We recently had the opportunity to catch up with Olaf Koch, the chairman and CEO of METRO Group, a Düsseldorf, Germany-based holding that’s in the business of wholesale, food retail and non-food speciality stores spread across 25 countries.
With more than 220,000 employees working for brands like Makro, Saturn, Media Markt and METRO, the company has emerged as one of Europe’s corporations most keen to engage with the tech startup community to help create a healthy ‘digital ecosystem for the catering and hospitality industry’, as they call it.
Koch is a kickstarter and strong supporter of the group’s activities in that context, including the recent establishment of the METRO Accelerator in Berlin, set up in partnership with Techstars and focused on the hospitality and food tech sector.
Tech.eu: METRO GROUP is a giant in the HoReCa, hospitality and consumer electronics space, formed through a big retail consolidation wave in Germany 20 years ago. How has the digital revolution impacted the company throughout the years?
Olaf Koch: Of course technology has always had a significant impact. Nowadays, e-commerce has enabled new ways to serve customers. But from my point of view, the change is much broader than the consideration of new sales channels. The change is almost universal.
The way our customers live and consume has changed dramatically over the course of the last ten years. Just take a look at how people interact and communicate today versus 2005. This has had an enormous impact on how people search for products and services, assess alternatives and finally conduct their purchases.
In other words, consumers can educate themselves in an unprecedented level. The time in which the retailer or wholesaler was “in control” of data and information is over. Therefore, today the full power is with the consumer. This massive change has intensified the need to become customer-centric and continuously strive for additional customer value.
Conversely, the digitisation of the catering and hospitality industry, although it had a slow start relative to other sectors, is poised to change it in many ways and on many levels. How do you think this digital transformation will impact METRO in the near and distant future?
In the context of our aim to support our customers to become more successful, we truly believe that digitisation is another fantastic opportunity. The purpose of our company is to be the “champion for independent business”. Besides providing unique products, services and solutions we want to help our customers as well to benefit from digital tools that help to boost their businesses.
There are various ways how this can happen in regard of Marketing, POS, supply chain etc. METRO can play an important role in making customers aware of these opportunities and helping them to start to use new tools. If this leads to more success for our customers it will be good for us as well.
You have taken an interest in working with startups and the tech entrepreneur community as a whole. How does this benefit METRO, and what do you as ‘the big corporate’ bring to the table?
What we bring to the table is sector expertise and access. Most innovations don’t succeed to reach a relevant audience in the hospitality sector. This is due to the fragmentation, the unique style of business but also the language.
We have a huge rolodex, thousands of sales representatives and we know how to talk this community. Therefore we are convinced that we can “build bridges” for startups in order to grow and scale their business. In an ideal case, we help our customers in the hospitality sector and we support tech entrepreneurs to establish a business.
By doing this I can see various beneficial consequences for METRO.
Concretely, METRO has partnered with Techstars to set up a vertical startup accelerator in Berlin. How did that cooperation come about, and how happy are you with the outcome so far?
When we noticed that the digitisation opportunity for the hospitality sector was sound but untapped, we wondered how we should approach it. We are aware of our competences, but we are also aware of our limitations. We are neither a VC nor a business building platform.
Through a nice coincidence we got to know Techstars. Their track record since 2006, their business model and definitely the “give first” mentality motivated us to have a more intensive discussion with them. Finally we came to the conclusion that a co-operation would create significant mutual benefit.
We had quite some expectations for the first program. After the conclusion of the first batch we were more than satisfied, we were super enthusiastic. That’s why we immediately decided to continue the cooperation.
There are multiple ways corporates can approach innovation and working with startups. Some invest as part of the business strategy, some employ an active M&A strategy, others have quota to buy from startups, etc. Why did METRO choose the accelerator partnership model, and which other strategies do you have in place that can be categorised as innovation management?
We have a multi-tier approach. In other words: for early-stage engagements we utilize the accelerator approach. But we also invest in more mature companies.
We have set up a small M&A team around innovation and we executed a few investments in the recent past. OrderBird, a leading provider of digital POS for restaurants, has been our most recent engagement.
Do you involve many people within METRO in engaging with startups, and if so, is it difficult to convince everyone of the importance of staying on top of (innovative) things within your field?
We try to be as inclusive as possible and to spread the “insight” that digitisation is another way to create value for our customers. In fact it might be one of the biggest opportunities for our company.
We try to keep people informed through our social intranet “UNITED”, town-hall meetings, workshops and further internal communications. On top of that we actively involve senior leaders as mentors for the accelerator programs.
Specifically in the catering and hospitality industry, what are some opportunities that you would advise startup founders to take a close look at? In other words, where do you believe the biggest opportunities and current offering gaps are situated?
I think the opportunities are massive across the whole value chain. This starts with customer interaction and communication. This could of course include online reservation, but go as far as managing “your community” of customers by keeping them informed and included.
The internal processes have significant room for improvement, from ordering processes to electronic check-out. This certainly will have a link to inventory management. Shrinkage still is one of the biggest problems and by the way also a cost factor. As you can see the scope is quite wide.
On a related note, do you think there’s an area within your field of expertise that you think startups shouldn’t get involved in, for whatever reason? Anything you would never dream of investing in or partnering with?
Spontaneously, I can’t think of one. My two cents on this would be: refrain from complexity. Try to make things as intuitive and simple as possible. Therefore there are areas in the business, which probably will take more time until they will happen.
What are some of the startups that you keep track of, whether they were part of the METRO Accelerator run by Techstars or not, that most excite you, and why?
I wouldn’t say that there is a defined or steady group. The watch list is quite dynamic. The one thing we are focusing on a lot is interoperability. How can we make sure that various tools will work together seamlessly.
Finding the right approach through defined APIs and shared standards will be a challenge that we need to master, if we want to see the emergence of a digital ecosystem for the hospitality sector. And this is what we aim for.
And finally, in the same vein, what’s the most innovative thing METRO itself has done – or is currently doing – that you wish more people knew about?
Well, I guess others should make that assessment. The only thing I can say is, that our shift to complete customer centricity has triggered a wave of innovative approaches in the core business but also in adjacent areas.
If there is one thing I would like to highlight to people outside it is: we are open for the NEW.
You have an idea that can make our customers more successful? Great! Let’s sit down and find out how we can make it happen!
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