Metro Cash and Carry India is turning to smaller stores to speed up its network rollout as it tries to reach profitability.
The German discount wholesaler is about to open its 27th store in the market which will be just 40,000sqft in size, far smaller than the 75,000-100,000sqft format of most existing stores.
The new compact store in Ghaziabad follows another of similar size in Nasik.
Arvind Mediratta, CEO and MD of Metro Cash and Carry India, says going forward new stores will be between 40,000sqft and 50,000 sqft. “We are doing away with bigger stores in the range of 75,000-100,000sqft,” he said.
The smaller footprint has also been necessitated by a lack of development sites: a 100,000sqft store requires about eight acres of land, an area not easy to find in cities.
“The store format of 40,000sqft is easy to scale up,” Mediratta said in an interview. “A lot of people think more space means more sales. Customers don’t come to you more often because you have a bigger store.”
Metro Cash and Carry India is targeting 50 stores by 2020, but given the move to smaller outlets, that number may be surpassed, said Mediratta.
“[But] we don’t want to get into reckless expansion. In our business, to make money the cost of real estate has to be right. It is not just about the availability of the real estate but it has also to be at the right price,” he said.