Wumart, Dmall, Metro tie up to benefit all

Nationwide growth

If any of Metro's assets in China attracted Zhang Wenzhong, a renowned entrepreneur, the most, it probably would be the German retailer's high food quality and safety standards.

"The two companies are complementary and will be able to reach a larger scale if combined," said Zhang.

"We respect Metro's food safety and quality standards. They will help raise our food safety and quality levels, which will meet the upgrade of consumption trend in China."

Sarrailh agreed. He said the fact that Wumart started as a retailer, rather than an e-commerce player, has set the tone for their talks.

"They are interested in consumers and they understand developing business and supply chains in a sustainable way," said Sarrailh. He said retail businesses cannot be sustainable economically if they rely mostly on giving out vouchers, a popular practice by online retailers.

First, Wumart's joint venture with Metro will allow it to become a nationwide retailer. Second, the German brand will further improve Wumart's status as a reliable retailer among consumers.

Zhang said they have to learn Metro's strict processes to reinforce their food safety awareness.

Wumart and Dmall's digital capacity will boost Metro's efficiency in terms of both its business-to-business model and business-to-consumer model.

Meanwhile, Metro will also provide access for Wumart to its global sourcing capacities and supply chains to enrich Wumart's product assortment by increasing imported goods at fair prices.

Metro's business-to-business model is also part of what Wumart is interested in developing but has not been able to maximize its potential for years.

After announcing the Metro deal, Wumart organized a forum on digital retail in Beijing where hundreds of retailers and CEOs of top consumer goods firms have gathered.

With annual sales of 50 billion yuan ($7.1 billion) and more than 1,500 stores, Wumart has offered digital solutions or platforms for Chinese small-and medium-sized retailers with its Dmall alliance, which is centered on Dmall's OS system serving Chinese hypermarkets and small-sized formats.

Xu Shaochuan, chief operating officer of Wumart, set the goal to increase online sales by 20 percent to contribute 20 percent of total revenue by 2020 through digitalization, upgrade of its online and offline integrations and a return to smaller format stores.

"The deal with Metro will bring out the best from the synergy of the two leading retailers," Zhang said.