From wholesale store for professional customers to leading international self-service wholesaler – METRO Cash & Carry has charted an unprecedented path of growth over the past 50 years. The basis for this success was and remains the good relationships the retailer has established with its professional customers. It also makes an important contribution to its customers by helping them grow their business and unleash their entrepreneurial spirit, informs Vishal Sehgal, Corporate Relations, Metro Cash & Carry India
What has METRO’s journey been so far in India?
METRO Cash & Carry commenced operations in India in 2003 with the opening of its first wholesale distribution centre in India at Yeshwantpur, Bangalore. Currently, the retailer has 16 sixteen operational wholesale centres in 8 states and 12 cities – three in Bangalore, two each in Hyderabad and Mumbai, and one each in New Delhi, Kolkata, Ludhiana, Jalandhar, Zirakpur, Amritsar, Vijayawada, Jaipur and Indore.
METRO Cash & Carry India is currently celebrating 50 years of being the Cash & Carry wholesale pioneer, since Otto Beisheim opened the first METRO in Mulheim Germany. Since then, the company has expanded its operations to 29 countries across the world. In India, METRO has celebrated 10 years of serving professional customers in 2013. So, we have gathered our market experience over a decade in India, and over half-a-century across the world.
Over the last 10 years, METRO Cash & Carry India has developed a large base of core customers that includes small retailers and kirana stores, hotels, restaurants and caterers (HoReCa), corporates, SMEs, all types of offices, companies and institutions, as well as self-employed professionals. Only business customers are allowed to purchase at METRO, all of them duly registered and provided with a customer registration card. With considerable international expertise and a nuanced understanding of the Indian market honed over the past 10 years, METRO Cash & Carry India is now well-positioned to cater to the specific needs of all these customer segments.
What were the major challenges in the Indian market?
METRO’s presence in India for over a decade has instituted a very strong and positive perception of the company in terms of price perception, operational efficiency, and quality in our three broad customer segments of Traders, HoReCa and Offices/Companies. But the process of evolution has been nuanced, and has been further refined and developed steadily as we entered each new market. Over the last 10 years, continuing research conducted by cross-functional teams within our company revealed that our business model is ideally built to serve certain niche groups within our three broad customer groups.
We have strived to stay relevant and responsive to their business needs, by fine-tuning our offerings to these niche customer groups and serve them with specialised and comprehensive wholesale solutions, rather than just a range of products and services. The challenge is to offer the right assortment at the right price, while ensuring high quality, clear communication and operational efficiency.
How does METRO support retailers?
Changing consumption patterns in India have made small retailers, grocers and kirana stores re-evaluate their offerings, in the face of increased competition and changing customer preferences. METRO’s Super Trader programme grooms kirana traders to understand this changing market, by studying their customer needs and improving their store assortment, hygiene, planning, infrastructure and promotion.Since its inception in 2010, METRO has reached out to hundreds of kirana stores across Indian cities. As part of this programme, the retailer helps the kirana gather market intelligence on his customer-base and his competition, and understand the key challenges and opportunities of his day-to-day business. Such issues could include the daily turnover of the store, the nature of competition from neighbouring outlets, the kirana’s relationship with existing distributors, or the nature of his supply chain. With this knowledge, the kirana is able to collaborate with METRO to develop solutions in terms of assortment, store layout, planogram, promotions, aesthetics, customer service, and overall store hygiene.
METRO also organises workshops on the latest and emerging trends in the Kirana world. This programme showcases the best practices in the trade with respect to managing stocks, merchandising, customer service, and assortment. It also offers to facilitate the transition to best practices through its Super Trader program. Besides regular training, traders are also brought into consultation with industry experts at Super Trader conventions.
How does METRO support farmers and small manufacturers?
METRO is committed to an efficient supply chain, enabling better food supplies across the country. So we have set up Fruits & Vegetables Collection Centres across our markets to procure fresh produce directly from farmers, who are informed in advance of the requirement and can plan their harvest accordingly. Fresh produce is transported and delivered directly to our network of distribution centres within 12-15 hours of harvest. In addition, cultivators of fruits and vegetables find an expanded market in METRO’s vast and diverse customer base across the country. Farmers now get better value for their produce, because METRO eliminates multi-handling of goods and invests in supply chain efficiency.
We also support our farmers and small manufacturer suppliers with intensive training interventions, backed by stringent quality guidelines for all business partners. Our training objectives include implementing international standards and certification systems, and meeting customer requirements in terms of food quality and safety.
Which brands have grown and by how much through their association with METRO?
In a typical wholesale centre, METRO stocks around 6,000 FMCG and Grocery articles, with a shelf space of about 2,500 square metres. A high-volume distribution channel like cash-&-carry has the advantage of being able to offer small suppliers shelf space that may otherwise be scarce in regular markets. By showcasing such products, we have been instrumental in the growth of a number of food and non-food producers.
We have also provided SME suppliers with production support in the improvement of their facilities, production processes as well as instituting quality standards that have helped them raise their revenues significantly. Some examples of our business partners include Milky Mist dairy products, Lion Dates and MTR Foods, as well as non-food partners such as Gala, F-Gear, Prestige and Proline – all of whom have found it beneficial to supply to METRO and have grown with us. METRO’s focus on local suppliers and small manufacturers is also fairly high. The ratio between national and regional brands stands at about 75 percent and 25 percent, respectively.
We are committed to providing the best-possible support to our customers so they can reach their goals: with our exceptional service, top-quality products, the far-reaching expertise we have gained over the years and new ideas. We want to be a champion for independent businesses, putting ourselves in the shoes of our professional customers at all times. Their initiative, their creativity, their courage and their passion serve as our motivation to always be the best in our business.
The message YOU & METRO gets to the heart of how important close relationships are to achieving mutual success – in relationships between METRO Cash & Carry and its customers, as well as those with business partners and employees.
What kind of promotional activities does METRO conduct with brands?
METRO Cash & Carry India has a long-term and sustainable approach to customer relationships. We believe that our offerings to customers go beyond just low prices and a vast assortment. Our motto of ‘Every Business Grows With Us’ is at the root of all that we do for our customers. The company regularly conducts customer engagement programs for various target groups.
METRO’s Super Trader programme is aimed at helping kiranas become more competitive and profitable. It helps them enhance their offerings with sharper assortments and more efficient inventory management, greater hygiene in the handling and storage of goods, and improved ambience and services for their customers. METRO provides its HoReCa customers with a range of customized services and interactive platforms for knowledge sharing through a unique initiative called Chef-o-logy. We are committed to nurturing culinary talent in the next generation, through the Young Chefs’ Culinary Challenge that we host every year with our customers in the Hospitality Industry. METRO also conducts hygiene and quality training initiatives for small and mid-sized restaurants and dhabas in the interest of raising standards of hygiene, quality and food safe.
We believe that the better we support our customer’s daily businesses, the stronger their relationship becomes with our company. Or to put it another way: what is good for our customers is also good for METRO Cash & Carry.
Please elaborate on the technological efficiencies implemented at METRO Cash & Carry India.
In keeping with the large volumes of goods, sales and trade offers that are inherent to the cash-&-carry business, METRO’s information technology systems are designed towards quick and accurate data management. We have developed in-house technological capabilities to optimize day-to-day operational processes and track operational data – resource planning, mobile goods management systems, specialised trackers of the assortment/trade offers and of course, customer feedback and issue-handling applications. All of these are integrated into a highly complex information system that enables our employees to be agile, responsive and efficient in handling the needs of our customers.
In accordance with our company policy, waste/expired/damaged goods are destroyed and disposed in the most sustainable manner. Our wet garbage, for instance, is processed for use by municipal authorities in the production of organic manure, while other waste is treated by our own Sewage Treatment Plants to ensure minimal pollution to the environment.
What are METRO Cash & Carry India’s supply chain, storage, warehousing, and transport efficiencies?
Our supply chain is geared towards providing our customers with the confidence that all aspects related to food quality and safety – from sourcing through production, packaging and sale – are monitored against strict quality processes. To maintain quality in all we do, we remain actively engaged in developing logisitical infrastructure, international standards quality processes and standards, and a deep engagement with small and medium enterprises, which are a critical part of customer and supplier networks.
METRO has instituted stringent quality guidelines applicable to all its local and national suppliers of food and non-food products, and also provides specialised quality training and technical know-how to its suppliers. Some of our significant initiatives to strengthen our fresh supply chain efficiency have included the training of over 1,250 fishing crews along India’s coastline to enhance their knowledge and skills in better fish procurement and post-harvest techniques to minimize losses through proper transit and storage. Several METRO meat suppliers have been trained intensively in hygienic meat production, handling, processing and packaging of meat, aligned to the company’s international best practices. METRO’s farmer collection centres allow us to halve the time taken from farm to shelf by maintaining efficiency in fruits and vegetable procurement, and providing our customers with the freshest possible produce with minimum wastage.
In addition, METRO is proud to be the only modern trade wholesaler in the country compliant with the stringent HACCP (Hazard Analysis and Critical Control Point) standards of food safety, which addresses critical areas of Fresh Food (Meat, Fish, Fruits, Vegetables, Dairy, Frozen Bakery), covering in-store activities and procedures from Goods Receiving till the Point of Sale for these departments. We were also recently awarded the CII National Award for Food Safety for our flagship outlet in Yeshwanthpur, Bangalore.
Please comment on the increasing competitive landscape in Cash & Carry.
The Indian customer is increasingly discerning, quality conscious and aware of global trends. So it is in the interest of the markets to accommodate the presence of more players, who will improve the supply chain infrastructure, raise quality standards, and help promote value offerings across the board. Modern Trade can benefit the Indian market greatly through the availability of a wider range of products and services, rationalisation of prices, higher quality standards and increased trasnparency. Moreover, small suppliers and farmers can be assimilated into an efficient and integrated supply chain, with opportunties for knowledge sharing and training to meet global standards of quality. Clearly, modern trade has a lot to offer.
The current regulations already permit 100 percent FDI in the wholesale Cash-&-Carry sector. We see policy reforms such as GST and the review of the APMC Act as steps that can benefit economic growth in a free and liberalised market such as India. With greater investments in supply chain infrastructure, a stable policy environment, as well as a stronger and self-sustaining economy, we at METRO believe that the cash-&-carry model is a sustainable model for the Indian market.
METRO’s business model will continue unchanged in India, where we look forward to growing and developing our Cash & Carry model beyond our current presence. As announced recently, we are looking to expand our presence in the country to 50 wholesale outlets by the year 2020, and we hope to achieve this through the highest standards of operational excellence, supply chain efficiency and customer service. We have always maintained that we are driven by our own strategic operators – whether we are navigating new markets, adapting, localising or fortifying our presence. Our growth has been steady and at our own pace, based on internal and environmental factors.
