Month: May 2019

Cash and Carry cos looking at smaller store sizes to expand rapidly

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May 17, 2019

Metro which entered India in 2003 has initially opened huge wholesale store in the range of 1,00,000 sq.ft but have lately cut down the size of their new stores to half. Another new entrant in this space LOTS Wholesale Solutions which has around 1,00,000 sq.ft stores in Thailand has decided not to open stores bigger than 40,000-50,000 sq.ft in India.

Written By Varun Jain

Cash and Carry cos looking at smaller store sizes to expand rapidly
New Delhi: Cash and Carry companies like Germany’s Metro Cash and Carry and Thailand’s LOTS Wholesale Solutions are looking to open smaller stores in the country in order to reach more customers and expand at a much faster pace. Even Walmart India which runs its Cash and Carry store called Best Price Modern Wholesale store is experimenting with smaller stores.

Metro which entered India in 2003 has initially opened huge wholesale store in the range of 1,00,000 sq.ft but have lately cut down the size of their new stores to half. Another new entrant in this space LOTS Wholesale Solutions which has around 1,00,000 sq.ft stores in Thailand has decided not to open stores bigger than 40,000-50,000 sq.ft in India. Walmart, which usually has 50,000 sq.ft stores in the country has now started to look at smaller 45,000 sq.ft stores as well.

“We have been experimenting with different formats. When we started we opened big boxes which required land parcels of 7-8 acres. Sourcing land parcels of such size is very difficult in our country because real estate is at a bit premium. So we have now started opening smaller format stores. The typical size of the stores is 5,000 sq.m. We are now going to experiment with even smaller stores. So this has been the reason for slow expansion,” Arvind Mediratta, managing director and CEO of Metro Cash & Carry India.

The company which entered India in 2003 operates 27 stores at present plans to touch 50 stores in the next 2 years.

“We would prefer to have independent standalone stores versus operating in a mall. Now when we look at opening the store we also look at the catchment, how many kirana or HoReCa customers are there or how many restaurants are there in the vicinity. In the last 3 years, we have opened 8 stores. Last stores that we opened in Nasik and Ghaziabad has an even smaller footprint of about 4,000 sq.m. So yes we are looking at smaller stores,” Mediratta further said.
Cash and Carry cos looking at smaller store sizes to expand rapidly

According to Devangshu Dutta, chief executive of retail consultancy Third Eyesight, the stores and wholesale clubs in the west are supported by higher consumer incomes and a larger demand base, they hold a larger number of SKUs, are built on cheaper real estate and have superior road access to the stores. Consumers there drive longer distances, and buy more during each visit, he said.
“Conversely, in India, the economics are very different – incomes are lower, purchases are smaller and more frequent, and these rules apply even to B2B business. By contrast, real estate in India is expensive and large land parcels are hard to come by. So smaller stores would allow the companies to penetrate deeper into the market, and would possibly be economically more viable,” said Dutta.

For Walmart which started operation in India in 2009 and currently operates 24 Best Price stores, the ideal size of the outlet is 50,000 sq.ft., a size which allows meeting the requirements of its business members, especially the small businesses and kiranas.

“Customer-centricity and availability of right real estate land parcel help us determine the location and size. At a couple of locations, we have developed smaller stores of 45,000 sq.ft., more so to help us meet the member needs of those unique geographies based on the availability of right land parcels,” said Krish Iyer, President, and CEO of Walmart India. The company aims to reach 50 stores count in the next 4 years.

Pinakiranjan Mishra, Partner & National Leader, Consumer Products and Retail, EY India, feels that the strategy of opening small stores is probably driven by a desire to manage cost optimally while offering a sharper assortment. According to him, this will also help in faster expansion due to better real estate availability and ability to move closer to the customer.
Cash and Carry cos looking at smaller store sizes to expand rapidly

Lots Wholesale Solutions believes that flexibility with the choice of real estate is key to faster expansion in India.

“There are more than 12 million retailers and about 13 million HoReCa organisations in India, which shows the country has a huge potential and we can grow enormously by being close to them. With the format of our small stores, we will be able to penetrate in the market and serve our customers better,” said Tanit Chearavanont, Managing Director, Lots Wholesale Solutions.

“By opening stores closer to the catchment markets we have been able to reap benefits of greater traction and repeat purchases by our members. To ensure proximity to customers we have to be flexible with the choice of real estate, not always will you get a big box in city center locations,” said Chearavanont. The company opened its first store in India last year and said that it will invest more than Rs 1,000 crore in India in five years to open its wholesale outlets across the northern region. The company’s immediate plan is to open 15 stores in the first three years.

Source: retail

Electronics Retailers Bank On Private Labels As ‘Crowd-Pullers’

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May 15, 2019

Consumer durable retailers see approximately seven percent of their revenue come from the sale of private label products

Written By Sharleen Dsouza

Koryo and Vise may not be a buyer’s first choice for an air conditioner or a television but electronics retail chains are increasingly betting on such private labels to draw customers. Being cheaper, they boost sales. But that’s not the only reason.Such brands offer low net margins for sellers of appliances and televisions but serve two purposes. They help convert enquiries into sales for consumers who find products from bigger estab…

Source: bqprime

Is Amazon Turning Into A Threat For Its Sellers?

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May 14, 2019

Written By Nishant Sharma

Amazon’s private label model, led by AmazonBasics, doesn’t violate E-commerce FDI norms in India. (Photographer: Simon Dawson/Bloomberg)

Solimo, Symbol, Myx, Vedaka and Presto.You may have bought products from these brands on Amazon India. But what you may have missed is that these, and many other labels, are owned by Amazon Inc. itself.The world’s largest online retailer brought its AmazonBasics label to India in 2015. It launched another brand Solimo, offering home appliances and household items, the same year. The company now sells 10,000 products, including clothi…

Source: bqprime