Microsoft® Windows Server SystemTM Customer Solution Case Study

METRO Builds a More Personal Shopping Experience with Future Store

Overview “We will use Microsoft technology to bridge the Country or Region: Germany interim period from today into the long term future Industry: Retail when we have our stores fully equipped with RFID.” Customer Profile Zygmunt Mierdorf, CIO and Executive Vice President HR The METRO Group is the fourth largest retailer in the world and the largest in METRO Group Germany. Based in Düsseldorf, Germany, the METRO Group is now the fourth

Business Situation largest retailer in the world, with annual revenues of over 50 billion METRO operates its Store of the Future in Euros (U.S.$66.5 billion). METRO has a global reach, doing Rheinberg, Germany, to test out new ideas in retailing and map out the way people business in 28 countries. Its brands include Kaufhof Galleria for its shop in stores. department stores, METRO Cash & Carry in the wholesale sector,

Solution Real and Extra in the food retailing sector, Praktiker for the home Microsoft is a Gold Partner with METRO for improvement segment, and Media Markt in consumer electronics. its Future Store Initiative. Microsoft®

Windows Server SystemTM, including BizTalk® Server 2004, SharePoint® Portal METRO has a strong focus on IT to drive profitability, to optimize the Server, and SQL ServerTM, is the basis for the Real-Time Integrator, which makes process chain, and to create innovative ways to operate its stores. point of sale (POS) data immediately Dr. Hans-Joachim Körber, Chairman and CEO, METRO Group, available for purposes of decision making. explains: “That was the reason why we created the METRO Group Benefits Future Store. It’s a supermarket where we put in all new „ A more personal shopping experience „ Greater convenience in the store technology. Everything IT available in the world is in this store. It is „ Improved staff utilization a complex IT environment, and it is well-received by our „ Real-time information about store operations customers.”

Situation which we think we can get to by using the new technologies.” METRO wanted to create a permanent test lab for new retail technology. The company Dr. Wolfram makes the point that the key to built the Future Store in Rheinberg, a small greater efficiency is collaboration among all town near Düsseldorf, Germany. This is a the entities along the supply chain, and the physical store, (the Extra brand) visited by sharing of information in real-time. real customers. “Collaboration has always played a significant “Microsoft is leading the The METRO Future Store Initiative is the role for the METRO Group. Collaboration on way in retail technology.” company-wide initiative of METRO Group. the one hand with our suppliers and collaboration with our service partners and Dr. Hans-Joachim Körber, Chairman and Whatever is new in retail technology is service providers, because all of them need CEO, METRO Group implemented at this Rheinberg location. New to be networked in a way that the information retail technology is tested in this lab flow is organized automatically, and environment. Both customers and employees commensurate necessary actions are also find out whether in-house processes benefit triggered automatically.” consumers. Once a particular process is accepted, then it is rolled out into the store An important element to make this portfolio all over Germany. collaboration work is the universal acceptance of the Electronic Product Code “We have a living laboratory in our Future (EPC). Dr. Körber explains: “I think it’s very Store,” says Zygmunt Mierdorf, CIO and important that we go for standardization. Executive Vice President HR, METRO Group. Currently we have different barcodes in the “I have the vision for our company to be the world. The Americans have UCC, the world’s most successful leader as a virtual Europeans have EAN. With EPC we have, for network organization serving consumers in the first time, the chance to have one the retail industry.” worldwide standard. That’s why Wal-Mart and METRO are on the international EPC Board— Dr. Gerd Wolfram, Executive Manager for the to make sure that on the retail side, we go for Future Store Initiative, METRO Group, says, “I one standard.” EPC Global will provide think the biggest challenge and the biggest uniform electronic product codes across opportunity with the new technology is to geographies in order to enable a global combine and integrate the demand side and supply chain. supply side, which means we get real-time information from the customers about their The Future Store has “Intelligent Scales” that requirements, likes, and dislikes, and about can identify different kinds of produce and changes and trends, directly through the then weigh and price the produce retail network to the manufacturing side. For appropriately. The Future Store has “Smart that reason, we are able to react very fast Shelves” that can detect the number of items and be very responsive to consumer needs.” on a shelf and whether goods have been inadvertently mixed up. The self-checkout Dr. Wolfram continues, “We may have the stations are very popular and work smoothly. wrong level of inventories; we may have too POS information is made available high a level of inventories. There is a great immediately to store employees to manage volume of hidden reserves in the supply checkout lanes and to detect possible fraud. chain, which we think we can reveal, [and]

Dr. Körber emphasizes, “I think you need a offerings specific to their needs. Stores and vision for new technology. And we have a customers can communicate more directly vision. That’s why we have the store. The with handheld computer devices. vision is that ten years down the road a Individualization will be a major building block customer can take the trolley, put in all his in the Future Store vision. merchandise, pass the scanner, and everything is scanned in a second and Efficiency. Efficient shopping means ease, charged to his account. That is the vision we convenience, and a quick checkout process have. We will start the logistic, but eventually, that does not involve standing in a queue with every product having a radio frequency tag, we will be in a new retail world.” Virtual technologies. Internet technology and virtual technologies can help consumers Principles of Shopping in the Future prepare for shopping in advance of actually There are some general principles of how visiting the store. In METRO’s vision for the METRO sees shopping as changing in the future, consumers may use their “smart future through the capabilities offered by refrigerators”—which “know” which items on information technology (IT). This technology their shelves are in low supply—to directly and will not only support the customer for the in- automatically communicate with the shop via store experience, but also help in the Internet. preparations outside of the store, by offering the following benefits: There are many ways METRO and the consumer will be able to create a more Acceleration. The main benefit on the exciting and a more productive shopping consumer side will be the acceleration of the environment. METRO’s solution is to offer shopping process. Consumers can quickly many options and a lot of convenience to see what they need to know about a product. customers, with an emphasis on offering “Three things which are They can pick a product off the shelf and take several shopping solutions specific to each very impressive in the it to a nearby information kiosk which, via consumer’s needs. Microsoft solution are the touch screen, gives information about the speed of implementation, product and how to use it. If the product rests Rollout of New Technologies the ease of integration into on a smart shelf, removing the product from METRO is pushing new technology forward by different kinds of input and the shelf will automatically kick off a video rolling out an “intelligent scale” and the “fast output sources, and the telling the consumer about the product. This lane checkout” in its hypermarket and power of the software easily accessible, comprehensive information supermarket stores in Germany. functionality.” about product categories, especially critical product categories such as meat, fish, and METRO Group will roll out Radio Frequency Dr. Gerd Wolfram, Executive Manager cheese, accelerates the shopping process. Identification (RFID) across four of its six for the Future Store Initiative, divisions in November 2004. The Future METRO Group Mobility. Customer mobility is important. In Store in Rheinberg and other stores have the future, customers—who write their been successfully piloting RFID. Every item is shopping lists while at home, in the office, or tagged and automatically sends out its own in the car—can create lists on their handheld bar code, which eliminates the need to scan. devices and communicate with the store on The company is now ready to move from pilot the way there. to production. This initiative signifies a production environment that involves more Personalization. Retail in the future will be than 35% of METRO's stores in the four more personalized, so customers will get the involved divisions. "RFID is a major initiative

for the Metro group," says Zygmunt Mierdorf, The Store Manager’s Workbench utilizes CIO and SVP of the METRO Group. "METRO is continuous data feeds with its real-time very pleased Microsoft has joined EPC Global integrator. The Store Manager’s Workbench and is making significant investments to is a productivity tool to get continually make this technology available using open refreshed actual figures about sales—not only standard technologies. Microsoft is total sales but also sales from different partnering with the METRO Group to support departments or categories, plus information this first large implementation." about the actual stock and information about “Microsoft has been able to delivery. The Store Manager’s Workbench Solution provides this data in a convenient graph develop a solution for the Store Manager’s format. Workbench in a very short Microsoft is a Gold Partner in the Future period of time—a solution Store Initiative. Dr. Körber notes, “One of the METRO, with Microsoft, has also developed which will be of great help major partners in our Future Store Initiative is the Cashier Manager’s Workbench. Managers for the general Microsoft. We are very proud that we have can get the actual figures on how many administration and Microsoft as a partner, and Microsoft helps customers are entering and leaving the store customer service us a lot.” and how many customers are standing in the procedures in the Store of queue. The POS optimizer then uses this the Future.” One of the biggest challenges is bringing in all information to optimize check-out staffing. the information from different sources The cashier manager can decide whether to Zygmunt Mierdorf, CIO and Executive Vice together quickly, so that it is immediately open additional cashier positions or to close President HR, METRO Group usable. them down on the basis of the data. “The partners, Microsoft and METRO, thus address Mierdorf adds, “In the new fields of RFID and the pain points the customer is facing today, EPC, Microsoft is offering fresh, powerful and standing in the queue in the checkout is solutions. I think, especially in real-time retail a key [customer] complaint,” says Dr. software and in middleware, Microsoft has Wolfram. the building blocks where all of the data coming from the RFID readers will be filtered Real-Time Communications in the Store to discover alert situations and then go out to The real-time communicator is built on data other applications in real time to react to from the real-time integrator. “Cashiers can those alerts.” set up alerts to the manager when they need help—for example, when a scanner fails to He continues, “We will use Microsoft® read the bar code on a product, or there is no technology to bridge the interim period from bar code on the item, or additional money is today into the long-term future when we have needed in the cashier desk. This kind of thing our stores fully equipped with RFID products can be done very easily now by looking at the and we can use RFID technology to display screen, pushing a button, and then alerting necessary information for our employees.” the cashier manager, and he or she can then react as needed.” Real-Time Integrator Taps into POS Microsoft developed the Store Manager’s “It’s all about real-time retailing, real-time Workbench in a short period of time, greatly information going to the different positions so facilitating general administrative and that [employees] can act in a very short customer service procedures in the Future time,” says Dr. Wolfram. Store.

Mierdorf notes, “The enablers within the react and to make the future of retail more Microsoft technology that help us the most efficient and convenient.” are the collaboration functionalities, for example, [Microsoft] SharePoint® Portal Dr. Wolfram comments, “Three things are Server, BizTalk® Server, and the development very impressive in the Microsoft solution. The tools which use XML standards. These are speed of implementation--four to six weeks--a the basic enablers which help us to create very short time for developing and integrating solutions in a very short time.” into the Future Store. The second thing is the easy interface that allows access to different Microsoft technology is effective with a whole inputs and provides output to different range of devices in the Future Store. Real- devices. And the third thing is the power of time information can be provided to store the software functionality, smaller and employees via smart phones, IP phones, or smarter devices with a lot of functionality.” PDA devices, all of which work together and are linked through the different enablers “The most exciting thing for me personally in offered by Microsoft technology. Real-time the Future Store is that the customers like information can also be provided to the the technology, use it, experience it, and start customer by the Personal Shopping Assistant to integrate it into their shopping behavior. (PSA). The PSA guides the shopper to where It’s very good and very positive,” Dr. Wolfram items can be found in the store and also concludes. keeps a tally of what is in the cart.

Mierdorf elaborates on this point. “In the area of mobility, Microsoft can contribute a lot. The company is making software that builds new functionalities into smart phones, so you can bring information to the customer’s phone—a shopping list for example, or a store plan where the customer can navigate in the store through different aisles and get tips and hints where the products are.”

Benefits

Dr. Körber says, “Microsoft is taking a leading role in the retail sector.”

Mr. Mierdorf adds, “METRO especially likes the fact that Microsoft offers solutions with their many vertical partners in the retail segment, and that these solutions can be developed and deployed quickly. These kinds of applications are very visible to the customer, visible to the store people, to the store manager, and to the store staff. They have very powerful tools in their hands to

For More Information Microsoft Windows Server System For more information about Microsoft Microsoft Windows Server SystemTM is the products and services, call the Microsoft comprehensive, integrated, and interoperable Sales Information Center at (800) 426- server infrastructure that helps reduce the 9400. In Canada, call the Microsoft complexity and costs of building, deploying, Canada Information Centre at (877) 568- connecting, and operating agile business 2495. Customers who are deaf or hard-of- solutions. Windows Server System helps hearing can reach Microsoft text telephone customers create new value for their (TTY/TDD) services at (800) 892-5234 in business through the strategic use of their IT the United States or (905) 568-9641 in assets. With the Windows ServerTM platform Canada. Outside the 50 United States and as the foundation, Windows Server System Canada, please contact your local delivers dependable infrastructure for data Microsoft subsidiary. management and analysis; enterprise integration; customer, partner, and employee To access information using the World portals; business process automation; Wide Web, go to: www.microsoft.com communications and collaboration; and core IT operations including security, deployment, For more information about Bertelsmann and system management. products and services, call or visit the Web site at: For more information about Windows Server www.metrogroup.de System, go to: www.microsoft.com/windowsserver2003

Software and Services − Microsoft Windows 2000 Advanced „ Microsoft Windows Server 2003 Server © 2004 Microsoft Corporation. All rights reserved. This case study is for informational purposes only. MICROSOFT MAKES NO „ Microsoft BizTalk Server 2004 WARRANTIES, EXPRESS OR IMPLIED, IN THIS SUMMARY. Microsoft, BizTalk, SharePoint, Windows, the Windows logo, „ Microsoft SharePoint Portal Server Windows Server, and Windows Server System are either registered trademarks or trademarks of Microsoft Corporation in „ Microsoft SQL Server 2000 the United States and/or other countries. The names of actual companies and products mentioned herein may be the trademarks of their respective owners.

Document published March 2004