Mumbai: Despite the complicated foreign direct investment rules and regulations in India, Germany- based Metro AG said it is well-positioned in the country and its expansion plans are also on the right track.
“We were the first international self-service wholesaler to enter the Indian market. We have gathered enough experience to run the cash-and-carry business in India and feel that we are on the right track with regard to expansion,” Metro’s customer management director (India) Ajay Sheodaan told PTI in an e-mail interaction.
The world’s third largest retailer, which entered India in 2003, has so far opened five outlets across Bangalore, Mumbai, Hyderabad and Kolkata and has recently signed a Memorandum of Understanding (MoU) of Rs 900 crore with the Punjab Government to open six more centres in that state.
“So far, we have signed an MoU of Rs900 crore with the Punjab government to open six cash-and-carry outlets in that state. These are in the pipeline,” Sheodaan said.
In comparison with Metro, industry leader US-based Wal-Mart, through in a joint venture with Bharti Retail, has opened only one outlet so far in Amritsar whereas French- player Carrefour is still in talks with some domestic retail giants to start its operations.
Asked why the company was going slow on expansion in the country, Sheodaan said that though India offered huge opportunities for the cash-and-carry business with one billion inhabitants and a rapidly-growing middle-class “there are, however, several challenges that needs to be overcome.”
“India is a like a continent with 30 different countries, which are culturally different from each other and that is the biggest challenge for any cash-and-carry business. Building a distribution network becomes difficult due to the size as also the high-level of fragmentation,” he said.
The federal system with various disparate regulations in India and a plethora of complicated licences, including Agriculture and Produce Marketing Committee (APMC) licence, further compound the problem, Sheodaan said. Land and infrastructure was also expensive, he said.
With a global turnover of 33.1 billion euro, Metro is present in 30 countries with over 650 stores. It is testing new format stores in Germany that focus more on hotels, restaurants and catering customers, as well as selling fewer non-food ranges and more private-labels.
Asked about how Metro planned to differentiate itself from its competitors, Sheodaan said one of its marketing strategies is to woo retail customers through loyalty programmes like ‘Metro Bandhan´, that help the company reach out to pre-identified target groups and incentives them to increase their share of wallet through custom-made services, he said.