Metro Cash and Carry India Pvt. Ltd will open its second store in Delhi on 15 October, taking the total number of the company’s wholesale stores in India to 19. It plans to have 50 outlets in the country by 2020.
Besides opening physical stores, the local arm of Germany’s Metro AG is also looking at e-commerce to make available more products to its customers, a first for Metro worldwide, Rajeev Bakshi, managing director, Metro Cash and Carry India, said on Tuesday.
The German retailer has started a pilot called Metro Direct a few days ago in Bengaluru. Metro Direct is an online service that allows existing customers to order non-food items online, even if an item is not available at a Metro outlet.
“This gives us the scope to increase our offerings. A lot of items are available through Metro Direct that may not be available at a particular outlet,” Bakshi said. Metro will initially test the service for three months, and then finalize the model. Depending on its success, it may look at taking the online model nationwide, and in some other countries.
In the e-commerce experiment, Metro is following what its rival Walmart India Pvt. Ltd has already done. In July, the local arm of the American retailer announced that it has brought all its 20 wholesale stores in India to its e-commerce platform called www.bestprice.in that enables small businesses to place orders online to get products delivered at their doorstep.
Metro customers also get the products delivered to their doorstep if ordered online. However, Metro’s service is limited to non-food items.
“Offering an omni-channel shopping experience to our members is thus poised to be a major growth driver for Walmart in India,” Krish Iyer, president and chief executive officer of Walmart India, had said in a statement in July.
Metro’s 19th store will be located at Seelampur in eastern Delhi spread across 78,000 sq. ft where French retailer Carrefour SA used to have a store. Metro has acquired three of Carrefour outlets after the French retailer shut its five outlets in India last year.
Metro generally spends about Rs.60 crore in setting up an outlet, and looks at cities with a population of 1 million or more, according to Bakshi. The company’s German parent had in March announced a possible investment of Rs.400 crore in India, according to a regulatory filing.
While the company entered India in 2003, 12 of the 19 stores were opened in the past five years. The German retailer operates more than 2,200 stores in different formats such as hypermarkets, wholesale, electronics and departmental stores in 32 countries.
“We had to build the market, and the ecosystem for wholesale. It takes time. And, we also tweaked our model, such as reduced store size, for Indian market before we started expanding,” said Bakshi. Besides, the German retailer has started facilitating Indian small business owners to export products such as spices and nuts to Metro units worldwide. Although this started about three years ago, the volume is still low.
According to Bakshi, a new outlet takes about 2-3 years to break even. However, he declined to comment on when the company would break even in India.
Walmart in June said it would open 500 stores in India over the next 10-15 years. Currently, it has 21 outlets. Walmart has already invested about Rs.2,000 crore in India. In June 2014, the parent announced plans to invest about Rs.623 crore in India, according to Walmart India’s filings with the Registrar of Companies.
The organized wholesale business in India is at a nascent stage with just about 100 stores between the top companies. Of this, Reliance Industries Ltd, the only other organized wholesale retailer, has 45 cash-and-carry outlets.