Case Analysis Of Metro Group

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Metro Group is the Germany’s wholesale trade and retail group and a leading worldwide player with yearly sales of €55.7 billion as on 2005. The group is organized into four business units namely Real/extra (everyday retail hypermarket), Kaufhof(up-market department store chain),Market/Saturn (electronics retail chain) and Metro Cash &Carry (wholesalers). It C&C operates 544 stores globally and contributes 50.4% of the Metro group’s consolidated sales. Metro C&C started off in Germany in 1964 with just one store and through organic growth, expansions and mergers built a global brand in itself. It started off in 1960’s selling fresh foods and non-food items and later on in 1970’s fresh meat and fish were also added to its product list. In its…show more content…
No international competition existed at the time of entry of Metro C&C and international companies accounted for about 1% of grocery retail sales in 2004. Metro realized that India had a huge potential for its business as 98% of the market was served by traditional markets and allied factors such as strong growth, urban migration, rising living standards and increase in consumer spending augured well for Metro. Moreover, Metro was well aware of the fact that mandis (markets) set up under the Agricultural Produce Marketing (APMC) act at present were inefficient and there was rotting, waste of produce, inefficient pricing and more importantly the moot objective of the act for which it was enacted i.e helping farms getting the right price for their produce was failing. So, it saw an opportunity for itself as it knew that it has expertise to improve the lacunae existing in the mandi by opening its stores. After getting necessary approvals from national level Foreign Investment Promotion board to establish state of the art cash and carry complexes for food and non-food products at urban locations it opened its first stores in Bangalore. The license allowed it to procure products locally that can include purchasing, processing products from cooperatives and manufacturers and the license also mandated Metro to assist agricultural sectors to reduce product losses and enhancing export value of consumer products. But soon after opening its stores it faced protests from a section of people belonging to Swadeshi Jagran Manch and trader associations who opposed their business model arguing that Metro indulged in predatory pricing and thereby establishing a monopsony which Metro vehemently denied and defended in court of law that it’s just a wholesaler and also it argued that as per the regulations they are not operating in retail market as they are barred by the extant laws. Metro soon

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