Economic Times: August 18, 2016
Metro Cash-and-Carry plans to invest Rs 2,100 crore in India to open 50 stores by 2020, as the world's largest wholesale store chain says it has found the right model for the country and is in a position to accelerate growth. For the German company, India, along with China, Russia and Turkey, are the focus markets, Damien Veilleroy , Head - Asia, at Metro AG, tells Rasul Bailay. Edited excerpts.
What is your perspective on the retail and ecommerce market in India?
For us, India is now becoming a very important market and in terms of investment, it will be one of the countries where we will invest the most in the future. We have been here for the last 14 years and it took a while to adjust our model in the country and it was longer than expected. The learning curve in India was not that easy.
You brought your global model to India — similar cut-and-paste of stores that you would have in Germany or elsewhere. That wasn't right for a country like India...
If you look at the first generation of stores we opened here, and if you compare with the current stores, you will see huge difference in terms of merchandising, design. Now, you will see it is an Indian store. For example, the way we sell rice — we were earlier not indicating the percentage of humidity every single type of rice contains. It does not matter in Europe, but here it does, and it is extremely important. We started without having rice salesmen on the floor. You need somebody and it is important in India because consumers here need to talk to someone about the product and want to know more about it. It takes some time to understand the way consumers behave. In India, such issues multiply by the number of provinces. Consumers in Punjab and Bengaluru are entirely different. So that is what makes India a little more complicated than any other market.
Have you learnt now?
Now, we are a bit more comfortable. We have learnt and we have a team that is much more experienced than 14 years ago when we started.
Is India one of the few countries where locals run the show?
It is one of the few countries. Putting Europe aside, if you look at Asia, India is the only country (where the business is) fully operated by Indians. The management and whole board is Indian. It is not there in China, Japan, Vietnam or Pakistan. Where does India rank for Metro? For Metro, it will be definitely among the top four in terms of our expansion plans including Russia, China, Turkey. If you look at the economic developments in India, it makes sense for us to accelerate. If you put everything together, India becomes important for us.
So there is a renewed focus on India now?
There is for the reasons I explained. We have learnt and we are now ready to accelerate. We have a model which is in place, a team and expertise which we developed over time. Also, we have the support of the shareholders who believe it is the right market.
Are you in any way disappointed as you have been here for 14 years but grew very slowly?
You always learn and you get some frustration at some point and some satisfaction. I will say that we are extremely well positioned today thanks to these 14 years. If you look at our customers of kirana, hotels and restaurants and offices and independent institutions, we are improving customers' satisfaction every single week. We are improving on multiple aspects. We are seeing significant improvement in footfalls at our stores and that is the best proof for a retailer that our customers are getting satisfied and they increase their frequencies and increase the number of customers.
Are you now in a sweet spot in terms of your model in India?
A number of things changed in the last 14 years and it keeps changing. The model is changing because the market is evolving as well. You need to have bigger stores in certain locations and some small in others and this flexibility is enabling Metro to access various cities. So, we have been able to adjust. For example, we have two-floored stores in Delhi and Mumbai. Categories of products that barely existed, say five years ago, are now booming.
Example is cosmetics and skin care products. Organic products are a big thing in India.
Did you take a leaf out of Wal-Mart's cash-and-carry model in India as it started this wholesale store in the range of 50,000 sq ft with less than 10,000 stock keeping units?
If you look at many markets, Wal-Mart has come and studied Metro. We didn't send anybody to the US to study Wal-Mart when we came to India.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.