MxMIndia

Tag: multi-brand retail

  • Even international chains such as German retailer Metro Cash & Carry believe that the reform move may impact local businesses

    Multi-brand FDI to hit kirana shops: Metro boss

    By Dipti Jain

     

    It is not just small traders and kirana stores who are worried over loss of business if foreign direct investment (FDI) in multi-brand retail is allowed. Even international chains such as German retailer Metro Cash & Carry believe that the reform move may impact local businesses.

     

    While the influx of international retail giants will bring in investments in back-end and supply chain management, the Indian arm of Metro Cash & Carry said this will decrease the importance of small traders in the country as consumers would shift to large format stores from the local kirana shops.

     

    “Consumers will shift to large format stores, so the relevance of small traders will decrease. Because of substantial increase in disposable income due to a growing economy, the focus has today shifted from small to large format stores,” said Rajeev Bakshi, managing director, Metro Cash & Carry, India.

     

    The statement by the German company comes as a surprise especially after international chains have been waiting for the opening of FDI in the sector as they reason it would benefit smaller players by way of technological enhancements as well as creation of new jobs, besides giving them an opportunity to tap into the growing retail market in India.

     

    The government and other retailers have argued that the entry will help local outfits get more efficient and innovative and also check wastage as nearly 40 per cent of the farm produce is lost due to poor storage and distribution facilities in the country. Several global giants such as Wal-Mart and Carrefour are waiting for the government to finally permit FDI in the multi-brand segment, an area that Metro does not intend to enter immediately.

     

    In recent weeks, the government has pitched for opening up multi-brand retail and even cited the backing it has received from several states.

     

    The government allowed 100 per cent FDI in single brand retail last year. However, the permission for 51 per cent FDI in multi-brand retail had to be put on hold after widespread protests by Congressmen as well as UPA allies, including Trinamool Congress.

     

    While the impact on small traders would affect Metro’s business in the country, the company is betting on a growing business from hotels, restaurants and caterers (Horeca) for continued growth. “This will indirectly impact our business, but then the other business takes off. People are eating out much more than before. So our Horeca business will go up. The net effect on us is balanced,” Mr Bakshi said.

     

    However, Mr Bakshi added that it is not just foreign retail majors, even large cash-rich domestic players have the capacity to exploit the market. Despite discussions that modern stores and wholesale chains would make the local channels irrelevant, Mr Bakshi said with the demand pattern shifting, these models are becoming irrelevant themselves. Metro Cash & Carry entered India in 2003 and currently has 11 wholesale distribution centres.

     

    The company has already invested close to Rs1,000 crore and plans to open six to eight stores annually, each entailing an investment of around Rs 60 crore. The company recently opened its store in Delhi and Jaipur and is planning two more stores in Chandigarh and Indore.

     

    Source: The Economic Times

    Copyright © 2012, Bennett, Coleman & Co. Ltd. All Rights Reserved

     

  • The multiple financial scams under the UPA-2 rule have not just tarnished the nation’s image, they have made India a highly suspect destination for business

    Anil Thakraney: An open letter to the PM

    By Anil Thakraney

     

    Dear MMS,

     

    You complain that India Inc’s negative comments are disappointing. You are apparently displeased about what the suits have to say about your government. That the UPA’s policies are quite depressing for business in India.

     

    Well, Sirji, the industry leaders have every reason to feel disheartened and negative about theIndiastory. If at all, I would say they are being pretty mild and cautious in their observations, because they can’t afford to upset the assorted politicians and bureaucrats in your team. Backlash from an upset government can be rather hurtful.

     

    Before you sulk over their comments, let’s examine your own track record since UPA-2 came to power: In the last one year alone, fuel prices have spiralled out of control, sending the economy for a toss and making the inflation figures go through the roof.

     

    As if that was not bad enough, the rupee is getting weaker by the day, and has now hit an all-time low. What is particularly pathetic, is that all this is happening under the leadership of a man touted as a master economist.

     

    I am not going to discuss the crashing infrastructure in the metros (many firang suits are known to take a sharp U-turn the moment they emerge from the Mumbai airport) because it’s too damn depressing. But I must point out that the multiple financial scams under your rule have not just tarnished the nation’s image, they have made India a highly suspect destination for business.

     

    In fact, the Anna Hazare campaign has made India look like a global clown on the world stage. And by the way, your complete mishandling of the Anna team hasn’t helped matters at all.

     

    And oh, just what happened with the FDI in multi-brand retail idea? You did not have the skills and means to push it through. At the very first sign of protest from the opposition leaders you ducked for cover. How encouraging is that for India Inc? It doesn’t end here. Your various ministers are often at war with each other, and as a leader you seem to have no control over their bickering.

     

    Sir, it’s a long list of gripes, and frankly I don’t want to put out the laundry list and destroy the New Year festive mood. But let me just say this: Instead of feeling bad, you should be thrilled that despite your government’s abysmal performance and dubious policies, many business leaders continue to be bullish on India.

     

    Thank them rather than complain. Happy New Year!

     

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    PS: Fantastic presentation at the BAFTA by acclaimed screenplay writer Charlie Kaufman. Totally from the heart, and an eye-opener. A must watch not just for those in the movie business but for all creative people.

     

    Link: http://video.bafta.org/services/player/bcpid1089742060001?bckey=AQ~~,AAAABxWZS7k~,uLPjGIDNpTm4SaHbu0n1-QlyJhJ3l3ls&bctid=1314090439001