Shop like a pro at Makro C&C in Belgium
Metro enjoys a variety of fortunes within its international portfolio. Despite some withdrawals in recent years, this still numbers an impressive 25 countries. One of the most challenging is Belgium where the group continues to haemorrhage money. With net sales stagnating at €846m, losses jumped to €107m in the business year to September 2017 — the third decline in a row.
Metro Belgium runs six 'Makro' and eleven 'Metro' cash & carry stores focussing on the end consumer and professional HoReCa, respectively. The problem child is Makro where the company has just announced a relaunch with a "new commercial approach" aimed at gaining 45,000 new customers annually.
This 'Value Creation Plan' is all very well, but there have been numerous such experiments in the past. So why should this one be any more successful? Country manager Vincent Nolf is sanguine...
"We have to focus on our DNA"
We have great store locations, but this is obviously not enough. A gradual decline in customers has impacted turnover and, subsequently, financial results. Turnover has also been affected by the sale of our petrol stations and the transfer of our consumer electronics business to Media Markt during 2017.
But the integration of Media Markt as a shop-in-shop concept doesn't seem to have helped your turnaround. Where was management thinking flawed on this?
I still believe the decision as such was the right one. Makro was losing relevance in consumer electronics. Investments were not paying back in this segment. However, we wrongly assumed that Media Markt would attract customers from remote areas when other Media Markt stores were sometimes closer to them.
Why have customer numbers been declining overall?
We also lost focus against a backdrop of increasing competition. Customers were no longer able to differentiate us from other retailers, many of whom are also closer to customer homes than our stores.
How come your own sister company, Metro, has increased market share in Belgium over the last three years?
The concept has a clear profile. It is oriented towards B2B and specifically geared towards the HoReCa sector. Metro's products for professionals are distinctive and have focused on our ultra-fresh & frozen competence. Here we were able to draw on the expertise of our international buying offices.
We will also add new store design and local assortment elements.
If Makro is your problem child and Metro still has a chance, why not simply sell Makro?
We believe in our new business plan, which includes both Metro and Makro. We have already started to implement our new commercial strategy for Makro. Although it will take several years before all the benefits of the new strategy can be reaped, first results will soon be visible. 2019 will be the decisive year for our new Makro strategy.
So how is Makro going to win customers back?
We must restore what we call our historical DNA. Our plan for Makro is an assortment for professionals in large volumes and with differentiated offers that you cannot find elsewhere.
Enabling end consumers to 'buy like a pro' will make a commercial difference. We will give hobby cooks, for example, access to ingredients used by Michelin chefs.
This approach is also reflected in our non-food assortment with, for example, kitchen sets for pros.
We will also focus our assortment on the needs of local residents. There are many inhabitants of Italian origin living in Charleroi, for example, so we will offer more Italian specialties at our Makro store in Lodelinsart. These products will be sourced through Makro's sister company Metro in Italy, which makes our offer unique on the Belgian market.
Last but not least, we will introduce new store design elements that make daily shopping at Makro easier. These include, for example, a fast track which should enable shoppers to do their shopping in only 15 minutes.Belgian unions LBC and ACLVB dread your restructures because they often come with redundancies. They fear that your new 'Value Creation Plan' will lead to at least 500 job losses. If you want union support, how can you allay their fears?
Our new plan is not a restructure, but a commercial strategy that aims to get former customers back to our Makro stores and to attract new ones. We need a strong and committed team to achieve this. There is no social plan involving redundancies at this point. We cannot predict the future, but for now we want to focus fully on the new business plan that was worked out in close cooperation with our employees.
Your Belgian operations have undergone several restructures over the years. None of these have led to a sustainable turnaround, why will your 'Value Creation Plan' be any different?
We have involved our teams – management as well as staff – in thinking about the plan and everyone will be closely associated with its implementation.
I am also happy to announce our 'lab store' in Deurne – here we have the chance to test new concepts and innovations before implementing them in our six Makro stores.Whatever your new plans are, isn't the brutal reality that your store concept passed the zenith of its lifecycle long ago? Why should consumers or even professional traders want to shop in a Big Box any more?
Of course, customer requirements have changed significantly. This implies great challenges for the whole retail and wholesale sector. The most prominent developments are obviously e-commerce and home delivery. From the perspective of customers, who can now buy everything online, why should they make the effort to drive to a store?
At the same time it's crucial for us to keep up with new developments – as Makro does, for example, with its e-shop, which is working well. Also, we will invest in our delivery capabilities and extend customer services 'outside the box' in order to ensure the highest level of customer convenience.
So we strongly believe that there are good perspectives for big 'box' stores and ones in our corporate blue colours too!