Metro Cash & Carry pips Amazon, Walmart in profitability, revenue growth

German wholesale retail giant Metro Cash & Carry India has managed to pip two of its American rivals in the local market, in profitability as well as revenue growth. 

Metro, which had opened its first store in the country 15 years ago, zoomed past rivals like Walmart and Amazon Wholesale by turning profitable for the first time in 2018-19.

According to its filings with the Registrar of Companies (RoC), during the last financial year, Metro posted Rs217.4 crore net profit. But the two American giants remained in the red. 

While, Amazon Wholesale reported Rs 141 crore net loss, Walmart’s net loss stood at Rs172 crore in 2018-19.

Metro’s top line growth remained ahead of the two as well. It reported Rs6,553 crore operating revenue in the year – 13 per cent higher than the Rs5,807 crore it had posted in 2017-18. 

Walmart India’s revenue grew 11 per cent year-on-year (YoY) to Rs4,065 crore in 2018-19. Amazon Wholesale’s revenue dipped 8 per cent YoY to Rs11,232 crore.

Arvind Mediratta, managing director (MD) and chief executive officer (CEO) of Metro Cash & Carry India, which internally follows the October-September financial year, said Metro posted profit for two consecutive financial years – October 2018 to September 2019 and October 2017 to September 2018. 

He, however, refused to divulge the figures.

“In the financial year ended September 30, 2019, our revenue surged 11 per cent to ^848 million (Rs6,700 crore) from ^767 million (Rs6,130 crore),” he said.

While other retail giants like Walmart and Amazon continue to incur losses due to heavy discounting, Mediratta attributed Metro’s success to its ability to offer competitive pricing to 800,000 kiranas it works with. 

Further, Metro has optimised its portfolio to push high margin products along side, having scores of in-house products that allows it to rake in Rs1,000 crore from the Horeca channel.

To improve its margins, Metro has identified and pushed products like yogurt, frozen foods, snacks and juices, chocolates and spices that draw bigger margin for the retailer. 

Its hundreds of in-house products, including conventionally low-margin products like agri-commodities, improved its margins.

According to Mediratta, after running a pilot for its smart-kirana programme for nearly a year in Delhi and Bengaluru, the India unit has now secured permission to take the programme pan-Indian. 

Under the programme, the wholesale giant modernises partner kirana outlets by placing point of sale (POS) devices, has easy credit schemes for shop-owners as well as customers and remodels outlets in 48 hours.

“Through the programme, we turn mom-n-pop stores into omni-channel stores that can take orders online and check real-time inventory. They can place orders and sell goods on credit or take e-payments like modern retail stores. Further, remodeling of kiranas lead to spike in their sales by 20 to 40 per cent,” he said. Further, it enables kiranas to lure their target customers with customised promotional emails and mobile messages.

Metro has tied-up with a fintech start-up EPayLater that offers easy credits and MSwipe as well as PayTM for e-payments and POS devices. “The aim is to turn Metro into a full solutions provider from a wholesaler,” he said.

However, given the importance of physical presence that allows Metro to address the problems of its partner kiranas efficiently, the firm is planning to open five-six new stores next year. Currently, it has 27 outlets, mostly in metros, and some of the new ones may come up in small towns.