Reaping the benefit of servicing kiranas

German wholesaler Metro Cash and Carry, which is celebrating its 15th anniversary in India (It opened first store on October 21, 2003 in Bengaluru), has had a rather slow and cautious journey in India so far in terms of geographical presence. It currently operates 27 wholesale distribution centres in select cities. Having spent 15 years to understand the needs of its customers (it sells only to kiranas [neighbourhood grocery stores], hotels, restaurants, caterers, and offices), the company is now geared up to embark on a rapid growth path with an eye on sustainable profits.

Over the last decade and a half, Metro’s business model has changed drastically, to suit the changing demands of the time, compared to what it was when it began operations in 2003. When it started first, there was no competition in its business and no ecommerce business either to offer deep discounts. Today, Metro no longer just looks at selling a range of products to kiranas, hotels or office customers, it has transformed itself into a wholesome player with a wide variety of services that includes providing consultancy services to “mom and pop” stores, free of cost.

“Now we understand Indian market very well. Many companies are stuck on the runway and never take off. We are proud that our plane has taken off and we are excited about the opportunities here and committed to India even more stronger,” Arvind Mediratta, Managing Director, Metro Cash and Carry India Pvt Ltd says.

Key lessons

Metro has understood the needs of Indian markets very well. As Mediratta says, the tastes and food requirements of customers changes every 50 kms and it caters to those changing needs through its stores across all regions in the country. It stores products that are relevant to different geographical regions and supply what the customer wants in all its centres. “Other big change is, we have developed a strong relationship with the customer and become their true partner or what we call Champion or independent businesses,” Mediratta adds. Today, Metro acts as a partner of kiranas and solves their problems by providing consultancy services to them. It acts as a wealth consultant, understands their pain points and recommend solutions, thereby empower them to compete with modern retail and ecommerce giants.

Many kirana stores in India do not have proper banking history and Metro has partnered with Fintech companies like Capital Float to provide working capital to kiranas. It also provides them with point of sale (PoS) terminals, which helps them to place orders daily and track their shipments.

Unlike earlier years, when kiranas or hotels and restaurants had to visit Metro stores to purchase their goods, they now get their goods delivered at their doorsteps. They can order their products through a field executive who visits them and the same will be delivered to them within a couple of hours. Metro has built up a strong sales force of 600 executives who visit at least 20 shops every day for six days a week. They take orders on their handheld devices and enable digital payments before delivering the goods.

“My sales have improved by 35% since I started buying from Metro. Besides, I don’t have to worry about sourcing of products from different places as Metro provides everything under one roof. Metro customer consultants come to my store and take orders on their tablets and the products are delivered to the store the same day. I can now focus on improving my sales and profitability,” Ram Babu, a regular customer of Metro said.

Champion for independent business

Metro is also helping kiranas to modernise their businesses by changing the shape of their shops and make it look like a modern retail store, wherein the customer can walk in and pick up what he wants.

In line with the company’s mission statement of being a ‘Champion for Independent Business’ and the company’s new brand campaign ‘Your Success is Our Business’, Metro’s Kirana Success Centre will empower the kirana community with solutions and technical expertise to run their businesses in a modern way. The centre will provide product management solutions to kiranas and small traders for a more holistic and sustainable growth.

The centre will also help them set up amenities such as modern fixtures with more storage space, in order to attain better visibility of assortment and display incomes. The modern fixtures can be availed by all the kiranas, irrespective of the size of their store, and will be installed within 48 hours.

“Rising competition and customer preferences are prompting small grocery and kirana stores to embrace technology to cater to the evolving customer needs in their respective catchments. A kirana needs to elevate and evolve to the digital age in order to stay relevant in the competition,” Mediratta says.

The Kirana Success Centre will also provide POS terminals to the kiranas for better stock management; will help them earn additional income through an array of value added services; help them track their sales and revenue; run special promotions for high-value consumers and even send text messages and emails for promotions to customers. Kiranas can print GST-compliant invoices with this digital PoS system. The modernisation drive is slated to augment their footfall by 20%. So far, 25,000 small businesses have registered with Metro for this service.

In the last 15 years, Metro has registered close to 3 million customers in India across all its 26 wholesale distribution centres, catering to over 5,000 suppliers, and has created over 12,500 direct and indirect jobs across the country. Its cumulative investment is in excess of Rs 1,300 crore. Metro sources 99% of products locally from SMEs & local suppliers.

For the year ended September 2017, Metro Cash and Carry India reported a turnover Euro 798 million (Rs 6,332 crore), a growth of 16% over the previous year.

Metro has launched many products under its own brands, which are 30-40% cheaper than other popular FMCG brands in the market. The company has launched a “switch and save” programme for its customers, wherein it offers same or better quality products than national brands across several product categories. Some of its food brands are Aro, Finelife, Metro Chef and Rioba. Its non-food brands are Tarrington House, Metro Professional and Lambertazzi. Under these brands, it sells cleaning equipment, toilet, floor, bathroom and dishwasher among others.

Expansion

Metro plans to continue its investment in India and open stores much faster than before. While refusing to commit on the expansion, Mediratta says the company will focus more on opening smaller centres with an average 50,000 sq feet rather than big stores due to shortage of real estate space. “More than expansion, we are chasing profits in India. The investments will continue, we will open more stores, and also open an omni channel ecommerce store. Some people want to buy online, we are going to start ecommerce very soon.”

In the last two years, the company has opened 9 new stores. It is set to open its 27th store at Ghaziabad in early October. Its focus markets are Karnataka, Andhra Pradesh, Telangana, Delhi-NCR and Western India. Having established its footprint in major cities in these states, the company is now looking at Tier 2 cities like Mysuru, Mangaluru, Hubballi-Dharwad and additional stores in Bengaluru among others.