Cash and Carry Mumbai

Did I forget to mention that the previous post was actually a project in my graduation?

Anyway, this one was done around September 2008. These are according to me, problems/observations/inferences on the opportunities in Cash and Carry in India. The brand I was testing was Metro Cash and Carry, the first-mover in Large Format, modern Cash and Carry in India.

I hear Carrefour and Bharti-Walmart are getting into the industry now. Videocon seems to be having second thoughts....

Anyway, here we go...

Time period: September 2008
Methodology: Literary search, followed by Interviews and Surveys

Results:

1. Considering Bombay traffic and other trasnportation problems, Transport poses the greatest problem to the Cash and Carry business. Case in point: Retailers were irritated that they had to pay for Metro's Transport facilities. I think Metro assumed that like in the West, retailers have pick-up trucks in which they can carry around their stuff.

2. Kirana (traditional, mom and pop retail) owners are happy with their distributors who - take back unsold stock, give them discounts and promotions, have been known to their family for ages.

3. The only problem faced with distributors is that sometimes, stock runs out and the kirana owner has to wait for the distributor to bring it. In such a case, a promise to customers that they will send over the stock/inform them as soon as it arrives usually placates the customers.

4. Most respondents did not even know what Cash and Carry is

5. Often, Kirana owners dictate terms to distributors

6. Metro users are very happy with the experience - they enjoy higher margins, find Metro's in house brands to be of equal quality to the major brands in the market and are thrilled about the extensive collection. But they are apprehensive of the loose products that Metro sells.

NOTE: I have only tested the kirana owners segment of Metro. A bulk of the customer base is made up of Hotel and Restaurant owners and Caterers. Recently I read in the Economic Times that Metro was switching focus to this segment.

It would be interesting to work with Cash and Carry. The advantage is that it is so closely linked to the retail industry that you can learn a lot about retail. Perhaps that is why Carrefour and Walmart are entering into this sector to start with... it also has a higher FDI cap (around 74%) than front-end retail.