A Digital Wholesale Journey

Welcome to the future

It is Monday, the year is 2025. Marcos, a restaurant owner, is chatting to his guests; he is greeting new arrivals and recommending dishes. Mondays used to be reserved for writing shopping lists in the office. Today, he is mingling with his guests and writing wine recommendations on the big blackboard overlooking the dining area. The shopping list is no longer his responsibility. His shelf takes care of it. Furnished with sensors that capture precisely which product needs replenishing, it automatically populates the list without any effort on Marcos’ part. The list is a component of an app that establishes a direct link between the restaurant owner and his preferred wholesaler. It checks whether the required products are available in the store, recommends related products and notifies the wholesaler about Marcos’ upcoming visit. Even though Marcos could get his goods delivered by drones, he prefers to visit the store in person – even in 2025. This time, he is looking for some personal advice in the liquor lounge.

Finding your own solutions

It sounds like science fiction now, but we might be taking it for granted soon. Timo Salzsieder, the CIO and CSO of METRO AG and CEO of its technological unit METRONOM, has no doubt about that. But the industry is still struggling with digitalisation. In 2018, Tata Consulting and the market research institute Bitcoin Research asked nearly 1,000 companies about the state of their digitalisation efforts. The result: unlike other industries, retailers and wholesalers rarely take advantage of modern technologies. Only cloud computing and blockchain are relatively widespread.

But the other possibilities are becoming more and more important due to the increasing complexity of the industry. The wholesale industry moves enormous quantities of merchandise around the world every day. For food products such as meat and fish, freezing zones must be observed during transport, which makes planning difficult.

METRO develops precise solutions to manage this complexity. In 2018, the company completely reinvented itself. It established its technological unit, METRONOM, whose director Timo Salzsieder has 20 years of experience in the digital sector. His past roles include a position on the Management Board of HolidayCheck. He contributed valuable new ideas for the entire company, especially regarding culture. Today, culture is an important component of his own business formula: execution + strategy + culture = success.

On top of its technological progress, METRO has also opened towards the outside world: it has engaged in productive exchanges with Google, Microsoft, Fraunhofer-Gesellschaft and other trading partners, taking inspiration from companies in other industries. “After all, we all face similar challenges,” the CIO of the wholesale and food specialist commented. The result: a more flexible, balanced IT architecture and better networking, both internally and with customers. The latter get to use an ordering software, for instance, while the drivers can take advantage of an app to make their route planning and delivery processes more efficient.

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Around 7,000 field representatives use the app ‘Sales and More’ to share information about their customers digitally. This allows them to give their customers even better advice.

It’s all in the mix

METRO relies on simpler, harmonic IT processes to cater to its customers even more effectively. Salzsieder explained: “We want to promote high standards and reduce complexity.” The company follows a simple credo: technology is pointless without customer centricity. To keep on top of the wildly diverse requirements and business models in the 25 countries in which it is active, METRO is launching another unit in Shanghai on top of its German and Romanian sites in 2019. Future locations could include India and Russia. All units will have IT governance and structure as well as specific processes from the headquarters in Düsseldorf, including the incoming goods department and procurement systems. The individual METRO subsidiaries will be free to develop their own, country-specific innovations.

Blazing trails

All these measures have the same purpose: improving the customers’ shopping experience. To achieve this goal, METRO is looking for answers to current trends. Five topics will be dominating the future of the company: visual search and recognition of products and faces, the use of virtual assistants (VR and AR) in the stores, algorithm-based retail (e.g. individualised prices and advertisements) and cashless payment.

At the 'LAB powered by METRONOM’ in Düsseldorf, METRO will present its first results. Take the algorithmic price-setting system, for instance: METRO customers already enjoy better prices when they buy in bulk. In the future, algorithms will be calculating prices individually, depending on who is buying. METRO has expanded its IT network and customer intelligence systems to include target-group-specific trend analyses. It has also voiced some ideas about the use of virtual and augmented reality systems. In France, it is already taking advantage of these technologies for the construction of its compact stores

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According to Salzsieder, the LAB is intended as a place of digital exchange and source of new ideas. “We will present what is already possible, highlight risks and opportunities and discuss solutions.” That is how METRO will digitalise.

Marcos has reached the store. His app has signed him in and is guiding him along the shelves using an indoor navigation system. It shows him the shortest routes to his products. In the Liquor Lounge, he uses a set of VR glasses to pay a visit to the winery that grows his new house wine, while a store employee tells him about their organic growing methods. After a wine tasting, he leaves the store with a full basket. He does not need to queue or wait around at the checkout. The app has registered everything and transferred the payment for Marcos’ purchase automatically. Shopping has never been easier.