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The initial plan of German multinational Metro Cash & Carry to open 50 stores in India by 2020 may no longer be possible in the same timeline, as the company turns its focus on profitable and sustainable growth, said a top executive.
The company has established a footprint of 25 wholesale stores spanning over 3 million sq ft in 15 cities across 10 States, with the most recent one being the 55,000 sq ft Metro Wholesale Distribution Centre (store) in Meerut last month, set up at an investment of ₹50-60 crore.
Shift in focus
“When India was defined as a market for accelerated expansion in 2014, we held the belief that the profitability of our Indian operations will be realised via store openings. Our experience here has shown that we can reach profitability by improving our existing infrastructure, by better understanding local customers and by enhanced offers and services,” Arvind Mediratta, Managing Director and CEO of Metro Cash and Carry India Pvt Ltd, told BusinessLine .
Reorganisation
“Nevertheless, the objective of significant store expansion in India is still valid as the market offers immense potential,” he said.
The company’s commitment to expansion has been further underpinned by the reorganisation of its India operations, which involved a split into two regions — North-East and South-West, with regional leaders being inducted to head the regions.
“The reorganisation helps us to sharpen our regional focus — a key element for us in order to manage the peculiarities of customers and markets successfully. So far, North and South markets have been our traditional strongholds. While we continue to focus on these markets. After the recent store opening in Meerut, several further expansion projects are on the agenda,” said Mediratta.
“Most investors in the India market make their plans based on their assessment of the market potential. All further investments are made on the basis of its performance. If it doesn’t match expectations, then the focus changes,” observed Harminder Sahni, founder and MD, Wazir Advisors. The wholesale major is targeting to double the revenue contribution of its own house brands in FY 2018 from the present single digit share to double digit share and sustain thereafter. Its own brands portfolio, which has over 1,000 products present in 96 categories like coffee, detergents, groceries, cold beverages etc, are in the food (Aro, Fine Life, Metro Chef, RIOBA) and non-food (Aro, Sigma and Tarrington House) segments.
“We have introduced a range of pesticide-free commodities under the Fine Life Bio brand in 2017 and will further strengthen the range this year. We are also launching our RIOBA brand in India which will provide a complete range of Café solutions later this year, starting with coffee capsules, instant coffee and coffee brewing machines,” said Mediratta.
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