Metro Cash & Carry seeks level playing field
The German wholesale retailer has thrown its might behind mom-and-pop groceries and has demanded level-playing for the unorganised sector, wading into a debate in India that ecommerce companies like Amazon and Flipkart are hurting small businesses...
“Kiranas cannot compete with ecommerce…. It is all over the media these days and predatory pricing should not be encouraged,” said Arvind Mediratta, chief executive of Metro Cash & Carry India. “Many of these (ecommerce) players have very deep pockets and can afford to make losses for a long period of time.” He said for most kiranas, livelihoods are dependent on stores. “So kiranas cannot afford to make losses even for a month,” He said ecommerce companies are offering deep discounts that will hurt mom-and-pop shopkeepers.
“How do you expect kiranas to compete and survive when ecommerce is selling urad dal at Rs. 1?” Both Amazon and Flipkart, that have become lightning rods for protests by small shopkeepers, have maintained they abide by Indian laws and reiterated they incur losses due to their continuous investments in India in building warehouses, technologies, supply chain among others ecommerce ecosystem developments and not because of predatory pricing as opponents allege. Mediratta advocated government support to modernise kiranas and organise loans under Mudra scheme.
Mediratta was echoing comments of his global boss Olaf Koch. In a January interview with ET, Koch, Metro’s global chief executive, had lauded India for amending its foreign direct investment rules for ecommerce marketplaces and said the new norms will help small and independent businesses.
Models operated by Amazon and Walmart-owned Flipkart came under heavy attack from kirana stores and small online vendors who accused both the heavyweights of virtually running inventory-led models in India with their preferred sellers controlling the bulk of the merchandise sold through their sites.
This prompted the government to tighten rules and restricted purchases by independent vendors from any wholesale entity related to the marketplace operators to 25%. The new legislation also completely bars any firm having financial links with the marketplace operators from selling on such FDI-backed platforms.
For the year ended March, Metro reported revenue of Rs. 6,563 crore and profit before tax of Rs. 217 crore, as per documents with the Registrar of Companies. Meanwhile, rival Walmart India posted 11% increase in its revenue at Rs. 4,065 crore while its net losses almost doubled year-on-year at Rs. 172 crore.