Retail Is Not A ‘ME’ Business; It’s A ‘WE’ Business

Arvind Mediratta, MD and CEO, METRO Cash & Carry India is an industry veteran with close to three decades of experience in wholesale, retail and marketing. He has been the man behind the turnaround story of the company and making it profitable after 15 years of operations in the country.

Mediratta recently spoke to BW Businessworld about the  journey of Metro Cash & Carry India from a loss making company to a profitable one and how he made it happen.

From Walmart to METRO; what motivated you to take up the challenge of driving a company that was in red since its inception?

 My quest for knowledge and constantly challenging the status quo has always motivated me to explore newer and challenging assignments. When I was approached to lead METRO in 2016, the company made it clear that they wanted someone who understands the psyche of Indian buyers, the retail, FMCG and wholesale business in India, and who could turn around the business to make it profitable. I was excited about this opportunity. It was also a time when there was immense competition as many players were entering the market; organized trade was rising, eB2B players were mushrooming, while the small retailers and kiranas, that account for close to 90 percent market share in food and grocery retail, were being ignored. At METRO, we were the first company to start talking about kiranas and their relevance, and engineered many a pioneering change for the kiranas, to be able to help them compete with the modern retail as well as the e-commerce players. The premise of our turnaround strategy was centred around independent businesses and the local Kirana stores.  Today, seven years later, the share of kiranas have significantly increased, despite a raging pandemic. I believe we have played a small but significant role in being their voice and helping them grow their business successfully. 

 How has the journey been at METRO? What was the biggest challenge when you joined METRO? What were the imperative changes you made into the organization which helped you to turn it profitable?

 I will say it has been an exciting journey and some incredible team effort. The first phase was to turnaround the business and make it profitable. We started working on fundamentals and were looking at driving efficiencies in all aspects of the business. We reorganized our India operation, plugged financial leaks by streamlining costs and made our operations more efficient. Our strategy was to sweat our existing assets, turnaround loss making stores, improve our earnings and operating margins, and reverse the past losses. With a focused approach on ‘People’ and ‘Purpose’, we made changes to our expansion model to make it more capex light and cost efficient. We expanded our operations in our existing stronghold clusters.

 The fundamental change was setting our mission right; what we stood for as a B2B player in India. Despite having three broad customer brackets – Kiranas, HORECA (hotels, restaurants, and cafes) and SCO (services, company and offices), our mission remained blurred. We made a clear statement of purpose, in line with what we stand globally- To be the champion for small independent businesses. With over 12 million kiranas in the country, we did not want to be just a goods provider to them. When I joined, I called my team to brainstorm what should be our intervention for the kirana customers, competing to stay relevant amidst modern retail and e-commerce revolution. We decided to be the McKinsey and Bain for Kiranas and conceptualized our ‘Smart Kirana program’. We helped them transform their business by educating them about planogram, inventory management, quality management and store remodelling to modern open format stores. We analysed their pain points and offered them data-driven solutions as well as interest free credit solution to optimize their working capital to help boost their businesses. Kiranas have seen huge value in our program after witnessing 40-50 per cent growth in their sales.  So far, we have engaged with over 2000 kiranas with modernisation and digitalisation solutions to enable more footfalls and profitability for them.

 Overall, we revamped our India strategy, focusing on improving our income and earnings, and channelized energies to transform the brand into a customer-centric enterprise. We have been investing in people, stores, technology to maintain our market leadership. A lot of innovations have been introduced in terms of store format, customer engagement, along with digital integration and e-commerce into our business to transform it into a B2B Omni-channel player. Along with a resilient team, we have managed to steer the brand towards being the largest, profitable and sustainable wholesale business in India.  I firmly believe, Retail is not a Me business; it is a We business!

 Can you elaborate on the shift you brought in the culture of the organization?

A very strong customer-centric performance driven culture was the second aspect that I pushed for. Apart from course correction, it was also imperative to inculcate a winning and performance-oriented culture by encouraging entrepreneurial spirit to turn profitable. We started emphasizing more on results and a performance linked rewards program wherein employees could earn up to 5x of their performance. With a ‘People first’ strategy, we emphasized on a culture of meritocracy and ownership & Leadership by Example in true entrepreneurial way.  We encouraged our people to think out of the box and become problem solvers treating this as their own business. We created a lot of reward and recognition program which was beyond just bonuses; it was recognition for the top stores, category winners for best buyer, monthly awards, quarterly and annual awards. It was a big cultural shift! We also introduced the concept of NPS (net promoter score) to measure customer satisfaction in our stores which was not done earlier. It helped us realize areas where we were doing well, and the areas where improvement was required. We also pushed for more inclusivity and diversity in leadership roles, understood the safety and security of our workforce during the pandemic, and provided all the required support. We also ensured that not a single employee was laid off during the pandemic nor there were any salary cuts. We strongly believe that if employees are taken care of, they will take care of the business.

 Did the emergence of ecommerce and quick commerce have an impact on Kirana segment? How has the consumer sentiment changed?

Kiranas are our main partners, accounting for over 90 percent     of food and grocery in the country. The emergence of quick commerce platforms offering instant deliveries, and heavy discounting may have lured consumers and their buying behaviour. But I believe that the enthusiasm to shop offline will never die. The future is clearly omnichannel, a confluence of online and offline retail. Kiranas were truly the frontline workers during the pandemic, and we ensured 0 shortage of products for them in those hard times. Our vision is to empower kiranas and provide cutting-edge solutions that will enable them to compete and thrive in the country’s changing business environment. We have also steadily worked towards providing a robust platform to several local and indigenous MSMEs and other small businesses besides customised solutions to grow their businesses and explore newer opportunities. Kiranas are now very agile, adaptable in terms of technology (usage of cashless transactions), and adopted all forms of digital payments modes. We’ve addressed their pain point of buying different products from various FMCG companies, we are now a one-stop-shop for all the kiranas, delivering their orders within 24 hours; we even do a rigorous price benchmarking with all competitors. Our SMART Kirana program has helped modernize operations of over 2000 kiranas across the country.

 Our ‘People first approach’ embraces not just thousands of our frontline workers, but encompasses millions of MSMEs, small traders, kirana customers associated with us. In the last several years, we have been the voice of kiranas and have made several deliberations and representations to seek a level playing field for them through the implementation of National Retail Policy.

 In the last three decades of being in business, how has the role of leaders/ leadership evolved? What is your advice to the next gen leaders?

I feel it’s important that the future leaders should aim to be authentic leaders; by not only focusing on what it will take to become a leader, but what it will take to stay as a true leader and inspire others. Considering the evolving business norms, organizations cultures, it’s also important for leaders to be purpose-led and to practice values, which they preach.

 Also, in my leadership journey, I have always believed in the concept of ownership. I have always encouraged people to think and act like owners. You have to empower and give people the freedom to work and also learn from their mistakes. All these aspects put together creates champions who can overcome any obstacles and challenges and keep performing consistently. Leadership is all about future-proofing your organization and creating the next talent pool of leaders.

 Name a book that has inspired you the most?

Marshall Goldsmith’s How Successful People Become Even More Successful! What Got You Here Won’t Get You There

 What do you like to do in your leisure time?

I love reading during my leisure time. Especially after the pandemic, reading has grown more than just a hobby. Reading has helped in assimilating more perspective in life, and I feel blessed to have qualitatively spend my time reading about so many interesting authors as well as reading through news and editorials on Indian & US economy, politics & sustainability.