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METRO GROUP : ANNUAL REPORT 2010 : BUSINESS → GROUP MANAGEMENT REPORT : 12. SUPPLEMENTARy ANd FORECAST REPORT Metro Cash & Carry will continue its international expansion course in 2011 and 2012, keeping its focus on the growth regions of Asia and Eastern Europe. Real Sales in the German food retail industry are expected to increase more in 2011 and 2012 than they did in 2010. This positive trend will be primarily stimulated by hikes in food prices, which, in turn, result from increasing commodity prices. due to ongoing intense competition especially on the part of discount stores, however, it is not certain that higher purchase prices can be completely passed on to consumers by the food retail industry. The shift in demand towards low-price private-label products is likely to continue unchanged as a result of the overall rise in the price level. The Eastern European food retail industry will continue to grow in the next two years. In addition to food price increases, an ongoing rise in consumer demand will positively impact retail industry development as the recovery from the financial and economic crisis picks up speed. A rejuvenated expansion of the modern food retail sector will also fuel growth. we expect the large-area hypermarkets to remain the growth drivers and to further extend their market share. Real will continue to pursue and further refine its successful strategy of the past years. In Germany, the focus in 2011 and 2012 will be on the continuation of Real’s successful repositioning. This includes the development of promising new formats such as “Real drive” or the online shop. Internationally, Real will continue its systematic expansion in order to profit from the boom in large-area hypermarkets in Eastern Europe. Media Markt and Saturn The regionally divergent development in consumer electronics retailing will continue in 2011 and 2012. This is because developments in this industry are more susceptible to changes in macroeconomic parameters. The German Federal Association for Information Technology, Telecommunications and New Media (BITKOM) anticipates the market to decline in western Europe in 2011. In Germany, the largest western European market, experts expect the retail industry to develop more favourably than in most other countries in the region. For this reason, 2011 → p. 136 sales in the German market will only fall slightly below those of 2010. In the area of consumer electronics, demand for flat-screen televisions will continue to remain high. All in all, however, demand in Germany and western Europe will drop in 2011 before sales pick up again in 2012 when major sporting events are expected to boost demand. Consumer interest in information technology products continues to remain high. The sector trade association BITKOM, for example, projects record sales in computers in Germany in 2011. The Internet will continue to grow in importance as a sales channel and increase its market share. In light of this development, only providers that do not solely rely on stationary sales or only on Internet sales, but combine both sales channels to operate as multichannel providers will benefit from this trend. Media Markt and Saturn are already operating as multichannel providers in Austria and the Netherlands. In 2011, this sales channel will be expanded to Germany. Consumer electronics retailing in Eastern Europe will continue to grow at varying rates over the next two years. Stimulated by the rapid recovery from the financial and economic crisis, demand for electrical and electronic equipment in Russia and Turkey will pick up in 2011 and 2012. we expect sector sales in Russia to exceed those of pre-crisis levels by 2012 at the latest. In contrast to this positive trend, countries that remain affected by the economic crisis, for example, Greece and hungary, can expect customers’ reluctance to spend money to persist. due to continued strong demand for basic electrical and electronic equipment, the region of Eastern Europe also holds enormous potential for growth beyond 2012. The Chinese market for electrical and electronic products is the third-largest market worldwide behind the USA and Japan. According to the European Information Technology Observatory (EITO), the Chinese market will see double-digit growth rates in 2011 and 2012 and will position itself behind the USA as the second-largest market as early as 2012. Media Markt and Saturn will continue their growth course and gain additional market share over the next two years. The unrelentingly high pace of expansion in all growth markets will significantly contribute to the expansion of each sales brand’s market position.
METRO GROUP : ANNUAL REPORT 2010 : BUSINESS → GROUP MANAGEMENT REPORT : 12. SUPPLEMENTARy ANd FORECAST REPORT Galeria Kaufhof The positive consumer climate in Germany and the comparably high propensity to buy will positively impact the development of the department store and clothing sector in 2011. The continuation of this trend in 2012 will depend on how stable consumer demand remains. Even though the final phase of consolidation in the department store sector has yet to be completed, the sector will continue to gradually eliminate overcapacity. In this respect, we expect the department store sector to continue to lag behind retail trends in 2011 and 2012 as well. Galeria Kaufhof is clearly positioned as a concept and system leader in the market. On this basis, we expect the sales division to continue to develop more favourably than the comparable competition and its market share to increase. Positioning Galeria Kaufhof as a multichannel provider will also contribute to this development. Positioning of METRO GROUP 2011 and 2012 Focus of future business policy Launched in 2009 and targeted to last for four years, the efficiency and value-enhancing programme Shape 2012 has led to a repositioning of the business policy. we will steadily continue down this path in 2011 and 2012 as well. A guiding principle of Shape 2012 is its systematic focus on the customer. The specific needs of customer groups as well as regional market conditions play a crucial role in this strategic focus. we are addressing these factors by further refining sales formats and sales channels. At Metro Cash & Carry, the focus is clearly on professional, commercial customers. The wholesaler will expand its successful delivery services and intensify customer service efforts. Real will continue to introduce new concept components as well as establish and expand new sales channels, including online sales and the drive-in supermarket “Real drive”. Media Markt and Saturn will continue to dovetail their stationary business with an online presence and press ahead with internationalisation. Galeria Kaufhof will continue to rigorously shift its business towards the lifestyle sector. At the same time, the sales division will continue to expand the product range available online. Efficiency and value-enhancing programme Shape 2012 The aim of Shape 2012 is to secure METRO GROUP’s longterm profitable growth. To achieve this goal, we have → p. 137 streamlined our structures and introduced measures to further improve our overhead costs. The profit improvement potential targeted for 2012 and beyond amounts to €1.5 billion compared with the reference year of 2008. In particular, 2009 and 2010 were characterised by efforts to anchor decentralisation and a stronger customer focus in company structures. In addition, numerous measures have created more efficient processes, reduced costs and initiated productivity improvement projects. during the remaining two years of Shape 2012, the programme’s focus will shift in particular to measures aimed at further fuelling and implementing productivity improvements. At the halfway point in the programme, it is already clear that Shape 2012 has led to a new way of thinking within METRO GROUP. The main idea of creating a more customer-focused and more efficient company is becoming more and more infused into our day-to-day business. Shape 2012 is reshaping the Group and having an impact on decisions in all business processes. The programme is preparing our Company for future challenges. In 2011 and 2012, the earnings contribution of Shape 2012 is likely to exceed the levels of 2009 and 2010 as improvements in overhead costs and value contributions from increased productivity both bolster performance. we also expect special items to occur in connection with the implementation of Shape 2012 again in 2011. however, these will be markedly lower than in 2010. Non-financial targets In addition to its financial targets, METRO GROUP also pursues a number of non-financial targets. These are outlined in detail in the Sustainability Report and include the four topics of “Quality, health and environment”, “Energy and resource management”, “Employees and social affairs” and “Social policies and stakeholder dialogue”. As a founding member of the Business Social Compliance Initiative (BSCI), an association of European retail and wholesale companies and brand manufacturers, we are committed to ensuring good working conditions throughout the entire supply chain. That is why at least 75 percent of our suppliers will have to pass the BSCI social audit by the end of 2011. Furthermore, our long-term objective is to reduce our greenhouse gas emissions per square metre by 15 percent by 2015 compared with the reference year of 2006.
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