Metro to set up cash-and-carry shop in Mumbai
Spread over 1 lakh sq ft, Metro will use the same cash-and-carry model it debuted with in Bangalore back in 2003. Retail therapy for shopaholics
By Girish Kuber, TNN |
MUMBAI: The fight between Big Retail and the strident traders’ lobby is all set to get messier. Come December, Metro, Germany’s largest retailer, is all set to launch its first store in Maharashtra in Bhandup, a relatively nondescript locality in Mumbai’s eastern suburbs.
Metro’s entry into Mumbai is timed with the Maharashtra government’s long-pending decision to amend the Agriculture Produce Marketing Committee Act, which prohibited both farmers from selling their produce directly in the open market as well retailers from buying at the APMC market yards. While the move is expected to prompt more organised retailers to source directly from farmers in the state, traders believe that they run the risk of losing their livelihood.
Spread over 1 lakh sq ft, plus 30,000 sq ft of parking space, Metro will use the same cash-and-carry model it debuted with in Bangalore back in 2003. By cutting out middlemen, Metro reckons it can offer huge savings on a majority of the 18,000 items on sale.
Since foreign retailers are not allowed to sell directly to individual buyers under the cash-and-carry format, ironically, Metro will target wholesalers and other traders who buy in bulk, the very same constituency that is now protesting against its entry.
The battlelines have already been drawn. “They claim to provide better prices to farmers. But we know better,” said Grain, Rice and Oil Merchants Associations (GROMA) president Sharad Maru. Two weeks ago, nearly 10,000 traders and wholesalers converged in Mumbai’s Azad Maidan to protest against the entry of Big Retail. The traders had threatened to launch a nation-wide agitation and disrupt the organised retail business across the country from January next year.
The traders had three specific demands: that the model APMC Act of 2001 be scrapped, no foreign direct investment in the retail sector by multinational corporations and a complete withdrawal of all cash-and-carry licences. The protesters had specifically decided to resort to violence against the existing organised retail chains, including Metro.
But the rising tide of protests doesn’t seem to have the state government unduly worried. A top official told ET that the state government’s talks with the German superstore were in the “concluding stages.”
“Efforts are on to complete the formalities and forge the deal when German chancellor Angela Merkel visits Mumbai later this month,” the official said. Metro’s India office in Bangalore confirmed the development, but refused to divulge more details.
Justifying their decision to push ahead with the Metro project, another government official said, “It’s not another mall. The Metro follows the HORECA model, that serves hotels, restaurants, caterers along with other small retailers. These customers buy at the Metro’s wholesale centers, pay in cash and transport the goods themselves.”
According to officials, the state government is hard-selling nine centres in all to Metro. “We have shortlisted nine places across the state that are ideal for large establishments such as Metro. While discussions are still on, so far only the Mumbai plan is confirmed,“ an official said.
Of course, dealing with irate traders isn’t a new challenge for Metro. In October 2003, just before its launch, the German retailer faced protests from wholesalers and distributors in Bangalore, who claimed that the cash-and-carry wholesale business was merely a backdoor entry into retail.
The other protestors were from the APMC traders, who claimed that because Metro wasn’t located in an APMC yard they couldn’t sell wholesale lots of fresh produce. As a result, Metro was forced to put on hold its plans to sell fresh fruits and vegetables in the city.
But now, it’s crunch time for sure. The agitation against Big Retail has now spread across four states. Several stores of Reliance Fresh stores have faced attacks in UP and Orissa, and the two states have actually asked them to down shutters. West Bengal has, in principle, blocked food retail. The state administration hasn’t come to the aid of the retailers wherever there has been any protest against them.
In fact, on Tuesday, Reliance and Subhiksha stores faced mob fury in New Mumbai, as local mathadi leaders called upon supporters to protest against FDI in the retail industry. Stones were pelted at Reliance Fresh and D-Mart outlets in Koparkharane and Subhiksha in the APMC area. Nearly 20,000 mathadi workers are part of the New Mumbai APMC, which is the largest co-operative market complex in Asia.
At present, Metro runs three stores in Bangalore and Hyderabad. Set up in Germany in 1964 Metro Cash and Carry today has 584 wholesale centers in 29 countries and is among the 50 largest companies world-wide listed by Fortune magazine. It commenced its Indian operations in 2003 with two modern wholesale centers in Bangalore and one later at Hyderabad. After Mumbai it has plans for Kolkata and Punjab, company insiders say.
Metro’s entry into Mumbai is timed with the Maharashtra government’s long-pending decision to amend the Agriculture Produce Marketing Committee Act, which prohibited both farmers from selling their produce directly in the open market as well retailers from buying at the APMC market yards. While the move is expected to prompt more organised retailers to source directly from farmers in the state, traders believe that they run the risk of losing their livelihood.
Spread over 1 lakh sq ft, plus 30,000 sq ft of parking space, Metro will use the same cash-and-carry model it debuted with in Bangalore back in 2003. By cutting out middlemen, Metro reckons it can offer huge savings on a majority of the 18,000 items on sale.
Since foreign retailers are not allowed to sell directly to individual buyers under the cash-and-carry format, ironically, Metro will target wholesalers and other traders who buy in bulk, the very same constituency that is now protesting against its entry.
The battlelines have already been drawn. “They claim to provide better prices to farmers. But we know better,” said Grain, Rice and Oil Merchants Associations (GROMA) president Sharad Maru. Two weeks ago, nearly 10,000 traders and wholesalers converged in Mumbai’s Azad Maidan to protest against the entry of Big Retail. The traders had threatened to launch a nation-wide agitation and disrupt the organised retail business across the country from January next year.
The traders had three specific demands: that the model APMC Act of 2001 be scrapped, no foreign direct investment in the retail sector by multinational corporations and a complete withdrawal of all cash-and-carry licences. The protesters had specifically decided to resort to violence against the existing organised retail chains, including Metro.
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But the rising tide of protests doesn’t seem to have the state government unduly worried. A top official told ET that the state government’s talks with the German superstore were in the “concluding stages.”
“Efforts are on to complete the formalities and forge the deal when German chancellor Angela Merkel visits Mumbai later this month,” the official said. Metro’s India office in Bangalore confirmed the development, but refused to divulge more details.
Justifying their decision to push ahead with the Metro project, another government official said, “It’s not another mall. The Metro follows the HORECA model, that serves hotels, restaurants, caterers along with other small retailers. These customers buy at the Metro’s wholesale centers, pay in cash and transport the goods themselves.”
According to officials, the state government is hard-selling nine centres in all to Metro. “We have shortlisted nine places across the state that are ideal for large establishments such as Metro. While discussions are still on, so far only the Mumbai plan is confirmed,“ an official said.
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Of course, dealing with irate traders isn’t a new challenge for Metro. In October 2003, just before its launch, the German retailer faced protests from wholesalers and distributors in Bangalore, who claimed that the cash-and-carry wholesale business was merely a backdoor entry into retail.
The other protestors were from the APMC traders, who claimed that because Metro wasn’t located in an APMC yard they couldn’t sell wholesale lots of fresh produce. As a result, Metro was forced to put on hold its plans to sell fresh fruits and vegetables in the city.
ADVERTISEMENT
But now, it’s crunch time for sure. The agitation against Big Retail has now spread across four states. Several stores of Reliance Fresh stores have faced attacks in UP and Orissa, and the two states have actually asked them to down shutters. West Bengal has, in principle, blocked food retail. The state administration hasn’t come to the aid of the retailers wherever there has been any protest against them.
In fact, on Tuesday, Reliance and Subhiksha stores faced mob fury in New Mumbai, as local mathadi leaders called upon supporters to protest against FDI in the retail industry. Stones were pelted at Reliance Fresh and D-Mart outlets in Koparkharane and Subhiksha in the APMC area. Nearly 20,000 mathadi workers are part of the New Mumbai APMC, which is the largest co-operative market complex in Asia.
At present, Metro runs three stores in Bangalore and Hyderabad. Set up in Germany in 1964 Metro Cash and Carry today has 584 wholesale centers in 29 countries and is among the 50 largest companies world-wide listed by Fortune magazine. It commenced its Indian operations in 2003 with two modern wholesale centers in Bangalore and one later at Hyderabad. After Mumbai it has plans for Kolkata and Punjab, company insiders say.
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