Fleury takes the helm of Metro's hypermarkets
Metro boss Olaf Koch clearly hasn’t been able to find a buyer for real,- and seems to have decided on a new and perhaps last push to get the company going again.
The owners of Metro have upped the Mönchengladbach company’s investment budget to €500m. But they expect Didier Fleury, CEO of real,-, to achieve a two-percent ebit margin and two-percent annual like-for-like revenues growth within three years.
Fleury’s talented predecessor and fellow Frenchman Joël Saveuse didn’t achieve this on a sustainable basis. So does he have a real chance?
Goodbye eastern Europe
At least Fleury will be able to concentrate on the German market now that real,- has sold its 100-odd eastern European outlets to Auchan for €1.1bn.
Several options are also being explored for Real’s remaining twelve outlets in Turkey, including their integration into Metro C&C.
But the odds for a German comeback are against Fleury as market share has declined and revenues fell to a new low last year of €8.1bn.
Insiders estimate that real,- needs annual capex of €150m just to meet the demands of the replacement cycle.
So Fleury wants to get the biggest bang for his buck by channelling expenditure into customer-oriented basics. These include new cash tills, bottle deposit machines, shopping trolleys and car parks.
Damn those rising costs
Some of the investment, however, will also be used to replace freezer cabinets and to modernise store technology. This will reduce specific energy costs, but they are still expected to rise overall by €50m during the next three years.
Meanwhile wages for the company’s 40,000 staff are increasing; and, with no real estate of its own, rents at Real's 311 hypermarkets are believed to be one percentage point higher than those of its competitors.
Although real,- has merged its seven regions into only three, the company intends to decentralise its structures. And regional assortments have been strengthened in line with customer expectations.
Pricing is also to become more flexible as part of a new marketing & advertising strategy. Instead of three broad price bands, real,- will now work with up to 20. In the biggest move for years, prices have already been lowered on around 2,000 lines, and this will be extended further.
Web shop distraction
Given that a number of stores look decidedly the worse for wear, it is a little surprising that Fleury also intends to start an online offensive at real,- by relaunching its web shop in November.
Admittedly, hypermarkets have been hardest hit by online competition, and clearly Fleury's intention is to drive in-store traffic, but why dilute one’s energies when there is still so much to be done in bricks & mortar?
To conclude, what is one to make of this new spin of the dice at a company, whose past acquisitions make it resemble a patchwork family? Watch this spot.
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