Web Technology in METRO Group retailing strategy

Fierce competition at home necessitates overseas expansion as METRO Group adopts Internet technologies to underpin consolidation and drive growth

METRO Group, a leading global retailer, was faced with fierce competition in its traditional European markets, limiting capacity for further growth. Overseas markets presented the best opportunity for business expansion.

METRO Group needed to counter adverse conditions in its traditional marketplace by building superior brands and also addressing new customer segments. To consolidate its home markets and promote growth overseas, METRO needed to web enable its business: underpinning the changes with a common culture and set of values to create competitive advantage. However, it recognised that web enabling a worldwide organisation consisting of 240,000 employees would be a huge task.

When METRO Group identified the need for an employee portal to enable culture change, it was natural that it should deepen and intensify an already successful relationship with Cisco. The new 'mymetro' portal was seen as the fulcrum that would begin the process of change.

Workshops with Cisco's Internet Business Solutions Group (IBSG) lent METRO insight into how Cisco's own eTransformation could provide invaluable experience and help in METRO'S own web enablement. A Net Readiness survey followed the discussions with the intention of creating a management framework for the company's Internet activities. METRO acknowledged Cisco was a clear leader in portals and took advantage of Cisco's considerable experience in the area.

The company is in the process of creating a uniform user interface that will be recognisable by any member of staff and that will also be personalised to suit day-to-day business activities. Portal functionality will be defined by role but in a wider sense it will also feature special content groups relating to specific functions. It will also include e-learning through virtual classrooms. Further options include an interactive CXO communication channel. Portal use will not be restricted to work only topics – wider lifestyle and entertainment information will also be included.

An essential component within the process was to eliminate all non-value creating activities. The company had already begun this by web enabling its vast supply chain operation, which not only achieved the goal of improving processes and cutting costs but also propelled mymetro activity, by enabling METRO to concentrate resources into front end activities to aid in brand-building activities. It also aimed to transfer an existing client server EDI system onto a web platform to further drive familiarity with web technologies and improve supply chain operations.

A further important aspect of METRO's strategy was to leverage advanced retail technologies as a testing ground to introduce a ‘store of the future' that would feature technologies designed to improve the customer shopping experience. For example, Cisco's Content Delivery Networking (CDN) would deliver content and data from a central source to any number of network-based delivery points, including plasma screens and personal shopping assistants. This allowed the company to dynamically change content to reflect changing sales offers and product and store information.

The first mymetro phase was opened in October 2002 to a group of 220 users in the company's HQ. By the middle of 2003, a further 700 people in METRO's IT arm, MGI, were using the portal and by mid-2004 the rollout will have embraced 3,500 employees. Hundreds of people have also been moved onto value creating work following the adoption of the web-based EDI system. Thousands of METRO's suppliers have been connected to the web platform. They would have previously not had the expertise or money to establish such a link.

mymetro take up will be throughout the organisation but a particular focus is being given to enabling mymetro access at store level. In stores, METRO is planning to introduce the delivery of portal content through PDAs and Cisco IP phones.

The store of the future opened to a rapturous reception at the beginning of May 2003 and has been hailed as an example of how to use technology to place customers at the forefront of a company's strategies.

Next Steps
Employees right across the company will have self-service capability and it will hand back to them the responsibility for managing their own personal data as well as providing a toolkit that will support their day-to-day work. It has an overarching objective of removing the tons of paper, replacing it with a virtual structure so that employees work with and from within the system. Wider deployment of web-based supply chain technologies will also continue, with the aim of connecting suppliers from around the world.

What Cisco Offers
Cisco has set the standard for using Internet technology to transform business processes. Its Internet Business Solutions Group has vast experience helping companies make the transition to e-business. From helping companies determine their Net Readiness to installing networks for the integration of voice, video, and data, the experience and expertise of Cisco can help a business interested in any level of e-business implementation. Cisco offers:

  • Internet-powered business methodologies
  • Internet-powered application frameworks
  • Networking reference architectures
  • Alliances with best-of-breed companies with proven experience in building e-business applications and solutions

Zygmunt Mierdorf, Executive Board Member and CIO, points out that improving shareholder value depends upon improving efficiency and international expansion. He explains: "The company recognises that growth is not only dependent on giving customers what they need: it is also significantly dependent on its workforce adapting to the processes that will cut costs and help drive growth. Our exploration of technology use for employees has been an incredible success with our people and we will continue to introduce new technologies as they evolve."

Further Reading

Metro Group Snapshot

  • The first Metro cash and carry store was opened in 1964.
  • METRO AG was created following the merger of three independent retail companies in 1996. The newly formed company went public the same year.
  • It is the third largest European retailer and trading group and the world's fifth largest.
  • 2002 sales of nearly €52 billion, a four per cent increase on the previous year
  • Presence in 26 countries, with foreign sales accounting for 46 per cent of 2002 revenue.
  • 240,000 employees worldwide, almost half employed outside Europe
  • Market capitalisation of over €7.5 billion

July 22, 2003