf placement)

Resources have greater flexibility Processing rates are slower(everything is
manual) 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. 2. 3. 4. Launch of Wal-Mart in Pakistan. Inflation Government instability
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. 2. 3. 4. 5. Not providing goods on credit bases. Location of the store is quite
far away. Only deals in wholesales. Relatively poor security check and balance on
few items. 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. --
--------