Kiranasto fuel Metro Cash & Carry
With open-tile solutions, PoS machines, omnichannel provisions and interest-free working capital, the wholesaler is making the humble kiranas future-ready
The moment you enter the 100,000 square feet Metro Cash & Carry store in Yeshwanthpur, Bengaluru, you know it is manna from heaven for many kiranastore and Horeca (hotels, restaurants, and cafe) owners. Business-to-business retailers — seen there pushing overloaded carts of goods which they have grabbed at heavy discounts and which they would finally peddle at their own outlets — are its biggest customers. However, there is a small corner in the gigantic one-stop shop which is attracting more interest from retailers than the huge discounts that are up for grabs.
The Germany-based company, in an effort to provide end-to-end solutions to the kirana stores, has created a modular set-up for retailers to maintain a grip on the end-customer base. With the advent of modern retailers on the one hand and ecommerce biggies such as Amazon and Flipkart on the other, many local kirana owners have been left gasping for breath. “We do not want to have only a transactional relationship with the kiranas. We want to provide them with a onestop modernisation solution,” says Arvind Mediratta, managing director and chief executive officer, Metro Cash & Carry India.
But what are these “modernisation solutions”? Moving beyond the supply side issues, the B2B wholesaler is now addressing the pain points on the demand side. Neighbourhood kirana stores, which were earlier relevant for the entire monthly shopping basket for a particular family, have now become a morning top-up corner as customers have moved from mom-and-pop stores to modern retail. But there is still a huge opportunity there.
The retail market in India is estimated to reach $1.1 trillion by 2020 from $672 billion at present, according to a joint report by Assocham and MRRSIndia.com. Since modern retail is likely to grow 20 per cent yearon-year, Metro Cash & Carry has decided that its own future lies in making kirana stores future-ready in terms of feel, look and technology.
The company — its mantra is ‘if our business customers are successful, we are successful’ — has come up with an open-tile solution for modular stores using which an entire kiranastore can be transformed within 48 hours. This opens up the regular closed-format kirana store — it begins to resemble a modern trade outlet, so that customers can browse through the goods on their own instead of going over-the-counter with their list of provisions. The store can be customised according to the needs of the owner at prices starting from ~2,00,000 based on the area, and includes open counters, open shelves, storage spaces, and storage bins for staples such as rice, wheat, sugar. Since every kirana store owner may not have the kind of cash it entails, the entire solution can be availed of on the payment of monthly instalments.
Metro Cash & Carry claims the overall sales of items would go up by up to 30 per cent once the kirana stores adopt an open format as the visibility of available items would be high. For example, the company explains, a lot of women are not comfortable asking for sanitary napkins from kirana attendants. The sale of such products would go up when there are open shelves to select and pick up items from. “Also impulse purchase would increase as customers browse through the products,” says Mediratta.
Metro Cash & Carry, which clocked a revenue of ^798 million in FY16-17 (October to September), is also creating avenues for additional income by tying up with brands so that in-store advertising for their products could add to the store income of a kirana owner.
The wholesaler has also partnered with EasyPay to provide point-of-sale devices for kiranastores to track daily sales, inventory and customer details, just like modern retailers do. A kiranaowner can see the entire range of assortment and discount available from Metro Cash & Carry on his PoS device and place an online order with the wholesaler. “These machines allow the kirana stores to operate like an omnichannel player,” explains Mediratta. The retailers can also keep a check on the product that are in high demand and invest their money in stocks accordingly. Electricity bills, phone recharge, gas bills can also be paid through these PoS machines. More visits by customers for these services mean more sales for the store owner. The company with over 3 million B2B clients has already digitised over 500 kirana stores through its PoS offering.
The company also has a ‘Own Business Day’ initiative, offering much higher discounts to retailers than the wholesale price during certain periods. The programme, in its second edition this year, allows small retailers to compete with modern players such as D-Mart and ecommerce majors such as Flipkart and Amazon, said Mediratta.
The company has also been running a loyalty programme called Bandhan to provide an additional 2 per cent discount to regular customers. Metro is also offering working capital loans to small and big retailers in which the interest cost would be borne by the cash-and-carry player. Starting from ~5,000, the credit could go up to ~40,00,000. The company has opened nine stores in the past two years across India, taking the number to 27 so far. Over a period of time, the company has also worked around its investments. The retailer claims that its spending per store has come down by more than half now.
We do not want to have only a transactional relationship with the kiranas. We want to provide them with a one-stop modernisation solution ARVIND MEDIRATTA MD & CEO, Metro Cash & Carry India