Blog: Dean BestWholesale changes at Metro Cash and Carry

Dean Best | 17 July 2009

The latest stage in Metro Group's bid to drive its business forward has been unveiled - with its domestic cash-and-carry operations now under the microscope.

Today (17 July), Metro Cash and Carry outlined what is - to all intents and purposes - a root-and-branch review of its business in Germany.

After a couple of years of falling sales and profits, Metro CC is looking to slash costs but also generate extra sales. The group wants to cut EUR150m (US$211.8m) in costs over the next three years. Stores will not be closed - at least not under current plans - but jobs will go.

Metro CC is also chasing up to EUR700m in extra sales by 2012 - an ambitious target that the retailer plans to meet, in part, by doubling the amount of own-label products it sells.

Despite success in other parts of the world, Germany is proving one of Metro CC's two most challenging markets.

The other is the UK. Here, Makro, Metro CC's local business, has suffered in recent years and is looking to improve under MD Hannes Floto through remodelling depots and focusing on core customers.

It will be some months before these turnaround programmes bear fruit but, if you look at the operations of the Metro Group as a whole, these initiatives are just two among a number brough in since company CEO Eckhard Cordes took the reins 18 months ago.

In January, Cordes unveiled 'Shape 2012', a cost-cutting programme designed to boost profits by EUR1.5bn by 2012.

In May, however, Metro revealed it made a loss during the first quarter of 2009, hitting the company's shares and forcing Cordes to reassure investors that the global economic downturn offered opportunities for " a healthy and financially strong company" like the German group.

"We are determined to seize these opportunities," Cordes then said.

Metro's larger rival Carrefour has just embarked on its own turnaround programme, and as Lars Olofsson, the French retail giant's CEO knows, it will take heaps of determination and stamina for these changes to succeed.


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