Metro Keeps Moving Forward

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SaigonTimes English - 35 month(s) ago 4 readings

Metro Keeps Moving Forward

Metro Cash & Carry has seen its business growing beyond expectation over the past 10 years of operation in Vietnam. The German wholesaler is on track for its business expansion plan, with wholesale stores opened in different locations to penetrate the fast growing distribution market.

Metro Keeps Moving Forward

By Dinh Dung

Deepening presence: A Metro Cash & Carry store in HCMC
Metro Cash & Carry has seen its business growing beyond expectation over the past 10 years of operation in Vietnam. The German wholesaler is on track for its business expansion plan, with wholesale stores opened in different locations to penetrate the fast growing distribution market.

When starting business in Vietnam in 2002, the German-invested wholesale chain operator planned to establish eight stores in the country because it thought that the number would be enough for the local market. However, the giant wholesaler soon realized that the local distribution market was growing steadily, giving more opportunities for wholesalers. “We have seen Vietnam’s economy, living standards and demand growing faster than our expectation, so we continue to invest in the country,” says Randy Guttery, managing director of Metro Cash & Carry Vietnam.

The company has identified Asia as the growth engine, thus a large percentage of its investment is earmarked for countries in the region, including Vietnam where it has invested a lot of money to double outlets nationwide in the past two years and planned to expand business further. “In our expansion plan for 2011 and 2012, Vietnam is number two market in Asia in terms of both sales and the number of stores,” Guttery says.

Metro has committed to long-term investment in Vietnam by continuing to increase the size of its outlet system across the country. Last year alone, the company opened four store bases in different cities and provinces, and also built four other facilities in 2011. The latest outlet is the wholesale center opened in the central coastal city of Nha Trang in Khanh Hoa Province in mid-December. The company set aside some US$13 million to turn a two-hectare site in Vinh Trung Commune into a 5,000-square-meter modern store base which can offer some 25,000 food and non-food items, of which 90-92% are produced in Vietnam.

Guttery attributed the potential market in Nha Trang to the booming tourism that generates impressive business opportunities for the wholesaler’s expansion. “To get closer to customers, we have set up business not only in big cities like Hanoi and HCMC, but also in provincial economic centers like Nha Trang,” Guttery says, adding Nha Trang has a lot of hotels and restaurants, caterers and traders who are among Metro’s core business customer groups.

The company is going to open another outlet in Buon Ma Thuot City in the highland province of Daklak. The store is smaller than its sister in Nha Trang, with around 4,000 square meters of selling space for 22,000 food and non-food products.

Guttery revealed that the company is working for a plan to set up four more stores next year, one in the north, and three in the south. Once translated into reality, Metro will increase the number of its wholesale facilities across the country to 21.

Along with the rapid expansion, Metro sees its customer base growing 10 times from some 100,000 customers 10 years ago to some one million registered buyers who are not only hotels, restaurants and caterers but also small business owners, mom-and-pop shops and farmers.

Guttery highlights the important role of small and medium businesses in the emerging economies like Vietnam, saying the company’s success in the country is proven through the unique business-to-business concept.

Expanding to provinces

Major cities like Hanoi and HCMC are the destinations for any distributors, local and foreign alike, to set up their first outlets. Without exception, Metro Cash & Carry Vietnam has chosen the two cities to facilitate its first steps in the local distribution market. Among its current locations, the wholesale operator is recording better business performance from the centers in Hanoi and HCMC.

As part of its long-term strategy, the company is moving toward neighboring provinces to set up new outlets in hope of cashing in on the potential opportunities that abound in smaller townships. Besides Hanoi and HCMC, the wholesaler has established its store system in cities and provinces, such as Binh Duong, Dong Nai, Binh Dinh, Can Tho, Haiphong and Danang, among others.

Talking about the expansion strategy, Guttery says the company looks into the number of business customers, around 60,000 potential customers, to decide whether to go into a store development. Stores in provinces are often smaller, and thus it requires less investment capital. However, they are still profitable as their business has beaten the company’s expectation. “There are still a lot of potential customers who tend to own private businesses and small shops,” he talks about the reason for expansion to provinces.

Seen from the angle of social contribution, a wholesale center benefits farmers, laborers, enterprises and investors. It not only brings investment capital to localities, increases goods flows and develops infrastructure, but also creates new jobs for local communities. Each center employs directly and indirectly 400-500 people.

For customer’s convenience

Metro is working hard to build new stores and modernize its store bases to make it easier for customers to shop there. The first thing is to improve the facility to get a customer card. Within 10 minutes, a customer can get a card and shop in the store. Depending on business size, a company can have up to 14 cards for shopping.

In the past, the wholesale operator did not allow children into stores because of concern for safety. However, it has changed the regulation after it worked on the safety to allow children accompanying their parents to go shopping.
Besides improving the supply chain, the company has spent several million U.S. dollars upgrading the entire front and checkout system for better service. So, the shopping activity at those stores is becoming much faster, friendlier and more efficient as compared to two or three years ago. For payment, Metro saw no customers using credit cards for payment 10 years ago, but it has now started to set up the first payment sections for those using credit cards.

The wholesale operator also has better care for the delivery service, as it is witnessing the increasing demand for the service. There are not only hotels and restaurants requiring a door-to-door service, but also smaller buyers such as mom-and-pop shops.

Ambitious target

The economic difficulty has touched everyone, slowing down business in many sectors. However, Metro has seen its business this year growing at the same pace as that of last year, even surpassing the sales target.

Guttery noted that customers’ spending slowed down earlier in the year, but business came back around June. “What we saw was changes in the way of customer purchasing. They come less often but they buy a lot more.”

He says the last month of 2011 saw inflation to start going down, and with this pace, it should cool down in 2012. Although 2012 remains a challenging year, he believes Metro will reach its business target.

Talking about the company’s expansion plan, Guttery says as cities keep getting larger and people keep moving from rural areas to urban ones, there will be more potential customers for business. So, Metro is looking for opportunities to set up more outlets nationwide in the years to come.

“We think around 30 to 35 stores would be enough, but time will tell,” Guttery says.

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