Metro Cash & Carry
What have been MCC’s key competitive advantages as it has moved into emerging markets?
Metro Cash & Carry´s key competitive advantages were that it was often the first mover as it was the first wholesaler that worked with the cash and carry system, offering a wide range of products and having a non-traditional marketing approach that makes feel the customers as they were a member of a special “club”. For its international expansion the company created skills, especially when entering into emerging markets, to quickly set up in a new country and to adapt to local market demand, which was facilitated by having many local relationships.
When entering into a new market, the company firstly screened the possible countries perfectly,
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There was a strong potential as the country faced strong economic growth, urban migration, better infrastructure and a higher increase in consumer spending. On the other hand, there was a highly fragmented wholesale market, local demand was traditionally covered by so called wet markets and the political structure of India created problems as there was only limited coordination between state and central governments. Although Foreign Direct Investment (FDI) in India in retail space requires a joint venture, the wholesale segment has no such requirement. It was possible for Metro C&C to get approvals for setting up operations in India, however, they were not allowed to source agricultural products. Hence, expansion plans of the company were slow as they were waiting for the AMPC licenses and ignoring agro products (where margins were in the range of 75-80%) was irrefutable. Metro C&C also faced resistance from the local retailers association. Despite several drawbacks, the company was able to achieve sales above the budgeted target although at a slow rate. Furthermore, it provided better quality products at affordable prices to the Indian population.
How would you rethink MCC’s approach to strategic expansion and public relations in India going forward?
As soon as national development is concerned, Metro has to have in mind the local aspirations of development as these are extremely powerful. Metro