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retail | IST

Metro Cash and Carry plans aggressive expansion, expects to maintain double-digit revenue growth

It has been 15 years since German wholesaler Metro Cash and Carry set up shop in India. Now, the company is aggressively scaling up presence to stay aligned with the changing dynamics of the B2B (business-to-business) industry and also to take on competition.

It has been 15 years since German wholesaler Metro Cash and Carry set up shop in India. Now, the company is aggressively scaling up presence to stay aligned with the changing dynamics of the B2B (business-to-business) industry and also to take on competition.
Owing to the growth opportunity and consumption demand in India, the global parent has called out India as a priority market for the company. Rivals like US retail giant Walmart is also betting big on India and recently bought 77 percent in ecommerce giant Flipkart.
“India is one of the fastest growing markets in the Metro world. Contribution to Metro global business has increased over the last 2-3 years The company is looking at India as a growth market and has opened nine new cash and carry stores in two years,” said Arvind Mediratta, managing director and chief executive officer, Metro Cash and Carry.
The company clocked a revenues of 798 million EUR (or over Rs 6,000 crore), which translated into a YoY growth of 16 percent in the last financial year ending September 30, 2017.
The target of Metro Cash and Carry is to maintain a double digit revenue growth going forward. "Focus has been on sustainable and profitable growth,” said Mediratta, who has been chasing profitability for Metro in India since he took over in 2015-16.
Metro Cash and Carry has about 27 stores in India at present and is working with a target of 50 stores by 2020. This means Metro Cash and Carry will have to open at least 10 stores a year over the next two years to achieve this target.
“We are looking at densifying stores in existing clusters like Bengaluru, New Delhi, Kolkata and AP - Telangana. We are also seeing if the company can open stores smaller than 50,000 to 60,000 square feet,” said Mediratta.
The new stores are expected to be in existing metros as well as some tier 2 and tier 3 cities. Having invested about Rs 2,500 crore into the India market so far, traditionally these B2B stores have been about 1 lakh square feet in size.
The focus for the company going forward will be in the foods and grocery space, which even today makes up 82-84 percent of overall business for Metro Cash and Carry.
The company is looking to expand its basket of private brands, which make up single digit sales at present. By adding more staples, spices, dry fruits and more products in the personal care and household space, the company is looking to take the contribution of private labels to double digits.
With the festive season around the corner, Metro Cash and Carry is hoping to see good traction in demand. “We are expecting double digit increase in footfalls during festive period. See a big uptake in gifting volumes,” said Mediratta.
Will the mega Walmart-Flipkart deal affect a player like Metro Cash and Carry? Mediratta is quick to say that he sees "some impact on kirana stores due to Walmart-Flipkart deal."
"Kiranas are fearing that their contribution to food and grocery segment may come down. To help kirana stores, we have set up kirana success centre to take care of this area," he added.