WHAT DOES CASH AND CARRY OFFER TO LOW-INCOME GROUP?
SHAMSUL GHANI (firstname.lastname@example.org)
Aug 31 - Sep 06, 2009
During 1970s, the then popular marketing concept came under fire from various sections of the American society. The said concept envisaged developing and selling of a product to the consumer to satisfy his needs and wants. The critics took the position that marketing has placed heavy reliance on high-budget product promotion on one hand and high-cost fancy packaging on the other. While the cost of this unwanted value addition is passed on to the customer making the product too expensive, the one-time use of packaging material results in huge wastage of paper, wood, metal and the like material used in packaging.
The wastage not only carries a money cost, but also gives rise to pollution. Further, demand is created by opinion making groups (like children, women etc.) through sophisticated aid messages and the product is pushed on to the customer rather than sold. This led to the introduction of societal marketing concept which, according to Philip Kotler, "is management orientation aimed at generating customer satisfaction and long-run consumer and public welfare as the key to satisfy organizational goals and responsibilities."
The foremost of underlying premises of the societal marketing concept is described in the following words, "The main mission of the organization is to create satisfied and healthy customers and to contribute to the quality of life".
Those running the cash and carry business may well argue that the main premise of the societal marketing concept is fully taken care of. Through heavy investment outlets, a comfortable selling point with congenial atmosphere and ample facilities is created where a wide assortment of daily, short-term and long-term-use products is offered for sale at reasonable prices and under hygienic conditions. This can be true for both developed and developing societies.
Cash and carry business is the way of life for developed societies. This is also true for Pakistan as the question of affordability is taken care of through subtle means. The grandeur of the outlet and its location, normally keeps those away from it who can be suspected to raising the issue of affordability. Market segmentation concept is aptly utilized while going for such type of business. The target customers belong to high income groups in general and wholesale or bulk quantity buyers in particular.
The low income holder knows well that it is not his cup of tea. During the inauguration of Karachi branch of one of the well-known international cash & carry outlets, a categorical announcement was made that the said outlet was not meant for retail buyers (and lower income groups).
In Pakistan, the cash and carry business has assumed great significance with the entry of international chains Makro and Metro. While the higher income groups of our society were long aware of this concept, the opening of Makro and Metro branches in Lahore, Islamabad, Faisalabad and Karachi gave the common man an insight into this special marketing and shopping bonanza. The largest sales division of the German trade and retail giant Metro AG, Metro Cash and Carry is an international self-service wholesale-retailer organization.
It is said to be different from retail chains like Walmart etc. in a way that it targets wholesale professional customers rather than the end-consumers. In Karachi though, it has of late softened its stance and has opened doors for small retail buyers, yet the focus remains on bulk quantity sales. Its core customer groups include hotels, hospitals, traders, caterers and other business professionals. The names of the two chains may sometimes appear overlapping each other. The following brief history of the chains resolves this anomaly.
1964 - First Metro self-service wholesale outlet opened in Mulheim, West Germany.
1968 - A partnership with Dutch Company Steenkolen established Makro.
1970 - The first Makro store in Belgium was opened. Metro had 13 branches in Germany.
1971 - The company entered the markets of UK, France, Austria, and Denmark.
1972 - Metro Cash & Carry opened stores in Spain and Italy.
1984 - Metro has 100 self-service wholesale outlets across Europe.
1990 - Metro Cash & Carry succeeded in the markets of Turkey and Portugal.
1991 - Metro Cash & Carry entered North Africa and opened store in Morocco.
1994 - Metro Cash & Carry entered Eastern Europe and opened stores in Hungary, Poland.
1996 - Metro entered China in a joint venture with Jinjiang group, also entered Romania.
1997 - Metro entered Czech Republic.
1999-2000 - Metro entered Bulgaria and then Slovakia.
2001 - Metro entered Russia with two stores. By this time, it had 15 stores in China.
2002 - Metro entered Japanese and Vietnamese markets.
2003 - Metro opened first stores in Ukraine and India.
2004 - Market entry in Moldova.
2005 - In Belgrade, Serbia's first Metro Cash & Carry outlet was opened.
2006 - Metro Cash & Carry announced entry in Pakistan.
Metro Cash & Carry has presence in 29 countries with around 600 self-service wholesale outlets. It boasts of having its payroll more than 100,000 employees. Its sales in 2007 amounted to Euro 31.7 billion. While inaugurating its Karachi Gulshan branch, Metro's Managing Director, Giovanni Soranzo eulogized the importance of Pakistani market for his company by saying, "We see a vast prospect for our business-to-business wholesale concept and will continue to invest in this country to grow in the coming years. Along with expansion, we aspire to contribute to the economic growth of Pakistan."
The idea of "business-to-business" precludes any linkage with the end-consumer or the common man. Since the very name of the organization spells out in clear terms its operational structure. There should be no qualms about the exclusion of retail customers from the scheme of things. The entry to the outlet through a registration card should also be taken as a usual control measure.
But the City District Government has to offer genuine reasons for the closure of usual weekly bazaars in the vicinity of Metro. Is it a competitive maneuver? But how can the small-budget buyers thronging these bazaars can be expected to affect the sales of a business-to-business wholesale organization that caters to the needs of higher income groups. The utility of such high-profile cash and carry operators, for the economy as a whole, is difficult to measure. Here, we revert to the definition of societal concept of marketing. Are these mega outlets creating satisfied and healthy customers? Are they really contributing to the quality of life in Pakistan? Are they bringing price stability in our volatile markets?