Description
The doc describes the global retail industry, indian retail, Traditional & Modern Retailing, Organised Retail.
To Increase Retail Throughput for Metro Cash & Carry, Mumbai
Index
Sr. No 1 2 3 4 5 6 7 8
Topic Global Retail Industry India Retail Tndustry Metro Global Metro India Metro Mumbai Swot Ananlysis Strategy for 2009 Conclusion
Global Retail Industry
Overview The latter half of the 20th Century, in both Europe and North America, has seen the emergence of the supermarket as the dominant grocery retail form. The reasons why supermarkets have come to dominate food retailing are not hard to find. The search for convenience in food shopping and consumption, coupled to car ownership, led to the birth of the supermarket. As incomes rose and shoppers sought both convenience and new tastes and stimulation, supermarkets were able to expand the products offered. The invention of the bar code allowed a store to manage thousands of items and their prices and led to 'just-in-time' store replenishment and the ability to carry tens of thousands of individual items. Computer-operated depots and logistical systems integrated store replenishment with consumer demand in a single electronic system. The superstore was born. On the Global Retail Stage, little has remained the same over the last decade. One of the few similarities with today is that Wal-Mart was ranked the top retailer in the world then and it still holds that distinction. Other than Wal-Mart’s dominance, there’s little about today’s environment that looks like the mid-1990s. The global economy has changed, consumer demand has shifted, and retailers’ operating systems today are infused with far more technology than was the case six years ago. Saturated home markets, fierce competition and restrictive legislation have relentlessly pushed major food retailers into the globalization mode. Since the mid-1990s, numerous governments have opened up their economies as well, to the free markets and foreign investment that has been a plus for many a retailer. However, a more near-term concern, has been the global economic slowdown that has resulted from dramatic cutback in corporate IT and other types of capital spending. Consumers themselves have become much more price sensitive and conservative in their buying, particularly in the more advanced economies. From an operational point of view, active practitioners have voiced their opinion that retailer concerns in 2003 have turned to deflation, lack of pricing power, global over-capacity, low interest rates, economic stagnation, slump in world tourism and declining consumer confidence. But, even before the global economic slowdown that forced retailers into monitoring costs more effectively, technological advances were a way of life in retail organizations. Technology has become the real enabler for retailers over the last six years. Supply chain innovations for retailers were particularly strong in the second half of the 1990s and have continued into today. With all the emphasis on technology and cost-cutting, a major thrust of retailers continues to be demandbased i.e. finding new markets through globalization efforts. Four years ago, more than half (53 per cent) of the top 200 retailers operated in only one country. Today, only 44 per cent remain single-country merchants. This globalization trend can only intensify in the years ahead. The benefits of increased sales and greater economies of scale are too large to be ignored.
The global retail industry has traveled a long way from a small beginning to an industry where the world wide retail sale alone is valued at $ 7 trillion. The top 200 retailers alone account for 30% of worldwide demand. Retail sales being generally driven by people’s ability (disposable income) and willingness (consumer confidence) to buy, compliments the fact that the money spent on household consumption worldwide increased 68% between 1980 and 2003. The leader has in-disputably been the USA where some two-thirds or $6.6 trillions out of the $10 trillions American economy is consumer spending. About 40% of that ($3 trillions) is spending on discretionary products and services. Retail turnover in the EU is approximately Euros 2000 billion and the sector average growth looks to be following an upward pattern. The Asian economies (excluding Japan) are expected to grow at 6% consistently till 2005-06. Positive forces at work in retail consumer markets today include high rates of personal expenditures, low interest rates, low unemployment and very low inflation. Negative factors that hold retail sales back involve weakening consumer confidence. The global general merchandise store sector generated a market value of $1,375 billion in 2005, with a compound annual growth rate (CAGR) of 6.8% during the period 2001-2005, outperforming the 4.7% CAGR of the entire global retail industry in the same period. Moving into the future, the sector’s growth is set to decelerate slightly. Apparel and footwear forms a leading sub-sector for the global general merchandise store sector group. The apparel and footwear market generated revenues of $311.7 billion in 2005, representing 22.7% of the market value of global general merchandise store sector. Groceries and F&B also contributed significantly to the sector’s value, with revenues of $255.9 billion in 2005, representing 18.6% of the sector market value. Demand for these goods is expected to grow with population levels and exhibit relatively little price elasticity of demand. Drug, health and beauty aids formed the third lucrative sub-sector group contributing 10.5% of the sector’s market value. US is leading growth generating revenues of $520.4 billion in 2005, representing 40.3% while Europe accounted for 34% and Asia Pacific 14.5%. The global department store sector exhibited modest growth during the period 2001-2005, and is forecast to have a sluggish growth in the future. The industry sector generated a market value of $491.5 billion in 2005, with a compound annual growth rate (CAGR) of 6.8% during 2001-2005, which is lower than the 4.7% CAGR of the entire global retail industry in the same period. The relatively sluggish performance was attributed in part to competition from other modes of retail, such as online shopping, and also to declining customer traffic in the US shopping malls. US market was the largest driving force to account for 48.4% of the global department store sector industry in 2005, corresponding to $237.9 billion. In comparison, Asia-Pacific generated 24.1% of the sector’s market value. India has a retail market value of US$7 billion with 12 million retail outlets. Retailers of organized formats such as department stores, discounters, big boxes, and specialty stores, constitute only 3% of the Indian retail market. More than 80% of the country’s retail market is run by small family businesses using household labour. According to Ernst & Young, India is the 4th largest economy in the world in terms of Purchasing Power Parity (PPP). India's consumer products market is expected to grow to
S$400 billion by 2010, making it one of the five largest markets in the world. The research company expects India to become the 3rd by 2010, just behind the US and China. China’s total retail market grew 88.47% in current terms to RMB 5.387trn in1997 and 2004 – representing an annual average growth rate of 10.87%. At constant 1996 prices, the market grew by 88.64% over the same period – an average annual rate of 9.52%. Large-scale operation requirement and heavy capital investment have limited local entrants into China’s mass merchandising market. As a result, foreign retailers such as Wal-Mart and Carrefour run most of the hypermarket businesses in China. A small handful of local players in hypermarkets include Shanghai Lianhua Century Hypermarket and Beijing Hualian Hypermarket. The U.S. has Wal-Mart. France has Carrefour. Each country has a retailer that has become the biggest and best, and the one to catch up to. Some of the major countries with their top retailers are mentioned below: United States – Wal-Mart Stores (Fortune 1) Cash and Carry/Warehouse Club, Discount Department Store, Hypermarket/Supercenter/Superstore, Supermarket. The top retailer in the U.S. is also the largest retailer in the world, using total annual revenue as the measure. Australia – Woolworths Ltd. Convenience/Forecourt Store, Discount Department Store, Electronics Specialty, Other Specialty, Supermarket.
Brazil – Comanhia Brasileira de Distribuicao SA Grupo Pao De Acucar Convenience/Forecourt Store, Electronics Specialty, Hypermarket/Supercenter/Superstore, Supermarket.
Canada – Loblaw Companies, Ltd. Cash & Carry/Warehouse Club, Discount Store, Hypermarket/Supercenter/Superstore, Supermarket.
China – Bailian Group Convenience/Forecourt Store, Department Store, Home Improvement, Hypermarket/Supercenter/Superstore, Supermarket.
France - Carrefour (Fortune 33) Cash and Carry/Warehouse Club, Discount Department Store, Hypermarket/Supercenter/Superstore, Supermarket, convenience/forecourt store.
Germany - Metro AG (Fortune 56) Apparel/Footwear Specialty, Cash & Carry/Warehouse Club, Department Store, Electronics, Specialty, Hypermarket/Supercenter/Superstore, Other Specialty, Supermarket.
Mexico – Organizacion Soriana S.A. de C.V. Cash & Carry/Warehouse Club, Hypermarket/Supercenter/Superstore.
Russia – X5 Retail Group N.V. Convenience/Forecourt Store, Discount Store, Hypermarket/Supercenter/Superstore, Supermarket. South Africa – Pick ‘n Pay Stores Ltd. Apparel/Footwear Specialty, Convenience/Forecourt Store, Drug Store/Pharmacy, Home Improvement, Hypermarket/Supercenter/Superstore, Other Specialty, Supermarket.
United Kingdom – Tesco Convenience/Forecourt Store, Department Store, Discount Department Store, Hypermarket/Supercenter/Superstore, Supermarket.
Top 25 Global Retailers Worldwide
Retail Industry in India India’s GDP growth of 9.4 per cent in 2006-07 is the highest posted for over 18 years, reflecting the booming economy of the country. Growing in tandem with the economy is the Indian retail sector. The sector is on a high growth trajectory and is expected to grow by more than 27 per cent over the next 5 to 6 years. Retail is one of India’s largest industries, contributing to about 10 per cent of the GDP and providing employment to 8 per cent of the nation’s workforce. Indian retail business promises to be one of the core sectors of the Indian economy, with organised retail sector estimated to grow by 400 per cent of its current size by 2007-08. The growth and potential of the sector is being widely acknowledged both in the domestic as well as international forums. India topped AT Kearney’s Global Retail Development Index 2007 for the third consecutive year, retaining its position in the global market as the most preferred retail destination amongst emerging markets. For the fifth time, India also topped the Global Consumer Confidence Index June – 2007 conducted twice a year by The Nielsen Company. Indians were judged the world’s most optimistic consumers, with large sections of the population considering “now” a good time to spend. Indian consumers were also found to be bullish about their personal finances over the next 12 months. The economics of Indian consumerism is buoyant, with India ranking as the fourth largest economy in terms of Purchasing Power Parity (PPP), next only to United States, Japan and China. India is expected to outpace Japan by the year 2010 to become world’s third largest economy. With 54 per cent of the Indians aged below 25, the young Indian consumer is buying big to look good and feel good. Retail Revolution Retailing in India is evolving rapidly, with consumer spending growing by unprecedented rates and with increasing number of global players investing in this sector. Organised retail in India is
undergoing a metamorphosis and is expected to scale up to meet global standards over the next five years. India’s retail market has experienced enormous growth over the past decade, more than doubling in size to US$ 311.7 billion in 2005-06. The market was estimated at US$ 1.1 trillion (in PPP terms) in 2005-06. The most significant period of growth for the sector was between years 2000 and 2006, when the sector revenues increased by about 93.5 per cent translating to an average annual growth of 13.3 per cent. The sector’s growth was partly a reflection of the impressive Indian economic growth and overall rise in income levels of consumers.
Even the introduction of Value Added Tax (“VAT”) in April 2005 has not severely impacted consumer demand for retail goods. Greater exposure to western products and lifestyles has helped drive consumerism. The sector also benefited considerably by the rising popularity of satellite television since the early 1990s, which provided a highly effective mass marketing route, reaching out to the large Indian consumer base.
Traditional & Modern Retailing
Traditional retailing continues to be the backbone of the Indian retail industry, with traditional / unorganised retailing contributing to over 95 per cent of total retail revenues. The quintessential mom-and-pop retailing outlets or the cornerstore formats constitute a major part of Indian retail store formats. Over 12 million small and medium retail outlets exist in India, the highest in any country. More than 80 per cent of these are run as small family businesses. Prevalence of traditional retailing is highly pronounced in small towns and cities with primary presence of neighborhood “kirana” stores, push-cart vendors, “melas” and “mandis”. Organised formats are only in the initial stages of adoption in these regions. Leading retail players in the industry are beginning to explore these markets and the rural consumers are slowly beginning to embrace the newer organised retail formats. Modern/Organised retailing is growing at an aggressive pace in urban India, fuelled by bourgeoning economic activity. Organised retail revenues are expected to increase from an estimated US$ 12.9 billion per annum in 2005-06 to more than US$ 43 billion by 2009-10. The sector is predicted to grow by 400 per cent, in value terms, by 2007-08. A large number of domestic and international players are setting up base and expanding their business with newer organized retail formats and intense competition driving innovation in formats.
Growth across segments
Retail sector in India is primarily categorized by the type of products retailed, as opposed to the different retail formats in operation. The Food and Beverages vertical accounts for the largest share of revenues at 74 per cent of the total retail market. This category has the highest consumer demand across all income levels and various retail formats. The Indian consumer behavior of preferring proximity to retail formats is highly pronounced in this sector, with food, grocery and allied products largely sourced from the local stores or push-cart vendors. Apparels and consumer durables are the fastest growing verticals in the retail sector. Mobile phone as a product category has witnessed the highest growth in consumer demand amongst all retail product offerings, with increasing penetration of telecommunications in towns and villages. The Telecommunications sector has been adding on an average 5 million new users every month. The other product categories are gaining traction predominantly in the urban areas and emerging cities, with increasing average income and spending power of young urban India.
Organised Retail
Organised retail clocked revenues of US$ 12,927 million, compared to total retail sales estimated at US$ 311,731 million in 2005-06.The apparel industry contributed to the largest share of the organised retail pie, with revenues of US$ 4,756 million, owing to the rapidly rising number of malls and introduction of several domestic and international apparel brands in the country. The Food and Beverages segment recorded the highest growth over 2004-05, with the proliferation of supermarkets, hypermarkets and the entry of major players like Reliance Fresh (promoted by Reliance Retail Ltd).
This segment is poised to gain traction, with several new players planning their entry and the existing players expanding their business in this segment at a rapid pace. The Home Décor segment followed suit growing at 18 per cent, with a boom in the real estate and housing sector. Penetration of organised retail was at 4.15 per cent in 2005-06, an increase from the 3 per cent estimated for 2004-05, and is projected to increase to 9.52 per cent in 2009-10, with revenues from organised retail expected to touch US$ 43,829 million in 2009-10. Footwear segment recorded the highest penetration of 32.84 per cent, primarily due to the presence of well established players like Bata, Liberty and Paragon. These players have been in the market for over three decades, have good brand recall and a well established distribution network penetrating both rural and urban areas.
Consumer durables segment and the books and music segment also witnessed continued growth. Entry of players like Crossword and Music world has given the segment strong impetus. Apparel is one of the fastest growing verticals, with the highest number of domestic and foreign brands mushrooming in the market, and increasing consumer willingness to pay for brand and quality of products.
Future Outlook
Retail sector revenues is pegged to reach US$ 460.6 billion by 2010-11, with the organised retail sector projected to grow to US$ 43.8 billion in the said year. It is envisaged that modern retail will adapt and absorb some of the traditional formats in the course of its expansion. Unorganised retail formats are expected to converge and combine in formats such as mushrooming village malls and rural retailing ventures. With the rural retail revenues forming the largest share of total retail revenues, increasing number of players are in the fray to explore opportunities in the rural areas. The rural retail revenues are estimated to increase by 60 per cent by 2012, with larger share of increase in demand for consumer and household products. Retail giants are set to embrace newer and innovative formats, by giving modern retail a traditional look in line with consumer needs and expectations. Pilot test concepts are already being rolled out by players like Indian Tobacco Company (ITC) and DCM Shriram Consolidated Ltd. (DSCL) with their rural initiatives of Choupal Saagar and Hariyali Kisan Bazaar, and are exploring options to increase their customer outreach. Established players like Unilever, Dabur and Godrej have strengthened their distribution channels and are increasing their penetration to leverage the higher consumer demand in these markets. Reliance Retail Ltd, a wholly owned subsidiary of Reliance Industries Ltd, is set to embark on the establishment of 1,600-odd rural retail hubs by 2010, with the aim to make these hubs the nodal institutions for retailing activity, ushering in a new era of organised-rural retail. With modest store formats being pursued to attract the average rural customer, as opposed to the plush and vibrant formats adopted for the urban retailing, rural retailing is set to provide a new dimension to the Indian retail scenario.
Potential Untapped Market
India ranks first, ahead of Russia, in terms of emerging market potential and is deemed a “Priority 1” market for international retail. Organised retail penetration is on the rise and offers an attractive proposition for entry of new players as well as scope for expansion for existing players.
India is home to a large base of consumers with annual incomes ranging from US$ 1,000 – US$ 4,700, comprising of over 75 million households. A steadily rising percentage of rich and super rich population and impressive disposable incomes offers a spectrum of opportunities, spanning from rural retailing to luxury retailing. The impressive retail space availability and growing trend of consumerism in the emerging cities and small towns add to the market attractiveness. Pantaloon Retail India Limited, one of India’s retail giants captures a mere 0.3 per cent of total market; compared to Tesco Plc, which captures 14.3per cent of England’s market and Walmart which captures 20 per cent of USA’s market; giving an insight into the large untapped market potential.
Policy & Regulatory Environment
The Government is progressively undertaking reforms and liberalising the retail sector; thereby attracting significant foreign investments. The regulatory and supervisory policies are being reshaped and reoriented to meet the new challenges and opportunities in this sector. To facilitate easier flow of Foreign Direct Investments (“FDI”) inflow, instead of having to seek Foreign Investment Promotion Board (“FIPB”) approval, FDI up to 100 per cent is allowed under the automatic route for cash and carry wholesale trading and export trading. FDI up to 51 per cent is allowed, with prior Government approval for retail trade in ‘Single Brand’ products with the objective of attracting investment, technology and global best practices and catering to the demand for such branded goods in India. This implies that foreign companies can now sell goods sold globally under a single brand, such as in the case of Reebok, Nokia and
Adidas. However, retailing of multiple brands, even if the goods are produced by the same manufacturer, is presently not allowed. Relaxation of FDI restrictions are being vigorously pursued by the business and trade coalitions and are expected to fall in place over the next 3-5 years. The most common channels for entry of foreign retailers are the strategic license agreements, franchising, distribution, manufacturing, joint ventures and cash and carry wholesale trading.
Cash-and-Carry Wholesale Trading
100 per cent FDI is allowed in wholesale trading which involves building a large distribution infrastructure to assist local retailers and manufacturers.
Joint Ventures
International firms can enter into agreements with domestic players, and set up base in India. The share of the multinational is restricted to 49 per cent in this route.
Manufacturing
International retailers can set-up manufacturing units for their products in India. Entry through this route entails the company the rights to retail the products in India through individual retailing outlets.
Retailing Format in India Malls:
The largest form of organized retailing today. Located mainly in metro cities, in proximity to urban outskirts. Ranges from 60,000 sq ft to 7, 00,000 sq ft and above. They lend an ideal shopping experience with an amalgamation of product, service and entertainment, all under a common roof. Examples include Shoppers Stop, Piramyd, and Pantaloon.
Specialty Stores:
Chains such as the Bangalore based Kids Kemp, the Mumbai books retailer Crossword, RPG's Music World and the Times Group's music chain Planet M, are focusing on specific market segments and have established themselves strongly in their sectors.
Discount Stores:
As the name suggests, discount stores or factory outlets, offer discounts on the MRP through selling in bulk reaching economies of scale or excess stock left over at the season. The product category can range from a variety of perishable/ non-perishable goods.
Department Stores:
Large stores ranging from 20000-50000 sq. ft, catering to a variety of consumer needs. Further classified into localized departments such as clothing, toys, home, groceries, etc. Departmental Stores are expected to take over the apparel business from exclusive brand showrooms. Among these, the biggest success is K Raheja's Shoppers Stop, which started in Mumbai and now has more than seven large stores (over 30,000 sq. ft) across India and even has its own in store brand for clothes called Stop.
Hyper marts/Supermarkets:
Large self-service outlets, catering to varied shopper needs are termed as Supermarkets. These are located in or near residential high streets. These stores today contribute to 30% of all food & grocery organized retail sales. Super Markets can further be classified in to mini supermarkets typically 1,000 sq ft to 2,000 sq ft and large supermarkets ranging from of 3,500 sq ft to 5,000 sq ft. having a strong focus on food & grocery and personal sales.
Convenience Stores:
These are relatively small stores 400-2,000 sq. feet located near residential areas. They stock a limited range of high-turnover convenience products and are usually open for extended periods during the day, seven days a week. Prices are slightly higher due to the convenience premium
MBO (Multi Brand Outlets):
Multi Brand outlets, also known as Category Killers, offer several brands across a single product category. These usually do well in busy market places and Metros. RETAIL SALES IN INDIA
Key Players in India
? Pantaloon Retail (India) Limited ? Shopper’s Stop Limited ? Tata Trent Ltd. ? RPG Enterprises ? Landmark Group ? Madura Garments ? Vivek Group ? Globus ? Subhiksha Trading Services ? Nilgiris Ltd. ? Provogue Ltd. ? Bata India Ltd. ? Archies Ltd ? Metro in India
Pantaloon Retail (India) Limited
Pantaloon Retail, a Future Group venture started its operations with Pantaloon Shoppe in 1993 and has since emerged the retailing giant of India with over 5 million square feet of retail space spread over 450 stores across 40 cities in India. Pantaloon Retail operates in over twenty diverse store formats, with a spectrum of offerings ranging from food and grocery to carpentry services.
Shopper’s Stop Limited
Shoppers Stop, established in 1991 with its flagship store- Shoppers Stop by the K. Raheja Group, has now expanded to over 100 retail outlets spread across 1.1 million square feet of builtup area, spanning a spectrum of retailing verticals and formats. The group offers formats in the lifestyle and luxury segment, with the growing affluent middle class population as their target consumer base.
Tata Trent Ltd.
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Established in 1998 Revenues: US$ 53 million Retail sector activity: Apparel, Specialty – books and music Current store format: Hypermarket, Supermarkets Future plan: New venture-Infiniti Retail Ltd. Manufacture private labels in apparels Principal fascia: Westside, Landmark, Star India Bazaar
RPG Enterprises
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Established retail in 1996 Revenues: US$ 182 million Retail sector activity: Food & grocery, Beauty products, Specialty- music Current store format: Convenience stores, supermarkets, hypermarkets Current outlets: 279 outlets Music world has tie ups with 350 affiliates across the country. Future plan: by 2009 set-up 2000 stores in India Principal fascia: Spencer’s, Music World
Landmark Group
? ? ? ? ? Present in India since 1999 Retail sector activity: Apparel, Home décor & Furnishing Current store format: Department stores, Hypermarkets Current outlets: Lifestyle-10 outlets, Max Retail-4 outlets Future plan: Presence in mini metros and Tier-II cities
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Principal fascia: Lifestyle, Home Centre, Max Retail
Madura Garments
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Established in 1988 Part of the Aditya Birla Nuvo Group Retail sector activity: Apparel Principal fascia: Louis Philippe, Van Heusen, Allen Solly, SF jeans, Peter England Joint Venture with international brands: Esprit Current outlets: Planet Fashion-50 outlets, Trouser town-9 outlets Future plan: Projected to increase to 300 outlets by 2009 and diversify into the women’s wear segment
Vivek Group
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Established in 1965 Revenues: US$ 91.5 million Retail sector activity: Food & Grocery, Beauty, SpecialtyElectronics & Home appliances Current store format: Supermarkets, Hypermarkets Current outlets: Vivek-23 outlets, Jaisons-26 outlets, Premier-3 outlets Future plan: Set up 60 stores in South India Principal fascia: Viveks, Jaisons, Premier
Globus
? ? ? ? ? ? ? Established in 1998 Retail sector activity: Apparel Current store format: Stand alone stores Current outlets: 21 Future plan: To set up 100 stores by 2008 Manufacture private labels under Globus and F21 Principal fascia: Globus
Subhiksha Trading Services
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Established in 1997 Turnover of US$ 75.6 million Retail sector activity: Food, Medicines Current store format: Supermarkets
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Current outlets: 150 outlets Future plan: To set up 600 stores with 145 stores in NCR region Principal fascia: Subhiksha
Nilgiris Ltd.
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Established in 1904 Revenues: US$ 30.5 million Retail sector activity: Food & grocery, Specialty- Bakery products Current store format: Supermarkets Future plan: To increase stores to 100 Principal fascia: Nilgiris
Trinethra Super Retail Ltd.
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Established in 1986 (Taken over by Aditya Birla Nuvo Group in 2006) Revenues: US$ 58.5 million Retail sector activity: Food & Grocery, Beauty products Current store format: Convenience stores, Supermarkets, Hypermarkets Current outlets: 150 outlets Future plan: To enter into Pharmacies, Apparel, Footwear Principal fascia: Trinethra Super Retail LTD., Trinethra Quick Shop
Provogue Ltd.
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Established in 1997 Revenues: US$ 38.1 million Retail sector activity: Apparel, Footwear Current store format: Stand alone stores Current outlets: 139 outlets Future plan: To manage and develop malls Principal fascia: Provogue, Prozone Present since 1931 Revenues: US$ 179.8 million Retail sector activity: Footwear and Accessories Current store format: stand alone stores Current outlets: 1100 outlets Future plan: To remodel 150 stores and open 40 more stores Principal fascia: Bata
Bata India Ltd.
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Archies Ltd
? ? ? ? Present since 1979 Revenues: US$ 20.8 million Retail sector activity: Specialty-cards & gifts Current store format: Stand alone stores
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Future plan: To increase from 73 stores to 200 by 2008 Principal fascia: Archies, Stupid Cupid
Presence of MNC chains in India Metro in India
Metro AG of Germany has a presence in India at Bangalore, Kolkatta & Mumbai. It opened its first Indian outlet in Yeshwanthpur, Bangalore in 2003 on a sprawling 6,500 square metres area and added one more centre there.
Metro (Global)
Mission Statement "METRO is a Cash & Carry self-service wholesaler for businesses and professionals. METRO provides quality products and business solutions at the lowest possible prices". "As worldwide No. 1 in self-serve wholesale, we systematically address the needs of our customers. In keeping with our motto "From professionals for professionals," we offer an extensive range of high-quality food and nonfood products at competitive prices. With efficient logistics and a business concept that can be adapted flexibly to the requirements of diverse markets and locations, we are actively setting the stage for sustainable growth."- CEO METRO Cash & Carry
Frans W.H. Muller (CEO)
The METRO Cash & Carry success story began in 1964 with the opening of the first wholesale outlet in Germany. Today the company is represented in 30 countries with METRO and MAKRO Cash & Carry stores at 544 locations - and offers its commercial customers up to 50,000 different products from a single source. METRO Cash & Carry International GmbH in Duesseldorf, Germany, is the Management Holding Company steering the global business. The METRO Group was created in 1996 through the merger of leading trading companies. The corporate group is composed of high-performance, operationally independent companies and businesses.
The group includes: ? METRO/Makro Cash & Carry, the world’s market leader in cash and carry ? Real Hypermarkets ? Extra Supermarkets ? Media Market ? Satum, Europe’s leader in consumer electronic retailing ? Galeria Kaufhof, the system leader in the department store business.
Just as the group profits from the strengths of the individual companies, each sales division receives support and reinforcement from the entire corporation’s business potential. Furthermore, all members of the METRO Group profit from the important synergy effects that only a nationally and internationally successful major corporation can offer. METRO Group today, is the third largest trading and retailing group in the world. The company employs over 2,50,000 staff in 30 countries. In the year 2005 METRO Group had generated sales of over €55.7 billion; 53% of total sales came from outside Germany. With 655 stores in 29 countries, METRO Cash & Carry is an international leading player in self-service wholesale. The product range and services are tailored exactly to the needs of the professional customers. Hoteliers, restaurateurs, caterers and small-scale food retailers find everything they need to guarantee their business success. Their trademarks are top quality, huge choice and excellent value for money. METRO Cash & Carry has an international
identity – and a true international corporate culture to support it. This clearly distinguishes them from others and is a key for their swift international expansion in Eastern Europe and Asia. METRO Cash & Carry is the major growth driver of the METRO Group, one of the world’s leading retailing companies. In 2008, they achieved sales figures of around 33.1 billion Euros.
Background
All under one roof The business concept of METRO Cash & Carry is specially tailored to the needs of commercial customers, such as small and medium-size retailers, restaurants, cafeterias, hotels and other service providers as well as institutions. The Cash & Carry principle is that the customers themselves select the purchases from the wholesale store shelves, then pay and take the goods with them. The innovative METRO Cash & Carry concept of self-service wholesale was introduced to Germany more than 40 years ago by Professor Dr. Otto Beisheim: in 1964 he opened the first Cash & Carry wholesale outlet in the city of Mülheim, in the Ruhr area. Then as well as now, the Cash & Carry concept is characterized by outstanding depth and breadth of product range,a consistently customer-oriented approach as well as a favorable cost-benefit ratio.
Business Concept
A broad range of products at competitive prices Customers can always expect to find a comprehensive product range at METRO Cash & Carry stores. Depending on size and type, the outlets offer as many as 20,000 different food products and up to 30,000 nonfood products. METRO Cash & Carry maintains a large stock of all products in its range, in a selection of formats, all at competitive wholesale prices and in excellent quality. In addition, restaurants, hotels, caterers and food retailers profit from a large range of fresh goods. Spe cific store architectures to meet professional standards METRO Cash & Carry operates in various countries with three store formats: Classic, Junior and ECO. The sales area of a Classic wholesale outlet is 10,000 to 16,000 square meters. This format is mainly used in Western European countries. In Eastern Europe and Asia, smaller Classic stores so called Junior stores of 7,000 to 9,000 are generally built. ECO stores – for example, in France and Italy – have sales areas of 2,500 to 4,000 square meters. While the Classic outlets offer a comprehensive range of up to 50,000 food and nonfood products, ECO stores are concentrated on food, especially perishables. With ranges comprising 90 percent food products, ECO stores are mainly geared toward hotel and catering industry customers requiring large amounts of fresh, high-quality food on a daily basis. Adapting to meet local needs
A special characteristic of the METRO Cash & Carry sales concept is that the product range of each store is tailored to the requirements of the local target group. The goods that stock the shelves and refrigeration units are carefully selected according to the consumer behavior and demands of the respective region. On the English Channel, the Moskva or the Yellow Sea, METRO Cash & Carry outlets all have something in common: approximately 90 percent of their merchandise is purchased from local producers and suppliers within their countries. The METRO Cash & Carry policy of local procurement supports the regional economies – for example, by generating new business for manufacturers and farmers. The company also helps producers and suppliers in developing modern cultivation, processing and distribution methods. In addition, the stores address special needs with a wide selection of international products, such as the Turkish foods offered in Germany.
History (Metro (Global))
The METRO Cash & Carry success story
1964
The first METRO self-serve wholesale outlet opens in the city of Mulheim in the Ruhr area. Even the first store carries a considerably wider product range than conventional wholesalers. Its sales are 14000 square meters also represents an entirely new dimension. Metro Cash & Carry opens three more stores in Germany and systematically expands its network over the following years. Today, customers can find at least one Metro Cash & Carry outlet in every larger German city. The first step beyond German borders. A partnership with the Dutch company Steenkolen Handelsvereeniging leads to the establishment of MAKRO Zeifbedieningsgroothandel. The first step beyond German borders. At this time there are already 13 METRO Cash & Carry outlets in Germany. The compnay enters key Western European markets in the UK, France, Austria and Denmark. METRO Cash & Carry opens stores in Spain and Italy. After 20 years in business, METRO Cash & Carry already operates more than 100 self-service wholesale outlets across Europe. METRO Cash & Carry etnters new markets in Turkey and Portugal. METRO Cash & Carry succeeds in making the jump to North Africa with its first store in Morocco.
1967
1968 1970 1971 1972 1984 1990 1991
1992
Following its Greek market entry, METRO Cash & Carry is present in the majority of EU member countries. Hungary and Poland open their markets. METRO Cash & Carry is one of the first international trade-sector companies to establish a foothold in Eastern Europe. In a joint venture with the Jinjiang Group, METRO Cash & Carry is granted a nation-wide wholesale license for the emerging market of China. In the same year, the compnay enters Romania. Coinciding with this stepped up expansion, the METRO Group is established in Germany, with METRO Cash & Carry as its highest-volume sales division. Within the year, the holding METRO AG is listed on the stock market. METRO Cash & Carry maintains its focus on Eastern Europe, opening for business in the Czech Republic. Existing Makro Stores in Europe and Morocco are integrated into the METRO Cash & Carry network. METRO Cash & Carry opens an outlet in Bulgaria, adding a further Eastern European location to its corporate portfolio. The first store in Slovakia opens its doors. METRO Cash & Carry establishes a presence in Russia, with two stores. With the first store opening in Croatia the market entry is performed. At this stage, the Company already operates 15 outlets in China. Entering the Japanese and Vietnamese markets, the company continues to expand in Asia. METRO Cash & Carry opens its first wholesale stores in Ukraine and India. METRO entry in Moldova. In 2004, stores are opened at more than 30 new locations, around three quarters of them in the growing markets of Asia and Eastern Europe. In Belgrade, Serbia's first METRO Cash & Carry outlet is inaugurated. METRO Cash & Carry announces upcoming market entry in Pakistan. Market entry in Pakistan, opening of 600th store in Novosiirsk. Metro Cash & Carry announces that in 2009 it will be entering the growth markets of Kazakhstan and Egypt
1994
1996
1997 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Corporate Culture
The 10 METRO Cash & Carry principles The success of the company is based on the following principles: ? Focused on professional customers ? Efficient store concept designed for professional needs ? One-stop shopping ? Advanced customer service ? Enhanced customers’ competitiveness ? Excellence in supply chain and quality management
? ? ? ?
Strengthening of local suppliers Development of national infrastructures Career opportunities Internationally transferable concept
Social Responsibility
METRO Cash & Carry takes on social responsibility As an international wholesaling company operating in 29 countries, METRO Cash & Carry combines business success with a deep sense of responsibility for society. By entering new markets, the company secures more than its own future viability. METRO Cash & Carry creates jobs, and in many cases acts as a pioneer in developing modern trade and supply structures. For instance, in India and Vietnam METRO Cash & Carry has initiated training programs for local farmers. In cooperation with the German Investment and Development Company (DEG) 14,000 sheep farmers and 1,000 fishermen in India are receiving training in animal husbandry and the processing of their food products. Even today, a large proportion of the goods spoil on the way to consumers due to outdated supply chains and the absence of refrigeration technology. The transfer of know-how represents a significant contribution to the improvement of the food supply.
Internationalization
Business principle and success factors Internationalization is a core element of the METRO Cash & Carry strategy. It has played a decisive role in the company’s rise to become the worldwide market leader in self-service wholesale. In advance of market entry METRO Cash & Carry examines potential market entries with great care. Before setting foot in a new country, an intensive advance assessment is carried out. Should this scoring yield positive results, it is then followed by a comprehensive feasibility study. This includes thorough on-site research along with an assessment of all modalities involved in doing business at the proposed location. A team of specialists analyzes all aspects relevant to operations, such as purchasing, sales and marketing, laws, human resources and logistics. The decisions on market entry and on the actual location, type and size of the planned outlets are based on the results of this study. Local staff a priority The objective is to staff a new store as quickly as possible with local employees, and to qualify them in the company’s own intensive training programs. The people who call the region home have the advantage of knowing the professional customers. They are able to perfectly adapt the service offering to the national or regional culture. By hiring local staff, from sales people to managers, the company also contributes to the country’s job market. In many nations, METRO Cash & Carry has grown to become one of the largest private employers within just a few years. Expanding the business concept in Europe
The sales concept of METRO Cash & Carry is not only successful in Germany. In 1968, the partnership with the SHV Group led to the establishment of Makro Zelfbedienigsgroothandel – the first step beyond German borders. Up to 1972, METRO and MAKRO Cash & Carry continued to expand in Southern and Western Europe. A leap across the Mediterranean In the 1990s, the jump across the Mediterranean was successfully carried out with stores in Turkey and Morocco. After around 30 years in business, the company was present in a dozen countries with more than 200 outlets. This made METRO Cash & Carry the most widely represented international food trading company worldwide. Development in Eastern Europe The next important step was the entry into the emerging markets of Eastern Europe. Within a few years, wholesale outlets were opened in Hungary, Poland, Romania, Czech Republic, Bulgaria and Slovakia. The company was established at an early stage in many of the countries that became members of the European Union in May 2005. “Wherever the euro goes, we’re already there,” says an advertising slogan of the METRO Group. Expansion into the Far East In the mid-90s, METRO Cash & Carry moved further eastward: it became the first international wholesaling company to receive a license for nationwide expansion in China. In 1996, the first wholesale outlet opened for business in Shanghai. At a time when hardly any other Western trader or manufacturer dared to make the leap into the country, METRO Cash & Carry again displayed perfect instincts. Today, after less than ten years, METRO Cash & Carry already operates 24 wholesale stores in China. Sails set for further emerging markets The METRO Cash & Carry concept has great potential. Over three billion people, or about half of the world’s population, live in countries where the company is already present. Every year, new stores are opened and new markets entered. The main focus has been on Eastern Europe and Asia. Two thirds of all new business locations are established in these growth regions, with special concentration on expansion in China and Russia.
Facts and figures
As an important international company in self-serve wholesale, METRO Cash & Carry continued on its international expansion course in 2007. The company systematically expanded its presence, especially in the emerging markets of Asia/Africa and Eastern Europe. At the end of the business year 2007, the wholesale brand METRO Cash & Carry was present at over 600 locations in a total of 29 countries.
Fiscal Year Sales
2008 € 68.0 billion (plus 5.8 percent) € 41.3 billion (60.8 percent) € 2,225 million 2 € 3,543 million 2 € 560 million € 9.3 billion € 1.18 4 2,195 32 12,350,000 square meters 290,940 (254,457)
2007 € 64.3 billion 1 € 38.1 billion € 2,078 million 1 € 3,343 million 1 € 983 million € 18.7 billion € 1.18 4 2,097 31 11,779,000 square meters 275,520 (239,242)
of which abroad
Earning before Interest and Taxes (EBIT) Earning before Interest, Taxes, Depreciation, Amortization (EBITDA) Consolidated Netincome 3 Market Capitalization (based on Year-End Stock Price) Dividend per Share of Common Stock Locations (Outlets) Countries with Metro Presence Selling Space Number of Staff on Annual Average Total (converted to Fulltime Equivalent)
* Continuing operations only (discontinued operations: Extra and Adler in 2007 and 2008) 1 Adjustment of previous year’s amounts due to preliminary accounting for business combinations in 2006 2 In 2008 adjusted for the costs of trimming of Real’s store network; €203 million was adjusted in EBITDA, of which Real accounted for €223 million and other companies/consolidation for €20 million; €237 was adjusted in EBIT, of which Real accounted for €224 million and other companies/consolidation for €13 million 3 Including discontinued operations 4 Subject to approval by the Annual General Meeting METRO Cash & Carry kept growth path in 2008 – Challenging year ahead Düsseldorf, 13 January, 2009 - Despite the global economic slowdown, METRO Cash & Carry maintained its growth path throughout the financial year 2008. According to preliminary and unaudited figures, sales increased by 4.5% to € 33.1 billion (Before currency effects: + 5.4%).
On like-for-like basis, sales grew by 1.6% in 2008. Nevertheless, the company’s business experienced a slowdown in the fourth quarter, when revenues increased by 2,2% before currency effects. Especially non-food sales decreased significantly in the last months of 2008. Both, Dr Eckhard Cordes, CEO of METRO Group, and Frans Muller, CEO of METRO Cash & Carry International, expect a challenging year 2009, but expressed also their confidence that the company will successfully cope with these difficult times. “Q4 sales development has been under expected pressure but we managed to implement first necessary measures to secure our growth and profit targets,” said Frans Muller. “I am confident that we are well prepared for the challenge as we have geared up with an even stronger focus on customer added value, competitiveness, operational basics and cost position.” In Western Europe, annual sales of METRO Cash & Carry in local currency came in slightly above the 2007 level in spite of the difficult macroeconomic situation. Eastern Europe continued the dynamic growth in 2008, in absolute terms and like-for-like. In Asia/Africa sales were clearly on the rise during the year. METRO Cash & Carry opened 40 new stores to a total number of 655, whereof nine openings took place in Russia, five in the Ukraine and four in Germany. The store networks were also extended in Poland and Bulgaria with three openings each as well as in France, Turkey and India with two openings each. Belgium, the Netherlands, Portugal, Greece, Romania, Czech Republic, China, Japan, Morocco and Pakistan also opened new stores. The overall performance of the METRO Group also has been positive and coped well in the negative global business climate. Sales went up by 5.9% to € 68 billion (Before currency effects: + 6.1%). Eastern Europe and Asia/Africa again showed the highest growth rates, while Western Europe held up well despite the difficult environment. Dr Cordes stated: “All in all, we had a satisfactory performance last year. But 2009 will be very challenging. The customers will think twice about where and for what they want to spend their money.“ METRO Group is now closely scrutinizing all cost structures, Dr Cordes added. The budget for investments was reduced to a maximum of € 1.6 billion. “With these measures we create additional entrepreneurial flexibility. This is why I am convinced that we will be able to further strengthen our competitive position also in 2009.”
Metro Worldwide
Metro (Global) locations around the world Country Austria Belgium Bulgaria China Croatia Czech Republic Denmark France Germany Greece Hungary India Italy Japan Moldavia Morocco Netherlands Poland Portugal Romania Russia Serbia Slovakia Spain Number of outlets 12 9 8 34 6 12 4 86 120 7 13 5 47 3 3 6 16 25 10 23 31 5 5 34 Market entry 1971 1970 1999 1996 2001 1997 1971 1971 1964 1992 1994 2003 1972 2002 2004 1991 1968 1994 1990 1996 2001 2005 2000 1972
Turkey Ukraine United Kingdom Vietnam
10 13 33 7
1990 2003 1971 2002
Metro (India)
METRO Cash & Carry started operations in India in 2003 with two Distribution Centres in Bangalore. With this METRO introduced the concept of Cash & Carry to India. These Centres offer the benefit of quality products at the best wholesale price to over 150,000 businesses in Bangalore. METRO offers assortment of over 18000 articles across food and non food at the best wholesale prices to business customers such as Hotels, Restaurants, Caterers, Food and Non-food Traders, Institutional buyers and professionals. METRO today is poised to extend its concept of Business to Business (B2B) Wholesale to other cities in the country. Concept (B2B) METRO's Cash & Carry business model is based on a Business to Business (B2B) concept and focuses on meeting all the needs and requirements of business customers. It is a modern format of wholesale trading, catering only to business customers. "Cash & Carry" means that the customers pick the goods themselves, pay in cash and transport their goods with their own vehicles. The advantage as compared with conventional wholesale lies in the more competitive price, the scope of the food and nonfood assortment, the immediate availability of the merchandise and the customer-oriented working hours. Society India is a land of opposites: people traveling to the subcontinent for the first time are often overwhelmed by the diversity of cultures and starkly contrasting traditional and modern lifestyles existing side by side. Holy cows stand with seeming disinterest in the middle of chaotic traffic intersections, pilgrims bathe in the Ganges and merchants offer spices at colorful bazaars. At the same time, India is one of the 21st century’s fastest-advancing high-tech locations – with a prospering IT sector and a huge proportion of students and young professionals who wear western attire and use modern communications technology. An economy on a growth course India is one of the fastest-growing emerging markets. Its gross domestic product was up by eight percent in 2006, and experts forecast a dynamic development at about the same level for the next few years. This is benefiting numerous sectors. For example, trade and retail: according to the Global Retail Development Index 2006, compiled by the management consultancy AT Kearney (www.atkearney.com), India is the world’s most attractive country for companies wishing to invest in this sector. Other areas also offer great potential, such as the chemicals and automotive
industries. However, economic strength is very unevenly distributed between regions: for instance, the net domestic product in the state of Delhi is 150 percent above the national average, while the quota in Bihar is only 31 percent of the national average. The METRO Group was quick to recognize the potential of the Indian market. It was the first international retailing company to set up operations on the subcontinent – and is now making a significant contribution to the development and expansion of the country’s retail infrastructure. In addition, the company supports the domestic economy: almost all the goods it sells are bought from local suppliers. Obstacles for investors The METRO Group, Wal-Mart, Tesco, Carrefour – a large number of international retail companies are investing in India’s growth potential. The country’s laws, however, still place tight restrictions on the activities of foreign companies: so far, investors are only permitted to operate single-brand stores, via franchise agreements, within the framework of a minority holding or as a wholesaler in India. The sales brand METRO Cash & Carry, with its self-service wholesale stores, is an example of a company that profits from these regulations. A further legal obstacle: in states like Karnataka, the Agricultural Produce Marketing Act (APMA) grants small enterprises the exclusive right to sell fruit and vegetables – a profitable business, considering that the majority of Indians are vegetarians.
Successive expansion The METRO Group is a prime mover, having already done pioneering groundwork in a number of countries. By entering the Indian market as well, the company stayed a step ahead of its competitors. As early as the mid-1990s, the METRO Group began analyzing the structures and special aspects of the Indian market. In fall of 2003, the time was ripe: the first two METRO Cash & Carry wholesale stores opened their doors in Bengaluru. Known as India’s Silicon Valley, the city formerly named Bangalore is home to numerous domestic and foreign IT companies and now has a population of over six million.
A high level of availability of goods The sales concept of METRO Cash & Carry offers commercial customers a range of benefits: for instance, goods always being available in sufficient amounts. The wholesale outlets in Bengaluru are able to guarantee that 95 percent of merchandise is in stock at all times. Just compare: the largest wholesaler in the region keeps a mere 65 percent of goods constantly in stock. Thanks to METRO Cash & Carry, commercial customers no longer have to keep large inventories. If a product sells out, it can be conveniently restocked – even if it is a special item.
Well cooled
METRO Cash & Carry safeguards the quality and freshness of its products by ensuring that the cold chain is consistently maintained – in transit as well as in the wholesale stores themselves. This is especially important in India, with its subtropical and tropical climate zones, where temperatures can rise above 50 degrees centigrade. For this reason, the two METRO Cash & Carry stores in Bengaluru are equipped with large climate-controlled areas for perishable goods. In each store, this section comprises more than 1,850 square meters of the approximately 10,200square-meter total sales area. In the Hyderabad store, the climate-controlled zone covers about a fifth of the total area.
10 Advantages Here are the Top 10 reasons to partner with METRO: 1) Best Prices With huge purchasing power & efficient operations, we make sure to provide you quality products at the best prices. 2) It's your Warehouse With our computerized goods management system, you are assured about availability of the products, in quantities you need. Meaning you need not tie up your money in stock that does not sell quickly.
3) Everything under One roof 18,000 different Food & Non-food items to meet all your different needs under one roof. This will save your time as compared to purchasing from a variety of sources. 4) Extended business hours To make sure that you are always served, we are open 7 days a week, from 6 a.m. to 10 p.m.
5) Quality guaranteed
Strict quality checks and modern storage technology including cold storage ensures that you get the best quality 6) Free parking Hassle free parking space for around 450 two wheelers & 270 four wheelers, to make sure that you are free of parking problems. 7) After sales Service We do not just make a sale, our Customer Service Team is available to you for resolving your queries, and problems, if any. 8) Offers at your fingertips Every two weeks you receive our catalogue, METRO Mail with over 300 offers for your business at the best wholesale prices. Also receive instant alerts through e-mail and SMS. 9) Clear and easy invoice Our detailed invoice makes it easy for you to monitor your purchases. All your purchase information is available on a single invoice, enabling you to manage your stocks better. 10) Great value for money A wide range of our own brand products offers high quality at the lowest price, which adds to your profits even more.
Metro ( Mumbai )
Magnet Mall Neptune Living Point LBS Road Opposite GKW Factory Bhandup West Mumbai - 400078 Contact No: 022 - 25658125 Toll Free No: 1800 425 0099
We are open everyday from 6:00 a.m. to 10:00 p.m
Launch Plan
Mumbai Metro did a launch plan of their retail store in Bhandup on 8th May 2008 and it is 10 months now.
Soft Launch
HoReCa (Hotels, Restaurants, and Cafes ) : May 5th 2008 200 premium outlets were invited for the soft launch where they were displayed with the best quality products like meat, Grocery products, METRO in-house brands like Quality & ARO, cold chain at the METRO store. The store Manager – Mr. Swen Betzing interacted personally with all the General Managers & Chefs of the premium 5-star hotels & deluxe properties across Mumbai city. The guests had a first-hand look of all the 18000 SKUs displayed at the METRO store at Bhandup (West). It is a replica of the METRO group across the world. All the stores look alike to each other.
Traders: May 6th2008 500 high volume traders were invited for the soft launch. There was a scheme of giving a silver coin to all the traders who would attend the soft launch. The 1st –day order booking was Rs. 35 lacs.
METRO Cash & Carry opens first wholesale center in Mumbai Mumbai, 7 May 2008 – Today, METRO Cash & Carry, the international leader in self-service wholesale, opened its first outlet in Mumbai at Neptune’s Magnet Mall in Bhandup. The company exclusively caters for professional customers like hotels, restaurants and small retailers like Kirana stores. The assortment and services are tailored to the special needs of this target group. Mumbai is METRO Cash & Carry’s fourth wholesale center in India. “We are convinced that our unique business-to-business concept will be very successful in Mumbai and well accepted by our professional customers“, said Martin Dlouhy, Managing Director of METRO Cash & Carry India. “We see a vast potential for our wholesale centers in this business metropolis. Therefore we are already exploring the possibilities to open further outlets to effectively meet the needs of our customers.” METRO Cash & Carry wholesale centers are open exclusively for professional customers, all of them duly registered and provided with a customer card. This means that the company does not sell to private end consumers. The core target group comprises hotels, restaurants, caterers as well as Kirana stores and other small retailers. At METRO Cash & Carry‘s wholesale centers they can find everything they need to run their business under one roof. Moreover, the company offers a constant availability of highest quality products at competitive wholesale prices. For instance Kirana stores can use METRO Cash & Carry as their warehouse and utilize their free capital for their businesses, rather than lock it up in inventory. The company’s unique businessto-business concept also caters to the professional work schedule with extended shopping hours
of up to 16 hours a day. “By this means we clearly help our professional customers to increase their competitiveness and thereby strengthen their own business, especially Kirana stores can benefit from our presence”. The METRO Cash & Carry wholesale center in Mumbai has a selling space of 6,500 square meters (70,000 square feet) and was built in a construction time of 14 months. Most of the work to build this outlet was carried out by local contractors, mainly using local material. Due to scarce availability of appropriate real estate, this is the first time METRO Cash & Carry India has built a multi level wholesale center. It is also a premier for the company to open an outlet in an Indian shopping mall, which was chosen for being in the urban center and thus very close to the customers. “To meet the special needs of our professional customers, we have to prove our flexibility and adaptability – also in terms of the location of our business”. On average, a new METRO Cash & Carry wholesale center is an investment of about 20 million Euros. Each METRO Cash & Carry wholesale center, including the one in Bhandup, provides around 450 local direct and indirect employment opportunities.
The product range in the Mumbai wholesale center comprises more than 18,000 articles: 8,000 food and 10,000 non food products. For the convenience of its professional customers METRO Cash & Carry opens from 6:00 am to 10:00 pm. The focus on local suppliers, which is typical for METRO Cash & Carry’s business model, is also pursued in India. Around 95 percent of the goods on display in Mumbai originate from local producers and distributors.
METRO Cash & Carry entered the Indian market in 2003. Besides the new outlet in Mumbai, the company operates two wholesale centers in Bangalore and one in Hyderabad. Thereby METRO Cash & Carry proved to be a close partner of the local economy. The company for instance invested in training programs for more than 40,000 sheep farmers as well as 1,150 fishing crews from India and helped to vaccinate and de-worm around 1 million sheep and goats. Currently METRO is preparing a special Kirana training. The aim is to help them enhance their business by educating them in terms of pricing policy, goods storage, assortment as well as marketing issues and microfinance. METRO Cash & Carry is represented in 29 countries with over 600 self-service wholesale centers. With more than 100,000 employees worldwide, the company achieved sales of € 31.7 billion in 2007. METRO Cash & Carry is a sales division of the METRO Group, one of the most important international trading companies. In 2007 the group reached sales of about € 64 billion. The company has a headcount of some 280.000 employees and operates over 2,200 outlets in 31 countries. The operating business is performed by the sales brands which operate independently in the market: Metro/Makro Cash & Carry – world market leader in cash & carry wholesale,
Real hypermarkets, Media Markt and Saturn – market leader in consumer electronics centers in Europe, and Galeria Kaufhof department stores.
Get your METRO Card in 4 Easy Steps 1) Fill in the application form.
2) Present your business license and your Photo ID along with a copy at the Distribution Centre. (Value Added Tax Registration (VAT), Central Sales Tax, Excise license, Service/ Professional tax, Shops & Establishments registration (Labour License), Health/Trade (Corporation) License, Liquor license, Food license (PFA), Drug license, Weight & Measures license, Government fair Price shop, Kerosene license, Registrar of Cooperative societies, Gas agency license, Electricity board contractor license, Small scale industries license, Licenses issued by Reserve Bank of India, Registration Certificate Indian Medical Council (Practicing Doctors), License issued under essential commodities act (selling pesticides, agro seeds), Entertainment license.).
3) Immediately you will receive your temporary METRO Card
4) Our customer consultant would personally visit you and introduce you to the concept and hand over your METRO card to you.
About the Card Personalised cards are issued to the representative of the business to facilitate business purchases at any of the METRO Distribution Centre across the globe.
Product Variety Available Food The store offers a wide array of over 8000 food items. These include among other things:
Dairy, Frozen & Bakery Cheese, Butter, Eggs, Milk, Yogurt, Chilled Ready Meals, Drinks, Ice Cream, Frozen Vegetables & Fruits, Bread and Bakery Products.
Fresh Fish & Sea Foods Whole Fresh Fish & Fish Cuts - Pomfret, Seer, Mackerel, Sardines, Rohu, Catla etc., Crab, Lobster and other Sea Food (some live fish also) Meat Fresh Poultry, Pork, Sheep, Lamb, Goat, Goat Kid. Other meats and Meat Products - Sausages, Ham, Bacon etc.
General Grocery Canned Goods - Fruit, Vegetables, Meats & Meat Products, Pet Foods Edible Grocery - Oils, Cereals, Coffee, Tea, Biscuits, Spices, Seasonings, Sugar, Sauces, Pickles, Noodles, Soups etc. Confectionary Sweets, Candies (hard boiled - lollipops, orange candy etc.), Chocolates, Crisps (mixture, farsan), Snacks & Nibbles
Beverages, Wines & Spirits Beer, Wines, Spirits, Water, Soft drinks, Juices.
Detergents & Cleaning Materials Laundry Detergents (Washing powders, Bars etc.), Cleaning agents (Cleaning bars, powders etc.), Household Products, Paper Goods (Paper Plates, Tissues, Cups etc.) Health & Beauty Cosmetics, Perfumes, Personal Care, Oral, Hair, OTC Medicines (Disprin etc.)
Dried Fruits and Nuts Cashew nuts (Kaju), Almonds (Badam), Pistachios (Pista), Raisins (Kismis) etc.
Tobacco Cigarettes Cigarette Accessories, Cigars etc
Non Food The store offers a wide array of over 10,000 non-food items. These include, among other things: Office equipment Office Supplies & Machines, Computers & Accessories, Cash Registers, Phones, Fax Machines etc .
Media / Accessories Portable Audio, Music Systems, TV Sets, Entertainment Accessories, Cameras, Car Radio, etc. Home Electrics / Improvement Refrigerator, Washing Machines, Microwaves, Mixer Grinders, Toasters, Lamps & Bulbs, Hand Tools, Power Tools, etc.
Household Household Requirements, Kitchen Articles, Crockery, Cutlery, Tableware, Glassware, Pots and Pans etc. Home Decoration / Seasonal Gifts, Artificial Flowers, Furniture, Aluminium Ladders, Arts & Crafts, Candles, etc.
Home Textiles / Ladieswear / Menswear / Childrenwear Bed Linen, Towels, Table Linen, Curtains, Carpets, Shoes, Apparel -Men's, Apparel - Ladies & Kids etc.
Sports / Toys / Luggage / Shoes / Leather Goods Sports Clothing, Swimwear, Toys & Gifts, Sports Shoes, Bikes & Accessories, etc.
Exclusive at METRO METRO Cash & Carry has its own brands spread across several categories of food & non food items. These are very popular across the globe. In India currently the brands that are available are: ARO A value for money brand, consistent specification & availability. METRO offers to its customers the Aro line for all categories of products.
Quality Guaranteed quality at a very attractive price. Products under this brand primarily cater to Hotels, Restaurants and Caterers.
Lambertazzi An exclusive collection of leather products that includes luggage, shoes, belts and other accessories.
Sigma For all your office requirements. Quality, wide range and the best price in the market. Tarrington House A variety of home textiles such as towels, bed linen, tablecloths, pillows all of the highest quality.
Alaska For all Household appliance requirements. Washing machines, vacuum cleaners, air-conditioners and many more.
Active A sports brand with products ranging from sportswear to shoes
Authentic With the focus on the latest trends in apparels, this brand offers a variety of designs for men and women. Varesa A quality product that caters to household needs.
Services & Quality
Quality & Cool Chain Quality & Hygiene We at METRO are committed to providing all our customers with quality products at all times. The strict internal procedures and modern storage technology including cold storage ensures that you get the best quality. Cool Chain - Extended cold chain Facility At METRO we provide transport solutions for your fresh purchases. Cooling boxes recommended by METRO: ? Keep your fresh products safe for 6 hours from 50 C to 150 C ? Fully loaded boxes maintain the temperature at its best ? Using the METRO Ice gel pack reduces the temperature inside ? Keep the box in a cool environment. Prevent sunlight Freshness Guaranteed METRO maintains a freshness charter that ensures quality of the products at all times. ? ? ? ? ? ? ? ?
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Bakery Dairy Deep Frozen Products Delicatessen Fruit & Vegetables Fish Fresh Meat Frozen Meat Processed Meats (Chilled & Ambient) ? Processed Meats (Frozen) Guarantee and Warranty If you change your mind METRO will give you cash or credit refund for the products returned within 7 days from the date of purchase in the original packaging. For any problems, please contact customer entrance at our
Distribution Centres. We will be happy to assist you. All your purchases at METRO come with a Warranty that entitles you to free services, repairs or exchanges. METRO strives at all times to ensure the best services. Transport Solutions To help you with the delivery of your purchases to your business premises we have partnered with Relogistics. There are various delivery solutions at competitive rates that you can avail of at the delivery counter at our distribution centres.
EMI Now pay in insallments! Because you are paying in cash, we can keep our prices low. At METRO you always know what you pay. There is no need to negotiate. We do not hide credit charges in our selling prices. However, if you like to finance your purchase, now CitiFinancial offers at METRO, EMI at competitive rates. Choose from a variety of financing option from 12 upto 24 monthly installments. HACCP Solutions HACCP (Hazard Analysis and Critical Control Point) – this is the name given to the food hygiene and quality assurance concept embodied in the European Union Hygiene Law. As of January 1, 2006, adherence to the food hygiene requirements established in the EU regulation No. 852/2004 will be mandatory in handling food products. METRO Cash & Carry offers its customers tailored service and product solutions, to support the implementation of HACCP as much as possible. In this context, the company is installing a new freshness system in its wholesale outlets. The solution enables customers to transport frozen and perishable products in suitable containers that maintain the correct temperature.
Marketing Strategy
Sustained Increase of Enterprise Value The claim of METRO to being a driving force in international trading and retailing is reflected in the marketing strategy. It is geared towards profitable growth and the consistent and sustained increase in enterprise value. The key pillars of this strategy of profitable growth are: ? the sales growth ? the optimization of the portfolio, ? and the optimization of the merchandizing concepts. Sales Growth METRO pursues a policy of profitable growth in sales through expansion and internationalization. The focus is on success, not on size. Therefore, the profitability aspect
takes precedence over sheer growth in volume. The objective of the internationalization policy is to increase the foreign share of group sales. International expansion concentrates on the emerging markets in Asia and Eastern Europe. METRO quickly managed to achieve market leadership in the respective wholesaling or retailing segment on most foreign markets. In established markets the sales divisions consistently consolidated their market position. One of the remarkable features of the METRO sales strategies is that they can be applied throughout the world. Their success and acceptance can be ascribed to the fact that they take into account the cultural particularities, specific expectations and needs of the foreign markets. Portfolio Optimization Each sales division has to position itself in the market such that its value and profitability rise continuously so that it can contribute to increasing the enterprise value of the METRO. The objective is to offer shareholders an optimum return on their investment. The composition of the portfolio makes allowance for the demands of the capital market. METRO is only active in those business segments where sales divisions of a significant size can operate on sufficiently large market segments. The portfolio relies on this diversity. The business areas and sales divisions complement each other in terms of their business activities. The central parameter for economic success is the internationally established control and management instrument of the economic value added (EVA). It serves as the benchmark for all strategic and investment decisions of the group. An important element of the value-oriented business management is the full integration of the EVA into the reporting concept of METRO. Concept Optimization The consistent, customer-oriented optimization of METRO merchandizing concepts constitutes an essential element for the long-term securing of earnings. In this context each sales division is to evolve into an unmistakable brand in its trading and retailing segment. This strategy is known under the term "retail branding". As retail brands the sales divisions develop their own particular image for a successful market appearance. Customers are addressed individually and their loyalty is ensured by way of new, attractive instruments. A strict customer orientation in terms of assortment and service as well as new forms of customer retention paved their way to business success. With the objective of increasing customer benefit and improving the efficiency of business processes, METRO is sustainably advancing the modernization process in this sector. The testing and application of innovative technologies in retailing increases shopping convenience for the customers, results in an even broader fulfillment of customer expectations and raises efficiency along the supply chain. Split of the registered Members at METRO: Turnover of each Time zone
Time zone 1 2 3 4 5 6 Active Registered Customers Buying Customers Buying Rate Average Frequency Turn Over in TINR Share by TZ F Share NF Share
CY
7,227 9,497 11,305 14,152 6,081 30,961
PY
4,826 6,719 8,988 11,303 5,175 26,820
CY
4,830 4,569 3,294 2,909 1,267 3,770
CY
67% 48% 29% 21% 21% 12%
CY
6.8 4.2 3.4 3.0 3.2 3.1
CY
126,861 110,655 74,718 68,636 45,076 175,356
CY
21. % 18. % 12. % 11. % 7. % 29. %
CY
77% 76% 75% 80% 81% 84%
CY
23% 24% 25% 20% 19% 16%
7 8 4 0 79,227 63,831 CY= Current Year 2008 Py = Previous year TINR = Turnover in Indian Rupees TZ = Time Zone F Share = Food Share NF Share = Non-Food Share
53 7 20,699 175% 26%
2.5 11.7 4.3
685 765 602,752
0. % 0. % 100. %
39% 57% 79%
61% 43% 21%
Total
Turnover of each Timezone Time zone Active Registered Customers Buying Customers Turnover per customer in INR Average sales per Visit (In TINR) Avg. in
Dec08
Number
CY
1 2 3 4 5 6 7 8 4 79,227 7,227 9,497 11,305 14,152 6,081 30,961
PY
4,826 6,719 8,988 11,303 5,175 26,820
CY
4,830 4,569 3,294 2,909 1,267 3,770 53 0 7 20,699
CY
26,265 24,219 22,683 23,594 35,577 46,513 12,919 109,251 29,120
CY
3.836 5.725 6.623 7.969 11.083 15.244 5.187 9.326 6.843
CY
3191. 4552. 5264. 6160. 8223. 11359. 4361. 5582. 5449.
CY
33071 19330 11282 8613 4067 11503 132 82 88080
Total
63,831
Feedback – What Retailers are feeling about METRO:
1 . Gangar
General Stores – Village Road – Bhandup (W) Daily sale: Rs. 15000/ Gangar General Stores is a large size Kirana store located on Village Road, Bhandup (W). They have visited METRO 12 times, but not bought goods once also. Constructive points:
Credit: the retailer is getting credit facility from existing distributors. He gives a cheque of 7 days from the day of delivery. So after adding 2 days to clear, it becomes 9 days credit that is offered to them. Price: As per the retailer, prices of 6 out of 10 products that he buys from METRO are cheaper than his existing purchase price. But, when he includes transportation, the price is the same. He wants additional profit to be given to him. Sugar: his purchase price: 19.4, MSP: 18.9. Tur Dal: 45, MSP: 44.5. Delivery: they are getting door-step delivery. He agreed that if we can deliver to them free of cost, then he shall come on Sunday to METRO, bill the products he wants to purchase & leave the goods with us to be delivered next day. Replacement: Companies are offering to replace the goods if they expire or are unsold. Credit Card: they suggested to us that we should accept all bank credit cards. Everybody may not be having a Citibank Credit Card.
2 .Arihant
Stores Village Road – Bhandup (W) They have visited METRO twice, but not bought goods. Card No. : 80867 Daily Sale: Rs. 5000/Arihant Stores is a small size Kirana store located on Village Road, Bhandup (W). Constructive points: Transportation cost: When the retailer includes the transportation cost, the price is equal to his existing purchase price. They want additional profit margin as compared to their existing supply chain. Credit – 1 month credit – In some products like stationary & books, they get a 1 month credit. Apart from this, average credit is 7 days. Replacement: as mentioned above. Price: as mentioned above Owner – replacement to manage The shop is managed by 2 owners - husband & wife. Commodity products – with fluctuating rates are managed by husband & other FMCG products are handled by his wife. It is not possible for both to close the shop & come to METRO at the same time, excepting on a Sunday
3. Omkar Medical
– Tembhipada Road, Bhandup (W) Daily Sale: Rs. 10000/Card No. : 57814 This shop is a mid-size Medical store. They have visited METRO once. Constructive points: Orders – Cash: they are used to giving cash to salesman who takes the orders. They want us to take their orders every week & collect the cash as they don’t have time to come to the store. List – Assortment: they have asked us to take their complete assortment list & work on it & inform them from it which products we can sell to them & their MSPs. Time: The shop is closed only on Sunday. They can come to METRO on Sunday afternoon. They have visited METRO once. Minimum 6 pieces purchase: In apparel, they cannot purchase 6 pieces together. They want to buy less then that.
4 .Guru
Kripa Stores – Tembhipada Road, Bhandup (W) Daily Sale: Rs. 4000/Card No. : 88628 This is a small shop mainly selling biscuits, confectionary. They have visited METRO only once. Cheque – 7 days: they get 7 day cheque facility from existing distributors. Price: they don’t find our price competitive in biscuits & confectionary articles like Coffee Bite. Soan Papdi - 1+1 free - In some articles like Soan Papdi, their regular consumer is buying from us as we have schemed is such products – e.g Soan Papdi : 1+1 free Availability of biscuits & chocolates: When they had come to METRO during opening, they couldn’t buy Parle & Nestle. We explained to them they both are currently available at METRO.
Feedback – Customer expectations
1. Delivery – at a minimum value 2. Credit facility – all credit cards should be allowed to be used at METRO 3. Price – should be lower than market price 4. Service – assistance by staff when they visit the store 5. Availaibility – continuous availability of all products & appropriate stock level. 6. Replacement of expired products.
7. After sales service of electronic products.
Swot Analysis
Structure of METRO Mumbai store – all levels
Department Structure: Every Department shall have 2 supervisors & approx 12 to 15 associates.
Reporting Structure Department Manager
Supervisor
Associate
Structure & Responsibilities of METRO Mumbai store Customer Marketing team – all levels
V in o d FM
KAM s T r a d e r s H o R e C a In s titu tio n s M a n d M r o n o Ui t t t a mS a n t oKs ah n c h G na n e s h a j a R a je s h
CC S a c h in
T r a d eUr s a y d M ukesh V e n k a tT o ta l : 5 JP Abdul
T r a d eAr lso k A m it S u m it T o ta l : 6 Abhay A n th o n y D evanand H o R e SC aa c h i n P r a d e e Tp o t a l : 3 N ik h il I n s t i t u G i oa n rs a vT o t a l : 1 t u T o ta l: 1 0
H o R eM o h a m m a d Ca V in a y T o ta l : 3 P ra k a s h I n s t i t u Ni oi k nh si l T o t a l : 2 t Laxm an T o t a l: 1 0
W h o l e s ai j lae y T o t a l : 2 V M o h it P r o p o s e d S u m m a r y - C C & K P rMo sp o& s D dM SS u m m a r y - C C A e T ra d e rs 1 5 T ra d e rs 1 1 H o R e C a8 H o R e C a6 I n s t it u t i o 5 s n I n s t it u t io 3 s n 28 W h o l e s a 2l e 22 DM 2 T o ta l 3 0
Departmentwise – Responsibilities
Marketing 1. Key Account Managers 2. Customer Marketing ? Sales & Promotion of In-House Brands Customer Entrance ? Welcoming the Customer and guiding for an effective shopping experience. Administration Checkout: ? Billing, checking goods, easy passage of customers at the exit Goods Receiving ? Receive goods as per order given, entry in to the system, checking stocks are in Administrative Logistics and Control ? To maintain data & do the system changes in price & updating product details Re-Ordering ? To co-ordinate with the Floor Managers & Department Managers to place order with the suppliers Common Responsibilities of Operations’ Departments: Availability of all products Shelf display Arrangement of products as per Plano gram Freshness of stock: correct code date of products sold Following HACCP standards of storage & preservation ? Co-ordination with suppliers to supply stock at required quantities & timing ? Sales ? ? ? ? ? Department names: Ultra Fresh Food Fish, Dairy Frozen and Bakery Meat, Fruits & Vegetables Dry Food Grocery Beverages Wines Spirits & Tobacco, Sweets and Confectionery, Non Food In-Food
Non-Food Apparels, Sports & Toys, Footwear and Luggage, Media and Home Appliances, Home Improvement, Home Textiles, Home Décor and Household. HR ? To look after the welfare of the employees Maintenance ? To look after proper functioning of the Store Security ? To ensure safety & security at entry and exit points Training ? To take care of training needs of the employees of the Store. 4.5 Customer details handled by Customer Marketing team – number & type
Thank You
doc_417121411.doc
The doc describes the global retail industry, indian retail, Traditional & Modern Retailing, Organised Retail.
To Increase Retail Throughput for Metro Cash & Carry, Mumbai
Index
Sr. No 1 2 3 4 5 6 7 8
Topic Global Retail Industry India Retail Tndustry Metro Global Metro India Metro Mumbai Swot Ananlysis Strategy for 2009 Conclusion
Global Retail Industry
Overview The latter half of the 20th Century, in both Europe and North America, has seen the emergence of the supermarket as the dominant grocery retail form. The reasons why supermarkets have come to dominate food retailing are not hard to find. The search for convenience in food shopping and consumption, coupled to car ownership, led to the birth of the supermarket. As incomes rose and shoppers sought both convenience and new tastes and stimulation, supermarkets were able to expand the products offered. The invention of the bar code allowed a store to manage thousands of items and their prices and led to 'just-in-time' store replenishment and the ability to carry tens of thousands of individual items. Computer-operated depots and logistical systems integrated store replenishment with consumer demand in a single electronic system. The superstore was born. On the Global Retail Stage, little has remained the same over the last decade. One of the few similarities with today is that Wal-Mart was ranked the top retailer in the world then and it still holds that distinction. Other than Wal-Mart’s dominance, there’s little about today’s environment that looks like the mid-1990s. The global economy has changed, consumer demand has shifted, and retailers’ operating systems today are infused with far more technology than was the case six years ago. Saturated home markets, fierce competition and restrictive legislation have relentlessly pushed major food retailers into the globalization mode. Since the mid-1990s, numerous governments have opened up their economies as well, to the free markets and foreign investment that has been a plus for many a retailer. However, a more near-term concern, has been the global economic slowdown that has resulted from dramatic cutback in corporate IT and other types of capital spending. Consumers themselves have become much more price sensitive and conservative in their buying, particularly in the more advanced economies. From an operational point of view, active practitioners have voiced their opinion that retailer concerns in 2003 have turned to deflation, lack of pricing power, global over-capacity, low interest rates, economic stagnation, slump in world tourism and declining consumer confidence. But, even before the global economic slowdown that forced retailers into monitoring costs more effectively, technological advances were a way of life in retail organizations. Technology has become the real enabler for retailers over the last six years. Supply chain innovations for retailers were particularly strong in the second half of the 1990s and have continued into today. With all the emphasis on technology and cost-cutting, a major thrust of retailers continues to be demandbased i.e. finding new markets through globalization efforts. Four years ago, more than half (53 per cent) of the top 200 retailers operated in only one country. Today, only 44 per cent remain single-country merchants. This globalization trend can only intensify in the years ahead. The benefits of increased sales and greater economies of scale are too large to be ignored.
The global retail industry has traveled a long way from a small beginning to an industry where the world wide retail sale alone is valued at $ 7 trillion. The top 200 retailers alone account for 30% of worldwide demand. Retail sales being generally driven by people’s ability (disposable income) and willingness (consumer confidence) to buy, compliments the fact that the money spent on household consumption worldwide increased 68% between 1980 and 2003. The leader has in-disputably been the USA where some two-thirds or $6.6 trillions out of the $10 trillions American economy is consumer spending. About 40% of that ($3 trillions) is spending on discretionary products and services. Retail turnover in the EU is approximately Euros 2000 billion and the sector average growth looks to be following an upward pattern. The Asian economies (excluding Japan) are expected to grow at 6% consistently till 2005-06. Positive forces at work in retail consumer markets today include high rates of personal expenditures, low interest rates, low unemployment and very low inflation. Negative factors that hold retail sales back involve weakening consumer confidence. The global general merchandise store sector generated a market value of $1,375 billion in 2005, with a compound annual growth rate (CAGR) of 6.8% during the period 2001-2005, outperforming the 4.7% CAGR of the entire global retail industry in the same period. Moving into the future, the sector’s growth is set to decelerate slightly. Apparel and footwear forms a leading sub-sector for the global general merchandise store sector group. The apparel and footwear market generated revenues of $311.7 billion in 2005, representing 22.7% of the market value of global general merchandise store sector. Groceries and F&B also contributed significantly to the sector’s value, with revenues of $255.9 billion in 2005, representing 18.6% of the sector market value. Demand for these goods is expected to grow with population levels and exhibit relatively little price elasticity of demand. Drug, health and beauty aids formed the third lucrative sub-sector group contributing 10.5% of the sector’s market value. US is leading growth generating revenues of $520.4 billion in 2005, representing 40.3% while Europe accounted for 34% and Asia Pacific 14.5%. The global department store sector exhibited modest growth during the period 2001-2005, and is forecast to have a sluggish growth in the future. The industry sector generated a market value of $491.5 billion in 2005, with a compound annual growth rate (CAGR) of 6.8% during 2001-2005, which is lower than the 4.7% CAGR of the entire global retail industry in the same period. The relatively sluggish performance was attributed in part to competition from other modes of retail, such as online shopping, and also to declining customer traffic in the US shopping malls. US market was the largest driving force to account for 48.4% of the global department store sector industry in 2005, corresponding to $237.9 billion. In comparison, Asia-Pacific generated 24.1% of the sector’s market value. India has a retail market value of US$7 billion with 12 million retail outlets. Retailers of organized formats such as department stores, discounters, big boxes, and specialty stores, constitute only 3% of the Indian retail market. More than 80% of the country’s retail market is run by small family businesses using household labour. According to Ernst & Young, India is the 4th largest economy in the world in terms of Purchasing Power Parity (PPP). India's consumer products market is expected to grow to
S$400 billion by 2010, making it one of the five largest markets in the world. The research company expects India to become the 3rd by 2010, just behind the US and China. China’s total retail market grew 88.47% in current terms to RMB 5.387trn in1997 and 2004 – representing an annual average growth rate of 10.87%. At constant 1996 prices, the market grew by 88.64% over the same period – an average annual rate of 9.52%. Large-scale operation requirement and heavy capital investment have limited local entrants into China’s mass merchandising market. As a result, foreign retailers such as Wal-Mart and Carrefour run most of the hypermarket businesses in China. A small handful of local players in hypermarkets include Shanghai Lianhua Century Hypermarket and Beijing Hualian Hypermarket. The U.S. has Wal-Mart. France has Carrefour. Each country has a retailer that has become the biggest and best, and the one to catch up to. Some of the major countries with their top retailers are mentioned below: United States – Wal-Mart Stores (Fortune 1) Cash and Carry/Warehouse Club, Discount Department Store, Hypermarket/Supercenter/Superstore, Supermarket. The top retailer in the U.S. is also the largest retailer in the world, using total annual revenue as the measure. Australia – Woolworths Ltd. Convenience/Forecourt Store, Discount Department Store, Electronics Specialty, Other Specialty, Supermarket.
Brazil – Comanhia Brasileira de Distribuicao SA Grupo Pao De Acucar Convenience/Forecourt Store, Electronics Specialty, Hypermarket/Supercenter/Superstore, Supermarket.
Canada – Loblaw Companies, Ltd. Cash & Carry/Warehouse Club, Discount Store, Hypermarket/Supercenter/Superstore, Supermarket.
China – Bailian Group Convenience/Forecourt Store, Department Store, Home Improvement, Hypermarket/Supercenter/Superstore, Supermarket.
France - Carrefour (Fortune 33) Cash and Carry/Warehouse Club, Discount Department Store, Hypermarket/Supercenter/Superstore, Supermarket, convenience/forecourt store.
Germany - Metro AG (Fortune 56) Apparel/Footwear Specialty, Cash & Carry/Warehouse Club, Department Store, Electronics, Specialty, Hypermarket/Supercenter/Superstore, Other Specialty, Supermarket.
Mexico – Organizacion Soriana S.A. de C.V. Cash & Carry/Warehouse Club, Hypermarket/Supercenter/Superstore.
Russia – X5 Retail Group N.V. Convenience/Forecourt Store, Discount Store, Hypermarket/Supercenter/Superstore, Supermarket. South Africa – Pick ‘n Pay Stores Ltd. Apparel/Footwear Specialty, Convenience/Forecourt Store, Drug Store/Pharmacy, Home Improvement, Hypermarket/Supercenter/Superstore, Other Specialty, Supermarket.
United Kingdom – Tesco Convenience/Forecourt Store, Department Store, Discount Department Store, Hypermarket/Supercenter/Superstore, Supermarket.
Top 25 Global Retailers Worldwide
Retail Industry in India India’s GDP growth of 9.4 per cent in 2006-07 is the highest posted for over 18 years, reflecting the booming economy of the country. Growing in tandem with the economy is the Indian retail sector. The sector is on a high growth trajectory and is expected to grow by more than 27 per cent over the next 5 to 6 years. Retail is one of India’s largest industries, contributing to about 10 per cent of the GDP and providing employment to 8 per cent of the nation’s workforce. Indian retail business promises to be one of the core sectors of the Indian economy, with organised retail sector estimated to grow by 400 per cent of its current size by 2007-08. The growth and potential of the sector is being widely acknowledged both in the domestic as well as international forums. India topped AT Kearney’s Global Retail Development Index 2007 for the third consecutive year, retaining its position in the global market as the most preferred retail destination amongst emerging markets. For the fifth time, India also topped the Global Consumer Confidence Index June – 2007 conducted twice a year by The Nielsen Company. Indians were judged the world’s most optimistic consumers, with large sections of the population considering “now” a good time to spend. Indian consumers were also found to be bullish about their personal finances over the next 12 months. The economics of Indian consumerism is buoyant, with India ranking as the fourth largest economy in terms of Purchasing Power Parity (PPP), next only to United States, Japan and China. India is expected to outpace Japan by the year 2010 to become world’s third largest economy. With 54 per cent of the Indians aged below 25, the young Indian consumer is buying big to look good and feel good. Retail Revolution Retailing in India is evolving rapidly, with consumer spending growing by unprecedented rates and with increasing number of global players investing in this sector. Organised retail in India is
undergoing a metamorphosis and is expected to scale up to meet global standards over the next five years. India’s retail market has experienced enormous growth over the past decade, more than doubling in size to US$ 311.7 billion in 2005-06. The market was estimated at US$ 1.1 trillion (in PPP terms) in 2005-06. The most significant period of growth for the sector was between years 2000 and 2006, when the sector revenues increased by about 93.5 per cent translating to an average annual growth of 13.3 per cent. The sector’s growth was partly a reflection of the impressive Indian economic growth and overall rise in income levels of consumers.
Even the introduction of Value Added Tax (“VAT”) in April 2005 has not severely impacted consumer demand for retail goods. Greater exposure to western products and lifestyles has helped drive consumerism. The sector also benefited considerably by the rising popularity of satellite television since the early 1990s, which provided a highly effective mass marketing route, reaching out to the large Indian consumer base.
Traditional & Modern Retailing
Traditional retailing continues to be the backbone of the Indian retail industry, with traditional / unorganised retailing contributing to over 95 per cent of total retail revenues. The quintessential mom-and-pop retailing outlets or the cornerstore formats constitute a major part of Indian retail store formats. Over 12 million small and medium retail outlets exist in India, the highest in any country. More than 80 per cent of these are run as small family businesses. Prevalence of traditional retailing is highly pronounced in small towns and cities with primary presence of neighborhood “kirana” stores, push-cart vendors, “melas” and “mandis”. Organised formats are only in the initial stages of adoption in these regions. Leading retail players in the industry are beginning to explore these markets and the rural consumers are slowly beginning to embrace the newer organised retail formats. Modern/Organised retailing is growing at an aggressive pace in urban India, fuelled by bourgeoning economic activity. Organised retail revenues are expected to increase from an estimated US$ 12.9 billion per annum in 2005-06 to more than US$ 43 billion by 2009-10. The sector is predicted to grow by 400 per cent, in value terms, by 2007-08. A large number of domestic and international players are setting up base and expanding their business with newer organized retail formats and intense competition driving innovation in formats.
Growth across segments
Retail sector in India is primarily categorized by the type of products retailed, as opposed to the different retail formats in operation. The Food and Beverages vertical accounts for the largest share of revenues at 74 per cent of the total retail market. This category has the highest consumer demand across all income levels and various retail formats. The Indian consumer behavior of preferring proximity to retail formats is highly pronounced in this sector, with food, grocery and allied products largely sourced from the local stores or push-cart vendors. Apparels and consumer durables are the fastest growing verticals in the retail sector. Mobile phone as a product category has witnessed the highest growth in consumer demand amongst all retail product offerings, with increasing penetration of telecommunications in towns and villages. The Telecommunications sector has been adding on an average 5 million new users every month. The other product categories are gaining traction predominantly in the urban areas and emerging cities, with increasing average income and spending power of young urban India.
Organised Retail
Organised retail clocked revenues of US$ 12,927 million, compared to total retail sales estimated at US$ 311,731 million in 2005-06.The apparel industry contributed to the largest share of the organised retail pie, with revenues of US$ 4,756 million, owing to the rapidly rising number of malls and introduction of several domestic and international apparel brands in the country. The Food and Beverages segment recorded the highest growth over 2004-05, with the proliferation of supermarkets, hypermarkets and the entry of major players like Reliance Fresh (promoted by Reliance Retail Ltd).
This segment is poised to gain traction, with several new players planning their entry and the existing players expanding their business in this segment at a rapid pace. The Home Décor segment followed suit growing at 18 per cent, with a boom in the real estate and housing sector. Penetration of organised retail was at 4.15 per cent in 2005-06, an increase from the 3 per cent estimated for 2004-05, and is projected to increase to 9.52 per cent in 2009-10, with revenues from organised retail expected to touch US$ 43,829 million in 2009-10. Footwear segment recorded the highest penetration of 32.84 per cent, primarily due to the presence of well established players like Bata, Liberty and Paragon. These players have been in the market for over three decades, have good brand recall and a well established distribution network penetrating both rural and urban areas.
Consumer durables segment and the books and music segment also witnessed continued growth. Entry of players like Crossword and Music world has given the segment strong impetus. Apparel is one of the fastest growing verticals, with the highest number of domestic and foreign brands mushrooming in the market, and increasing consumer willingness to pay for brand and quality of products.
Future Outlook
Retail sector revenues is pegged to reach US$ 460.6 billion by 2010-11, with the organised retail sector projected to grow to US$ 43.8 billion in the said year. It is envisaged that modern retail will adapt and absorb some of the traditional formats in the course of its expansion. Unorganised retail formats are expected to converge and combine in formats such as mushrooming village malls and rural retailing ventures. With the rural retail revenues forming the largest share of total retail revenues, increasing number of players are in the fray to explore opportunities in the rural areas. The rural retail revenues are estimated to increase by 60 per cent by 2012, with larger share of increase in demand for consumer and household products. Retail giants are set to embrace newer and innovative formats, by giving modern retail a traditional look in line with consumer needs and expectations. Pilot test concepts are already being rolled out by players like Indian Tobacco Company (ITC) and DCM Shriram Consolidated Ltd. (DSCL) with their rural initiatives of Choupal Saagar and Hariyali Kisan Bazaar, and are exploring options to increase their customer outreach. Established players like Unilever, Dabur and Godrej have strengthened their distribution channels and are increasing their penetration to leverage the higher consumer demand in these markets. Reliance Retail Ltd, a wholly owned subsidiary of Reliance Industries Ltd, is set to embark on the establishment of 1,600-odd rural retail hubs by 2010, with the aim to make these hubs the nodal institutions for retailing activity, ushering in a new era of organised-rural retail. With modest store formats being pursued to attract the average rural customer, as opposed to the plush and vibrant formats adopted for the urban retailing, rural retailing is set to provide a new dimension to the Indian retail scenario.
Potential Untapped Market
India ranks first, ahead of Russia, in terms of emerging market potential and is deemed a “Priority 1” market for international retail. Organised retail penetration is on the rise and offers an attractive proposition for entry of new players as well as scope for expansion for existing players.
India is home to a large base of consumers with annual incomes ranging from US$ 1,000 – US$ 4,700, comprising of over 75 million households. A steadily rising percentage of rich and super rich population and impressive disposable incomes offers a spectrum of opportunities, spanning from rural retailing to luxury retailing. The impressive retail space availability and growing trend of consumerism in the emerging cities and small towns add to the market attractiveness. Pantaloon Retail India Limited, one of India’s retail giants captures a mere 0.3 per cent of total market; compared to Tesco Plc, which captures 14.3per cent of England’s market and Walmart which captures 20 per cent of USA’s market; giving an insight into the large untapped market potential.
Policy & Regulatory Environment
The Government is progressively undertaking reforms and liberalising the retail sector; thereby attracting significant foreign investments. The regulatory and supervisory policies are being reshaped and reoriented to meet the new challenges and opportunities in this sector. To facilitate easier flow of Foreign Direct Investments (“FDI”) inflow, instead of having to seek Foreign Investment Promotion Board (“FIPB”) approval, FDI up to 100 per cent is allowed under the automatic route for cash and carry wholesale trading and export trading. FDI up to 51 per cent is allowed, with prior Government approval for retail trade in ‘Single Brand’ products with the objective of attracting investment, technology and global best practices and catering to the demand for such branded goods in India. This implies that foreign companies can now sell goods sold globally under a single brand, such as in the case of Reebok, Nokia and
Adidas. However, retailing of multiple brands, even if the goods are produced by the same manufacturer, is presently not allowed. Relaxation of FDI restrictions are being vigorously pursued by the business and trade coalitions and are expected to fall in place over the next 3-5 years. The most common channels for entry of foreign retailers are the strategic license agreements, franchising, distribution, manufacturing, joint ventures and cash and carry wholesale trading.
Cash-and-Carry Wholesale Trading
100 per cent FDI is allowed in wholesale trading which involves building a large distribution infrastructure to assist local retailers and manufacturers.
Joint Ventures
International firms can enter into agreements with domestic players, and set up base in India. The share of the multinational is restricted to 49 per cent in this route.
Manufacturing
International retailers can set-up manufacturing units for their products in India. Entry through this route entails the company the rights to retail the products in India through individual retailing outlets.
Retailing Format in India Malls:
The largest form of organized retailing today. Located mainly in metro cities, in proximity to urban outskirts. Ranges from 60,000 sq ft to 7, 00,000 sq ft and above. They lend an ideal shopping experience with an amalgamation of product, service and entertainment, all under a common roof. Examples include Shoppers Stop, Piramyd, and Pantaloon.
Specialty Stores:
Chains such as the Bangalore based Kids Kemp, the Mumbai books retailer Crossword, RPG's Music World and the Times Group's music chain Planet M, are focusing on specific market segments and have established themselves strongly in their sectors.
Discount Stores:
As the name suggests, discount stores or factory outlets, offer discounts on the MRP through selling in bulk reaching economies of scale or excess stock left over at the season. The product category can range from a variety of perishable/ non-perishable goods.
Department Stores:
Large stores ranging from 20000-50000 sq. ft, catering to a variety of consumer needs. Further classified into localized departments such as clothing, toys, home, groceries, etc. Departmental Stores are expected to take over the apparel business from exclusive brand showrooms. Among these, the biggest success is K Raheja's Shoppers Stop, which started in Mumbai and now has more than seven large stores (over 30,000 sq. ft) across India and even has its own in store brand for clothes called Stop.
Hyper marts/Supermarkets:
Large self-service outlets, catering to varied shopper needs are termed as Supermarkets. These are located in or near residential high streets. These stores today contribute to 30% of all food & grocery organized retail sales. Super Markets can further be classified in to mini supermarkets typically 1,000 sq ft to 2,000 sq ft and large supermarkets ranging from of 3,500 sq ft to 5,000 sq ft. having a strong focus on food & grocery and personal sales.
Convenience Stores:
These are relatively small stores 400-2,000 sq. feet located near residential areas. They stock a limited range of high-turnover convenience products and are usually open for extended periods during the day, seven days a week. Prices are slightly higher due to the convenience premium
MBO (Multi Brand Outlets):
Multi Brand outlets, also known as Category Killers, offer several brands across a single product category. These usually do well in busy market places and Metros. RETAIL SALES IN INDIA
Key Players in India
? Pantaloon Retail (India) Limited ? Shopper’s Stop Limited ? Tata Trent Ltd. ? RPG Enterprises ? Landmark Group ? Madura Garments ? Vivek Group ? Globus ? Subhiksha Trading Services ? Nilgiris Ltd. ? Provogue Ltd. ? Bata India Ltd. ? Archies Ltd ? Metro in India
Pantaloon Retail (India) Limited
Pantaloon Retail, a Future Group venture started its operations with Pantaloon Shoppe in 1993 and has since emerged the retailing giant of India with over 5 million square feet of retail space spread over 450 stores across 40 cities in India. Pantaloon Retail operates in over twenty diverse store formats, with a spectrum of offerings ranging from food and grocery to carpentry services.
Shopper’s Stop Limited
Shoppers Stop, established in 1991 with its flagship store- Shoppers Stop by the K. Raheja Group, has now expanded to over 100 retail outlets spread across 1.1 million square feet of builtup area, spanning a spectrum of retailing verticals and formats. The group offers formats in the lifestyle and luxury segment, with the growing affluent middle class population as their target consumer base.
Tata Trent Ltd.
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Established in 1998 Revenues: US$ 53 million Retail sector activity: Apparel, Specialty – books and music Current store format: Hypermarket, Supermarkets Future plan: New venture-Infiniti Retail Ltd. Manufacture private labels in apparels Principal fascia: Westside, Landmark, Star India Bazaar
RPG Enterprises
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Established retail in 1996 Revenues: US$ 182 million Retail sector activity: Food & grocery, Beauty products, Specialty- music Current store format: Convenience stores, supermarkets, hypermarkets Current outlets: 279 outlets Music world has tie ups with 350 affiliates across the country. Future plan: by 2009 set-up 2000 stores in India Principal fascia: Spencer’s, Music World
Landmark Group
? ? ? ? ? Present in India since 1999 Retail sector activity: Apparel, Home décor & Furnishing Current store format: Department stores, Hypermarkets Current outlets: Lifestyle-10 outlets, Max Retail-4 outlets Future plan: Presence in mini metros and Tier-II cities
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Principal fascia: Lifestyle, Home Centre, Max Retail
Madura Garments
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Established in 1988 Part of the Aditya Birla Nuvo Group Retail sector activity: Apparel Principal fascia: Louis Philippe, Van Heusen, Allen Solly, SF jeans, Peter England Joint Venture with international brands: Esprit Current outlets: Planet Fashion-50 outlets, Trouser town-9 outlets Future plan: Projected to increase to 300 outlets by 2009 and diversify into the women’s wear segment
Vivek Group
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Established in 1965 Revenues: US$ 91.5 million Retail sector activity: Food & Grocery, Beauty, SpecialtyElectronics & Home appliances Current store format: Supermarkets, Hypermarkets Current outlets: Vivek-23 outlets, Jaisons-26 outlets, Premier-3 outlets Future plan: Set up 60 stores in South India Principal fascia: Viveks, Jaisons, Premier
Globus
? ? ? ? ? ? ? Established in 1998 Retail sector activity: Apparel Current store format: Stand alone stores Current outlets: 21 Future plan: To set up 100 stores by 2008 Manufacture private labels under Globus and F21 Principal fascia: Globus
Subhiksha Trading Services
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Established in 1997 Turnover of US$ 75.6 million Retail sector activity: Food, Medicines Current store format: Supermarkets
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Current outlets: 150 outlets Future plan: To set up 600 stores with 145 stores in NCR region Principal fascia: Subhiksha
Nilgiris Ltd.
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Established in 1904 Revenues: US$ 30.5 million Retail sector activity: Food & grocery, Specialty- Bakery products Current store format: Supermarkets Future plan: To increase stores to 100 Principal fascia: Nilgiris
Trinethra Super Retail Ltd.
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Established in 1986 (Taken over by Aditya Birla Nuvo Group in 2006) Revenues: US$ 58.5 million Retail sector activity: Food & Grocery, Beauty products Current store format: Convenience stores, Supermarkets, Hypermarkets Current outlets: 150 outlets Future plan: To enter into Pharmacies, Apparel, Footwear Principal fascia: Trinethra Super Retail LTD., Trinethra Quick Shop
Provogue Ltd.
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Established in 1997 Revenues: US$ 38.1 million Retail sector activity: Apparel, Footwear Current store format: Stand alone stores Current outlets: 139 outlets Future plan: To manage and develop malls Principal fascia: Provogue, Prozone Present since 1931 Revenues: US$ 179.8 million Retail sector activity: Footwear and Accessories Current store format: stand alone stores Current outlets: 1100 outlets Future plan: To remodel 150 stores and open 40 more stores Principal fascia: Bata
Bata India Ltd.
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Archies Ltd
? ? ? ? Present since 1979 Revenues: US$ 20.8 million Retail sector activity: Specialty-cards & gifts Current store format: Stand alone stores
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Future plan: To increase from 73 stores to 200 by 2008 Principal fascia: Archies, Stupid Cupid
Presence of MNC chains in India Metro in India
Metro AG of Germany has a presence in India at Bangalore, Kolkatta & Mumbai. It opened its first Indian outlet in Yeshwanthpur, Bangalore in 2003 on a sprawling 6,500 square metres area and added one more centre there.
Metro (Global)
Mission Statement "METRO is a Cash & Carry self-service wholesaler for businesses and professionals. METRO provides quality products and business solutions at the lowest possible prices". "As worldwide No. 1 in self-serve wholesale, we systematically address the needs of our customers. In keeping with our motto "From professionals for professionals," we offer an extensive range of high-quality food and nonfood products at competitive prices. With efficient logistics and a business concept that can be adapted flexibly to the requirements of diverse markets and locations, we are actively setting the stage for sustainable growth."- CEO METRO Cash & Carry
Frans W.H. Muller (CEO)
The METRO Cash & Carry success story began in 1964 with the opening of the first wholesale outlet in Germany. Today the company is represented in 30 countries with METRO and MAKRO Cash & Carry stores at 544 locations - and offers its commercial customers up to 50,000 different products from a single source. METRO Cash & Carry International GmbH in Duesseldorf, Germany, is the Management Holding Company steering the global business. The METRO Group was created in 1996 through the merger of leading trading companies. The corporate group is composed of high-performance, operationally independent companies and businesses.
The group includes: ? METRO/Makro Cash & Carry, the world’s market leader in cash and carry ? Real Hypermarkets ? Extra Supermarkets ? Media Market ? Satum, Europe’s leader in consumer electronic retailing ? Galeria Kaufhof, the system leader in the department store business.
Just as the group profits from the strengths of the individual companies, each sales division receives support and reinforcement from the entire corporation’s business potential. Furthermore, all members of the METRO Group profit from the important synergy effects that only a nationally and internationally successful major corporation can offer. METRO Group today, is the third largest trading and retailing group in the world. The company employs over 2,50,000 staff in 30 countries. In the year 2005 METRO Group had generated sales of over €55.7 billion; 53% of total sales came from outside Germany. With 655 stores in 29 countries, METRO Cash & Carry is an international leading player in self-service wholesale. The product range and services are tailored exactly to the needs of the professional customers. Hoteliers, restaurateurs, caterers and small-scale food retailers find everything they need to guarantee their business success. Their trademarks are top quality, huge choice and excellent value for money. METRO Cash & Carry has an international
identity – and a true international corporate culture to support it. This clearly distinguishes them from others and is a key for their swift international expansion in Eastern Europe and Asia. METRO Cash & Carry is the major growth driver of the METRO Group, one of the world’s leading retailing companies. In 2008, they achieved sales figures of around 33.1 billion Euros.
Background
All under one roof The business concept of METRO Cash & Carry is specially tailored to the needs of commercial customers, such as small and medium-size retailers, restaurants, cafeterias, hotels and other service providers as well as institutions. The Cash & Carry principle is that the customers themselves select the purchases from the wholesale store shelves, then pay and take the goods with them. The innovative METRO Cash & Carry concept of self-service wholesale was introduced to Germany more than 40 years ago by Professor Dr. Otto Beisheim: in 1964 he opened the first Cash & Carry wholesale outlet in the city of Mülheim, in the Ruhr area. Then as well as now, the Cash & Carry concept is characterized by outstanding depth and breadth of product range,a consistently customer-oriented approach as well as a favorable cost-benefit ratio.
Business Concept
A broad range of products at competitive prices Customers can always expect to find a comprehensive product range at METRO Cash & Carry stores. Depending on size and type, the outlets offer as many as 20,000 different food products and up to 30,000 nonfood products. METRO Cash & Carry maintains a large stock of all products in its range, in a selection of formats, all at competitive wholesale prices and in excellent quality. In addition, restaurants, hotels, caterers and food retailers profit from a large range of fresh goods. Spe cific store architectures to meet professional standards METRO Cash & Carry operates in various countries with three store formats: Classic, Junior and ECO. The sales area of a Classic wholesale outlet is 10,000 to 16,000 square meters. This format is mainly used in Western European countries. In Eastern Europe and Asia, smaller Classic stores so called Junior stores of 7,000 to 9,000 are generally built. ECO stores – for example, in France and Italy – have sales areas of 2,500 to 4,000 square meters. While the Classic outlets offer a comprehensive range of up to 50,000 food and nonfood products, ECO stores are concentrated on food, especially perishables. With ranges comprising 90 percent food products, ECO stores are mainly geared toward hotel and catering industry customers requiring large amounts of fresh, high-quality food on a daily basis. Adapting to meet local needs
A special characteristic of the METRO Cash & Carry sales concept is that the product range of each store is tailored to the requirements of the local target group. The goods that stock the shelves and refrigeration units are carefully selected according to the consumer behavior and demands of the respective region. On the English Channel, the Moskva or the Yellow Sea, METRO Cash & Carry outlets all have something in common: approximately 90 percent of their merchandise is purchased from local producers and suppliers within their countries. The METRO Cash & Carry policy of local procurement supports the regional economies – for example, by generating new business for manufacturers and farmers. The company also helps producers and suppliers in developing modern cultivation, processing and distribution methods. In addition, the stores address special needs with a wide selection of international products, such as the Turkish foods offered in Germany.
History (Metro (Global))
The METRO Cash & Carry success story
1964
The first METRO self-serve wholesale outlet opens in the city of Mulheim in the Ruhr area. Even the first store carries a considerably wider product range than conventional wholesalers. Its sales are 14000 square meters also represents an entirely new dimension. Metro Cash & Carry opens three more stores in Germany and systematically expands its network over the following years. Today, customers can find at least one Metro Cash & Carry outlet in every larger German city. The first step beyond German borders. A partnership with the Dutch company Steenkolen Handelsvereeniging leads to the establishment of MAKRO Zeifbedieningsgroothandel. The first step beyond German borders. At this time there are already 13 METRO Cash & Carry outlets in Germany. The compnay enters key Western European markets in the UK, France, Austria and Denmark. METRO Cash & Carry opens stores in Spain and Italy. After 20 years in business, METRO Cash & Carry already operates more than 100 self-service wholesale outlets across Europe. METRO Cash & Carry etnters new markets in Turkey and Portugal. METRO Cash & Carry succeeds in making the jump to North Africa with its first store in Morocco.
1967
1968 1970 1971 1972 1984 1990 1991
1992
Following its Greek market entry, METRO Cash & Carry is present in the majority of EU member countries. Hungary and Poland open their markets. METRO Cash & Carry is one of the first international trade-sector companies to establish a foothold in Eastern Europe. In a joint venture with the Jinjiang Group, METRO Cash & Carry is granted a nation-wide wholesale license for the emerging market of China. In the same year, the compnay enters Romania. Coinciding with this stepped up expansion, the METRO Group is established in Germany, with METRO Cash & Carry as its highest-volume sales division. Within the year, the holding METRO AG is listed on the stock market. METRO Cash & Carry maintains its focus on Eastern Europe, opening for business in the Czech Republic. Existing Makro Stores in Europe and Morocco are integrated into the METRO Cash & Carry network. METRO Cash & Carry opens an outlet in Bulgaria, adding a further Eastern European location to its corporate portfolio. The first store in Slovakia opens its doors. METRO Cash & Carry establishes a presence in Russia, with two stores. With the first store opening in Croatia the market entry is performed. At this stage, the Company already operates 15 outlets in China. Entering the Japanese and Vietnamese markets, the company continues to expand in Asia. METRO Cash & Carry opens its first wholesale stores in Ukraine and India. METRO entry in Moldova. In 2004, stores are opened at more than 30 new locations, around three quarters of them in the growing markets of Asia and Eastern Europe. In Belgrade, Serbia's first METRO Cash & Carry outlet is inaugurated. METRO Cash & Carry announces upcoming market entry in Pakistan. Market entry in Pakistan, opening of 600th store in Novosiirsk. Metro Cash & Carry announces that in 2009 it will be entering the growth markets of Kazakhstan and Egypt
1994
1996
1997 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Corporate Culture
The 10 METRO Cash & Carry principles The success of the company is based on the following principles: ? Focused on professional customers ? Efficient store concept designed for professional needs ? One-stop shopping ? Advanced customer service ? Enhanced customers’ competitiveness ? Excellence in supply chain and quality management
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Strengthening of local suppliers Development of national infrastructures Career opportunities Internationally transferable concept
Social Responsibility
METRO Cash & Carry takes on social responsibility As an international wholesaling company operating in 29 countries, METRO Cash & Carry combines business success with a deep sense of responsibility for society. By entering new markets, the company secures more than its own future viability. METRO Cash & Carry creates jobs, and in many cases acts as a pioneer in developing modern trade and supply structures. For instance, in India and Vietnam METRO Cash & Carry has initiated training programs for local farmers. In cooperation with the German Investment and Development Company (DEG) 14,000 sheep farmers and 1,000 fishermen in India are receiving training in animal husbandry and the processing of their food products. Even today, a large proportion of the goods spoil on the way to consumers due to outdated supply chains and the absence of refrigeration technology. The transfer of know-how represents a significant contribution to the improvement of the food supply.
Internationalization
Business principle and success factors Internationalization is a core element of the METRO Cash & Carry strategy. It has played a decisive role in the company’s rise to become the worldwide market leader in self-service wholesale. In advance of market entry METRO Cash & Carry examines potential market entries with great care. Before setting foot in a new country, an intensive advance assessment is carried out. Should this scoring yield positive results, it is then followed by a comprehensive feasibility study. This includes thorough on-site research along with an assessment of all modalities involved in doing business at the proposed location. A team of specialists analyzes all aspects relevant to operations, such as purchasing, sales and marketing, laws, human resources and logistics. The decisions on market entry and on the actual location, type and size of the planned outlets are based on the results of this study. Local staff a priority The objective is to staff a new store as quickly as possible with local employees, and to qualify them in the company’s own intensive training programs. The people who call the region home have the advantage of knowing the professional customers. They are able to perfectly adapt the service offering to the national or regional culture. By hiring local staff, from sales people to managers, the company also contributes to the country’s job market. In many nations, METRO Cash & Carry has grown to become one of the largest private employers within just a few years. Expanding the business concept in Europe
The sales concept of METRO Cash & Carry is not only successful in Germany. In 1968, the partnership with the SHV Group led to the establishment of Makro Zelfbedienigsgroothandel – the first step beyond German borders. Up to 1972, METRO and MAKRO Cash & Carry continued to expand in Southern and Western Europe. A leap across the Mediterranean In the 1990s, the jump across the Mediterranean was successfully carried out with stores in Turkey and Morocco. After around 30 years in business, the company was present in a dozen countries with more than 200 outlets. This made METRO Cash & Carry the most widely represented international food trading company worldwide. Development in Eastern Europe The next important step was the entry into the emerging markets of Eastern Europe. Within a few years, wholesale outlets were opened in Hungary, Poland, Romania, Czech Republic, Bulgaria and Slovakia. The company was established at an early stage in many of the countries that became members of the European Union in May 2005. “Wherever the euro goes, we’re already there,” says an advertising slogan of the METRO Group. Expansion into the Far East In the mid-90s, METRO Cash & Carry moved further eastward: it became the first international wholesaling company to receive a license for nationwide expansion in China. In 1996, the first wholesale outlet opened for business in Shanghai. At a time when hardly any other Western trader or manufacturer dared to make the leap into the country, METRO Cash & Carry again displayed perfect instincts. Today, after less than ten years, METRO Cash & Carry already operates 24 wholesale stores in China. Sails set for further emerging markets The METRO Cash & Carry concept has great potential. Over three billion people, or about half of the world’s population, live in countries where the company is already present. Every year, new stores are opened and new markets entered. The main focus has been on Eastern Europe and Asia. Two thirds of all new business locations are established in these growth regions, with special concentration on expansion in China and Russia.
Facts and figures
As an important international company in self-serve wholesale, METRO Cash & Carry continued on its international expansion course in 2007. The company systematically expanded its presence, especially in the emerging markets of Asia/Africa and Eastern Europe. At the end of the business year 2007, the wholesale brand METRO Cash & Carry was present at over 600 locations in a total of 29 countries.
Fiscal Year Sales
2008 € 68.0 billion (plus 5.8 percent) € 41.3 billion (60.8 percent) € 2,225 million 2 € 3,543 million 2 € 560 million € 9.3 billion € 1.18 4 2,195 32 12,350,000 square meters 290,940 (254,457)
2007 € 64.3 billion 1 € 38.1 billion € 2,078 million 1 € 3,343 million 1 € 983 million € 18.7 billion € 1.18 4 2,097 31 11,779,000 square meters 275,520 (239,242)
of which abroad
Earning before Interest and Taxes (EBIT) Earning before Interest, Taxes, Depreciation, Amortization (EBITDA) Consolidated Netincome 3 Market Capitalization (based on Year-End Stock Price) Dividend per Share of Common Stock Locations (Outlets) Countries with Metro Presence Selling Space Number of Staff on Annual Average Total (converted to Fulltime Equivalent)
* Continuing operations only (discontinued operations: Extra and Adler in 2007 and 2008) 1 Adjustment of previous year’s amounts due to preliminary accounting for business combinations in 2006 2 In 2008 adjusted for the costs of trimming of Real’s store network; €203 million was adjusted in EBITDA, of which Real accounted for €223 million and other companies/consolidation for €20 million; €237 was adjusted in EBIT, of which Real accounted for €224 million and other companies/consolidation for €13 million 3 Including discontinued operations 4 Subject to approval by the Annual General Meeting METRO Cash & Carry kept growth path in 2008 – Challenging year ahead Düsseldorf, 13 January, 2009 - Despite the global economic slowdown, METRO Cash & Carry maintained its growth path throughout the financial year 2008. According to preliminary and unaudited figures, sales increased by 4.5% to € 33.1 billion (Before currency effects: + 5.4%).
On like-for-like basis, sales grew by 1.6% in 2008. Nevertheless, the company’s business experienced a slowdown in the fourth quarter, when revenues increased by 2,2% before currency effects. Especially non-food sales decreased significantly in the last months of 2008. Both, Dr Eckhard Cordes, CEO of METRO Group, and Frans Muller, CEO of METRO Cash & Carry International, expect a challenging year 2009, but expressed also their confidence that the company will successfully cope with these difficult times. “Q4 sales development has been under expected pressure but we managed to implement first necessary measures to secure our growth and profit targets,” said Frans Muller. “I am confident that we are well prepared for the challenge as we have geared up with an even stronger focus on customer added value, competitiveness, operational basics and cost position.” In Western Europe, annual sales of METRO Cash & Carry in local currency came in slightly above the 2007 level in spite of the difficult macroeconomic situation. Eastern Europe continued the dynamic growth in 2008, in absolute terms and like-for-like. In Asia/Africa sales were clearly on the rise during the year. METRO Cash & Carry opened 40 new stores to a total number of 655, whereof nine openings took place in Russia, five in the Ukraine and four in Germany. The store networks were also extended in Poland and Bulgaria with three openings each as well as in France, Turkey and India with two openings each. Belgium, the Netherlands, Portugal, Greece, Romania, Czech Republic, China, Japan, Morocco and Pakistan also opened new stores. The overall performance of the METRO Group also has been positive and coped well in the negative global business climate. Sales went up by 5.9% to € 68 billion (Before currency effects: + 6.1%). Eastern Europe and Asia/Africa again showed the highest growth rates, while Western Europe held up well despite the difficult environment. Dr Cordes stated: “All in all, we had a satisfactory performance last year. But 2009 will be very challenging. The customers will think twice about where and for what they want to spend their money.“ METRO Group is now closely scrutinizing all cost structures, Dr Cordes added. The budget for investments was reduced to a maximum of € 1.6 billion. “With these measures we create additional entrepreneurial flexibility. This is why I am convinced that we will be able to further strengthen our competitive position also in 2009.”
Metro Worldwide
Metro (Global) locations around the world Country Austria Belgium Bulgaria China Croatia Czech Republic Denmark France Germany Greece Hungary India Italy Japan Moldavia Morocco Netherlands Poland Portugal Romania Russia Serbia Slovakia Spain Number of outlets 12 9 8 34 6 12 4 86 120 7 13 5 47 3 3 6 16 25 10 23 31 5 5 34 Market entry 1971 1970 1999 1996 2001 1997 1971 1971 1964 1992 1994 2003 1972 2002 2004 1991 1968 1994 1990 1996 2001 2005 2000 1972
Turkey Ukraine United Kingdom Vietnam
10 13 33 7
1990 2003 1971 2002
Metro (India)
METRO Cash & Carry started operations in India in 2003 with two Distribution Centres in Bangalore. With this METRO introduced the concept of Cash & Carry to India. These Centres offer the benefit of quality products at the best wholesale price to over 150,000 businesses in Bangalore. METRO offers assortment of over 18000 articles across food and non food at the best wholesale prices to business customers such as Hotels, Restaurants, Caterers, Food and Non-food Traders, Institutional buyers and professionals. METRO today is poised to extend its concept of Business to Business (B2B) Wholesale to other cities in the country. Concept (B2B) METRO's Cash & Carry business model is based on a Business to Business (B2B) concept and focuses on meeting all the needs and requirements of business customers. It is a modern format of wholesale trading, catering only to business customers. "Cash & Carry" means that the customers pick the goods themselves, pay in cash and transport their goods with their own vehicles. The advantage as compared with conventional wholesale lies in the more competitive price, the scope of the food and nonfood assortment, the immediate availability of the merchandise and the customer-oriented working hours. Society India is a land of opposites: people traveling to the subcontinent for the first time are often overwhelmed by the diversity of cultures and starkly contrasting traditional and modern lifestyles existing side by side. Holy cows stand with seeming disinterest in the middle of chaotic traffic intersections, pilgrims bathe in the Ganges and merchants offer spices at colorful bazaars. At the same time, India is one of the 21st century’s fastest-advancing high-tech locations – with a prospering IT sector and a huge proportion of students and young professionals who wear western attire and use modern communications technology. An economy on a growth course India is one of the fastest-growing emerging markets. Its gross domestic product was up by eight percent in 2006, and experts forecast a dynamic development at about the same level for the next few years. This is benefiting numerous sectors. For example, trade and retail: according to the Global Retail Development Index 2006, compiled by the management consultancy AT Kearney (www.atkearney.com), India is the world’s most attractive country for companies wishing to invest in this sector. Other areas also offer great potential, such as the chemicals and automotive
industries. However, economic strength is very unevenly distributed between regions: for instance, the net domestic product in the state of Delhi is 150 percent above the national average, while the quota in Bihar is only 31 percent of the national average. The METRO Group was quick to recognize the potential of the Indian market. It was the first international retailing company to set up operations on the subcontinent – and is now making a significant contribution to the development and expansion of the country’s retail infrastructure. In addition, the company supports the domestic economy: almost all the goods it sells are bought from local suppliers. Obstacles for investors The METRO Group, Wal-Mart, Tesco, Carrefour – a large number of international retail companies are investing in India’s growth potential. The country’s laws, however, still place tight restrictions on the activities of foreign companies: so far, investors are only permitted to operate single-brand stores, via franchise agreements, within the framework of a minority holding or as a wholesaler in India. The sales brand METRO Cash & Carry, with its self-service wholesale stores, is an example of a company that profits from these regulations. A further legal obstacle: in states like Karnataka, the Agricultural Produce Marketing Act (APMA) grants small enterprises the exclusive right to sell fruit and vegetables – a profitable business, considering that the majority of Indians are vegetarians.
Successive expansion The METRO Group is a prime mover, having already done pioneering groundwork in a number of countries. By entering the Indian market as well, the company stayed a step ahead of its competitors. As early as the mid-1990s, the METRO Group began analyzing the structures and special aspects of the Indian market. In fall of 2003, the time was ripe: the first two METRO Cash & Carry wholesale stores opened their doors in Bengaluru. Known as India’s Silicon Valley, the city formerly named Bangalore is home to numerous domestic and foreign IT companies and now has a population of over six million.
A high level of availability of goods The sales concept of METRO Cash & Carry offers commercial customers a range of benefits: for instance, goods always being available in sufficient amounts. The wholesale outlets in Bengaluru are able to guarantee that 95 percent of merchandise is in stock at all times. Just compare: the largest wholesaler in the region keeps a mere 65 percent of goods constantly in stock. Thanks to METRO Cash & Carry, commercial customers no longer have to keep large inventories. If a product sells out, it can be conveniently restocked – even if it is a special item.
Well cooled
METRO Cash & Carry safeguards the quality and freshness of its products by ensuring that the cold chain is consistently maintained – in transit as well as in the wholesale stores themselves. This is especially important in India, with its subtropical and tropical climate zones, where temperatures can rise above 50 degrees centigrade. For this reason, the two METRO Cash & Carry stores in Bengaluru are equipped with large climate-controlled areas for perishable goods. In each store, this section comprises more than 1,850 square meters of the approximately 10,200square-meter total sales area. In the Hyderabad store, the climate-controlled zone covers about a fifth of the total area.
10 Advantages Here are the Top 10 reasons to partner with METRO: 1) Best Prices With huge purchasing power & efficient operations, we make sure to provide you quality products at the best prices. 2) It's your Warehouse With our computerized goods management system, you are assured about availability of the products, in quantities you need. Meaning you need not tie up your money in stock that does not sell quickly.
3) Everything under One roof 18,000 different Food & Non-food items to meet all your different needs under one roof. This will save your time as compared to purchasing from a variety of sources. 4) Extended business hours To make sure that you are always served, we are open 7 days a week, from 6 a.m. to 10 p.m.
5) Quality guaranteed
Strict quality checks and modern storage technology including cold storage ensures that you get the best quality 6) Free parking Hassle free parking space for around 450 two wheelers & 270 four wheelers, to make sure that you are free of parking problems. 7) After sales Service We do not just make a sale, our Customer Service Team is available to you for resolving your queries, and problems, if any. 8) Offers at your fingertips Every two weeks you receive our catalogue, METRO Mail with over 300 offers for your business at the best wholesale prices. Also receive instant alerts through e-mail and SMS. 9) Clear and easy invoice Our detailed invoice makes it easy for you to monitor your purchases. All your purchase information is available on a single invoice, enabling you to manage your stocks better. 10) Great value for money A wide range of our own brand products offers high quality at the lowest price, which adds to your profits even more.
Metro ( Mumbai )
Magnet Mall Neptune Living Point LBS Road Opposite GKW Factory Bhandup West Mumbai - 400078 Contact No: 022 - 25658125 Toll Free No: 1800 425 0099
We are open everyday from 6:00 a.m. to 10:00 p.m
Launch Plan
Mumbai Metro did a launch plan of their retail store in Bhandup on 8th May 2008 and it is 10 months now.
Soft Launch
HoReCa (Hotels, Restaurants, and Cafes ) : May 5th 2008 200 premium outlets were invited for the soft launch where they were displayed with the best quality products like meat, Grocery products, METRO in-house brands like Quality & ARO, cold chain at the METRO store. The store Manager – Mr. Swen Betzing interacted personally with all the General Managers & Chefs of the premium 5-star hotels & deluxe properties across Mumbai city. The guests had a first-hand look of all the 18000 SKUs displayed at the METRO store at Bhandup (West). It is a replica of the METRO group across the world. All the stores look alike to each other.
Traders: May 6th2008 500 high volume traders were invited for the soft launch. There was a scheme of giving a silver coin to all the traders who would attend the soft launch. The 1st –day order booking was Rs. 35 lacs.
METRO Cash & Carry opens first wholesale center in Mumbai Mumbai, 7 May 2008 – Today, METRO Cash & Carry, the international leader in self-service wholesale, opened its first outlet in Mumbai at Neptune’s Magnet Mall in Bhandup. The company exclusively caters for professional customers like hotels, restaurants and small retailers like Kirana stores. The assortment and services are tailored to the special needs of this target group. Mumbai is METRO Cash & Carry’s fourth wholesale center in India. “We are convinced that our unique business-to-business concept will be very successful in Mumbai and well accepted by our professional customers“, said Martin Dlouhy, Managing Director of METRO Cash & Carry India. “We see a vast potential for our wholesale centers in this business metropolis. Therefore we are already exploring the possibilities to open further outlets to effectively meet the needs of our customers.” METRO Cash & Carry wholesale centers are open exclusively for professional customers, all of them duly registered and provided with a customer card. This means that the company does not sell to private end consumers. The core target group comprises hotels, restaurants, caterers as well as Kirana stores and other small retailers. At METRO Cash & Carry‘s wholesale centers they can find everything they need to run their business under one roof. Moreover, the company offers a constant availability of highest quality products at competitive wholesale prices. For instance Kirana stores can use METRO Cash & Carry as their warehouse and utilize their free capital for their businesses, rather than lock it up in inventory. The company’s unique businessto-business concept also caters to the professional work schedule with extended shopping hours
of up to 16 hours a day. “By this means we clearly help our professional customers to increase their competitiveness and thereby strengthen their own business, especially Kirana stores can benefit from our presence”. The METRO Cash & Carry wholesale center in Mumbai has a selling space of 6,500 square meters (70,000 square feet) and was built in a construction time of 14 months. Most of the work to build this outlet was carried out by local contractors, mainly using local material. Due to scarce availability of appropriate real estate, this is the first time METRO Cash & Carry India has built a multi level wholesale center. It is also a premier for the company to open an outlet in an Indian shopping mall, which was chosen for being in the urban center and thus very close to the customers. “To meet the special needs of our professional customers, we have to prove our flexibility and adaptability – also in terms of the location of our business”. On average, a new METRO Cash & Carry wholesale center is an investment of about 20 million Euros. Each METRO Cash & Carry wholesale center, including the one in Bhandup, provides around 450 local direct and indirect employment opportunities.
The product range in the Mumbai wholesale center comprises more than 18,000 articles: 8,000 food and 10,000 non food products. For the convenience of its professional customers METRO Cash & Carry opens from 6:00 am to 10:00 pm. The focus on local suppliers, which is typical for METRO Cash & Carry’s business model, is also pursued in India. Around 95 percent of the goods on display in Mumbai originate from local producers and distributors.
METRO Cash & Carry entered the Indian market in 2003. Besides the new outlet in Mumbai, the company operates two wholesale centers in Bangalore and one in Hyderabad. Thereby METRO Cash & Carry proved to be a close partner of the local economy. The company for instance invested in training programs for more than 40,000 sheep farmers as well as 1,150 fishing crews from India and helped to vaccinate and de-worm around 1 million sheep and goats. Currently METRO is preparing a special Kirana training. The aim is to help them enhance their business by educating them in terms of pricing policy, goods storage, assortment as well as marketing issues and microfinance. METRO Cash & Carry is represented in 29 countries with over 600 self-service wholesale centers. With more than 100,000 employees worldwide, the company achieved sales of € 31.7 billion in 2007. METRO Cash & Carry is a sales division of the METRO Group, one of the most important international trading companies. In 2007 the group reached sales of about € 64 billion. The company has a headcount of some 280.000 employees and operates over 2,200 outlets in 31 countries. The operating business is performed by the sales brands which operate independently in the market: Metro/Makro Cash & Carry – world market leader in cash & carry wholesale,
Real hypermarkets, Media Markt and Saturn – market leader in consumer electronics centers in Europe, and Galeria Kaufhof department stores.
Get your METRO Card in 4 Easy Steps 1) Fill in the application form.
2) Present your business license and your Photo ID along with a copy at the Distribution Centre. (Value Added Tax Registration (VAT), Central Sales Tax, Excise license, Service/ Professional tax, Shops & Establishments registration (Labour License), Health/Trade (Corporation) License, Liquor license, Food license (PFA), Drug license, Weight & Measures license, Government fair Price shop, Kerosene license, Registrar of Cooperative societies, Gas agency license, Electricity board contractor license, Small scale industries license, Licenses issued by Reserve Bank of India, Registration Certificate Indian Medical Council (Practicing Doctors), License issued under essential commodities act (selling pesticides, agro seeds), Entertainment license.).
3) Immediately you will receive your temporary METRO Card
4) Our customer consultant would personally visit you and introduce you to the concept and hand over your METRO card to you.
About the Card Personalised cards are issued to the representative of the business to facilitate business purchases at any of the METRO Distribution Centre across the globe.
Product Variety Available Food The store offers a wide array of over 8000 food items. These include among other things:
Dairy, Frozen & Bakery Cheese, Butter, Eggs, Milk, Yogurt, Chilled Ready Meals, Drinks, Ice Cream, Frozen Vegetables & Fruits, Bread and Bakery Products.
Fresh Fish & Sea Foods Whole Fresh Fish & Fish Cuts - Pomfret, Seer, Mackerel, Sardines, Rohu, Catla etc., Crab, Lobster and other Sea Food (some live fish also) Meat Fresh Poultry, Pork, Sheep, Lamb, Goat, Goat Kid. Other meats and Meat Products - Sausages, Ham, Bacon etc.
General Grocery Canned Goods - Fruit, Vegetables, Meats & Meat Products, Pet Foods Edible Grocery - Oils, Cereals, Coffee, Tea, Biscuits, Spices, Seasonings, Sugar, Sauces, Pickles, Noodles, Soups etc. Confectionary Sweets, Candies (hard boiled - lollipops, orange candy etc.), Chocolates, Crisps (mixture, farsan), Snacks & Nibbles
Beverages, Wines & Spirits Beer, Wines, Spirits, Water, Soft drinks, Juices.
Detergents & Cleaning Materials Laundry Detergents (Washing powders, Bars etc.), Cleaning agents (Cleaning bars, powders etc.), Household Products, Paper Goods (Paper Plates, Tissues, Cups etc.) Health & Beauty Cosmetics, Perfumes, Personal Care, Oral, Hair, OTC Medicines (Disprin etc.)
Dried Fruits and Nuts Cashew nuts (Kaju), Almonds (Badam), Pistachios (Pista), Raisins (Kismis) etc.
Tobacco Cigarettes Cigarette Accessories, Cigars etc
Non Food The store offers a wide array of over 10,000 non-food items. These include, among other things: Office equipment Office Supplies & Machines, Computers & Accessories, Cash Registers, Phones, Fax Machines etc .
Media / Accessories Portable Audio, Music Systems, TV Sets, Entertainment Accessories, Cameras, Car Radio, etc. Home Electrics / Improvement Refrigerator, Washing Machines, Microwaves, Mixer Grinders, Toasters, Lamps & Bulbs, Hand Tools, Power Tools, etc.
Household Household Requirements, Kitchen Articles, Crockery, Cutlery, Tableware, Glassware, Pots and Pans etc. Home Decoration / Seasonal Gifts, Artificial Flowers, Furniture, Aluminium Ladders, Arts & Crafts, Candles, etc.
Home Textiles / Ladieswear / Menswear / Childrenwear Bed Linen, Towels, Table Linen, Curtains, Carpets, Shoes, Apparel -Men's, Apparel - Ladies & Kids etc.
Sports / Toys / Luggage / Shoes / Leather Goods Sports Clothing, Swimwear, Toys & Gifts, Sports Shoes, Bikes & Accessories, etc.
Exclusive at METRO METRO Cash & Carry has its own brands spread across several categories of food & non food items. These are very popular across the globe. In India currently the brands that are available are: ARO A value for money brand, consistent specification & availability. METRO offers to its customers the Aro line for all categories of products.
Quality Guaranteed quality at a very attractive price. Products under this brand primarily cater to Hotels, Restaurants and Caterers.
Lambertazzi An exclusive collection of leather products that includes luggage, shoes, belts and other accessories.
Sigma For all your office requirements. Quality, wide range and the best price in the market. Tarrington House A variety of home textiles such as towels, bed linen, tablecloths, pillows all of the highest quality.
Alaska For all Household appliance requirements. Washing machines, vacuum cleaners, air-conditioners and many more.
Active A sports brand with products ranging from sportswear to shoes
Authentic With the focus on the latest trends in apparels, this brand offers a variety of designs for men and women. Varesa A quality product that caters to household needs.
Services & Quality
Quality & Cool Chain Quality & Hygiene We at METRO are committed to providing all our customers with quality products at all times. The strict internal procedures and modern storage technology including cold storage ensures that you get the best quality. Cool Chain - Extended cold chain Facility At METRO we provide transport solutions for your fresh purchases. Cooling boxes recommended by METRO: ? Keep your fresh products safe for 6 hours from 50 C to 150 C ? Fully loaded boxes maintain the temperature at its best ? Using the METRO Ice gel pack reduces the temperature inside ? Keep the box in a cool environment. Prevent sunlight Freshness Guaranteed METRO maintains a freshness charter that ensures quality of the products at all times. ? ? ? ? ? ? ? ?
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Bakery Dairy Deep Frozen Products Delicatessen Fruit & Vegetables Fish Fresh Meat Frozen Meat Processed Meats (Chilled & Ambient) ? Processed Meats (Frozen) Guarantee and Warranty If you change your mind METRO will give you cash or credit refund for the products returned within 7 days from the date of purchase in the original packaging. For any problems, please contact customer entrance at our
Distribution Centres. We will be happy to assist you. All your purchases at METRO come with a Warranty that entitles you to free services, repairs or exchanges. METRO strives at all times to ensure the best services. Transport Solutions To help you with the delivery of your purchases to your business premises we have partnered with Relogistics. There are various delivery solutions at competitive rates that you can avail of at the delivery counter at our distribution centres.
EMI Now pay in insallments! Because you are paying in cash, we can keep our prices low. At METRO you always know what you pay. There is no need to negotiate. We do not hide credit charges in our selling prices. However, if you like to finance your purchase, now CitiFinancial offers at METRO, EMI at competitive rates. Choose from a variety of financing option from 12 upto 24 monthly installments. HACCP Solutions HACCP (Hazard Analysis and Critical Control Point) – this is the name given to the food hygiene and quality assurance concept embodied in the European Union Hygiene Law. As of January 1, 2006, adherence to the food hygiene requirements established in the EU regulation No. 852/2004 will be mandatory in handling food products. METRO Cash & Carry offers its customers tailored service and product solutions, to support the implementation of HACCP as much as possible. In this context, the company is installing a new freshness system in its wholesale outlets. The solution enables customers to transport frozen and perishable products in suitable containers that maintain the correct temperature.
Marketing Strategy
Sustained Increase of Enterprise Value The claim of METRO to being a driving force in international trading and retailing is reflected in the marketing strategy. It is geared towards profitable growth and the consistent and sustained increase in enterprise value. The key pillars of this strategy of profitable growth are: ? the sales growth ? the optimization of the portfolio, ? and the optimization of the merchandizing concepts. Sales Growth METRO pursues a policy of profitable growth in sales through expansion and internationalization. The focus is on success, not on size. Therefore, the profitability aspect
takes precedence over sheer growth in volume. The objective of the internationalization policy is to increase the foreign share of group sales. International expansion concentrates on the emerging markets in Asia and Eastern Europe. METRO quickly managed to achieve market leadership in the respective wholesaling or retailing segment on most foreign markets. In established markets the sales divisions consistently consolidated their market position. One of the remarkable features of the METRO sales strategies is that they can be applied throughout the world. Their success and acceptance can be ascribed to the fact that they take into account the cultural particularities, specific expectations and needs of the foreign markets. Portfolio Optimization Each sales division has to position itself in the market such that its value and profitability rise continuously so that it can contribute to increasing the enterprise value of the METRO. The objective is to offer shareholders an optimum return on their investment. The composition of the portfolio makes allowance for the demands of the capital market. METRO is only active in those business segments where sales divisions of a significant size can operate on sufficiently large market segments. The portfolio relies on this diversity. The business areas and sales divisions complement each other in terms of their business activities. The central parameter for economic success is the internationally established control and management instrument of the economic value added (EVA). It serves as the benchmark for all strategic and investment decisions of the group. An important element of the value-oriented business management is the full integration of the EVA into the reporting concept of METRO. Concept Optimization The consistent, customer-oriented optimization of METRO merchandizing concepts constitutes an essential element for the long-term securing of earnings. In this context each sales division is to evolve into an unmistakable brand in its trading and retailing segment. This strategy is known under the term "retail branding". As retail brands the sales divisions develop their own particular image for a successful market appearance. Customers are addressed individually and their loyalty is ensured by way of new, attractive instruments. A strict customer orientation in terms of assortment and service as well as new forms of customer retention paved their way to business success. With the objective of increasing customer benefit and improving the efficiency of business processes, METRO is sustainably advancing the modernization process in this sector. The testing and application of innovative technologies in retailing increases shopping convenience for the customers, results in an even broader fulfillment of customer expectations and raises efficiency along the supply chain. Split of the registered Members at METRO: Turnover of each Time zone
Time zone 1 2 3 4 5 6 Active Registered Customers Buying Customers Buying Rate Average Frequency Turn Over in TINR Share by TZ F Share NF Share
CY
7,227 9,497 11,305 14,152 6,081 30,961
PY
4,826 6,719 8,988 11,303 5,175 26,820
CY
4,830 4,569 3,294 2,909 1,267 3,770
CY
67% 48% 29% 21% 21% 12%
CY
6.8 4.2 3.4 3.0 3.2 3.1
CY
126,861 110,655 74,718 68,636 45,076 175,356
CY
21. % 18. % 12. % 11. % 7. % 29. %
CY
77% 76% 75% 80% 81% 84%
CY
23% 24% 25% 20% 19% 16%
7 8 4 0 79,227 63,831 CY= Current Year 2008 Py = Previous year TINR = Turnover in Indian Rupees TZ = Time Zone F Share = Food Share NF Share = Non-Food Share
53 7 20,699 175% 26%
2.5 11.7 4.3
685 765 602,752
0. % 0. % 100. %
39% 57% 79%
61% 43% 21%
Total
Turnover of each Timezone Time zone Active Registered Customers Buying Customers Turnover per customer in INR Average sales per Visit (In TINR) Avg. in
Dec08
Number
CY
1 2 3 4 5 6 7 8 4 79,227 7,227 9,497 11,305 14,152 6,081 30,961
PY
4,826 6,719 8,988 11,303 5,175 26,820
CY
4,830 4,569 3,294 2,909 1,267 3,770 53 0 7 20,699
CY
26,265 24,219 22,683 23,594 35,577 46,513 12,919 109,251 29,120
CY
3.836 5.725 6.623 7.969 11.083 15.244 5.187 9.326 6.843
CY
3191. 4552. 5264. 6160. 8223. 11359. 4361. 5582. 5449.
CY
33071 19330 11282 8613 4067 11503 132 82 88080
Total
63,831
Feedback – What Retailers are feeling about METRO:
1 . Gangar
General Stores – Village Road – Bhandup (W) Daily sale: Rs. 15000/ Gangar General Stores is a large size Kirana store located on Village Road, Bhandup (W). They have visited METRO 12 times, but not bought goods once also. Constructive points:
Credit: the retailer is getting credit facility from existing distributors. He gives a cheque of 7 days from the day of delivery. So after adding 2 days to clear, it becomes 9 days credit that is offered to them. Price: As per the retailer, prices of 6 out of 10 products that he buys from METRO are cheaper than his existing purchase price. But, when he includes transportation, the price is the same. He wants additional profit to be given to him. Sugar: his purchase price: 19.4, MSP: 18.9. Tur Dal: 45, MSP: 44.5. Delivery: they are getting door-step delivery. He agreed that if we can deliver to them free of cost, then he shall come on Sunday to METRO, bill the products he wants to purchase & leave the goods with us to be delivered next day. Replacement: Companies are offering to replace the goods if they expire or are unsold. Credit Card: they suggested to us that we should accept all bank credit cards. Everybody may not be having a Citibank Credit Card.
2 .Arihant
Stores Village Road – Bhandup (W) They have visited METRO twice, but not bought goods. Card No. : 80867 Daily Sale: Rs. 5000/Arihant Stores is a small size Kirana store located on Village Road, Bhandup (W). Constructive points: Transportation cost: When the retailer includes the transportation cost, the price is equal to his existing purchase price. They want additional profit margin as compared to their existing supply chain. Credit – 1 month credit – In some products like stationary & books, they get a 1 month credit. Apart from this, average credit is 7 days. Replacement: as mentioned above. Price: as mentioned above Owner – replacement to manage The shop is managed by 2 owners - husband & wife. Commodity products – with fluctuating rates are managed by husband & other FMCG products are handled by his wife. It is not possible for both to close the shop & come to METRO at the same time, excepting on a Sunday
3. Omkar Medical
– Tembhipada Road, Bhandup (W) Daily Sale: Rs. 10000/Card No. : 57814 This shop is a mid-size Medical store. They have visited METRO once. Constructive points: Orders – Cash: they are used to giving cash to salesman who takes the orders. They want us to take their orders every week & collect the cash as they don’t have time to come to the store. List – Assortment: they have asked us to take their complete assortment list & work on it & inform them from it which products we can sell to them & their MSPs. Time: The shop is closed only on Sunday. They can come to METRO on Sunday afternoon. They have visited METRO once. Minimum 6 pieces purchase: In apparel, they cannot purchase 6 pieces together. They want to buy less then that.
4 .Guru
Kripa Stores – Tembhipada Road, Bhandup (W) Daily Sale: Rs. 4000/Card No. : 88628 This is a small shop mainly selling biscuits, confectionary. They have visited METRO only once. Cheque – 7 days: they get 7 day cheque facility from existing distributors. Price: they don’t find our price competitive in biscuits & confectionary articles like Coffee Bite. Soan Papdi - 1+1 free - In some articles like Soan Papdi, their regular consumer is buying from us as we have schemed is such products – e.g Soan Papdi : 1+1 free Availability of biscuits & chocolates: When they had come to METRO during opening, they couldn’t buy Parle & Nestle. We explained to them they both are currently available at METRO.
Feedback – Customer expectations
1. Delivery – at a minimum value 2. Credit facility – all credit cards should be allowed to be used at METRO 3. Price – should be lower than market price 4. Service – assistance by staff when they visit the store 5. Availaibility – continuous availability of all products & appropriate stock level. 6. Replacement of expired products.
7. After sales service of electronic products.
Swot Analysis
Structure of METRO Mumbai store – all levels
Department Structure: Every Department shall have 2 supervisors & approx 12 to 15 associates.
Reporting Structure Department Manager
Supervisor
Associate
Structure & Responsibilities of METRO Mumbai store Customer Marketing team – all levels
V in o d FM
KAM s T r a d e r s H o R e C a In s titu tio n s M a n d M r o n o Ui t t t a mS a n t oKs ah n c h G na n e s h a j a R a je s h
CC S a c h in
T r a d eUr s a y d M ukesh V e n k a tT o ta l : 5 JP Abdul
T r a d eAr lso k A m it S u m it T o ta l : 6 Abhay A n th o n y D evanand H o R e SC aa c h i n P r a d e e Tp o t a l : 3 N ik h il I n s t i t u G i oa n rs a vT o t a l : 1 t u T o ta l: 1 0
H o R eM o h a m m a d Ca V in a y T o ta l : 3 P ra k a s h I n s t i t u Ni oi k nh si l T o t a l : 2 t Laxm an T o t a l: 1 0
W h o l e s ai j lae y T o t a l : 2 V M o h it P r o p o s e d S u m m a r y - C C & K P rMo sp o& s D dM SS u m m a r y - C C A e T ra d e rs 1 5 T ra d e rs 1 1 H o R e C a8 H o R e C a6 I n s t it u t i o 5 s n I n s t it u t io 3 s n 28 W h o l e s a 2l e 22 DM 2 T o ta l 3 0
Departmentwise – Responsibilities
Marketing 1. Key Account Managers 2. Customer Marketing ? Sales & Promotion of In-House Brands Customer Entrance ? Welcoming the Customer and guiding for an effective shopping experience. Administration Checkout: ? Billing, checking goods, easy passage of customers at the exit Goods Receiving ? Receive goods as per order given, entry in to the system, checking stocks are in Administrative Logistics and Control ? To maintain data & do the system changes in price & updating product details Re-Ordering ? To co-ordinate with the Floor Managers & Department Managers to place order with the suppliers Common Responsibilities of Operations’ Departments: Availability of all products Shelf display Arrangement of products as per Plano gram Freshness of stock: correct code date of products sold Following HACCP standards of storage & preservation ? Co-ordination with suppliers to supply stock at required quantities & timing ? Sales ? ? ? ? ? Department names: Ultra Fresh Food Fish, Dairy Frozen and Bakery Meat, Fruits & Vegetables Dry Food Grocery Beverages Wines Spirits & Tobacco, Sweets and Confectionery, Non Food In-Food
Non-Food Apparels, Sports & Toys, Footwear and Luggage, Media and Home Appliances, Home Improvement, Home Textiles, Home Décor and Household. HR ? To look after the welfare of the employees Maintenance ? To look after proper functioning of the Store Security ? To ensure safety & security at entry and exit points Training ? To take care of training needs of the employees of the Store. 4.5 Customer details handled by Customer Marketing team – number & type
Thank You
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