'The customer defines success'
4 minOctober 2019
SME Services is a key strategic business innovation by METRO. What’s it all about?
18 months ago, one of the things we looked into as part of the global METRO2025 employee programme was the issue of the full extent of restaurateurs’ requirements. Food and non-food are only a small part of what matters to independent restaurateurs. METRO currently offers little, if anything, for many other aspects such as finance, insurance, staff or professional food service equipment. At the same time, we have the customer access that would enable us to service these fields if we wanted to.
The future is all about a stronger symbiosis of food and kitchen equipment. If we marry professional convenience and appropriate equipment in the kitchen, we create a brand-new value promise.
Martin Behle, Operation Partner of METRO responsible for business in Germany and Austria
Why is that important?
If we can utilise existing customer access to offer restaurateurs value added over and above our main business, we can generate stronger customer loyalty. To achieve that takes relevance and a share of wallet of at least 30%. Below that and you are interchangeable. However, many of our customers only buy 10 to 20% of their requirements from us.
How do we reach customers with new services in the early phase of setting up a company?
Company founders make a lot of decisions right at the start, including about financing, location, staff, insurance, checkout systems. This all happens well before the question of where I get my food from, which means that METRO only reaches customers later in the process. We see the springboard to earlier customer access being for example the specialist food service suppliers who operate at local/regional level and sell and install kitchens to the restaurateurs.
Why should these specialist food service suppliers work with METRO if they could do the deal themselves?
The classical food service supply trade has been in flux for some time. Just selling equipment is something a lot of operators can do, and margins have been squeezed accordingly. The future is all about a stronger symbiosis of food and kitchen equipment. If we marry professional convenience and appropriate equipment in the kitchen, we create a brand-new value promise that addresses the main problem in the food service industry: shortage of trained staff. The traditionally labour-intensive mise en place is ready straight out of the chiller and is turned into a meal at the push of a button. Concepts like these paired with our broad customer access are very attractive for the specialist food service suppliers. That’s the basis of our partnership with PENTAGAST, Germany’s largest association of specialist food service suppliers. What we still need are financing models that enable us to get restaurateurs up and running quickly. So we combine share of wallet with equipment procurement costs in the first step. The bottom line is that PENTAGAST sells more equipment, we increase our revenue share and the customer is more successful. In the second stage we deal with issues around financial solutions.
How would you describe the future relationship between the core business of cash & carry and FSD on the one hand and SME Services on the other?
Nothing in isolation. That’s the basic rule. Everything we do must be worthwhile for the core business. Anything that isn’t, isn’t a solution. This combination of services and product ranges puts our core business centre stage, and that has to be the goal.
Could there also come a point in future where the good profit margins are generated by the SME services and the core business primarily enables frequency of contact and maintains the customer relationship?
Of course, it would be wrong to give these services and solutions away for free. They need to sustain themselves. But at the moment I don’t see us redefining the core business in the short or medium term. Our core business is food. End of story.
We’re currently launching SME Services in Germany. Are there solutions that also work one-to-one in other countries or will individual solutions for SMEs be developed country by country?
I believe that 80% of what we are currently developing in Germany can be applied on an international level. That is especially true of financing solutions and food service equipment; dealer networks in the countries in question need to be integrated locally. The blueprint that we’re implementing in Germany is a good template for the roll-out, which is why we are including the national companies in other countries in all these activities at an early stage.
How is success measured?
The customer defines success. No one else. If we market something that no one is interested in, then it’s not a success. If we cannot convince the other countries that it will generate value for them, then it’s not a success. However, if the customer understands the services as a value promise and by doing so becomes more loyal to our company and our core business, then it’s a success.
