Makro: The ultra fresh approach
From Aberdeen to Exeter the UK is dotted with Makro stores. They will be well known to tobacconists, convenience stores, caterers and non-food retailers but how many ‘complimentary business users’ know they too can be customers? Office buyers, universities, vets or plumbers are all part of the Makro community
Written by John O’ Hanlon & Produced by Kate Bradley
‘Cash & carry’ is a somewhat dated business description, resonating perhaps with cheap & cheerful or pay & display. Nevertheless it is a very important part or sub-sector of the retail trade. Because many cash & carry outlets look so very much like regular supermarkets, there is a great temptation to treat them like retail outlets, however almost the first thing Hannes Floto, the newly appointed managing director of Makro UK, told me was that he dismisses this association. His customers, many of them, may be retailers (though as many are not) but he considers that his is a supply chain business – and of course he does not sell to the public as a retailer would.
A cash & carry supplies the trade. They tend to specialise, so a CTN (confectioner, tobacconist and newsagent) may go to a different supplier from an ironmonger or a food store. But Makro doesn’t really resemble any of the others, which may be why Floto found it difficult to compare his business directly with any competitor. But a regular cash & carry is a warehouse that its customers can pick over and raid for the goods they sell on or use in their business, typically in bulk. Makro stores are radically different from that – though the benefits of price and availability are a given, they are more friendly to their customers as a hypermarket is to its consumers and they welcome non-traditional business customers.
A time to build
Makro Self Service Wholesalers Ltd began trading in the United Kingdom 35 years ago at Eccles in Manchester, and its headquarters is still there. On January 1st 1998, the Metro Group, one of Europe's biggest trading groups with outlets in 24 countries acquired the European cash & carry business of SHV Makro, in which Metro Group already held a 40 percent stake. Makro UK operates a network of 33 cash & carries across the country serving the UK’s major cities, and has a turnover in excess of £1 billion.
The international cash & carry network of which Makro UK is a part, covers over 500 self service wholesale stores worldwide. Under the brands Metro or Makro (you can’t use Metro in this country for example because Tesco got there first), 20 million commercial customers worldwide including hotels, restaurants, shops and grocery stores, caterers, hospitals and public offices as well as an increasing number of service providers can choose from up to 50,000 food and non-food products all in one place.
Hannes Floto comes to the UK from Makro Greece, where he was food buying director, an experience he is putting to good use as shall be seen. His predecessor Philipp Dautzenberg focused on organic growth for the wholesaler rather than opening new stores. He was also instrumental in developing a strong fresh foods offer for the company, including fruit and vegetables, fish, meat and cheese as a way of differentiating the chain from rivals. And this, Floto confirms, is a big differentiator. Perishable goods are not the strong suit of most cash & carry operations. “It is really a very fragmented kind of business – for example there are ethnic cash & carries that serve, for example the Indian or Chinese communities in European countries and these do their job very well. There would be no point in taking them on. But I really do believe that Makro is the only company in the market that offers a true one-stop-shop.”
A programme of renovation
Apart from the fresh produce, in which he wants to challenge the best supply chain practitioners, Floto offers computers and workwear, bicycles and garden products. Recently the company got a fair amount of trade press coverage, not all of it positive, for offering Microsoft’s Xbox 360 premium console at a price nobody else could believe, let alone match!
Dautzenberg concentrated on the refurbishment and enlargement of the existing stores, and Floto plans to do the same thing for the time being. There is going to be a huge programme of refurbishment at many of the larger stores to bring them up the standard to the standard of the Rayleigh store, which was completely refurbished last year and given a different identity across its 75,000 square feet of floor space.
Basically there are three levels of Makro outlets, Floto explains. The ‘classic’ store is upward of 10,000 square metres and sells the entire range. ‘Junior’ stores are between six and eight thousand square metres, selling the entire food range and a selection of non-food items targeted at their local customer profile. Finally, there are ‘Eco’ stores, which are smaller outlets of around 3,500 square metres – but there are none of these in the UK as yet.
Eventually all 33 0f the UK’s stores will be remodelled on the pattern of the Rayleigh ‘concept’ store, which is laid out with ample aisle space and the goods attractively displayed. It will take some time: during 2007 two more stores will be upgraded at a cost of €20 million each, however 2008 will see steeper investment, Floto says, and perhaps then he will be able to fill in some of the ‘white spaces on the map’ that he has his eye on.
Fresher than fresh
The Metro Group’s ability to manage the logistics of global fresh food purchasing and supply is one of its unique selling points. Hannes Floto is particularly enthusiastic about this: “Anybody can sell Coca-Cola, but nobody else in our business has a handle on fresh produce like fish for example. We have now brought in the concept of ‘Ultra Fresh’ to differentiate ourselves even more. To handle fruit and vegetables, meat and fish professionally requires special knowledge – particularly if you are going to do it ain all three areas at the same time!”
Each store has specialist staff to deliver the ultra fresh concept, and meet the guarantee that everything sold will have ample shelf life to meet the purchaser’s needs (which is why ‘fresh’ in layman’s terms is just not fresh enough!) He’s right. Makro is incidentally Coca-Cola’s biggest customer outside of the USA, which is impressive enough, but that is not a USP. Ultra Fresh is.
The company’s long term strategy is formulated around availability, not price. Makro regularly monitors availability and aims for 98 percent of the top 200 items to be found in any spot check. “As a wholesaler we have responsibility for the sustainability of supplies,” he asserts, adding that the firm is actively moving to farmed fish and away from wild sourcing. It is the responsible thing to do, and it is more reliable as long as you really know your supplier, he says, citing a Greek fish farm he developed when in that country that is making sure that fresh sea bass and sea bream are always available.
Makro’s logistics are proactive. Stock is picked up from the suppliers’ premises and delivered direct to the stores. It is never held in a warehouse. “We don’t run a fleet of vehicles – that is a job for a reliable partner,” he says. “We use our brains, not our vehicles!”
Makro Vision
Though he is fairly new in the job, Hannes Floto has a clear vision for the way he’d like to see Makro develop. He describes it as a situation: “…….in which our customers were coming to our stores, being warmly welcomed at the entrance, finding solutions for their specific business needs on our shelves, without worrying about availability, as all products are on the shelves every day. The customers are not checking prices as they trust us to have the right price for their business every day. There is no need to worry about best before dates as we guarantee that each product has enough shelf life left to be sold or used according to their specific business needs. In each department they find a professional partner who they know well. When the customers leave after a friendly and convenient checkout process they know that Makro is their business partner every day!”
Every day is right. The stores are open seven days a week, till 9.30 on weekdays and only a little earlier at weekends.