Industry perspective: Olaf Koch — Metro AG

Industry perspective: Olaf Koch — Metro AG

Metro AG CEO says digital will be a game-changer for the food wholesale group.

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Headshot Olaf Koch

Credit: Charles Best

What is Metro’s strategy?

In our wholesale business, we are there to help SMEs – for example, independent restaurateurs, café owners and small grocery stores – be more successful. In the 25 countries we operate in, we have given local teams the authority to tailor the business to suit their customers.

The hospitality industry in Europe is, on the SME side, almost entirely analogue. We’re talking about 1.8 million entrepreneurs in Europe who generate sales of approximately €420 billion sell-out value (US$470 bn). The operating system of most of these businesses is a piece of paper and a pencil.

Replenishment, for example, is driven by gut feeling, not data. By making data accessible, we have an enormous opportunity to help and support. Replenishing more accurately will lead to less shrinkage, save money and help the environment. With the data, you know instantly if it was a good day, which part of your restaurant did well and which didn’t.

What is the biggest impact technology has had on your business?

We are in a completely transparent market. In a split second, one can find out the price point of a product, its pros and cons and the quality of service. Yet, if we build relevance and show commitment to our customers, that is also apparent in a split second.

These insights have changed our focus from operations to customer dedication. We are in the relationship business and we have to consciously acknowledge that the customers decide success and failure. Thus, we need to anticipate and meet their needs and wishes. If we’re clear about who we are serving, we can adjust the offering and the format accordingly and initiate a cycle of interaction with customers about where we can do better and supply incremental value.

For us, customer centricity is directly correlated to employee engagement. We are a people’s business. As a result, our focus has been, and still is, on raising employee engagement. We are now at 76 percent – the industry average is around 64 percent. If you ask me, the correlation between employee engagement and customer satisfaction is not linear: it is exponential. You see this reflected in the Net Promoter Scores: at the best stores, the store manager, department managers and associates work closely together.

Has global volatility changed your strategy?

It has intensified our determination to distribute more authority locally. The typical Metro format used to be driven by standard operating procedures (SOP). In 2012, we allowed countries to adjust the product range. In 2015, we said to our local managing directors: “Here are the keys, you are now the CEO. You are free to adjust the product range, marketing mix, whatever. You cannot touch compliance, financial reporting, bookkeeping, food safety, quality or brand. Otherwise, you’re free. So please never fall back on the excuse of blaming head office.” Furthermore, we changed our boardroom culture into an operating partner model. Every company has a dedicated operating partner with whom they develop a value creation plan. This has helped us operate in some tough markets. Teams are quick to make the necessary decisions and they’re not waiting for head office approval.

What is the big opportunity for Metro?

To strengthen the relationship to our customers by building more relevance for them. In this context, digitization will be game-changing. For us, it has the potential to create much more value for our customers, cement our links with the community and help us become a meaningful partner for SMEs.

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