The German-based Metro Cash & Carry is filling its shelves with more local and regional brands as it tries to widen reach to large retail chains for a countrywide presence.
The global wholesaler's new outlet in Punjab, says its Managing Director, Mr Rajeev Bakshi, is helping develop Basant Ice Creams, a local Punjab supplier. In its upcoming store in Mumbai, Metro would expand its existing Maharashtra supplier network and help provide a distribution channel for local manufacturers. Earlier, Metro has helped grow brands such as Milky Mist Paneer and Govardhan (Go Cheese) Foods and Maunag Non Veg which supplies processed meats.
In its current distribution network, large manufacturers provide 80 per cent of the products to Metro, but the wholesaler is now enhancing the width of partners it sources from to include more small local manufacturers, says Mr Bakshi.
Traditionally, all large wholesalers follow a sourcing strategy of a narrow but a deeply penetrated system so that they get more from the same set of large manufacturers. Small manufacturers find it difficult to invest in distribution channels and sometimes access to these channels are fairly slim. “But small local manufacturers too need new supply chains and distribution channels to enhance their presence on retail shelves,” says Mr Bakshi.
Local sourcing
Commenting on global majors' increased local sourcing, Mr Arvind Singhal, Chairman of Consulting firm Technopak Advisors says, “This is one of the strongest arguments in favour of getting global retailers to India since it would lead to increased business opportunity for small and medium manufacturing sector.”
The other reason for increasing sourcing locally is that there are several India-specific products, such as cookware, crockery and cutlery, furniture and moulded plastic products that are either only manufactured in India or in other cases, are more cost and time effective to source locally, he explains.
Metro Cash & Carry which has seven distribution centres in India offers around 18,000 products and about 90 per cent of the products on the shelves are sourced from Indian manufacturers and suppliers.