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Metro Cash & Carry’s high-flying strategy for Vietnamese market
Metro Cash & Carry’s unique wholesale business-to-business model has set out a high-flying business strategy for the Vietnamese market, targeting to have 30-35 stores across the country during the next three to five years.
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Buying in Metro’s stores is now much faster and friendlier |
Seeing the potential of Vietnam as one of the fastest-growing economies in Asia, the worldwide leader in self-service wholesale Metro Cash & Carry opened its first outlet in the business metropolis in Ho Chi Minh City in 2002.
Since then, Metro Cash & Carry has operated 16 wholesale centres throughout the country - three in Ho Chi Minh City, two in Hanoi, as well as one Bien Hoa, Binh Duong, Vung Tau, Can Tho, Long Xuyen, Quy Nhon, Danang, Haiphong, Vinh, Halong and the latest is in Nha Trang.
It also operates four distribution centres and warehouses in Vietnam, including the vegetable and fruit distribution centre in Dalat (Lam Dong), the fresh food distribution centre in Binh Duong, and the dried food and non-food warehouses in Hanoi and Ho Chi Minh City.
Metro Cash & Carry’s wholesale and distribution network employs more than 3,500 people and has become one of the country’s major employers. In its business strategy, Metro Cash & Carry is focusing on professional customers such as hotels, restaurants, caterers, small and mid-sized retailers, as well as service companies and offices.
Randy Guttery, Metro Cash & Carry Vietnam managing director, said: “Our business is wholesaling. So all our customers are professional business owners or they work for a business and they buy for that business. Basically, all our customers are restaurant owners, small business owners, mom and pop shops, doctors, lawyers, farmers. They are people that own their own business. This makes our customer base.”
He added that: “Our customer base is really based upon many customers who have been doing business with us for a long time. This year our customers have been much more cost conscious, which means they are really looking for bargains. This year we’ve seen, let’s say, customers come to the store less often to save time and money.
Basically, they are coming to the store and buying more, but they are coming less often. But this year our customer base has increased. Why? Because customers are looking for ways to save money. They are looking for alternatives. So at this kind of a time period, our business is fairly resilient because we provide services to the customers that hopefully can help them run their business and be able to run their business more efficiently and at better cost.”
Metro Cash & Carry has offered the above target customer group greater efficiency than the multilayered supply chain, thus helping them improve their business. The greater efficiency is realised by offering customers one-stop solution for their purchases, helping them improve their assortment, offering them high quality products at reasonable and transparent prices and providing them a consistent supply source.
The key to Metro’s success boils down to its flexible business philosophy that can adapt itself to customers’ demands and the particular characteristics of each country Metro Cash & Carry operates in. This is part of the comprehensive strategy of Metro group, one of the world’s biggest retail giants present in 33 countries with over 700 self-service wholesale centres.
Metro Cash & Carry has a special way of doing business in that customers will come to Metro stores to buy and transport goods for themselves rather than ordering the goods through suppliers.
Additionally, Metro Cash & Carry has set basic requirements for suppliers of quality, commodity brand, modern supply chain, safety and hygiene. Particularly, Metro Cash & Carry has made one of the major improvements in Vietnam by putting into use a modern in-country transportation system of heavy multi-compartmentalised refrigerated vehicles. This has helped ensure the stable and fresh quality of products while being transported.
In some provinces and cities, Metro has partly succeeded in developing direct goods supply, contributing to reducing shrinkage and offering farmers’ good prices, while bringing customers quality and traceable products.
Guttery said Metro’s business-to-business model had proven its primacy for emerging economies like Vietnam. “We are increasing our investment here to access more customers, broaden our scope of business, help domestic enterprises to grow up, and Metro can have more sales opportunities from these potential customers”.
Guttery said Metro Cash & Carry Vietnam in 2010 opened four stores and in 2011 another four stores in Vinh, Halong, Nha Trang, and Buon Ma Thuot cities. These stores are of similar size with the one in Buon Ma Thuot a little bit smaller measuring 4,200 square metres in selling space, while those in Nha Trang, Vinh and Halong are each around 5,000 square metres in selling space.
“Basically, we looked for cities where there are enough potential small and large businesspeople for a store. For each store we have around 60,000 to 80,000 customers to make the store successful. So when we look at these cities we decide what city we want to go to, basically we look for cities that can give us that many customers,” Guttery said.
He said Metro Cash & Carry this year 2012 expected to open four more stores across the country, striving to have a total 30 to 35 stores in Vietnam in three to five years. “We remain bullish on Vietnam, which is the world’s second largest expansion market for Metro and where Metro still wants to come and build stores and invest,” Guttery said.
Basically by the end of this year, Guttery said, Metro Cash & Carry Vietnam would have an almost fully-integrated supply chain, including non-food, dried food, fresh food, and ultra-fresh meat and fish. “We will have had a cold chain entirely fish and have enough capacity to ship to all of our stores. This system should be big enough then to last until we have around 30-35 stores in the next three to five years”.
“We have worked very hard to build new stores and we have modernised the store base. We worked very hard to make it easier for these businesspeople to purchase at our stores,” he added.
“The first thing we did was enhance the facility to get a card. So if you are a business owner, you come to Metro and all you have to do is to prove you own a business. Within 10 minutes you can have a card and you can be purchasing in the store. The number of cards you receive is based on the size of your business. So most small businesses have four cards.
Very large businesses sometimes have up to 14 cards depending upon how many branch offices or how many purchasing offices of this kind of business. The first thing we did is make it very easy now for potential customers to get a card. Walking into the store within 10 minutes you should be able to do your purchasing in the store.”
“The second thing is that we have worked very hard on the safety of our stores because our stores are really warehouses. We worked on the safety of our stores and we allowed children into the store.”
“The next thing, which is a major improvement, is because we enhanced our supply chain, our in-stock position is much improved. Now all of our aqua-products are typically around 98 almost 99 per cent in stock. So, when you come into the store, there should be no reason why you can’t find everything that you want to buy in the store because of our enhanced supply chain.”
“The other thing that we did is we spent several million dollars at this juncture on upgrading our entire front and checkout system. We have new cash register, a new system, faster printer, and basically we upgrade and modernise our checkout system. So that’s much faster than it used to be. It depends on how much you want to buy.
Our customers tend to have very large orders because they’re buying their purchases to resell or they buy for their office. Our orders tend to be eight times or 10 times bigger than, let’s say, average retailers’. We have a lot fewer customers but a lot bigger orders. The cash register is faster, quieter and can give you the invoice right away.”
“All in all, purchasing in our stores is, let’s say, compared to three years ago is much faster, friendlier, and is an efficient way to buy. Apart from this, our store base has been modernised and most of our stores are less than three years old.
Basically by the end of this year we will have really refurbished our brand new store base. In 2010, 2011, and 2012, we build four new stores each year.”
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