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Stratagem
 

“Passive wholesaling is not in our DNA”
Rajeev Bakshi, MD, Metro Cash & Carry (India)
Issue Date - 15/03/2012
 
B&E: FDI in single retail has hit the pause button for the time being but its opening up is inevitable. How will that impact the wholesale cash and carry business of large retailers like Metro?
Rajeev Bakshi (RB): Indian hypermarkets are indirect competition for us; they provide the same range of products as we do except that they have a wider range of products. Like we talk about stocking 10,000 products, while a typical hypermarket says it stocks close to 15K-20K products. Therefore the assortment is much larger at hypermarkets.

B&E: There is already competition in the wholesale cash and carry format, with Carrefour and Walmart aggressively expanding their operation. What will be Metro’s USP, and strategy vis-à-vis products, pricing etc?
RB: I think we are a genuine wholesaler in every aspect. We have a heritage of wholesaling. We have also learnt from our experience in India over the last few years, in terms of how to operate in this country. We are very conscious about competition. Passive wholesaling is not in our DNA. We don’t just open a shop and sit down waiting for customers to come. We wholesale actively and reach out to the consumer in a big way. Like for example, delivery service, we have a strong USP here. We also do cash on delivery. We also teach the retailers in terms of how to do their shop front and store structure. In Bangalore and Delhi, we have involved hundreds of retailers, and have redone their shops. Our entire focus is about customer centricity. And in that sense we are becoming more of a marketing organisation rather than a passive retailing wholesaler.

B&E: What’s the product mix like. Do you localise as per the needs of different regions here?
RB: Less than 10% of the products in our stores is imported because needs of the people are very local. So if you come to our stores and look for a washing soap, you will find an array of choices right from Rin to Surf to the local brands like Sunlight 555. In places like Delhi we also have ‘chakki atta’ as well.

B&E: Is your performance in India in tune with your expectations when you started off? How will the growth of wholesale trade affect the business of traditional mandis in India?
RB: One is never satisfied and there’s always an upside. I believe the proof of the pudding is in the eating. The fact that we are expanding today means that we have confidence in the format, and it’s globally acceptable. As far as mandis are concerned, they will be transformed. The concept of bazaar is an old concept, which you find in any Indian city you go to. It’s located in the heart of the city. But now, with new townships coming in and alongside the development of shopping malls, big retail chains don’t necessarily have to be in the centre of the city. People have no problems driving to a location outside the city and buy all the necessary things from one place. So we will see there will be a shift away from the colony bazaar concept. In Delhi itself, what’s the relevance of an M-Block or a Rajouri Garden market today? Not as much as it used to be. Most of Sadar Bazaar retailers live in west Delhi, which is the most successful area where modern trade exists and is thriving. So loyalties are shifting as far as consumers are concerned.

 
B&E: What’s India’s share in Metro’s global operations?
RB: It’s still very small. Just the fact that we are only 10 stores in India, compared to 700 Metro stores globally, shows that. But it’s an important future growth market for us.

B&E: What’s your overall investment in India so far?
RB: It costs us between Rs. 450 to 700 million to set up a Metro store In India. Starting in 2003 we now have 10 stores here. So you can estimate the total investment we have made so far (should be roughly around Rs. 6 billion). We also plan to open 10-12 more stores this fiscal. We have identified top 40 cities in the country wherein we are actively exploring our options to set up stores.
          

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