As mom-and-pop stores become the toast of the town following the Covid-19 pandemic and the lockdown, wholesale player Metro Cash & Carry is tweaking its expansion strategy by putting kiranas at the centre stage.
The German chain will be coming up with six new stores in the next three quarters in priority markets, namely Karnataka, Andhra Pradesh and Telangana, which are going to be kirana-centric. These stores will have assortments focusing only on kiranas. The wholesale chain currently 27 stores that cater to kiranas, Horeca (hotels, restaurants and caterers) and hospitality sectors.
The new stores will be half the size of earlier Metro stores, covering an area of 20,000-25,000 square feet. Currently the company has four wholesale stores that spread above 100,000 square feet with two in Bengaluru, and one each in Hyderabad and Kolkata. Rest of the 23 stores are called Genesis format stores that are spread between 40,000 to 100,000 square feet.
“The construction activities had came to a standstill during the lockdown but now it has picked up in the past 45 days and we are close to opening a couple of these new-format stores in October, November and December,” said Arvind Mediratta, MD & CEO, Metro Cash & Carry.
These new format stores which will be focussing on the traders segment will be launched in smaller towns such as Tumkur and Hubli. The company has also applied cost optimisation programmes which have brought down the capex for the new stores by up to 40 per cent.
“We believe that bigger stores don't mean bigger sales.
It only means bigger costs,” said Mediratta.
Continuing to be bullish on kiranas which generate over 50 per cent of the revenue for the wholesale player, the company has launched an e-commerce platform for deliveries which is already contributing in double-digits to the share of business in four months. Earlier for home deliveries the orders would be taken by its 600 odd salesforce, but it is now being done through the app and is fulfilled within 24 hours. The salesforce is now focusing on adding new customers to the 900,000 user base of kirana players it already has and help in modernising them.
The company has a remodelling programme for kiranans to convert them into supermarkets which is taking their sales up by 40-50 per cent, claims the company. The Bengaluru-headquartered company has also set up kirana success centres in all its stores to give advisory to mom-and-pop players on revamping and competing with online and modern retail.
“If kiranas are successful, our share of wallet will go up as they form over 50 per cent of our revenue,” says Mediratta. The company has seen an up to 20 per cent increase in sales from kirana stores as compared to pre-Covid levels, especially in segments like processed food and toiletries.
A dampener has been the hospitality sector for the company which contributes 15 per cent of revenue and discretionary spend like apparel and large appliances. The segment saw zero sales during April-May but it picked up later. However, it is still 25 per cent less as compared to a year ago.