timer3 minApril 2021

For a long time, Russian consumers mainly shopped offline. But the start of the pandemic accelerated the trend towards e-grocery in the largest country in the world. METRO’s success in e-grocery retail comes down to being well prepared, the ability to learn and forging strong partnerships.

The first coronavirus wave hit Russia in early 2020. The government quickly announced ‘non-working days’ in order to curb the spread of the virus. Many companies had their employees work from home or closed down temporarily. This resulted in an explosive growth of online sales. After all, there are no physical distancing requirements or closing hours on the Internet, and the availability of goods is quite different compared to in-store shopping. The growing consumer culture also driving more and more customers to shop online.

The e-grocery market includes online retailers and marketplaces that sell food online, offline retailers’ own online shops, delivery services, food producers’ online shops and express delivery services. This is where METRO as a wholesaler comes into play. ‘When the lockdown began in Russia, the user interface was completed, we had enough products in our outlets, our supply chain was mostly ready and we were as prepared as we could be with regard to technology,’ remembers Martin Schumacher, CEO of METRO Cash & Carry Russia. ‘But the number of employees was an issue. In order for us to be prepared for such a sudden surge in demand, we would need hundreds of warehouse pickers. It cost our partners and us time to recruit and train people. That was the most difficult part. But once we had adjusted the process, we quickly experienced all kinds of growth.’

Strategic Partnership As a Means Of Success

In Russia, METRO decided to use a model of cooperation with delivery partners that allows the company to react flexibly to market needs. This model is called B2B2C (Business-to-Business-to-Consumer). The basic idea is that a retailer works directly with its partners, not the customers. This means that customers place their order on the METRO website or the partner’s website; then the partner picks and delivers the order. This business model means METRO can focus on managing inventory and operations in its stores instead of recruiting its own delivery staff or investing in its own logistics.

E-Grocery Market in Russia: METRO Wholesale Store

METRO operates its B2B2C model with already a number of partners in Russia, the most important one being the company Sbermarket. One factor contributing to METRO’s growth was the decision to set up dedicated business areas for delivery services in METRO stores. Pickers and drivers can process orders much faster in these zones, which measure 500 square metres or more, than if they had to browse through the entire wholesale store. Another success factor was introducing small-scale dark stores in the METRO stores. They are set up to store products exclusively for the online distribution channel. Guaranteed stock of goods that are in high demand online can be kept in the dark stores in order to prevent them going out of stock due to customers shopping in-store.

The Russian Customer – Offline and Online

While METRO Russia as a wholesaler primarily serves the hospitality industry and small traders, its reach has been extended to end consumers via the e-grocery partners.  With HoReCa and traders, METRO has a long-standing customer base – many customers have been shopping at METRO for 10 to 20 years. Many of these loyal METRO customers include those who now shop online, a large proportion of them women. In terms of the product range, the virtual shopping cart has a high share of products for daily use, such as frozen goods, fruit and vegetables as well as ultra-fresh products. Up to 40% of goods in the shopping cart are usually fresh produce.

‘Customers are more aware of what they’re buying. They’re looking for high-quality products and are prepared to pay a bit more for them,’ explains Alexander Fedosov, Marketing & E-Commerce Director of METRO Cash & Carry in Russia. Incidentally, more than 10% of online sales are own brand products, such as METRO Chef. Around 65% of orders are usually delivered on the same day and the rest the next day. However, this was not always possible due to the pandemic; customers sometimes had to wait, particularly during the first lockdown. This is also why METRO has worked on offering express delivery. With the partner Yandex, METRO can offer delivery times of less than 2 hours. Martin Schumacher: ‘We are very proud of the fact that we were able to take a leading position in the e-wholesale industry together with our partners in such a short period of time.’

Metro In Russia: A Diverse Market

METRO is represented in 51 regions in Russia and operates 93 METRO Cash & Carry stores as well as the partner franchise chain Fasol, which includes more than 1,700 stores. The company’s total sales amount to 2,6 bln. €. The delivery business is an important aspect of this: in 2019, METRO was already offering delivery services in Moscow and Yekaterinburg. By the start of the pandemic in March 2020, deliveries could be made to around 2 dozen cities. Today, the lion’s share of sales comes from Moscow, St. Petersburg, Yekaterinburg, Rostov-on-Don and Samara. ‘The share of the online distribution channel is now around 10%. This is probably the highest share in all of Central and Eastern Europe. A year ago, the figure was 3%, which means that we have tripled in structural terms,’ says Alexander Fedosov.