Eyes five per cent of its global revenue from India by 2015.
When Metro Cash & Carry decided to set shop in India in 2003, it had the early starter advantage to make inroads into the dynamic Indian retailing market. Almost eight years since, the Germany-based company is yet to secure a foothold, as competition from other international players stares in its face.
Today, Metro has set a road map to realise around five per cent of its global revenue from India sales by 2015, from the existing one per cent of the total euro 67 billion turnover of the group. However, company officials refused to comment on its revenue projections.
| LOOKING FORWARD |
| Investment per store would be at Rs 60 crore-70 crore —a total investment of about Rs 3,500 crore |
| 7 Metro Cash & Carry stores present in India currently |
| 2003 Metro Cash & Carry entered India |
| 95 PER CENT Proportion of Indian items on Metro Cash & Carry shelves in India |
| $140 BN Cash & Carry opportunity in India, of the $350-billion retail business |
| WALMART & CARREFOUR The Rivals opened their 1st India stores in 2009 and 2010, respectively |
| 50 more Metro stores in the pipeline in 4 to 5 years; Walmart plans another 10 to 12 stores next year, Carrefour quiet on expansion |
| Walmart has 9 stores in 2 years, Carrefour 1 in 9 months |
Since opening its first outlet in 2003, Metro has seven stores across India. The company is stepping up its expansion plans with 50 stores over the next four to five years.
Metro Cash & Carry India Managing Director Rajeev Bakshi had told Business Standard in a recent interview that investment per store would be at Rs 60 crore-70 crore — a total investment of about Rs 3,500 crore.
Bakshi said other Asian markets, including China and Japan, were way ahead of India in terms of sales revenue.
US-based Walmart, which was the other entrant in the cash and carry space in India, has a similar experience vis-à-vis other Asian economies like China, the Philippines and Indonesia.
More From This Section
“If you look at some other emerging markets like China, the Philippines, Indonesia, Brazil, or Mexico, you will find these are ahead of India by anything between five and 20 years. India has a lot of catching up to do.”
Numbers reflect the overall performance of the cash & carry sector in the country, with Walmart getting little less than $1 billion in revenues from its India operations — approximately one per cent of Walmart’s international revenue pegged at $100 billion. Walmart’s annual revenue is much higher at $405 billion. While Walmart’s China revenue is around $7.5 billion, the combined revenue from Japan, China and India was estimated at $16 billion, said company officials.
While Metro has seven stores in India in eight years, Walmart (in a joint venture with Bharti Enterprises) operates nine stores in a little over two years. Another cash and carry player, Carrefour of France, has one, which it opened last year.
Both Metro and Walmart have an aggressive expansion plans, but Carrefour is silent on its strategy. Walmart plans to set up 10 to 12 stores by 2012 and another 20 in the next two years.
For global retail chains, the cash & carry business model was the best way to find a way round the stiff regulations against foreign retailers opening single stores and make in-roads into the Indian market. However, Metro operates only in cash and carry segment globally. It has no presence in front-end retail.
Cash-and-carry represents an opportunity worth $140 billion of the $350-billion annual retail business in India. This format refers to goods sold at wholesale outlets or warehouses.
Its customers are retailers, professional users, caterers, institutional buyers and other businesses, who need special licences to buy from these outlets. There’s no restriction on foreign direct investment (FDI) in the cash-and-carry format.
However, for front-end multi-brand retailing, foreign players are not allowed. In single-brand retail, FDI is capped at 51 per cent.