Metro Store Chain

America's Wal-Mart is in 10 other countries and France's Carrefour basically is in 22, but Germany's Metro -- despite a total lack of presence in the U.S. -- is in 30 other countries, reports Deborah Orr in Forbes (4/18/05). Metro, metrogroup.de, decided to go global mainly because the marketplace is fairly flat in its native Germany, where unemployment hovers at about 12 percent, the population is "static, there's not enough wallet for growth -- and there are plenty of skilled discounters competing." That's enough to make undeveloped retail markets like Vietnam, some "6,000 miles away" from the $67.4 billion retailer's headquarters in Dusseldorf, look appealing. Going where no global retailer has gone before seems to be working for Metro, although it certainly is not an easy flight.

"When we opened in India ... there were queues around the store waiting for it to open," says Hans-Joachim Korber, Metro's ceo, and architect of the retailer's international strategy. "We had 15,000 happy customers and 12,000 protesters." As you may recall, India has a "ban on foreign retailers," which "Metro was able to skirt ... by describing itself as a wholesaler." When Metro's James Scott opened a store in Vietnam, he was shocked by shopper behavior: "People started ripping the packages open," he relays, "They thought we were hiding rotten fruit underneath the pretty pieces on top." So Metro jettisoned the shrink-wrap on the perishables, and also go rid of the scary "uniformed security guards at the door," which reminded shoppers of "the former totalitarian state." The store now has "women in au dai, traditional dress," up front. In China, Metro had to learn that "fresh means alive." And so it "installed tanks for snakes, frogs and snails in its Shanghai store."

But perhaps the real key to Metro's strategy is the way it works with local suppliers. Indeed, just about "everything Metro sells at its stores is grown or produced domestically -- over 80 percent in most countries." For example, in Vietnam, Metro set up farmers with fax machines and persuaded them to open bank accounts and required them to sign contracts -- all of this was brand new to the locals. It seems to be paying off for at least some of them, though, because now "farm-raised Vietnamese catfish and shrimp are ... supplying Metro stores worldwide." Meanwhile, in India, "Metro is working with nonprofits to train 14,000 shepherds and 1,000 fishermen in hygiene and chilling techniques, even as it finances repairs to ocean piers for tsunami-stricken fisherman. For Metro, it's not charity so much as quality control." And maintaining that quality, as James Scott notes, ultimately is the name of the game: "No matter how well-prepared you think you are," he says," it's an ongoing process."

Taken from Reveries “Cool News” weekday letter.