With a double digit count of stores now in India, Rajeev Bakshi, Managing Director, Metro Cash & Carry portrays his confidence in the brand and reaffirms the long term plans that will ensure India is a major part of Metro Cash & Carry’s growth worldwide.
Aadeetya Sriram (AS): Now that you have made your much anticipated entry into the capital, where do you move from now onwards?
Rajeev Bakshi (RB): We are going to have a lot of store additions; this year itself, we plan to add over 7-8 stores. The size of the stores is going to differ for each city. The Genesis concept that we follow at Metro is a customer centric concept, which means we are reaching out to the customer. We are not a passive wholesaler; therefore, we have a sales-force also. So given the customer centricity and potential of the city, we will define the store accordingly. For eg, the Hyderabad store covers 55,000 sq ft, while in Mumbai, it is 65,000 sq ft. But our base-store size is up to 50,000 sq ft, below which we are not resorting to in the short term. The average investment put across to set up each store is Rs 70 crore.
AS: With major traders like Carrefour already present, do you think you have lost the edge of being a first mover to them? What, according to you, have been the reasons for the delay?
RB: Well, the timing of the our entry into the capital has widely been scrutinised by the industry, considering the scope of the vast market the capital provides, but if you plan to set-up a large format store like what Metro has done now, the real-estate options at an agreeable price point is a challenge in itself. Delhi and Mumbai form the duo of being of the most expensive cities in terms of the estate value, which is also one of the reasons that we are not planning any more stores in Delhi until next year.
AS: With international brands such as yours making its foray into the main market in India, do you think traditional channels like the mandi are under pressure?
RB: There is no denying that the traditional channels would be under pressure in the short term. The format that Metro adopts is much more favourable. This can be attributed to the fact that there is definite difference between the number of articles in a household consumed today and earlier. This rise in consumption needs to be passed on to the supply-chain aspect as well, which, due to certain constraints in the market, becomes a challenging proposition.
AS: What is your strategy in Delhi with Metro Cash & Carry? Which other areas will you be targeting and by when?
RB: Our plan is to set up a cluster of stores in one city and then ramp up the number required to define the supply and demand outcome of the store. For Delhi, we plan to have one in east, west, north and south, but other than the one in the East, the rest are not expected to be set-up before next year.
AS: Where do you source your stock from? What is the ratio of international sourcing and local sourcing?
RB: Our sourcing strategy is based on the scale of the market we are present in, which relates to the demand. Other than 10 per cent of the products that are imported, the rest is sourced from local suppliers catering to the needs of the customer for domestic brands. So we have everything in our stores – right from the 555 brand detergent to rice, wheat and masalas.
AS: There have been suggestions that FDI in retail is not far away. What is your take on the entire development?
RB: Metro Cash & Carry is a fully B2B centric format, which is thoroughly FDI friendly. Retail hypermarkets are indirect competition to us, from a stocking perspective, as they clearly posses that extra luxury of warehousing larger amount of stock, wherein we stock up to 10,000 products they can store in excess of 15,000-20,000 products within their store.
AS: Metro Cash & Carry has its share of outlets across the country. How has the journey been in India and what have you learnt from your experiences?
RB: We are a genuine wholesaler. We have a heritage of conducting wholesale right across the globe. We have simultaneously learnt through our journey in India over the last few years as to how wholesale in India should be done. We are also conscious of the fact that passive wholesaling is not an option; we do active selling by reaching out to our customer, so things like home delivery and cash-on-delivery are what we have adopted in the country, as these are enabling the traders to transform themselves. So we’re becoming a marketing organisation rather than a passive wholesaling brand.
AS: Do you see traditional channels integrating themselves with a cash and carry format store like Metro in the near future?
RB: The need of the hour for traditional mandi’s is to transform. The old concept was more like a bazaar concept, situated across one of the busiest locations in the country. Nowadays, cities are not built around bazaar; they are built around places where shopping is an add-on service. The change in demand for assortment is determined from the change in needs. People are inclining towards convenience now rather than utility. Hence, the scope for growth of mandi’s can only be attained, if necessary changes are undertaken.
AS: How many outlets does Metro Cash & Carry have across the globe and how much does India contribute to its global revenue?
RB: Metro has more than 700 stores across 35 countries and in India there are 10 stores, including the one in Delhi. The contribution of the Indian stores to the global company is hardly visible as of now but we believe with growth the numbers will show a different side in the next couple of years as we open up more stores. Our next store is going to be in Jaipur, which we will be opening in a month’s time.
AS: With 10 stores in India, how much has Metro invested for its operations in the country?
RB: We have invested close to Rs 1,000 crore in the Indian market, which includes the cost of setting up stores, marketing initiatives and logistic operations, which is completely in-house for us. The issue of logistics is the biggest concern for us, but we have our collection points that make the entire process much easier to handle.