Metro Plans Wholesale Online Platform For Kirana Stores
German wholesaler Metro’s Indian unit plans to launch an online platform to make it easier for mom-and-pop stores to buy from it.
Metro Cash and Carry India Pvt. Ltd. plans to go live with its e-commerce channel by the end of this year. The company will give neighbourhood retail stores the option to integrate their back-end with that of the wholesaler, Arvind Mediratta, managing director and chief executive officer, told BloombergQuint in an interview. That will help Metro keep track of inventory and replenish stock when a store runs out of products.
Metro Cash and Carry, which had 25 wholesale centers and 600 salespersons, provides doorstep service. “What they (kirana stores) are saying is we don’t need to wait for your salespersons to come and we would like to place an order on your app or e-commerce site,” Mediratta said. “That’s what we are working towards.”
The German wholesaler also started a centre in Bengaluru that will help mom-and-pop stores turn into modern trade outlets. The retailer will help design outlets and display products in a way that boosts sales. The service will later be expanded across 10 states and Delhi.
Better supply management will help the wholesaler offer a better price to its customers who order in bulk. “We have tied up with companies like Kotak Mahindra Bank and we have a private label credit card,” he said, adding that it will help the stores buy stock. “It’s a joint card; the cost of the credit is borne by metro, so they (stores) don’t have to pay a single penny in interest cost. It is a service that we are providing to them.”
Revising India Expansion Strategy
In 2014, Metro Cash and Carry India had outlined a plan to open 50 stores across the country by 2020. The wholesaler has shifted focus on operating margin, according to Mediratta. That means it slowed down expansion in India. Two new centres will open in Nashik and Ghaziabad, taking the total count to 27 by the end of the month.
“We are chasing profitable and sustainable growth. That is the reason we are looking at every new store very carefully,” Mediratta said. “Because you can leverage the economies of scale much better in cities where we have a strong presence.”
The company didn't disclose how many of its 25 stores are profitable in India. The ideal timeline for its stores to be profitable is two-three years, Mediratta said.
In the year ended March 2017, Metro Cash and Carry's revenue rose nearly 22 percent to Rs 5,632, according to its filling with the Registrar of Companies. Net loss, however, widened to Rs 136.4 crore compared with a loss of Rs 112.3 crore in the previous year.
To drive profit, it's looking at increasing the share of its private labels, which now contribute about 8 percent of sales. The share of its own brands, according to Mediratta, is much higher in Metro’s other markets.
Metro’s peer Walmart Inc has taken control of India’s largest e-commerce company Flipkart to tap consumer retail. Does the German retailer have a plan to enter multi-brand retail?
Metro Cash and Carry, said Mediratta, will stick to being a business-to-business company.