Interview with Metro China
The World's Largest E-Commerce Market
Interview with Metro China, Mr Jeroen de Groot, CEO of METRO Cash & Carry China
METRO Cash&Carry entered the Chinese market in 1996 and now runs 90 stores all over the country. The food wholesale specialist also runs its online operations on T-Mall. Mr. Jeroen de Groot, responsible for METRO China operations as CEO since 2013, explains Metro's experiences in the Chinese market.
*From your experience what differences are there between Chinese and German customers? I.g. do you offer transportation- or delivery-services and mobile payment?
A: I see more commonalities than differences. But if we have to name a few differences, in the past most Chinese consumers made price the first priority. But now with increasing income and better awareness, more and more consumers, especially the fast growing middle class and the younger generation, pay more attention on professionalism, safety and quality.
One more difference may be the fast growing adoption of mobile payment among Chinese consumers. China has rapidly risen to be the world's largest e-commerce market worth about 26.1 trillion yuan last year, up 19.8 percent year-on-year. For example, the user number of Alipay, one of the most popular mobile payment solutions in China, has exceeded 500 million and in daily lift people are using mobile payment almost everywhere.
To ride this latest trend and offer customers convenient services, we surely offer all kinds of mobile payment services in our stores including Alipay, WeChat Pay and Apple Pay.
The express delivery is also growing very fast like mobile payment in China. Surely we also offer delivery services to different customer groups. For professional HORECA customers like restaurants, hotels, caterers, etc, we have established a Food Service Distribution (FSD) system, which is operated by a dedicated team within METRO China. For other customers buying online or offline, we also offer delivery service, either by our team or through the third party service providers.
*Your product-range includes European goods. How do they meet Chinese shopping habits and lifestyle?
A: We offer a wide range of assortments including overseas and local brands. As of imports, we are selling not only European goods, but also goods from almost all regions of the globe, thanks to our global buying competence.
Imports are getting more and more popular as the Chinese are looking for more high quality and safe products along with the living standard improvement. In our stores, we offer a broad range of carefully selected and customized imported products for our customers. High quality wines, fresh salmon, imported milk, infant formula milk powder, just to name a few, are always well received by local professional customers and consumers.
*What goods are important for Chinese customer but would not appeal to Germans?
A: If we talk about assortment, there are definitely many differences in the selection of offerings. For example, the way Chinese cook is much different from that by Germans, therefore the selection of food ingredients, sauces and even cookware are all much different from those used by Germans. That means when we select the assortment, we have to look closely at the local needs.
Besides, as a general observation, imported products are preferred by many Chinese for the reason mentioned above. For example, nowadays a growing number of Chinese parents would purchase imported infant milk formula for their babies.
Another difference is what we call “welfare & gifting”. This is a very unique demand in the Chinese market. Chinese enterprises have the tradition of giving customized gift sets including food and non-food products to employees as welfare, to show care to their well-being, at around festival seasons or for special events. This gives us opportunities to do welfare business with these enterprises. Therefore we have been making efforts in welfare & gifting business in recent years as one of our focus channels.
*Metro C&C has recently started to sell products also on T-Mall. How many products do you provide and what are your expectations?
A: METRO has started partnership with Alibaba since 2015 and established a cross-border flagship store on T-Mall that year. Now we have four channels on Tmall: Cross Border Flagship Online Store, Domestic Flagship Online, and we supply Tmall Supermarket and Tmall Global Direct Online Store as a supplier. For these four channels, we have different assortment selections and in total we have about several hundreds of SKUs.
The customers on Tmall are totally different groups than those at our offline stores - they are much younger and have different purchasing behavior. Our main purpose of the cooperation with Alibaba is to learn what kind of new products are welcomed among the Chinese customers, to enhance the brand awareness in the younger customer group and to gain new customers.
*How do you organize the delivery with heavy traffic in most big Chinese cities and do Chinese online-customer expect same-day -delivery?
A: Heavy traffic is a problem not only for the big Chinese cities, but all big cities in the world. For Metro, as our deliveries are mostly carried out for professional customers like hotels, restaurants, canteens, etc., they are usually done in the early mornings when the traffic is not that heavy yet.
As of delivery to consumers, we mainly partner with third party solution providers. Thanks to the well-developed express delivery infrastructure in China, same-day delivery is very feasible and practical indeed. Some of our partners, like Meituan, can help pick up goods from our stores and deliver in less than two hours.
*In Germany efficient consumption of energy is a very important topic for grocery retailers. Is that the same in China?
A: I should say Chinese people are paying more and more attention to the environment, especially on how to protect it from the impact of manufacturing, transportation and consumption of the energy resources. Awareness from the government and the people keeps rising. The country’s leadership has clearly laid down the vision to ensure harmony between human and nature, to protect the environment and develop an ecological civilization.
METRO in China has been pushing forward many green initiatives since its market entry. In recent years, we have renovated a few stores into green stores with extensive technological applications and installation for more efficient energy consumption and environmental protection, building up solar panels on roof of several stores, upgraded our cooling system to CO2 Cascade System and changed lights to LED lights in all our outlets. Due to these efforts we also won a number of awards from government and industry organizations. Our Dongguan Green Store, renovated last year, recently was awarded the LEED(Leadership in Energy and Environment Design) Gold Certificate and China’s 3-Star Green Building Label, the first time for any player in retail/wholesale sector in China. We are proud that we are among the leaders in environmental protection in China’s wholesale/retail industry.