Olaf Koch: “Digital B2B – that requires warmth and passion”

Digitalising the restaurant and hotel industry via an accessible platform: For METRO CEO Olaf Koch, who himself started out as a digital founder, this is the key to a new partnership with the retail giant’s customers: millions of small businesses worldwide.

Mr. Koch, is the reasoning so much easier today than it used to be? You once founded a small digital company …

Yes, the reasoning has become easier. Today we have a completely different acceptance for innovation and financial resources are much better available. The affinity for technology is also significantly higher. In the early 1990s, large corporations still had the privilege of using computers and operating data centers. It only changed with the triumph of personal computers and their networking. That was also the time when I founded my own company to develop networked applications. The framework conditions were not easy. I remember well that an interest-free subsidy loan was rejected because I had founded the company before the application. Venture Capital was in Germany at best still in its infancy.

Found your own or rather move big things in an innovative group – a personal alternative, which is still a pioneer …

There was an evolution. In the overheated dotcom euphoria, you were a superhero as founder. When the bubble burst, it was suddenly no longer chic. Reasons was equated with losing money. In contrast to the USA, it took a few years in Germany until the start-up dynamics started again. In my view, this is much more realistic, much more professional, without the romantic illusion of the great freedom. Founders work seven days a week. It is not stress-free when it comes to one’s own existence. So it is not unattractive to start in a great company, where you can actively contribute your talents and abilities. The better way depends, among other things, on one’s own life planning, the desired work-life balance and the willingness to take risks.

This is even more true for the hospitality sector, where the founders are even more analogue. What is your motivation to advance digitization here?

We have fundamentally reoriented our wholesale business model over the last few years. The core of our strategy is to contribute to the success of independent entrepreneurs in the hospitality industry. To do so, we must offer tailor-made assortments, provide solutions and gear our stores and supplies fully to the customer. In doing so, we are making ever better progress, which is also reflected in the sales development with these target groups. We have been growing continuously and progressively for five years. The motivation for our teams is tremendous, because we make a contribution to the entrepreneurs, their families, customers and the diversity in the industry. So far so good, but we wonder every day what else we can do to support customers. And that’s where digitization comes into play. Since 2014, we have been investigating the question how to further develop the economic success of our customers through innovative solutions. We came across a very wide range of opportunities. This starts with the customer approach and marketing, goes through the service processes to administrative tasks. However, they are rarely used. This puts the independent restaurateur in a strong disadvantage compared to the system catering, in which many functions and processes are optimized and digitized. The independent catering is often dependent on the entrepreneur, who often goes to the cause with incredible passion and dedication. That’s what makes the charm and soul of this industry. Frequently, however, there is a lack of commercial precision or even the use of technical aids. The potential, however, is huge.

And what about such a screening of possible technologies and scouting of innovation partners?

We have some exciting years behind us now. This was not a process that was straightforward and predefined. There was and is no strategic advice that could tell us exactly what to do. At first, we had only a small expedition team, a unit with two handfuls of people looking around internationally, to create a digital added value for our customers. At the beginning, we also occasionally invested in early-stage start-ups. That was well meant but not really effective. Young start-ups are de facto incompatible with a corporation, regardless of the day-to-day agenda, risk-weighing and not even language. In addition, the magnitude of the tasks do not match. Nevertheless, we wanted to expand our radius and develop the creativity and innovative power for the gastronomy more systematically. That’s why we’ve teamed up with Techstars: We with customer access and the claim to be Champion for Independent Business. And Techstars, an experienced start-up champion with the know-how to develop young companies. Alone through hundreds of applications for our joint accelerator programs, we have given an incredible number of innovation impulses. Working with the participants in the programs has enabled us to help many bring their ideas to life. And we have noticed that our customers are getting more and more involved in the topic. That inspired us incredibly … We with customer access and the claim to be ‘Champion for Independent Business’. And Techstars, an experienced start-up champion with the know-how to develop young companies. Alone through hundreds of applications for our joint accelerator programs, we have given an incredible number of innovation impulses. Working with the participants in the programs has enabled us to help many bring their ideas to life. And we have noticed that our customers are getting more and more involved in the topic. That inspired us incredibly … We with customer access and the claim to be ‘Champion for Independent Business’. And Techstars, an experienced start-up champion with the know-how to develop young companies. Alone through hundreds of applications for our joint accelerator programs, we have given an incredible number of innovation impulses. Working with the participants in the programs has enabled us to help many bring their ideas to life. And we have noticed that our customers are getting more and more involved in the topic. That inspired us incredibly … Alone through hundreds of applications for our joint accelerator programs, we have given an incredible number of innovation impulses. Working with the participants in the programs has enabled us to help many bring their ideas to life. And we have noticed that our customers are getting more and more involved in the topic. That inspired us incredibly … Alone through hundreds of applications for our joint accelerator programs, we have given an incredible number of innovation impulses. Working with the participants in the programs has enabled us to help many bring their ideas to life. And we have noticed that our customers are getting more and more involved in the topic. That inspired us incredibly …

And then what were the first steps in the market to win over customers for digitization and to develop a growth perspective?

In 2017, as part of the so-called METROpolitan pilot program, we accompanied selected start-ups and scale-ups and introduced them to the market with their digital products. In Berlin, Paris, Milan, Vienna and Barcelona we have gained 500 restaurants as pilot customers and helped them to implement digital solutions on our behalf. For us, the critical reflection was important: How to make the customer’s business really better – from the purchasing process through the cash register to personnel planning and billing. Today, we can dramatically reduce the administrative workload of the restaurateurs, significantly reduce costs and systematically increase contribution margins. So today we know exactly what the potential of our customers is. That’s 1,

A huge potential, but customers can not simply take digitization with them in the METRO market …

In our industry you can not introduce technology systemically, but only inclusive. It is only through collaboration, over which the small entrepreneur recognizes the sustainable advantage in his numbers. METRO is not a charitable company. Only if we provide customers with added value can we demand a price for this. And in the dialogue itself, we expand our customer relationship.

What does this look like?

The effort for technology companies, be it a start-up or a corporation, to bring individual solutions to the customer is enormous. The customer acquisition costs go through the ceiling. We have learned that we have to do it differently – through platforms for which METRO has the credibility and reach in the market like no other. That’s why we launched the online DISH platform in 2018. This stands for Digital Innovations and Solutions for Hospitality and offers restaurateurs access to digital tools, among other things: An Internet presence that a restaurateur can create in 15 minutes with his smartphone and make a few clicks with Google Maps, social media and search engine entries we charge for free. Our marginal costs are in the cent range per account. More than 140. 000 companies in 14 countries have been using this service since the rollout in early 2018 – thus we have set an example in the analogue industry. Digitization is possible.

And where is the business for METRO?

There is a clear test of success: Does our offer add lasting value that takes our business relationship to a new level? When we use a tool like MenuKit to enable a pilot customer to make a completely new calculation of his menu and thereby increase his contribution margin by about 25 percent, we have added value with two almost priceless components: technology and entrepreneurial competence. This more intense business relationship – that’s what we’re realigning our distribution system to.

How open does METRO have to be as a technology partner?

We follow an important principle of ecosystems: we are an open platform, by the way, not only limited to METRO customers and METRO technology. We also give third parties the opportunity to distribute their digital solutions through DISH. The more successful the applications we bring to our platform, the better for us all. We have very good experiences with the innovation partners. Within METRO, we have built the subsidiary Hospitality Digital, which is passionate about this industry and wants to make a difference with technology. In this environment I have to create freedom and flexibility, I can not do that in the logic of a large corporation. The same applies to our future online marketplace for restaurateurs. METRO itself has been operating its own online shops for several years. In the future, we will go one step further with the METRO MARKETS team, and we will become the online marketplace provider. Thus, we also offer a platform to other retailers and at the same time become the most relevant procurement platform on the Internet for restaurateurs.

How do you take along the many 10,000 employees who, in addition to the digital business, must continue to successfully operate a successful classic business?

That is by far the most important question and the biggest challenge. METRO comes from the goods, the operation of markets and since 2009 also from the supply. Now we are all growing into the new role of small business solutions provider. These will continue to make up by far the largest part of our sales in the future. We can no longer produce differentiation in the market solely through the quality and freshness of the goods. We need a brand positioning that is so firmly anchored in the customer that it recognizes a strong partner in us. We will do things for independent entrepreneurs, with whom they do not expect today, but who will demonstrate one thing more and more: We are fighting for their economic success and a long-term, successful future. Then they will realize: METRO is a partner like no other. Achieving this identification with the customer – this goal is shared today by all employees, across national borders and that motivates them unbelievably.

Personal passion for the customer as the basis for the digital platform and solutions business – do you see something that puts METRO ahead of other global providers?

Our biggest asset is the approximately 24 million customers who have a high regard for our brand and our team. B2B means passion, competence and trust. A true partnership in value creation does not come about through a purely transactional trading relationship, but only because we act credibly with the same passion as our customers. Technology can not replace this relationship, but it can amplify it. Technology – it has to act like a giant amplifier for the customer relationship.

 

Hans Gäng
14.11.2019
von Hans Gäng