REV: JANUARY 7, 2009
TARUN KHANNA KRISHNA PALEPU CARIN-ISABEL KNOOP DAVID LANE
Metro Cash & Carry
In autumn 2006, Thomas Hbner, CEO since 2002 of Metro Cash & Carry (C&C)—a chain of wholesale stores catering solely to commercial customers—pondered his next steps in India. Hbner reported to Dr. Hans-Joachim Körber, chairman of the board of management and chief executiveofficer of Metro Group, a conglomerate headquartered in Düsseldorf that operated divisions in 30 countries throughout Europe and Asia. (See Exhibit 1 for financial and other company information.) Krber was waiting to see results in India, where C&C had not expanded as quickly as in Russia and China. Despite stated plans to open eight to 10 stores each year, it had opened only two since it entered inthe country’s high-tech hub, Bangalore, in 2003.1 The stores increased sales despite being prohibited by regulations from selling agricultural commodities, a major product category for India’s commercial customers. And local protest groups had succeeded in questioning Metro’s value for the country. Hbner needed to assess Metro C&C’s strategy in the world’s last retail frontier, judged veryattractive by multinational players such as Tesco and Wal-Mart and ranked as the most desirable world market by consultancy A.T. Kearney.2
Metro Group was Germany’s largest trade and retail group and a major international player, with 2005 sales of 55.7 billion and continued plans for substantial international expansion. Listed in 1996, Metro AG, the holding company of Metro Group,instantly became one of the 20 largest companies on Germany’s stock exchange. Metro Group was organized into four business units: Real/Extra, an everyday retail hypermarket and supermarket; Kaufhof, an up-market department store chain; Media Market/Saturn, Europe’s leading electronics retail chain; and Metro C&C. With more than 100,000 employees, Metro C&C in 2006 was one of the world’s leading C&Cwholesalers, operating 544 stores under the Metro and Makro brand names, up from 430 in 2003. With 2005 sales of 28 billion, Metro C&C accounted for 50.4% of Metro Group’s consolidated sales, up from 46.5% in 2003. (See Exhibit 2 for company milestones.)
Growing at Home
Pioneered by Dr. Otto Beisheim,3 Metro C&C was part of the giant retail and wholesale group Metro Group, which in 2006employed over 250,000 people, half of whom worked outside Germany. Beisheim opened his first C&C store in Germany in 1964 and from this one store built a global merchandiser via organic growth, international expansion, and mergers.
Professors Tarun Khanna and Krishna Palepu, andCarin-Isabel Knoop and David Lane of the Global Research Group, prepared this case. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright © 2006, 2007, 2009 President and Fellows of Harvard College. To order copies or request permission to reproducematerials, call 1-800545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School.
MetroCash & Carry
German precursors of C&C wholesale were wholesalers that in the 1950s extended beyond dry goods to sell fresh foods and a few nonfood items to food retailers. Beginning in the mid-1960s, C&C wholesalers such as Metro greatly expanded the breadth and depth of their stock and gradually emphasized assortment rather than just price. Commercial equipment and other goods needed for...