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Germany-based wholesaler Metro Cash and Carry’s division in India, according to the company, has turned a profit for the first time in 15 years.

2.8% decrease in sales

Metro Cash & Carry reported a decrease in sales of 2.8% from €798m in 2016-17 to €776m in 2017-18. The company’s country-specific profit figures remain unknown. However, it has been reported that sales in local currency (INR) increased by 11% to INR61.4bn.

Commenting on the results, Metro’s CEO Olaf Koch said, “Five years down the line, the Indian arm should generate significantly more than €1bn in turnover and should continue to grow in profitability… If you look at the sheer potential of the markets we are serving, I cannot see the Cash & Carry model becoming redundant, not even in the most advanced economies”.

Private label

Discussing the company’s private label, Koch said, “Metro India could learn about private labels from other markets. The contribution from our private labels here is in high single digits but it should be in high double digits, specifically in wholesale”.

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We look at the latest news from UAE-based Lulu. This includes Lulu’s retail division Tablez and its plans to expand in India, with an aim of opening 300 stores by 2020. Tablez hopes to generate a revenue of INR4bn (US$57.3m) by 2020, up from the INR1bn (US$14.5m) it generates currently.

The revenue target will be driven by a range of retail brands and will not be solely down to LuLu’s grocery operations.

Tablez to increase its brands to 10…

Tablez currently operates six brands in India, across 42 stores, but hopes to increase its count to 10 brands in the short term. It has signed master franchise agreements with Springfield, Women'secret, Toys 'R' Us and Babies 'R' Us and a strategic cooperation agreement with China-based brand YOYOSO. Lulu also holds the franchise rights for US-based Cold Stone Creamery and Galito's and two UAE-based brands, Bloomsbury's and Peppermill.

Adeeb Ahamed, Tablez’s managing director, commented, “In 2017, we announced plans to invest around INR3.5bn (US$50.1m) and we have already invested almost half of it. The investment is expected to go beyond the announced level, and we may invest more to achieve the targets”.

…and expects to report a profit in 2019

Lulu is expanding by opening malls in Lucknow and Vizag, within which Tablez will establish itself. Tablez hopes to maintain a ratio of 70:30 between operating stores in shopping centres and in high footfall locations. The retailer will establish its presence in south India and expand across north India with its various brands. Tablez is expected to be profitable in 2019.

Tablez expands Cold Stone Creamery

In other news, Tablez has opened a new Cold Stone Creamery outlet in Chennai. It hopes to expand the brand to Mumbai and Hyderabad in 2019 and open a total of 50 stores in India by 2020. Tablez also hopes to increase revenue for the ice cream brand from INR200m (US$2.9m) to INR1bn (US$14.3m).

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Regulatory guidelines may have significant impact for ecommerce.

Takes effect on 1 February

In a move aimed at promoting fair trade in India, the government has announced a series of regulations for the ecommerce industry. From 1 February 2019, online marketplaces will not be allowed to list exclusive products on its platform. Previously, manufacturers and suppliers would work with Amazon or Flipkart exclusively to launch new products or promotions. This was especially common for smartphones and other consumer electronic items.

The new ruling states that online retailers must provide equal trading terms for all of its vendors and suppliers. Manufacturers and suppliers are now allowed to have a maximum of 25% of total online sales revenue from a single marketplace.

Aimed at helping smaller retailers compete against Flipkart and Amazon

Another new regulation that will be introduced prevents foreign companies from selling its own products directly to shoppers. An example of a product to be impacted by this regulation would be Amazon’s Echo speaker. Under the new rules, this product will not be allowed for sale in the Amazon India site

Deep discounts offered by online retailers have badly affected many smaller businesses, making it difficult for them to compete effectively. By removing these entry barriers, the government hopes to encourage the growth of local mid and small enterprises.

Find out more information about the Indian market here.

 

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