Interview with distribution

THERE'S CLAUDE SARRAILH, CHIEF CUSTOMER AND MERCHANDISE OFFICER AT METRO AG, TO TALK WITH PL MAGAZINE.

Metro, wholesale and private label a special marriage

Wholesale retail has a special, but great and natural relationship with private labels, as it addresses professionals, or better, people who get down to business, more than the end consumer.

And these customers look for a balanced relationship between quality and price, but also a high level of service and customization, which can only be achieved when the goods are directly managed, just like PLs. Claude Sarrailh, Chief Customer and Merchandise officer at Metro Ag, tells us.

What is the share of your PL products on the total sales? On an international level, we are talking about 17%, with significant differences from one country to another. In Italy, the incidence is already 25%, therefore in line with the average for large-scale distribution. In the long term we want to reach, globally, 35%, with a range that will be enriched, above all with items tailored to professional customers of Horeca and independent retail.

What are the most relevant categories for your PLs? Let's talk about Italy: here catering and small business professionals purchase especially disposables, frozen foods and canned goods. Relevant are also the fresh, such as dairy and meats, where the commercial proposition is defined based on partnerships with local and regional producers, a criterion ever more important for the Horeca. In the non-grocery and nonfood categories, seasonal and kitchen and cooking items dominate.

How many lines and brands are there? As a wholesale specialist, in over 30 countries and with a focus on Horeca customers, Metro offers eight main brands, on different price levels, so as to meet everyone’s needs. The most relevant brands are 'Metro,' 'Metro chef,' for food, and 'Metro professional' for Near (home

and personal care, ed.) and non-food categories in general. Finally, 'Aro' (detergents, but also pans and cutlery), which covers the entry level, counts a lot.

Is Horeca still the main customer in home food service, in the so-called Fsd? In general, yes. There is a direct link between the purchase of pls and the profession of customers, who tend to build loyalty in a very similar way both in the store and in the online channel.

Private label and sustainability, still a hot topic. How does Metro respond? The motto of our 'sCore' growth strategy is 'Doing wholesale right,' and this means - also, but not only - that we want to develop responsibly, expanding our supply, yet with low - impact products. We want our customers to feel no need to ask whether a product is sustainable or not, because we have already provided for that. In this regard, we are working hard to implement policies and action plans that include environmental, health and animal welfare. A few examples: no soy product can use GMO raw material, or cause severe crop depletion. Then, within our 'Health & nutrition strategy,' we re-think products to make them healthier, by reducing salt, sugar, saturated fat and additives. In fact, by working closely with suppliers, we can offer an organic range, within 'Metro Chef'. Our production partners are supported in understanding their own impact, through carbon footprint analyses.

Private label share of total sales (%)

Date and place of first opening November 8, 1963, Essen (D)

17

Adjusted EBITDA 2020/21 (million euros) 1.171

METRO GROUP 2020/21 net sales billion euros

Forecast net sales 2021/22 (%) +3/+7

Foreign branches (including Makro) 21

24.765

Total number of employees 95,000

Total outlets* 681

METRO ITALY

Source: company data

1.3 5.5

(+0.4) 49 16

April 27, 1972, Cinisello Balsamo (Mi)

25

Private label share of total sales (%)

Net sales 2020/21 (billion euros) Forecast market share 2021/22 5.5 Total points of sale Regions manned Date and Place first opening

And what about the results? Just to give you an example of the milestones, due to improved packaging, we scored 78 points in the Dow Jones sustainability index 2021, an increase of 22 %compared to the previous year.

New products and product launches: what's cooking? When we integrate new products into our supply, we do so keeping our customers' needs in mind. To support them in creating their signature menus, we provide both local and regional specialties, as well as products from around the world. For example, we will have the fresh ‘Metro Chef Pineapple’, from ‘Costa Rica’, and ‘Lime Metro Chef’, in 4 kg boxes, from Brazil, both imported by sea. Globally, we are going to launch more alternative meat and dairy variants under the Metro Chef veggie umbrella. On the other hand, locally, our Italian colleagues, in collaboration with our chefs, are creating products such as a special pizza flour that meets the needs of pizza chefs, or a cream cheese specially created for Japanese restaurants.

How long is the average duration of contracts with suppliers? In general, we aim for long-term collaborations with our partners, in order to jointly implement important criteria for equally important issues, such as quality and sustainability, which must meet our strategic guidelines. This is at the base of any great new product generation, which then gains the trust and builds the loyalty of professionals. Of course, the duration of each contract differs from product to product. But to give you an idea, there are industries that have been working with us for decades. Zanetti, for example, has been with us for more than 30 years now.l

Luca Salomone Professional Journalist specialized in Consumer Goods, Distribution, Shopping Centres and Finance.