INTRODUCTION TO METROMETRO Cash & Carry – this name stands for one of the greatsuccess stories in modern commerce. The unique wholesalebusiness-to-business model of METRO Cash & Carry is focused onlytowards professional customers such as hotels, restaurant, andcaterers as well as small and mid-sized retailers. METRO Cash &Carry offers this target group a greater efficiency than themultilayered supply chain thus helping them to improve theirbusiness: By offering them a one-stop solution for their purchases, byhelping them to improve their assortment, by offering them highquality products at reasonable and transparent prices and by offeringthem a consistent supply source. What does METRO offer?METRO Cash & Carry is a reliable partner for more than 20 millionprofessional customers worldwide. It gives them a clear competitiveadvantage in their own markets. Professionals can purchaseeverything they need to run their business: A restaurant owner, forexample, can buy food like fish or vegetables as well as kitchenequipment and office supplies.METRO Cash & Carry offers an exceptionally wide range of high-quality products under one roof. Depending on the size and type ofwholesale center, the assortment includes up to 20,000 items in thefood range and 30,000 items in the nonfood sector. As the nameimplies, METRO Cash & Carry customers select their own items andtake them with them to their restaurants and shops. With this uniquebusiness-to-business concept, the company has grown to become aleading international player in self-service wholesale.
Company HistoryMETRO Cash & Carry is a leading international company in self-service wholesale and operates more than 600 outlets in 29countries. With over 100,000 employees worldwide, the companyachieved sales of € 31.7 billion in 2007. By generating almost 50percent of the total sales, METRO Cash & Carry is the top-sellingsales brand of the METRO Group. Assortment and service ofMETRO Cash & Carry’s unique business-to-business model aretargeted only towards professional customers such as hotels andrestaurants as well as small and mid-sized retailers or institutions.The company offers these special groups a high level of assortmentcompetency both in food and nonfood as well as attractive wholesaleprices. An efficient and internationally conferrable concept ensuressuccess in entering new markets. METRO Cash & Carry – A story of expansionThe self-service wholesale trade came to Europe in the year 1964when METRO SB-Großmärkte GmbH & Co. KG was founded inMülheim/Ruhr. The initiator and driving force behind this concept wasProf. Dr. Otto Beisheim. In 1967 the Franz Haniel & Cie. companybecame a partner in the new venture. Prof. Dr. Otto Beisheim, theFranz Haniel & Cie. GmbH company and the Schmidt-Ruthenbeckfamily then each held one third of the shares in the German METROactivities and thus constituted the “original group of partners”.As from the year 1968 the concept was extended beyond theGerman borders, with the Dutch company SteenkolenHandelsvereeniging N.V. (SHV) as a new partner. The two sidesjointly established Makro Zelfbedienigsgroothandel C.V. with theoriginal group of partners holding 40 percent of the shares in thisactivity. Within the framework of a first major expansion driveMETRO/MAKRO Cash & Carry entered the market in nine WesternEuropean countries by 1972. In the nineties, METRO Cash & Carryexpanded its activities to Portugal, Turkey, Morocco and to EasternEurope.
In July 1996 METRO Cash & Carry merged with Kaufhof Holding AGand Asko Deutsche Kaufhaus AG and the METRO Group wasfounded. That year also saw the group’s going public. The Metrostock is the only retail stock listed in the German blue-chip index“DAX 30“.The first step into Asia was taken when METRO Cash & Carrymoved into China in 1996. Today the company is present in 5 Asiancountries: China, India, Japan, Pakistan and Vietnam. The METROCash & Carry business is going to be further internationalized andexpanded with the focus on Eastern Europe and Asia. Already bytoday, more than 80 percent of the staff is working outside ofGermany. In many countries the company is on of the majoremployers. METRO in PakistanMETRO Cash & Carry announced its operations in Pakistan inJanuary 2006. Since then, it has established itself as a potentialmarket leader in wholesale.Under the supervision of Managing Director Mr. Giovanni Soranzo,METRO Cash & Carry Pakistan has opened its first store in the cityof Lahore in October 2007.The company’s country head office is also based in Lahore andcurrently employs over 400 people in two offices..METRO Cash & Carry’scommitment to Pakistan isalso echoed in its donations tothe President’s EarthquakeRelief Fund.– The companydonated €100 000 in January2006 towardsPresidents Earthquake ReliefFund. It also has plans to funddevelopment activities in the country in association with the GermanInvestment and Development Company. Such activities have
successfully been carried out in other countries. A recent example inVietnam and a similar program for fishermen and sheep farmers inIndia where more than 900 fishing crew and 18,500 sheep farmerswere trained about the best practices.METRO Cash & Carry plans to invest in Pakistan on a sustained andreliable basis in the years to come. The company’s unique businessmodel offers potential for a decrease in market prices and promotionof local goods and personnel. 10 METRO Cash & Carry principlesThe 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 & QUALITYThe goal of METRO is to efficiently handle thousands of orders,shipments and deliveries and ensure that goods arrive at the rightplace at the right time.Supply Chain Management plays an important role in our high-performance logistics system and enhances our capacity to supplyfood and non-food products on a daily basis with consistent highquality, diversity and freshness.The distribution of products that are temperature-sensitive is a hugechallenge. Quality and freshness can only be assured if the goodsare constantly kept under a temperature controlled environment, rightfrom the time they leave the producer till they reach the customer.At METRO Cash & Carry Pakistan, the warehousing and transport forfrozen and chilled products is ensured at a constant temperature (inminus or plus degrees), according to product requirement.Temperature monitoring is done manually and by computerizedmechanisms, both during transportation truck and in cold storage.A) Fruits & Vegetables:For the first time in Pakistan, METRO Cash & Carry offers a platformfor Fruit & Vegetables equipped with modern accessories for productprocessing. This ensures hygienic, temperature-controlled, clean and
packed fruit and vegetables as per international standards of HazardAnalysis of Critical Control Points (HACCP).B) Live Fish:METRO Cash & Carry Pakistan offers live fish at Metrocenters. Now you can choose live fish of your choice and enjoy thetaste 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 stricthygiene and sanitation requirements in the day-to-day operations of our stores.We only buy products that are hygienically prepared and properly handled at sourceby suppliers. We ensure that sanitation measures are a key part of their productionand processing procedures.“Internal Environmental Analysis of Metro” LAYOUT PLANNING“Layout planning is determining the best physicalarrangement 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 DEPARTMENTSMetro has designed their departments in such a way that all theproducts of the same kind like fresh food, non-food & dry-food etc.are grouped together. For the convenience of the customerscurrently 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 & SeasonalHigh volumes of food items generate greater profit and to balancethem Detergents are considered a part of Food Department.This kind of a department layout shows that customers can movebetween 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 LAYOUTIn 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 • EchoCLASSICThis kind of layout is above 10,000 sqmJUNIORThis kind of layout is equal to 10,000 sqm i.e 120 kanalsECHOThis layout is between 5000-6000 sqm TYPE OF LAYOUT BEING USED IN PAKISTANMetro 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 CustomersMetro is catering not only for the customers of Lahore but alsooutside areas like Gujranwala, Sheikupura & Sargodha LaborIn metro, most of the work is being done by the labor. So it isimportant for Metro to choose such a location in which laborsupply 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 ApproachThey have a team of more than 300 employees working as a team
Quality Awards and StandardsMetro maintains their quality by the standard of ISO 9000 “COMPARATIVE ANALYSIS Regarding competition”There is one major competitor in pakistan’s wholesale 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 MetroOpportunities: 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. TerrorismStrength: 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 operationsWeakness 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 MetroProduct: They give more attention on Fast moving consumer goods but they don’tgive service after sale because they follow such standards which cause 0.2% error occurrence ratio regarding defected productsPrice:if we observe the prices of Metro then we come to know that they areproviding unique prices as compare to their competition ,they give quantitydiscount to their customer most of the time and which is their corecompetency with respect to Industry of whole sellers.Promotion:when we observe their Promotion strategy then we see that most of the timethey 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 operatingin that area where people face so much traffic problem so they chose the place in Lahorenear 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 tocustomers at their desired place but it requires specific amount and distance regardingshopping. Tactical issues & queuesMetro faces many tactical issues because they have to change theirinventory after every 14 days on Thursdays. They need very activeworkforce which shifts inventory from the top into the shelf space forthis. On the cash counter they face problem of queues. Positioning or segmentation Issue Metro position it self as a wholesaler brand in Pakistanbut people who don’t have retail stores they also come hereand do shopping ,according to our analysis and theiradvertisement the target only businesses and they shouldposition their brand also for ordinary customers who useproducts in their homes. Competition’s Prices issuesIf we analyze the prices of makro and other whole sale markets thenwe can see that metro prices are almost less than all so in order tomaintain prices metro face problem during setting customer pricesbecause customer select those whole sale markets who offermaximum discounts on quantity and transportation. -- --------