Dusseldorf, Berlin Steffen Greubel cannot be stopped by the pandemic. Since he took over the executive chair at Metro last May, he has visited almost every country in which the retail group is represented, as he recently affirmed in a post on LinkedIn. After all, there are 34 states, 24 of them with stationary metro markets – and all with their different corona-related entry requirements. However, Greubel will soon be able to remove some of the countries from his list.
Because the Metro boss is preparing to withdraw from other foreign markets. Specifically, it is about India and Belgium, as it is said in industry circles. This should direct more resources to the remaining countries. The company declined to comment on this information when asked.
There will be more details on Wednesday when Greubel will present the new strategy for the wholesale group to analysts and investors. It will not be a revolution, but a continuation of the route taken by predecessor Olaf Koch, according to those around the group. The focus is on strengthening profitability and close interaction with customers, especially in the catering industry.
Investors don’t expect a revolution from Greubel either, but rather an evolution. His predecessor Koch had set the general framework. He sold all peripheral areas or spun them off: Kaufhof was taken over by the Canadian group Hudson’s Bay, the supermarket chain Real went to the Russian investor SCP, the electronics chains Saturn and Mediamarkt Metro brought to the stock exchange under the name Ceconomy. What remained was the core business of wholesale, which includes supplying large customers in the catering and retail sectors.
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Less than a hundred days after taking office, Greubel announced his withdrawal from Japan in early August. “The deal was highly profitable, but the offer was just too good,” said a person familiar with the operations. A month later, the loss-making business in Myanmar, which his predecessor Koch had started just two years earlier, ended.
Focus is on the strong countries in Europe
The now planned sale of the national company in Belgium with 17 stores under the Metro and Makro brands is purely an emergency operation. The daughter has been making losses for years. In the 2019/20 financial year, a loss of 44 million euros was incurred in Belgium with a turnover of 714 million euros.
A further complication is that trade union participation in Belgium is very complicated, which makes it difficult to restructure the company, according to company circles. The Rothschild bank is now to examine strategic options for the deal.
The situation in India is very different. Business there is profitable. But given the fierce competition and huge market, significant investments would be needed to stay on par with the competition. According to company circles, the board of directors has therefore decided to find a strategic partner for the country.
With the foreseeable departure from India, Metro is again focusing more on Europe. Apart from its own delivery business, only shops with the yellow and blue logo remain in Pakistan and Kazakhstan in Asia. “Now Metro should say goodbye completely to Asia,” it says in financial circles. In any case, business in Asia only contributed just under EUR 1.5 billion to total sales of EUR 25 billion in the past financial year.
The withdrawal from other countries does not come as a surprise. As part of the strategy process, a review of the current portfolio is an elementary part, Greubel said in a conference call in the middle of last year. Each country is examined for its strategic importance for the group and its economic perspective.
Digitization should drive sales
Olaf Koch may be the strategist, his successor is an implementer. And that despite the fact that he had worked for the management consultancy McKinsey for 14 years. Unlike his predecessor, the man from Lower Franconia is not a portfolio manager, but a practical man who also takes care of the details.
He was shaped by his time at the Würth screw company, where he got to know and appreciate tightly organized sales and where the sales professionals told him their best tricks. There he also made a name for himself as a reorganizer when he led the Italian business out of the crisis.
The Metro boss has the backing of the major shareholders for his new strategy.
(Photo: Metro)
With this experience, Greubel wants to streamline sales at Metro for greater efficiency. Instead of waiting for business customers to come to the Metro stores, as in the past, the sales force is to be more active in sales in the future, and the sales team is to be strengthened.
He wants to further expand the digital tools that Metro has developed and makes available to customers, such as the reservation software for restaurants or programs to optimize the use of goods. He wants to use these instruments to bind customers more closely to the wholesaler and win a larger part of their purchasing volume.
The new customer app “M-Companion”, which had 1.4 million downloads in the past financial year, will play an important role in this. Initial evaluations have shown that users of the app order almost twice as often as the average customer.
Investments prevent increase in profit
The goal: significantly higher profitability than in the past. In Germany, the most important market in particular, there is still room for improvement. In the past year, the margin in this country was increased significantly through strict cost management and the operating profit increased from 125 to 149 million euros despite a drop in sales.
Greubel has already planned for at least a slight easing of the corona pandemic in its forecasts for the current financial year. He therefore expects sales growth of between three and seven percent.
The Metro boss, who has been in office for nine months, is not only withdrawing from regions of the world. He wants to expand. Acquisitions should contribute to growth. However, no major acquisitions or purchases to simply gain market share in a country.
For him, acquisition targets are companies that bring in new skills or customer groups, such as the Spanish delivery service Davigel. The company bought Metro a year and a half ago.
On the other hand, the desired higher efficiency in sales will initially have little effect on the operating profit (Ebitda). Investments in the sales team and digitization are expected to raise Ebitda in the current year to around the previous year’s level – according to the previous announcement.
Major shareholders are behind the new strategy
Compared to its predecessor, Greubel has an unbeatable advantage: it has the full backing of the largest shareholders. While Koch was repeatedly slowed down by cross shots or a lack of support from their ranks, the major shareholders are convinced of Greubel’s actions, as the supervisory board said. They even forgive him the loss of the dividend for the past financial year.
Steffen Greubel is in intensive dialogue with the three major shareholders, Daniel Kretinsky, who holds 40.6 percent of Metro through his holding company EP Global Commerce, and the Schmidt-Ruthenbeck and Beisheim families, who together have a combined stake of 23.94 percent . He is described by their side as “open and approachable”.
It is also helpful that Kretinsky has concluded a kind of truce with the important old shareholders. The Czech billionaire had twice tried in vain to take over Metro completely and take it off the stock exchange.
The founding families Schmidt-Ruthenbeck and Beisheim bitterly opposed the takeover. They described the initial bid of EUR 16 per share as much too low. After all, they had pooled their shares and even bought them to ward off Kretinsky. So Kretinsky, who is otherwise more invested in the energy sector, stopped halfway.
In the meantime, however, the major owners are pulling together and can agree on the important issues. Thus, Greubel’s appointment to the chief post was not disputed between them.
Nevertheless, the Metro frontman cannot lean back: Main owner Kretinsky had always said about his predecessor Koch that the direction was right, but that he was too slow. He will also apply the same bar to Greubel. The new boss has to set the pace.
More: These retailers are defying the consequences of the pandemic with new business models.