Second Covid-19 wave: METRO Cash & Carry goes online for kiranas

Faced with loss of custom in the second wave, kirana shop owners and wholesaler METRO Cash & Carry have rejigged their strategy by shifting their focus to digital online platforms.   

METRO Cash & Carry estimates that small retailers selling food and groceries have lost 10-15 per cent of their business in the past 45 days and that around 10-15 per cent of them are on the brink of closure.  

Since food and groceries account for 80-85 per cent of its business, METRO Cash & Carry has been affected too but it has changed its strategy to cope with the challenge.    

“We have changed from being a brick-and-mortar player to an omni channel operator,” said METRO CEO Arvind Mediratta. “We shifted big time to online with assured delivery for kiranas the next day. As much as 25 per cent of our sales during the second wave happened online compared to 2-3 per cent earlier. And as many as two lakh kiranas out of our eight lakh members have downloaded our online order and delivery app.”

Mediratta said e-commerce sales have gone up 10 times since they started in April 2020. But the overall market for food and groceries in May has been the worst so far, even as compared to last year when the first lockdown happened.

“In the second wave, essential retailers were allowed to be open for only four hours. Last year, they were open for 10-12 hours so clearly revenues have been hit hard,” said Mediratta.

As a result, in May, the wholesaler saw its grocery and food sales fall by 10 per cent because in many areas retailers were closed. Non-food sales were down too by about 50-60 per cent because the rules did not allow them to open at all.  

METRO’s response has been to ensure that it always has 95 per cent of the products that kiranas look for. “We are aware that there have been supply disruptions all across the country. This has ensured that the retailer can buy more of his needs from us,” he said.

METRO has also helped retailers with credit support as distributors had stopped offering them this service, forcing retailers to buy only in cash which in turn led to a limited inventory.

Mediratta said his company has focused on recurring customers to ensure that it increases its share of the wallet and reduces  customers’ dependence on other sources.

To this end, he said METRO makes sure that at least 95 per cent of their products are priced so competitively that others cannot match them.     

METRO has seen a clear change in consumer buying patterns during the second wave. Small packets of biscuits, ketchups, and jams saw a 20 per cent jump in sales over the pre-second wave period.

Another shift is that spending on healthcare has increased from five per cent of a family’s budget to 11 per cent, with obvious adverse effects on discretionary spending on consumer products. 

Mediratta said that according to estimates, consumers have spent over Rs 75,000 crore on products and services in healthcare which are not covered by insurance.

RETAILERS IN TROUBLE

• Kiranas report 10-15% drop in sales in May, forcing minimal inventory levels
• About 10 -15% of the 15 million kirana shops have closed down
• Metro shifts focus on online sales from just being a brick and mortar player
• Small packs and sachets of foods have gone up in May over the previous month    
• Health foods see a jump but summer products like AC and refrigerator sales are only 50% of pre-Covidlevels. Icecreams down 50%
• With huge spending on health care and medical expenses, discretionary spends on consumer products to get impacted