For a taste of what is to come at Makro, you only need to step into the fresh produce department at the cash and carry depot beneath its HQ in Eccles, near Manchester. There you will find a breathtaking range of 250 lines - with everything from mushrooms to melons on display - plus helpful and knowledgeable staff on hand to advise customers on what to buy. The initiative may well leave some rival C&C bosses scratching their heads over practicalities such as cost, wastage and logistics. But Makro MD Philipp Dautzenberg sees the development of a thriving fresh food offer as a way of differentiating the chain from rivals and he says it is, therefore, critical to the future success of the business.
It’s easy to understand why. Caterers are a key part of the Makro model, so Dautzenberg believes having a strong fresh offer is vital. As he says: “The C&C sector is not meeting their needs for assortment, freshness and quality. Go into most cash and carries and try to buy products to make a salad from scratch - you can’t.”
Dautzenberg’s argument is simple: if you have the right salad ingredients in place, plus the fresh meat and fish to accompany them on a menu, then you are on the way to becoming a true destination store for those customers. Get that admittedly difficult bit cracked, he says, and you drive loyalty that in turn helps build sales.
Of course, it helps that Makro - number five in our Big 30 ranking of wholesalers - is part of the giant Metro retail and C&C group, so it can draw on centralised buying and logistics functions to source products such as Spanish oranges, Italian deli meats and French wines.
But Dautzenberg’s fresh foods strategy is about more than just the products. He says Makro also needs the right people in place: “It’s not enough to just fill shelves, you need to sell the product.”
Take fresh meat, where Makro has traditionally performed well thanks to some great butchery departments. The emphasis now is on training staff to actually start selling the product to customers. The aim, as in the fresh produce department, is to have in place ‘customer consultants’ who can build relationships with customers - so they can pick up the phone whenever there’s a good deal going down, for instance. At the same time, Dautzenberg is keen to overhaul the fresh fish offer at Makro. “If you get somebody buying fresh fish from you, then it’s loyalty pure and simple - as they will come in two or three times a week,” he says.
Add into this mix some slicker - and more targeted - marketing and then Dautzenberg’s vision starts to take shape. Does it sound far-fetched? Well, Makro has already revamped the fruit and veg offer in all its depots. And in October, the group will unveil its new-look Charlton depot where this new thinking will be brought together for the first time.
All this work has been under way since Dautzenberg joined Makro in the UK in January 2004 from Metro’s Schaper C&C division. His priorities were to drive organic growth in the business, primarily with the focus on fresh, but also by developing other key destination areas for small traders such as housewares, cleaning products and stationery. Customers have responded well to the changes made so far - with Makro’s UK sales up 4.6% to £1.6bn in the last financial year.
On the face of it, many of the new initiatives are geared more for caterers, but Dautzenberg stresses that Marko is also building the retail side of its business. That has meant boosting parts of the offer that were not as strong as they could have been - general grocery, for instance - and improving communication with these customers. While Dautzenberg acknowledges the pressure faced by independent retailers, he is confident there will always be a vibrant sector, adding: “There’s nothing that worries us. First, because it is just one part of our business (and not 90% of it like some of our rivals) and second, because we see more opportunities to increase our share of this market.”
However, he rules out any possibility of Makro following other groups and building a delivered business to lock in retail customers. “At Schaper, 20% of our sales were delivered. So I know how difficult it is to run a delivery business out of cash and carry. You need very different skills.”
Similarly, he says Makro has no plans to launch fascia schemes in the UK either. However, he is keeping an eye on developments at sister companies in Eastern Europe where such schemes are being developed successfully.
With so much work under way to improve the business, it’s understandable that Dautzenberg says opening more depots isn’t a priority. But he adds: “There is no question that at some point we will be expanding again. There’s potential for many many depots.”
He also plays down the idea of making acquisitions to add to its 33 depots: “As our CEO says, we are not empire builders; just buying things means you can end up buying lots of problems. We will only buy if the target fits our strategy - with the right location, culture and customer structure. So while buying is a possibility, we would only look at something that fits with our structure, which is why acquisitions are not a key focus.”
Organic growth is the immediate priority. “This is a market where we can perform better,” says the man giving fresh impetus to Makro’s topline performance.
We are not empire builders; just buying things means you can end up buying lots of problems. Acquisitions are not a key focus