Germany-headquartered Metro Cash & Carry, which has plans to open 50 stores in India over the next four to five years with an estimated investment of Rs 3,500 crore, is likely to venture into e-commerce. Its India Managing Director, Rajeev Bakshi, spoke to Nivedita Mookerji on the company’s expansion plans, locational priorities, investments, online strategy, and impact of foreign direct investment (FDI) in multi-brand retail on the wholesale business. Edited excerpts:
Metro Cash & Carry recently opened its seventh store in India. What are your expansion plans?
Our goal is to have 50 stores in five years. But each store takes at least 18 months, from the time you start looking for land. As you go deeper, you face constraints on two fronts — to get the right real estate and the right people. These determine your speed of expansion. Real estate is a concern mainly because we have a very typical model. We don’t normally want to get into malls, we like to have build-to-suit structures for our stores. The mall structure doesn’t suit us because we have a very high throughput.
We will have two stores coming up this year — in Jalandhar and Borivili (Mumbai). Other are in the pipeline. Our investment plan is roughly Rs 60 crore to Rs 70 crore for each store.
Once FDI is allowed in multi-brand retail, will it impact the cash-and-carry business?
Ultimately, everything is a trading basket. Essentially, it is all about what is in your trading basket and what is your customer connect. For instance, offices can buy from organised retail, wholesalers or traditional channels. With FDI, there will be opportunity for some critical people to compete with us in certain channels because they are more specialised in certain segments whereas we are generalists. So, the answer is indirectly FDI will have an impact on the cash-and-carry business, but not directly.
So, FDI in multi-brand retail will be good for you?
We will look at the gross domestic product (GDP) growth numbers and consumer spending. But I would look at the demand drivers. There has to be a proliferation of categories, which the customer wants to buy and use. The demand side is very critical.
Is it true the government may relax some of the business rules?
If they are relaxed, it’s fine. We don’t have any problem with the rules in India. We are staying true to the script. If the rules are relaxed too much, cash and carry players may move towards a hypermarket format. In terms of discussions with the government, nothing is going right now apart from some talks on minor tweaks.
Do you plan to launch other international formats in India?
I don’t think transplanting formats will work here. In fact, evolving the existing cash-and-carry format will help us. For instance, we started the concept of Genesis, which is about customer centricity and rightsising our investments.
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Has your sales strategy changed over the years in cash-and-carry? How?
When we started, we were a passive wholesaler focused on traders. Now we are pro actively customer-centric. We are going out and talking to people about what we can do and offer to them.
What is your e-commerce or online strategy?
Online is a very interesting area. We have to deepen our relationship with the B2B (business-to-business) customers, some are pretty sophisticated. So, we are planning to develop a model to help the customers access end-consumers through e-commerce. We have to make it easy for them to have a higher visibility on their assortment and pricing. E-commerce is more about relationship building. For instance, a hotel executive can have a handheld computer which is connected to our range of products and prices on a daily basis. Also, we will facilitate a business customer to have easy access to the end consumer.
Is online model popular internationally?
B2B online is not too popular. It’s not as relevant as the B2C model.