Realty prices holding back retailer Metro’s expansion, says COO Pieter C. Boone
New Delhi: India has the potential to be one of the top markets for German retailer Metro AG’s wholesale business, but costly land is a key constraint for the company’s expansion, said chief operating officer (COO) Pieter C. Boone.
“It (India) has the potential to be among the top just because of the sheer size. But real estate prices are holding us back from expansion,” Boone said in an interview.
Boone was in India to attend a closed-door roundtable with Prime Minister Narendra Modi on Friday, as part of the World Food India 2017 event in New Delhi.
Boone said Metro has signed an in-principle agreement with the ministry of food processing industries to invest Rs1,690 crore in India as part of its expansion plan.
“We launched our operation in India in 2003. Since then, we have opened 24 wholesale centres across the country, with the last eight of them coming in the past two years. We’ll double the store count,” he added.
By 2020, the company has plans to have 50 stores in India, one of Metro AG’s four focus markets for future. The other three markets are Russia, China and Turkey.
Boone suggested that the government arrange land for wholesalers close to cities at a regulated price.
“The government is more open to constructive feedback. The dynamics in India have changed in a positive way. We may need to have a relook at our India strategy,” Boone said.
Metro reviews its short-term strategy at the end of every three years and will do so for India at the end of next year. “The local team is doing a feasibility study. We’ll have to review our strategy next year,” Boone added.
The company has been working on innovative solutions to support and empower farmers as they are key actors in the supply chain and ensure “competitiveness of traditional kirana stores.
“We want to champion India businesses,” he added.
In his presentation to the Prime Minister Narendra Modi, Boone raised two issues—the need for a single-window clearance, and improvement of logistics through public-private partnerships.
“There’s a clear vision but we need a single-window clearance. At present, it takes 18 months to get clearance for one project,” said Boone.
India, Boone said, could be a sourcing hub for Metro. The company has sourced 6,000 tonnes of shrimps during the past year. “We also source rice, fish (tilapia), mango and some textile products from India. We’ll increase the quantum of sourcing of these products from India to other markets,” he added.