Business-to-business: Metro’s business model shields it from competition

Retail boom in Pakistan has made the sector attractive for both local, foreign chains.

LAHORE:

The retail boom in Pakistan is not new. Customers have been queuing up at local retail giants, but those shops, being unorganised, were not fulfilling the needs and requirements of the customers under one-roof.

Metro Cash and Carry, the German retail giant was one of the first foreign retailers to enter Pakistan and opened its first outlet in 2007. In 2012, after the merger with Makro Habib, the stores were renamed Metro-Habib Cash and Carry, and since then have revolutionised the retail sector in Pakistan.

Nowadays, as the retail boom in Pakistan gains momentum international retail chains, who made a wise choice in entering Pakistan in the early days and have gained an understanding of the market, are expanding, while a few more are planning to enter as experts believe that the retail segment was still in its infancy.

Local retail chains have also evolved and adapted to compete with the global giants. This has created an atmosphere of healthy, but tough, competition between the local and global retailers. But, early entrants like Metro are not bothered as they have established their distribution chains, presence and know-how of the market. Basically, Metro has a unique business model compared to other retailers.

“People believe that we focus on individual consumers, but nothing could be further from the truth. It is Metro Cash and Carry’s business model, globally, and we have to adhere to that model,” said Metro Cash and Carry Managing Director Bouzeneth Benaovda, while speaking to The Express Tribune.

“Though a large number of individuals shop with us, and we cannot rule them out, but the major chunk of our business comes from other businesses,” he added.

For the newly-appointed MD, Metro’s business model makes the company relatively shielded from any competition in the coming years. Metro’s business revolves around the small and medium-sized retailers, also known as kiryana stores - which are in the thousands - apart from hotels, restaurants, traders and caterers.

The company offers corporate customers a comprehensive product range both in food and non-food, and efficient business solutions to enhance customer’s competitiveness in their own markets. In addition to an exhaustive product range, the retailer also provides a brands segment where small and medium scale industries can shelf their products for sale using Metro’s distribution channels.

Recently, Metro started selling office stationary, and a few more projects are in the pipeline to enhance their customer base product line, said Benaovda.

Talking about the company’s expansion plans, Benaovda said that Metro currently has nine stores in the four major cities of Pakistan. There is a huge potential for the retail sector in smaller cities like Multan, Rawalpindi, and the chain seeks to expand to those cities, only after consolidating their position in the cities where they operate presently.

The merger of Metro with Makro-Habib Cash and Carry had been great for the company, and the MD reveals that Metro may also complete some other mergers in the future, but that nothing was in the pipeline currently.

Metro-Habib Cash and Carry Pakistan is part of the Metro Group’s retail division Metro Cash and Carry, the international leader in self-service wholesale market. The company operates more than 700 stores in 29 countries in Europe, Asia and Africa, and employs a workforce of over 100,000 employees.

In Pakistan, Metro employs some 2,300 people. The company recorded a turnover Rs36 billion in fiscal 2013, which is expected to touch Rs46 billion in fiscal 2014 showing the success of their business model in Pakistan.

Published in The Express Tribune, August 3^rd, 2013.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.