German retailer Metro AG has announced it will exit Japan next month, revealing its business has “been under pressure for quite some time” in the archipelago Asian nation.
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The wholesale grocery retailer will permanently close its ten stores and delivery business in Japan, winding down operations by October 2021. In a press release, the company said it had analysed alternative options but saw no path to profitable growth.
“In each market it is operating in, Metro aims to achieve a leading market position as food wholesaler,” said Dr Steffen Greubel, CEO of Metro AG.
“Metro Japan has been under pressure for quite some time. We finally made the decision that we do not see the opportunity to achieve necessary scale in Japan and thus to reach our profitability targets and sustainable growth in sales. Hence, we have concluded that METRO Japan is not a strategic fit for the company’s long-term objectives,” continued Dr Steffen Greubel.
Metro Japan added that it plans to assist its 1,200 employees through the transition in a fair manner and would act fully in line with employer practice standards.
Metro landed in Japan some 20 years ago. Since its inception, the retailer has opened a network of stores in the Greater Tokyo area, last year serving 100,000 customers, predominately made up of professional customers in the hospitality sector.
However, in recent years, the retail landscape in wholesale groceries has changed in Japan. Increased competition has weighed on the firm’s profits, recording an EBTIDA of US$-5.93 million last financial, despite sales of US$296.6 million.
Metro said it had tried adjusting store formats, improving product assortment and expanding the delivery business to reposition the business but was unable to, “due to lack of scale and highly competitive market characteristics.”
Come end of next month, Metro’s real estate portfolio in Japan will also be sold, including six owned land plots with stores and three locations with long-term leases.
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“On behalf of our Management Board I want to extend my sincere appreciation to our Japanese colleagues for their diligent work, enduring passion and commitment in serving our customer over the past 20 years,” concluded Greubel.