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Makro aims for growth from Salford base

Gordo and Binnsy take a ride out to a very big shop indeed

Written by . Published on December 15th 2010.

Makro aims for growth from Salford base

There’s big, and then there’s Makro big.

Just off Liverpool Road in Eccles, is the unlikely headquarters of one of a company that actually started in Germany in the mid-1960s. It now serves 30 countries through more than 600 stores as part of retail giant Metro AG.

To be honest, it was just nice to get there in one piece, given that Gordo was driving. Once inside, it’s an eye-opening experience. There’s food, obviously. Lots of food, ranging from the bog standard tins of tomatoes to whole legs of Iberico ham (£68 to you) and wheels of exotic cheeses.

There’s plenty of booze too, priced at around half (or less) of what you’d pay in a bar or restaurant. I spied a bottle of Marques De Caceres Rioja for £4 instead of the £14 I normally pay in the supermarket. Gordo had to be forcibly removed from that section of the store, only to get recognised by the butcher and someone near the fish counter.

The 100,000 sq ft industrial warehouse on the outskirts of Salford is the hub for the cash and carry firm’s UK and European operations, and managing director Hannes Floto says the two markets have their differences.

“In terms of what you can stock, Europe is probably more sophisticated,” he said. “Things like halal meat, organic, some fish and vegetables...we are catching up though. Our job in the UK is to expand our product lines.”

Makro currently stocks around 250 product lines and Floto said he wants to see that swell to 350. The customer base is a mix between trade and off-the-street punter but the firm is keen to engage with local food and beverage operators, holding regular tasting sessions and cookery demonstrations in-store.

“We try to push out own branded stuff,” said Floto. “We have a lot of back-of-house products like frozen onion rings and some front of house, such as coffee. It’s growing more than any other product line.”

The target is 20 per cent growth on its own-brand lines, which Floto claims they are still short of ‘by single figures.’

Booze sales at the store, managed by long-time retail man Jason Parry, are performing well though, up 15 per cent on 2009, with Peroni the biggest beer seller by a stretch. “It makes up for 75 per cent of all our beer sales, “ according to Floto.

But the place also has a vast range of electronics, toys, office supplies – not what I was expecting at all. “It’s a common misconception that we just do food and drink,” said Floto. “We need to push non-food more.

“We’ve started to sell items from the cookshop online, and we’ll gradually migrate other products online too.”

Online is a relatively new thing for Makro, and the firm still uses traditional paper newsletters to communicate with customers.

“If we dropped those hard copy mail-outs, we could drop £10m in costs,” said Floto. “But people vote with their feet, not their voice. Our customers like to be communicated with in that way.”

Floto also knows there is still work to do to push the business back into profit, after the cost of closing three stores down last year landed its 2010 figures £44m into the red. It was also forced to shed around 800 jobs in a round of recessionary streamlining.

“That was a bit of a one-off and won’t happen this year,” he said. “We’re heading in the right direction and we’re better off now than we were a year ago.

“We had sales of £867m in 2010 and we always want to improve. It won’t take us five years before we are back into profit.”

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