German retailer Metro AG’s global reach across 30 countries was supposed to insulate it from market swings. Instead, turmoil around the world has battered the company, forcing the chain to retrench and refocus on Europe.
With a retail empire of more than 2,000 wholesale, food retail, consumer-electronics stores in Europe, Asia and Africa, Metro has a big presence in emerging markets. But crises in many of these countries, including Russia, Greece, Egypt, over the past few years have hurt its results.
The Russian market has been the key market to Metro AG. In 2013, almost 90% of income came from this region. Up to 2014 the share of the Russian division accounted for a quarter of total operating income of the group. However, after the imposition of sanctions by the European Union and the beginning of the economic crisis in Russia, the situation changed dramatically. After the introduction of the food embargo, Russia Metro could quickly replace some banned products with Russian goods, but because of the collapse of the ruble, Metro’s loss was about €1 billion.
According to Olaf Koch, Metro AG CEO, in 2016 a priority market for the company will be Germany, which last year accounted for 38% of group revenues. In Germany, from January to November 2015 Metro sales grew by 2.8% – that is the maximum growth since 1994.
Money from the sale of assets (Galeria Kaufhof, units in Vietnam, Denmark and Greece) will go to the development of online trading according to Koch.