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Decoded: Why German retail giant Metro wants to exit India

Worldwide, multinational corporations (MNCs) are viewed with suspicion whenever they set up operations in other countries. India is no exception. Such scepticism is especially rife in the retail industry.

Yet, as events of the past two decades indicate, foreign retailers and wholesalers have understood the importance of collaborating with kiranas in India. That this collaboration is a winning proposition was highlighted during the pandemic when kiranas offered last-mile connectivity, and modern retailers provided a plethora of goods that benefited small stores as well as consumers.

The irony, however, is that although kiranas have shed their earlier suspicions, most of their 'vocal local' supporters haven't. This is particularly unfortunate for German retail giant Metro Cash and Carry's operations in India, which has benefited many kiranas across the country. When the Dusseldorf-based company entered India in 2003, a series of protests were held by activist outfits and a few local farmers' unions, claiming that the livelihood of small traders would be threatened.

The initial years were challenging for Metro as it sought clearances from the Karnataka government to set up big-box cash'n'carry stores, while it was trying to expand to other big cities like Hyderabad and Kolkata. It took years to convince state governments that Metro's practices were not predatory but actually benefited small traders and kiranas. As the first MNC to establish organised wholesale stores, Metro was also the only one to have followed its global B2B business model in India. Therefore, unlike other foreign retailers, it did not have to modify its operational model to comply with local regulatory norms. Since its business model catered to local businesses and small retailers, it was never perceived as a big threat or competitor to kiranas and local retailers. Instead, it acted as their ally, proposing policy recommendations to benefit its kirana partners.

Unfortunately, given the sustained headwinds from stringent regulatory norms, pandemic-inflicted losses and geopolitical conflicts such as the Russia-Ukraine war, the bottom lines of most companies across industries have been majorly impacted. The impact of restricted funding has already been felt across India's startup landscape, as many have announced layoffs in recent weeks and suspended expansion plans.


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