Metro Cash and Carry
Executive Summary:
Indian wholesale and retail space represents unique opportunities and challenges for any company. Metro Cash & Carry forayed into India with its cash & carry (C&C) model. Although Foreign Direct Investment (FDI) in India in retail space requires a joint venture, the wholesale segment has no such requirement. The case mentions that it was possible for Metro C&C to get approvals for setting up operations in India, however, they were not allowed to source agricultural products. Hence, expansion plans of the company were slow as they were waiting for the AMPC licenses and ignoring agro products (where margins were in the range of 75-80%) was irrefutable. Metro C&C also faced resistance from the local retailers association. Despite several drawbacks, the company was able to achieve sales above the budgeted target although at a slow rate. The aim of this report is to highlight the Metro C&C’s situation in the Indian market, analyze the key issues and provide recommendations to Metro C&C to expand in the Indian market.
Situational Analysis:
Company – Metro C&C is a chain of wholesale stores that is part of the parent company Metro Group, Germany’s largest trade and retail group. With employee strength of over 100,000 employees worldwide, Metro C&C was one of the world’s first C&C players. As per this system, the wholesaler sells a wide array of food and non-food goods for immediate cash and it is the customers’ onus to transport his/her goods. The company touched revenues of €28 billion in 2005, which accounted for 50.4% of the group’s overall sales.
Metro C&C forayed into the Indian wholesale market in 2003 with 2 stores in Bangalore. By November 2006, it opened another store in Hyderabad. The company has its own warehouse, located outside Bangalore for packaging products. Metro Group Buying (MGB), Metro Group’s central purchase entity has two offices in India, one each in Bangalore and Delhi.
Indian wholesale and retail space represents unique opportunities and challenges for any company. Metro Cash & Carry forayed into India with its cash & carry (C&C) model. Although Foreign Direct Investment (FDI) in India in retail space requires a joint venture, the wholesale segment has no such requirement. The case mentions that it was possible for Metro C&C to get approvals for setting up operations in India, however, they were not allowed to source agricultural products. Hence, expansion plans of the company were slow as they were waiting for the AMPC licenses and ignoring agro products (where margins were in the range of 75-80%) was irrefutable. Metro C&C also faced resistance from the local retailers association. Despite several drawbacks, the company was able to achieve sales above the budgeted target although at a slow rate. The aim of this report is to highlight the Metro C&C’s situation in the Indian market, analyze the key issues and provide recommendations to Metro C&C to expand in the Indian market.
Situational Analysis:
Company – Metro C&C is a chain of wholesale stores that is part of the parent company Metro Group, Germany’s largest trade and retail group. With employee strength of over 100,000 employees worldwide, Metro C&C was one of the world’s first C&C players. As per this system, the wholesaler sells a wide array of food and non-food goods for immediate cash and it is the customers’ onus to transport his/her goods. The company touched revenues of €28 billion in 2005, which accounted for 50.4% of the group’s overall sales.
Metro C&C forayed into the Indian wholesale market in 2003 with 2 stores in Bangalore. By November 2006, it opened another store in Hyderabad. The company has its own warehouse, located outside Bangalore for packaging products. Metro Group Buying (MGB), Metro Group’s central purchase entity has two offices in India, one each in Bangalore and Delhi.