Metro Cash & Carry unveils turnaround plan

The turnaround programme is based on three core targets of growth, restructuring and innovation.

Metro Cash & Carry said the programme will improve its earnings development and open up additional sales potential.

The grocer's growth strategy includes making assortment changes, starting nationwide delivery, and permanently reducing prices of more than 5,000 products. It said improved private label ranges are set to increase the share of private label sales by roughly a third to 20 per cent of total sales by 2012.

The retailer is also investing several million euros in staff training in customer relationship management.

The restructure will mean staff costs are reduced by Euro75m until the end of 2012. Operating cost savings will total Euro50m until 2012 by analysing material costs, travel expenses and energy consumption. Logistics costs will also be reduced by Euro25m.

As part of its innovation programme, Metro opened the first three new concept stores this year. The assortments have been streamlined and the retailer is trialling a pre-picking service whereby Metro employees pick the customer's order, which is then collected by the customer in the check-out area.

"This comprehensive programme will enable us to achieve in the next two years a sustainable turnaround of the German business," said Frans Muller, management board member of Metro Group and chief executive of Metro Cash & Carry International. "We expect to see an end to the earnings erosion in 2009 and from next year on return step by step to profitable growth. Assuming stable economic conditions, we see earnings potential of up to Euro150m by 2012 and want to expand this in the following years."