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German retailer Metro to step up expansion in India

2014.05.26


German retailer Metro AG wants to step up expansion in India and is planning to have 50 wholesale stores in the country by 2020, up from 16 now, as part of a broader strategy for growth in emerging markets.

Europe's fourth-biggest retailer said in a statement on Monday that it wanted India to become one of its "focus expansion countries", alongside Russia, China and Turkey.

"We have seen continuous like-for-like growth recently in India. Now we decide to inject extra momentum into our expansion course there," Metro Chief Executive Olaf Koch said.

Metro, a sprawling retail empire which owns Europe's top consumer electronics chain, department stores and hypermarkets, is restructuring and looking to grow in emerging markets to make up for shrinking sales in western Europe. Emerging markets currently make up nearly one third of sales.

Metro has been active in India with its cash-and-carry business since 2003 and is one of the few foreign retailers operating in the country, which has sought to protect small traders from outside competition. Metro's wholesale business largely serves those traders as well as hotels, restaurants and small businesses.

In 2012, the government gave foreign supermarket chains the green light to enter its $500 billion retail sector. Full foreign ownership of supermarkets that sell directly to consumers is restricted. Metro sells goods to small shopkeepers, which dominate India retail market.

Last month, the Bhartiya Janata Party, widely expected to lead India's next government, said it would ban foreign supermarkets if it comes to power.

That could cast doubt on a joint venture announced in March between Britain's Tesco PLC and Tata Group's Trent Ltd to operate 12 stores in southern and western India.

Wal-Mart Stores Inc last month announced plans to open 50 more wholesale outlets in India and start online operations to sell to small shopkeepers, several months after it decided against opening its own retail stores there.

In March, Metro was forced to put on ice a plan to float a stake in its Russian wholesale business because of market turmoil over the crisis in Ukraine. It had hoped to raise cash from the listing to invest in emerging markets.

 


Source: Business Standard

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