‘In India you are only as successful as the partners you work with’

METRO started its India adventure optimistically, when it became the first foreign wholesaler to enter the market in 2003. “We saw enormous potential for our concept in India, specifically because the middle class in the country is growing so fast, and decided to take the plunge for that reason. But we had not taken into account the large regional differences in the country, the obstacles in the supply chains and the challenges in terms of infrastructure. In addition, the Indian government was concerned that we could pose a threat to the small supermarkets in the country. We therefore quickly came to the conclusion that we had to prove that we were going to support the small independent stores instead of undermining them, by investing heavily in them. Only by helping our partners grow could we become successful in India ourselves.”

Building our own Indian supply chain

One of the first steps METRO took was to adjust the range in the various stores. “In our first years, we focused on opening stores in different Indian states,” says Friedrich. “This involved a carefully selected range of products, because customer demand varies considerably from region to region and people like to buy locally. We therefore had to expand our list of suppliers in a short period of time.”

METRO was also confronted with a different system than we know in Europe. “The farmers here are used to selling their products to an intermediary, who then sells them to various shops and supermarkets. But that often does not benefit the quality. Because we have the hospitality industry and other large companies as customers, we want to be sure that we can offer the best of the best and that means that you have to take matters into your own hands.”

The company started special collection centers where the farmers could sell their products to the wholesaler themselves. “We now have 5 of these centers in 4 different states and it makes a significant difference in the quality and freshness of the fruit and vegetables that are in our stores,” Friedrich explains. “It is also a better deal for the farmers, they earn more from their products because there is no longer a need for an intermediary and they receive our payment the same day.”

However, the farmers had to get used to METRO’s methods in the beginning. “It took a while before the influx really got going. The farmers were used to working with specific intermediaries and didn’t want to let go of that right away to do business with us. But once one or two farmers joined us and the rest of the community saw the benefits of working with us, they were sold. Indians can adapt very quickly.”

Key to success: Strong Indian partners 

At the same time, METRO had to convince the Indian government that it did not want to dominate the Indian market and thereby sideline all local neighbourhood shops, the kiranas. “In addition to the hospitality industry, the kiranas are one of the three most important customers for METRO in India,” says Friedrich. “Therefore, we have absolutely no interest in pricing them out of the market. Just like with our suppliers, we started looking for ways to support them and make their working methods more efficient.”

In the meantime, the company has modernised around 2,000 kiranas in various ways with the “Smart Kirana” programme. “We renovate the shops so that they get a more modern look and feel and consumers can see the products better, but we also help with the digitalisation of accounting, stock and payments. In this way, these neighbourhood supermarkets are better attuned to the rapid digitalisation of Indian life.”

According to Friedrich, METRO has been able to prove to the Indian government with these initiatives that they do what they promise. “These initiatives have allowed us to build a good relationship with the Indian government over the years. Society and certainly politics in India are very hierarchical, so you don’t just sit down with everyone all of a sudden. Local politicians are very involved in their constituencies and know what’s going on, so they heard about our initiatives and how they positively influence the communities. As politicians, they naturally wanted to be part of that and that opened the door for us.”

E-commerce is a necessity

The company is now an established name in India with more than a million customers and focuses on the changing needs of the Indian consumer. “In India, you can’t make a long-term plan for the next ten years. Developments in this country are happening so quickly and as a company, we have learned to adapt to that,” says Friedrich. “Many of our current customers are busy entrepreneurs who want tasks such as purchasing products for their company to take up less time. To meet this need, we built an e-commerce platform, which has been in use successfully for almost a year now.”

Setting up METRO’s e-commerce platform in India went very smoothly. “We are not subject to strict legislation, because we do not sell directly to the end customer,” Friedrich explains. At the moment, it is not allowed to sell online b2c as a foreign company in India. Nevertheless, Friedrich advises every sales company in India to have an online presence. “We see that the omnichannel approach is very successful in India. So you give your Indian customers the option to browse through the products online and then make the actual purchase in the physical store. That is why we introduced our new app ‘METRO Wholesale’, which allows our customers to order anytime and anywhere. They then pick up their groceries at one of our locations. It shows that if you are not online in India, you are no longer in the game.”