Project Report on Metro Cash&Carry

1. INTRODUCTION TO METRO: METRO Cash & Carry – this name stands for one of the great success stories in modern commerce. The unique wholesale business-to-business model of METRO Cash & Carry is focused only towards professional customers such as hotels, restaurant, and caterers as well as small and mid-sized retailers. METRO Cash & Carry offers this target group a greater efficiency than the multilayered supply chain thus helping them to improve their business: By offering them a one-stop solution for their purchases, by helping them to improve their assortment, by offering them high quality products at reasonable and transparent prices and by offering them a consistent supply source.

What does METRO offer? METRO Cash & Carry is a reliable partner for more than 20 million professional customers worldwide. It gives them a clear competitive advantage in their own markets. Professionals can purchase everything they need to run their business: A restaurant owner, for example, can buy food like fish or vegetables as well as kitchen equipment and office supplies. METRO Cash & Carry offers an exceptionally wide range of high-quality products under one roof. Depending on the size and type of wholesale center, the assortment includes up to 20,000 items in the food range and 30,000 items in the nonfood sector. As the name implies, METRO Cash & Carry customers select their own items and take them with them to their restaurants and shops. With this unique business-to-business concept, the company has grown to become a leading international player in self-service wholesale.

Company History METRO Cash & Carry is a leading international company in self-service wholesale and operates more than 600 outlets in 29 countries. With over 100,000 employees worldwide, the company achieved sales of € 31.7 billion in 2007. By generating almost 50 percent of the total sales, METRO Cash & Carry is the top-selling sales brand of the METRO Group. Assortment and service of METRO Cash & Carry’s unique business-to-business model are targeted only towards professional customers such as hotels and restaurants as well as small and mid-sized retailers or institutions. The company offers these special groups a high level of assortment competency both in food and nonfood as well as attractive wholesale prices. An efficient and internationally conferrable concept ensures success in entering new markets.

METRO in Pakistan METRO Cash & Carry announced its operations in Pakistan in January 2006. Since then, it has established itself as a potential market leader in wholesale. Under the supervision of Managing Director Mr. Giovanni Soranzo, METRO Cash & Carry Pakistan has opened its first store in the city of Lahore in October 2007. The company’s country head office is also based in Lahore and currently employs over 400 people in two offices. 1

METRO Cash & Carry’s commitment to Pakistan is also echoed in its donations to the President’s Earthquake Relief Fund.– The company donated €100 000 in January 2006 towards President's Earthquake Relief Fund. It also has plans to fund development activities in the country in association with the German Investment and Development Company. Such activities have successfully been carried out in other countries. METRO Cash & Carry plans to invest in Pakistan on a sustained and reliable basis in the years to come. The company’s unique business model offers potential for a decrease in market prices and promotion of local goods and personnel.

Issues: Tactical sales issues & queues Metro faces many tactical issues because they have to change their inventory after every 14 days on Thursdays. They need very active workforce which shifts inventory from the top into the shelf space for this. Sales force facing problem of managing queues on the cash counter. Sales force motivation and activate participation in work is shrinking. Giving sales force up to date product knowledge in shorter span of time is a problem Positioning or segmentation Issue Metro position itself as a wholesaler brand in Pakistan but people who don’t have retail stores they also come here and do shopping ,according to our analysis and their advertisement the target only businesses and they should position their brand also for ordinary customers who use products in their homes. Competition’s Prices issues If we analyze the prices of makro and other whole sale markets then we can see that metro prices are almost less than all so in order to maintain prices metro face problem during setting customer prices because customer select those whole sale markets who offer maximum discounts on quantity and transportation.

2. External and Internal Analysis: Key success factors: 10 METRO Cash & Carry principles The success of the company is based on the following principles: • Focus on professional customers • One-stop shopping • Efficient store concept designed for professional needs • Advanced customer service 2

• Enhanced customers’ competitiveness • Excellence in supply chain and quality management • Strengthening of local suppliers • Development of national infrastructures • Career opportunities • internationally transferable concept

Competitive analysis: There is one major competitor in Pakistan’s whole sale industry and that is Makro. • •

Both use News papers, internet, pamphlets and book lets because it contains detailed introduction about the business and its products. Both Metro and Makro are in a wholesale business

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Both Spent not much on Marketing campaigns

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Metro believes in the concept of in source while Makro outsources its food production

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They both have teams for customer service

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Metro has trained staff while Makro has just hired sales person

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Metro has proper shelf placement of products whereas Makro does not

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Metro follows the same layout all over the world and Makro does not

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Metro places its inventory in its store and warehouse, while Makro places inventory only in store it does not has any warehouse

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Metro hire logistics for transportation

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Metro focus on proper shelf placement of products while Makro has not practicing this.

SWOT Analysis of Metro: Opportunities: 1. Changing trend of shopping, people prefer to go the place where they can find maximum variety under one roof. 2. Metro is planning to open new stores at different locations. 3. Company name itself is an opportunity as “Metro” itself is a very popular name and they can expand business with any company they like to. 4. People are coming more towards hygienic food.

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Threats: 1. Launch of Wal-Mart in Pakistan. 2. Inflation 3. Government instability 4. Terrorism Strength: 1. Largest whole seller platform. 2. They are selling few products with their own brand name. 3. Metro don’t spend money on advertisements through electronic media. 4. Metro is operating their business according to the buying pattern of the customers. 5. Metro Values its Employees and Customers. 6. Defined format adapted to local market needs 7. Efficient and low-cost operations Weakness 1. Not providing goods on credit bases. 2. Location of the store is quite far away. 3. Only deals in wholesales. 4. Relatively poor security check and balance on few items. 5. High priced imported items. METRO DEFINING QUALITY  Value for price paid People who purchase products from Metro feel that they charge the right amount for goods that they usually buy.  Support services Metro gives warranty depending on the type of product purchased. Example it gives warranty on its electronics.  Psychological It has a good ambience, staff is friendly & responsive. TYPE OF LAYOUT BEING USED IN PAKISTAN Metro Pakistan is using the “junior” Layout. This kind of layout is equal to 10,000 sqm i.e 120 kanals.

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Advantages of Proper Layout Planning • • • • • • •

Proper Layout is it self Marketing of products. Critical in building good working relationships Increasing the flow of information Improving communication Promoting the visibility of key items in retail business Contributing to customer satisfaction Customer convenience

WAREHOUSE LAYOUT • • • •

Metro has its warehouse at Sharakpur which is known as the “Metro Platform” They use the “Proactive approach” Metro itself is a of kind ware house To locate the inventory & order placement, Metro has a software known as GMS

Suppliers 

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Metro is outsourcing this service by hiring “Logistic Company” for transportation services Metro has its own suppliers who supply directly to its warehouse from all over the world & local suppliers supply both to Metro & its warehouse

Customers Metro is catering not only for the customers of Lahore but also outside areas like Gujranwala, Sheikupura & Sargodha Labor In metro, most of the work is being done by the labor. So it is important for Metro to choose such a location in which labor supply is adequate Site considerations Metro also considers the following factors while choosing the location, they have local zoning & taxes, access to utilities, utility cost, soil conditions, climate, adequate drainage, approach roads, parking and etc.

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3.

Sales management practices:

Strategic planning Metro Cash & Carry hopes to double its international own-brand sales share from the current 10 to around 20 percent by 2012 with its new private label strategy and streamlined portfolio of six exclusive labels. The new strategy includes a tighter assortment, a sharpened customer focus and even more competitive pricing, according to a company statement. The new private label brands are gradually rolling out in all 655 self-service wholesale stores in the 29 countries where Metro Cash & Carry does business. Combined with a very competitive pricing, our own brand assortment will significantly help metro professional customers to boost their own business. With new own-brand strategy we are focusing even more on the special needs of core customers, such as hotels and restaurants, traders and offices and knowledge and understanding of their business has helped to develop a high quality, user-friendly and tailor-made product range. The new own brand portfolio includes: • Aro sold on a price entry level, below the benchmark competition and comprises 700 reliable food and non-food products. • Fine Food, which “stands for high-value products, addressing independent food traders as well as service stations with 700 items.. • Horeca Select, which offers 1,500 food and non-food products for professional kitchen use. • H-Line, an assortment of 350 non-food and “near food” products that offer solutions for the hotel and [restaurant] sector. “The professional look and performance of H-Line offers a realistic alternative to franchising,” the company said. • Rioba, a line of 150 coffee and cocktails making supplies for bars, cafés, hotels, companies and offices. • Sigma, a line of 600 office supplies that serves all customer groups.

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On average the selling price will be 10 to 20 percent less than similar branded products, while offering a quality that is comparable to the best standard on the market, according to a company statement. “Altogether, this new approach allows us to offer our professional customers a real added value. This is especially important in the course of an economic downturn,” said Thomas Rudelt, head of corporate own-brand management. Strategy for sustainable, profitable growth At the heart of the Company’s strategy are customer focus, positioning and expansion along with efficient processes and structures. The objective is to boost the value of METRO GROUP in the long term by means of profitable, sustainable growth. The Company’s management culture encourages each individual employee to act autonomously. ‘As decentralized as possible, as centralized as necessary’ is the guiding principle. In 2009, METRO GROUP launched the efficiency and value-enhancing program me Shape 2012 to tap existing potential for further growth within the Group. With this scheme, the Group hopes to improve earnings by €1.5 billion per annum from 2012 onwards. Cost cutting will account for some €800 million of this. METRO GROUP aims to generate the remainder by taking steps to increase productivity and improve customer relations, for example. Shape 2012 had a tangible effect on profits even in the first half of 2010.

Personal selling approach Personal selling, unlike advertising or sale promotion, involves direct relationships between the seller and the prospect or customer. In a forma sense, personal selling can be defined as a twoway flow of communication between a potential buyer and a salesperson that is designed to accomplish at least three tasks: (1) identify the potential buyer’s needs; (2) match those needs to one or more of the firm’s products or services; (3) on the basis of this match, convince the buyer to purchase the product. Finally, it is a complex communication process, one still not fully understood by marketers.

Personal selling techniques: The importance of the personal selling function depends partially on the nature of the product. As a general rule, goods that are new and different, technically complex or expensive require more personal selling effort. The salesperson plays a key role in providing the consumer with information about such products to reduce the risks involved in purchase and use. Metro have active sales force standing in each row to help customer. Company is publishing the Metro magazines of new food items.

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The sales process 1. Preapproach (Preparing) Review key decision makers especially for business to business o o o

assess credit histories prepare sales presentations Identify product needs.

Helps present the presentation to meet the prospects needs. 2. Approaching the Customer Sales force objective is not only reaching to the potential customer and strive to develop a relationship rather than just push the product. First impression of the sales person is Lasting and therefore important, Sales force wore proper uniform. Neatness and cleanliness important. Sales force use referrals, cold calling or repeat contact. Sales force wore proper uniform. 3. Making the Presentation Need to attract and hold the prospects Attention to stimulate Interest and stir up Desire in the product so the potential customer takes the appropriate Action. AIDA Try to get the prospect to touch, hold or try the product. Sales force is trained so they are able to change the presentation to meet the prospect needs. Overcoming Objections Seek out objections and address them. Anticipate and counter them before the prospect can raise them. Try to avoid bringing up objections that the prospect would not have raised. Price objection is the most common Need to provide customers with reasons for the $s, build up the value before price is mentioned Must be convinced of price in own mind before you can sell to customer. Get budget info. on buyer before you try to sell, and must know what they want, must sell service on top of product augmented product--to create value!! Must know value of product, provide warranties etc.!!

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4. Closing Ask prospect to buy product/products. Use trial closes, Metro ask about financial terms, preferred method of delivery. 20% sales people generally close 80% sales. The following are popular closing techniques: o o o o

Trial Close (Minor decision close) Assumptive close (Implied consent close) Urgency close Ask for the sale close

If prospect says no, they may just need more reasons to buy. 5. Following Up Metro follow up sale, determine if the order was delivered on time, installation OK etc. Also helps determine the prospects future needs. Accomplishes four objectives: o o o o

customer gain short term satisfaction referrals are stimulated in the long run, repurchase prevent cognitive dissonance

Steps of Sales P± Positive state of mind O± Open discussion U± Understand customer needs C± Close the discussion H± Handshake

Benefits to metro: From customer’s point of view i. Personal selling provides an opportunity to the consumers to know about new products introduced in the market. Thus, it informs and educates the consumers about new products. ii. It is because of personal selling that customers come to know about the use of new products Business Studies in the market. The sellers demonstrate the product before the prospective buyers and explain the use and utility of the products. iii. Personal selling also guides customers in selecting goods best suited to their requirements and tastes as it involves face-to-face communication. iv. Personal selling gives an opportunity to the customers to put forward their complaints and difficulties in using the product and get the solution immediately.

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Relationship selling: The relationship-building process which is designed to meet the objectives contains six sequential stages. These stages are (1) prospecting, (2) planning the sales call, (3) presentation, (4) responding to objections, (5) obtaining commitment/closing the sale and (6) building a longterm relationship. Metro move beyond functional relationships, they develop strategic partnerships or strategic alliances. These are long-term, formal relationships in which both parties make significant commitments and investments in each other in order to pursue mutual goals and to improve the profitability of each other. Marketing managers and sales managers must make some very important decisions regarding how the sales fore should be organized.

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“Continuous Improvement & Metro”:  

Proper shelf placement & training of staff Metro trains its staff by two process: o Process o System   

It has its own in-house training organization called HOT (House of Training) They also send their staff abroad for proper training They use “train the trainer” approach

Team Approach They have a team of more than 300 employees working as a team Quality Awards and Standards Metro maintains their quality by the standard of ISO 9000

Service departments support the sales departments in their vending activities: • 11

Customer entrance and after sales services

Welcoming customers check & issue customer cards at the entrance. Sales force is dealing with goods returns and After Sales Service, Customer Care. •

Customer manager:

Acquiring new customer and visiting registered customers. •

Human Resources:

Manager is dealing with all human resources topics for the stores staff. •

Decoration and maintenance:

Settling of demonstration furniture, display material and signage for the presentation of goods

Recruiting and Selecting Salespeople Metro have assessment centers--intense training environment that places candidates in realistic problem settings in which they give priorities to their activities, make and act on decisions. Recruitment should be a continual activity aimed at reaching the best applicants. Applicants chosen that most match the demographics of the target market Compensating Sales People To attract, motivate and retain sales people that facilitate and encourage good treatment of the customers. Metro try to understand personalities of sales people. Strive for proper balance of freedom, income and incentives. They know the Need to determine the best level of compensation required, and the best method of calculating it. o o o

Straight salary straight commission (selling insurance)--single percentage of sales or sliding rate Combination plan

Motivating Sales People Providing systematic approach must also satisfy non-financial needs: o o o

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Job security Working Conditions Opportunities to succeed

Forecasting; The purpose of this section is to provide a brief summary of market research literature regarding the forecasting of sales of products with guidance that goes beyond an ad hoc choice of a forecasting tool. The guidance provided by years of market research will lead to the recommendation of a forecasting model that has been developed from product adoption theory and rigorously tested in its ability to perform An S-curve pattern implies that product sales initially grow at a rapid rate, then the rate of growth tapers off, and finally declines with time. Historical analysis of product sales curves indicates this is one of the most common, if not the most common pattern of new product sales over time. Exhibit 1 shows the cumulative percentage of the potential market (i.e., total number of adopters) that has made an initial purchase of a product. As move up and to the right of the S-curve in Exhibit 1, i.e., as look at the rate of adoption of a product over time by first time purchasers, initially have the innovators buying the product, then early adopters, and so on as if move up the S-curve, until you get to the point of market saturation, where the last set of first-time buyers are known as the laggards. Exhibit 2 shows the time of adoption of buyers for the product. If the buyer is to the left of the vertical line in their time of adoption they are innovators, early adopters or part of the early majority, if to the right they are the late majority or the laggards. Exhibit 3 displays types of S curves developed from alternative types of product sales forecasting models. Exhibit 4 displays the types of diffusion models, including the highly adopted Bass (1969) model (hereafter referred to as the "Bass Model") that combines the innovation and imitation properties into one increasingly generalized model

Evaluating Sales force Performance: 1. To ensure that compensation and other reward disbursements are consistent with actual salesperson performance 2. To identify salespeople that might be promoted 3. To identify salespeople whose employment should be terminated and to supply evidence to support the need for termination The table shows the five measurement items used to generate data on sales force competence development. On the general question (P1), the firms were found to do well with a score of 83.37% representing 356 (156 + 120 + 80 = 356) points. Specifically, they did better in mentoring (P4) with a score 84.56% representing 367 points. This is closely followed by coaching (P3), which had a score

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of 83.14% representing 365 points. Project team staffing (P5) came next with a score of 81.86% representing 334 points. Sales force skills training (P2) came last with a score of 80.60%. In total, the aggregate score is 52.40% representing 1415 (349 + 365 + 367 + 334=1415) points out of a maximum of 2700 (135 responses x 5 grade points x 4 SFCD tasks = 2700) points. This indicates an average level of involvement of these participating firms in sales force competence development tasks. On the whole, it can be observed from this descriptive analysis that the participating firms were doing well in their sales force competence development programmes, however, coaching is mostly emphasized, followed by mentoring and project team staffing, and finally by skill training

Diagnosis and Alternatives Metro is very well serving their customer. We analyze that why the retailer are not going to metro. The issue the customer are facing is time consuming visit, outside city (transportation) so the corrective action need to take like online shopping and rickshaw scheme that will help retailers to transport goods to metro.

Recommended Sales Strategy To get the long term benefits Metro need to focus on Relationship building strategy. Like consultancy service for the retailers. Those wanted to open a business regarding the retail shop with the low initial capital , Metro consultant give them the complete idea, graphical layout of the store how they can effectively run with the business with low cost . This not only facilitate retailer but Metro will develop partnership with many retailers, Help Metro with goods and strong image and standing in the market. CONCLUSION: Metro Cash & Carry Pakistan has proved itself as to be a company for investment. Taking in hand flag of satisfaction Metro is heading towards professional advancement and competency by providing high quality services to his. Customers and prove to be a successful company from investment point of view.

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Exhibit 1:

Exhibit 2:

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Exhibit 3

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