Note ban proves a big gain for wholesalers Metro Cash Walmart

Note ban proves a big gain for wholesalers Metro Cash Walmart

Two of the country’s biggest wholesalers — Metro Cash and Carry and Walmart — saw double digit sales growth, helped by demonetisation which saw sellers’ dependency on traditional retail channels drop significantly and a greater number of small grocers rushing in to buy daily essentials from the big box formats after November

Metro, the first global firm to enter India, is the largest cash and carry operator here, and posted higher growth than Walmart. Both saw significant jump in revenue growth compared to previous years. Metro, the Düsseldorf-based retail and wholesale group posted a 22% rise in sales during FY17 to Rs 5,632 crore, compared to 16% growth a year ago. Walmart India, that runs Best Price Modern Wholesale stores saw revenue growth nearly double to 13% at Rs 3,609 crore, versus a 7% growth in FY16

The Düsseldorf-based retail and wholesale group said it had split its India operations into two divisions to sharpen focus, added four new stores, and helped digitisation of kiranas that aided growth. “The new operating model has helped us to get better proximity to our customers, sharpen our offering both in terms of assortment and pricing and significantly improve our instore execution

Demonetisation helped the cash and carry industry as a whole,” said Arvind Mediratta, who joined Metro Cash and Carry India last year as its managing director. He didn’t comment on the financials.Cash and carry operators sell goods to local kirana stores, hotels and catering firms. Nearly 3% of traditional trade in all consumer product goods (CPG) moves through organised wholesale and has been growing faster than modern trade, albeit on a lower base.

There are an estimated 10 million kirana stores in India and a part in the hinterland. While traditional wholesalers will still have a big role to play in the distribution of FMCG products, organised ones expect to gain share due to goods and services tax.

“Several payment alternatives are available for our members that gives them great flexibility to purchase from our stores and online.  We have been helping our members particularly small kiranas in preparing them for GST enabled formal economy,” said Rajneesh Kumar, senior vice-president at Walmart India.

Traditional retailers continue to act as the most critical channel for Metro, which has been convincing local grocers to use their big-format stores as warehouses instead of crowding their own small shops with stock.Metro has also partnered with few startups to fund smaller businesses and also has more than 100 sellers to help modernise retail.

“As Metro strengthens its focus on technology, we have installed point-of-sale machines at local kirana stores, which will help sellers manage daily sales, track profitability and cash-flows and also link inventory management to the wholesaler’s ordering systems,” added Mediratta.

Both global firms have identified India as one of their bastion for growth. Metro considers the market one of its “focus expansion countries” along side Russia, China and Turkey. Earlier this month, Walmart stores opened a fulfilment centre, or ‘dark store’, in India, one of its first globally in an effort to speed up operations in the country.

The Economic Times, New delhi, 30th november 2017