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METRO GROUP : ANNUAL REPORT 2011 : BUSINESS
→ GROUP MANAGEMENT REPORT : 11. Risk REPORT
Online business
In addition to international expansion, Internet sales are an
important factor and, at the same time, an opportunity to
secure the future success of our Company. online retail is
experiencing strong growth. We expect this development to
continue. as a result, it is imperative for MeTRo GRoUp to
further strengthen its Internet sales channel to ensure that it
does not leave competitors any room to gain market share.
We are taking successive steps to expand our sales divisions’
online business. In the financial year 2011, the respective
opening and expansion of the online shops of saturn and
Galeria Kaufhof marked important milestones in our transformation
from a purely stationary provider to dovetailed
multichannel sales operations. Risks related to this strategy
include the high demands placed on logistics and information
technology: the success of our multichannel offering depends
on our ability to offer our customers fast and reliable deliveries
and to guarantee safe, convenient ordering. In addition,
it is important to optimally link the stationary business with
electronic retailing. With the acquisition of the Redcoon
group, one of the leading online retailers of electronic products,
we have added a pure play online retailer to our portfolio
to counter competition from the sales segment focused
exclusively on the Internet.
Risks related to business performance
Suppliers
as a retail and wholesale company, MeTRo GRoUp depends
on external providers for the supply of goods and services.
We choose our suppliers very carefully, particularly in the
own-brand area. We place a high priority on the reliability
of our suppliers as well as on product quality and compliance
with safety and social standards. Defective or unsafe
products, an exploitation of our environment or inhumane
working conditions would cause extensive damage to the
image of MeTRo GRoUp and pose a long-range threat to
the Company’s success. For this reason we continuously
monitor our own-brand suppliers to check whether they
adhere to MeTRo GRoUp’s high procurement policy standards.
In particular, these include the quality standards
tested by the Global Food safety Initiative (GFsI), such
as the International Food standard and the GloBalGap
certification for agricultural products. They help to ensure
the safety of foods on all cultivation, production and sales
levels. In addition, we conduct special training programmes
to help suppliers in emerging markets to fulfil
safety standards. In 2012, we will expand these training
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programmes to qualify our suppliers with regard to our set
standards governing environmental aspects and humane
working conditions.
above all, however, our requirements of our suppliers are
regulated in special contracts which are regularly reviewed
for compliance. violations of conditions can lead to exclusion
from our supplier network or, in case of inacceptable
production methods such as sandblasting of jeans, which is
harmful to human health, to a procurement ban on a product.
In this way, we further minimise our supplier risks.
To prevent disruptions in the supply of goods and to avoid
becoming dependent on individual companies, we work with
a variety of suppliers. By taking this approach, we ensure
that the desired product is practically always in stock in the
desired quality and quantity and, in the process, achieve
high levels of customer satisfaction.
Products
our success also depends heavily on the procurement prices
of the products offered for sale. In many cases, our large purchasing
volumes in numerous countries have a positive effect.
product prices are based on the availability of the required raw
materials that may temporarily or continually become scarce.
This can drive up procurement prices or lead to a certain level
of volatility. For example, increased energy prices can lead to
higher procurement prices for a variety of products.
But products themselves can become scarce, too. one case
in point is fish, which can become scarce as a result of overfishing.
For this reason, MeTRo GRoUp launches own measures
and supports initiatives fostering the sustainable use of
natural resources. In the fisheries area, for example, we
have developed a Group-wide procurement policy and play
an active role in the Marine stewardship Council (MsC) and
the aquaculture stewardship Council (asC). These organisations
award product seals for sustainable fishery or aquaculture
aimed at the conservation of fish stocks. During the
reporting year, MeTRo GRoUp also joined the Roundtable on
sustainable palm oil (Rspo). The organisation, which
includes companies and non-governmental organisations,
works towards the sustainable cultivation of palm oil plants,
a raw material used in cosmetics and sweets, in particular.
among other things, we address supply shortages resulting
from population growth through central trading offices in
key procurement markets.