Metro Bundle
What is the history of Metro AG?
Metro AG, a global wholesale and food service distributor, began its journey in 1964 by introducing the cash-and-carry concept in Germany. This model revolutionized B2B retail by allowing professional customers to select, pay, and transport goods directly.
Founded by Ernst Schmidt and Wilhelm Schmidt-Ruthenbeck, the company initially focused on serving commercial clients like hotels and restaurants. This strategic focus aimed to address the unmet needs of businesses in procurement.
What is Brief History of Metro Company?
Metro AG's history is marked by its pioneering cash-and-carry model, established in Germany in 1964. This innovation allowed professional customers to self-select, pay, and immediately take their purchases, streamlining business operations. The company was founded by Ernst Schmidt and Wilhelm Schmidt-Ruthenbeck with a clear vision to serve commercial clients, such as hotels and restaurants, who were often underserved by traditional retail. Today, Metro AG operates as a dedicated food specialist with a substantial international presence, boasting approximately 626 wholesale stores across 21 countries as of March 2024. Their evolution includes a multichannel approach, integrating wholesale stores, food service distribution (FSD), and digital platforms to maintain market competitiveness. Understanding this trajectory provides insight into their current strategies and future growth. For a deeper dive into the external factors influencing the company, consider a Metro PESTEL Analysis.
What is the Metro Founding Story?
The Metro Company history began on November 8, 1963, with the vision for a wholesale center that opened its doors in Mülheim an der Ruhr, Germany, in 1964. This marked the start of a significant development in the retail landscape, driven by the founders' understanding of market needs.
The Genesis of a Wholesale Giant
The Metro Company origins are rooted in the entrepreneurial spirit of brothers Ernst and Wilhelm Schmidt-Ruthenbeck, alongside Otto Beisheim. Recognizing a gap in the market for efficient procurement solutions for professional clients, they conceptualized a new business model.
- The first wholesale center opened in Mülheim an der Ruhr, Germany, in 1964.
- The founding team identified a need for self-service wholesale options for businesses like hotels, restaurants, and independent traders.
- The innovative cash and carry model allowed professional customers to purchase a wide range of products immediately.
- Initial funding in 1967 saw key families becoming partners, facilitating expansion and growth.
- This early structure set the stage for understanding the Competitors Landscape of Metro.
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What Drove the Early Growth of Metro?
The early years of the company were characterized by swift international expansion and strategic diversification. Established in 1964, it quickly moved beyond its German origins, entering the Dutch market in 1968 through a partnership. This marked the beginning of its global footprint.
International Expansion Begins
Following its inception in 1964, the company rapidly expanded geographically. By 1968, it had entered the Netherlands, establishing Makro Cash & Carry stores in collaboration with Steenkolen Handelsvereniging NV. This partnership was a key step in its early internationalization strategy.
Broadening European Reach
The early 1970s saw significant growth across Europe. Wholesale operations commenced in France, Austria, and Denmark by 1971, followed by expansion into Spain and Italy in 1972. This period solidified its presence in key European markets.
Formation of METRO AG and Public Listing
A major development occurred in March 1996 with the formation of METRO AG through a significant merger. This consolidation aimed to strengthen market position amidst a challenging retail environment. The company's shares were first listed on the Frankfurt Stock Exchange on July 25, 1996.
Continued Global Push and Acquisitions
The company continued its international expansion, entering Romania and China in 1996. By 1997, international turnover represented 7.1% of the total. Major acquisitions in 1998, including Makro Cash & Carry and other hypermarket chains, further bolstered its market presence. By 2001, international sales reached 45% of the group's business, with the cash-and-carry division proving most profitable. Understanding the Marketing Strategy of Metro provides insight into this rapid growth.
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What are the key Milestones in Metro history?
The Metro Company has a rich history marked by pioneering business concepts and strategic adaptations. Its origins lie in the innovative cash-and-carry self-service wholesale model, designed specifically for professional clients. The company's evolution includes a significant restructuring in 2017, transforming into a focused wholesale and food service group after spinning off its consumer electronics arm.
| Year | Milestone |
|---|---|
| 2017 | Launched as a dedicated wholesale and food service business group following a spin-off. |
| 2020 | Completed the sale of a majority stake in its Chinese joint venture for over €1.5 billion. |
| 2023/24 | Reported adjusted sales growth of 5.9% despite a net loss of €125 million. |
| 2024/25 (Q1) | Achieved 7.1% sales growth in local currency, reaching €8.6 billion. |
Key innovations include the development and expansion of digital solutions, such as the DISH POS system, aimed at digitizing gastronomy customers. The company has also focused on enhancing its multichannel approach, integrating stores, Food Service Distribution (FSD), and online marketplaces.
Cash-and-Carry Concept
Pioneered a self-service wholesale model tailored for professional customers, revolutionizing how businesses procured goods.
Strategic Divestments
Streamlined its global portfolio through targeted divestments in markets like Morocco, the UK, Greece, and India, focusing resources on core operations.
Digitalization of Gastronomy
Expanded digital offerings like the DISH POS system to support the digital transformation of its food service clients.
Multichannel Growth Strategy
Focused on enhancing its integrated multichannel model, encompassing physical stores, delivery services, and online platforms.
Delivery Sales Growth
Achieved significant increases in delivery sales, which rose by 16.8% to €7.9 billion in FY 2023/24, demonstrating a strong shift towards this channel.
Focus on Strategic Customers
Increased the share of strategic customer sales, particularly from the HoReCa sector, to 74% by the end of FY22/23, with a target to exceed 80% by 2030.
The company has faced challenges including market downturns, intense competition, and cost inflation, which impacted its financial performance. Despite a net loss of €125 million in FY 2023/24, the company demonstrated resilience through strategic initiatives and sales growth across its channels.
Market Volatility
Navigated periods of market downturns and economic instability, which presented ongoing operational hurdles.
Competitive Landscape
Operates in a highly competitive sector, requiring continuous adaptation and innovation to maintain market position.
Cost Inflation Pressures
Experienced the impact of cost inflation, necessitating strategic adjustments to pricing and operational efficiency.
Transformation Costs
Incurred transformation costs related to its strategic restructuring and growth initiatives, affecting short-term profitability.
Structural Challenges
Addressed structural challenges within its business model and market operations to ensure long-term sustainability and growth.
Portfolio Optimization
Undertook significant portfolio optimization through divestments, a strategic move to concentrate on core strengths and enhance overall business performance.
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What is the Timeline of Key Events for Metro?
The Metro Company history began in 1964 with the opening of its first wholesale store in Mülheim/Ruhr, Germany, introducing the cash-and-carry concept. The company's evolution is a testament to its strategic expansion and adaptation, marking significant milestones in its journey from its Metro Company origins.
| Year | Key Event |
|---|---|
| 1964 | The first wholesale store opened in Mülheim/Ruhr, Germany, pioneering the cash-and-carry model. |
| 1968 | International expansion commenced with Makro Cash & Carry stores in the Netherlands. |
| 1971-1972 | The company entered markets in France, Austria, Denmark, Spain, and Italy. |
| 1996 | METRO AG was established through a merger and subsequently listed on the Frankfurt Stock Exchange. |
| 1996 | Expansion into Romania and China marked entry into fast-growing markets. |
| 2001 | Cash-and-carry operations extended into Russia. |
| 2017 | METRO AG was refocused as a pure wholesale and food service business after spinning off Ceconomy. |
| 2019 | METRO MARKETS, an online marketplace, was launched and began its continuous growth. |
| 2020 | A majority stake in the Chinese joint venture was sold to Wumei Technology Group for over €1.5 billion. |
| 2021 | Wholesale operations in Japan and Myanmar were discontinued. |
| 2022 | The 'sCore' growth strategy was introduced, targeting HoReCa and Traders customers and multichannel development. |
| 2023 | Acquisition of Swedish FSD specialist Johan i Hallen & Bergfalk (JHB) and launch of DISH POS in France and Germany occurred. |
| 2024 | Acquisition of UK food service distribution specialist Caterite Food & Wineservice took place, and METRO celebrated its 60th anniversary. |
| 2024/25 | Sales reached €31.029 billion in FY 2023/24, with a net loss of €125 million; H1 2024/25 sales grew 5.3% to €15.6 billion. |
| 2025 | An agreement was signed with EP Global Commerce (EPGC) for the delisting of METRO AG from the Frankfurt Stock Exchange. |
| 2025/26 | Currency and portfolio-adjusted sales growth of 3% to 7% is anticipated for FY 2024/25. |
Strategic Growth and Financial Targets
By 2030, the company aims for sales exceeding €40 billion and adjusted EBITDA over €2 billion. Digital sales are projected to constitute 40% of total sales, with FSD sales expected to more than triple.
Multichannel Development and Own Brands
Investments are being made to optimize wholesale locations into combined delivery centers and enhance the multichannel model. The company also plans to increase its own-brand share to over 35%.
Marketplace Expansion and Sustainability Focus
The METRO MARKETS online marketplace is slated for international expansion, supported by growth in sales teams. Sustainability is a core objective, aiming for climate neutrality by 2040 and waste reduction.
Future Outlook and Confidence
Despite cost inflation and geopolitical uncertainties, the company's leadership is confident in its strategic direction for sustainable growth and improved profitability, reflecting a commitment to its founding vision. This forward-looking approach aligns with the Mission, Vision & Core Values of Metro.
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