Research_paper

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IMPACT OF THE ENTRY OF INTERNATIONAL
MODERN TRADE TO THE LOCAL
DISTRIBUTORS OF PAKISTAN
Hira Nadeem

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IMPACT OF THE ENTRY OF INTERNATIONAL MODERN TRADE TO THE
LOCAL DISTRIBUTORS OF PAKISTAN
ABSTRACT:
This paper focuses on the impact of the entry of International Modern Trade (IMT) on the local distributors of the fast
moving consumer goods (FMCGs) and discusses about the manufacturer’s support of different channel members, the
distributors and the modern trade, in Pakistan. The paper uses primary and secondary sources to analyze in depth the
situation in two of the leading companies of edible oil industry in Pakistan and presents recommendations regarding the
optimal plan for concerned FMCG manufacturers to adopt balanced policies towards both the general and modern trade
channels. The entry of large organized wholesalers into the local economy gave rise to a new buying pattern similar to
the one seen in the West; the paper finds a shift from the traditional purchasing through the “kiryana”1
stores to the
newly emerged trend of international retailing. This brought a change in the economy; a drop in the sales of a particular
product by the distributors is compensated by the increase in sales via modern trade. Overall, the paper highlights the
difficulties faced by the edible oil industry manufacturers in choosing the two alternative channel structures to ensure
the availability of their range of products in the market. The data used in the paper shows an approximately 30% share
of the modern trade, in 2010, in the total sales of the edible oil industry from a previously 100% contribution of the
distributors before the emergence of the two global retailers, Netherland-based MAKRO and Germany’s METRO.
1. INTRODUCTION:
Earlier, the manufacturers just had to rely on the distributors to take their products to every nook and corner of the city.
The pattern was such that the companies decided on how many distributors they want to employ in a particular city and
then the geographical area was allocated, depending on the distributors’ investments; the greater the investment, the
more the area they were given. The stores that came under the distributor were also allocated as A, B and C class stores
with A having the greatest demand and C having the lowest. The distributors after estimating the demand, purchased
from the manufacturers at the trade price by paying in advance and then sold the goods at the retail or printed price to
the large and small retail stores, termed as ‘kiryana stores’ either on the cash or on a credit for a particular period of
generally 1 or 2 weeks. The additional advantage that these distributors provided to the wholesalers of Akbari Mandi2
and small retailers besides credit was the free door step delivery. The advantage to the manufacturers was the deeper
and wider penetration of their products at the hands of distributors. The whole network of the distributors was deemed
unbreakable but this perception changed with the introduction of a new retailing trend in Pakistani market; this trend
entailed the concept of buying at a price lower than the retail price.
1
Kiryana stores refer to the local nearby stores commonly known as corner shops.
2
Akbari mandi is the biggest wholesale and retail market of Punjab. Market contains 800 shops selling over 1100 items.

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In recent years, the government of Pakistan is looking forward to the foreign investors to invest into the Pakistani
market by adopting a liberal policy on foreign direct investment allowing 100 percent foreign ownership in retail. (Aman,
Hopkinson, 2010). On the other hand, Sub-Continent, lately divided into India and Pakistan, has always attracted the
West as a market with huge population and a lot of potential for retail businesses to flourish. With this objective in mind
METRO Cash & Carry (C&C) started its operations in India in 2003 with two Distribution Centres in Bangalore and
introduced the concept of Cash & Carry in India. These Centres offered the benefit of quality products at the best
wholesale price to over 150,000 businesses in Bangalore. (METRO, India) Though it operated as a partnership in India, it
still managed to capture the market, and planned to make the next advancement to penetrate into the Pakistani market
whose government offered much more incentives than the government of India.
With increased advantages and ease of investing into the local economy, the large organized wholesalers, such as
MAKRO and METRO entered the retail sector of Pakistan. In late 2006, MAKRO opened its first branch in Karachi,
whereas METRO rooted itself in Pakistan, in mid 2007. This disrupted the traditional retail structure and gave rise to a
new competitive environment between the distributors and the IMT channels. The manufacturers had two alternate
distribution channels for their products as compared to the long established channel marked by distributors. Though
both came forward with the concept of C&C business format, they had different business models. MAKRO opened as a
joint collaboration with the House of Habib and came to be known as MAKRO Habib Pakistan Ltd., whereas METRO
operated as a foreign branch to Germany’s local METRO. Both were large stores of area about 8-11,000 sq. feet and
offered self service with various facilities such as one-stop shopping, wide range of products for households, air-
conditioning in the entire stores and most importantly cheap prices for the goods. Both targeted HORECA3
(Hotel,
Restaurant and Café) by providing them bulk amount of goods at a price far less than what was offered in the market, to
generate traffic of professional consumers on their floors.
1.1 Two year analysis after the entry of MAKRO and METRO (2007-08)
The emergence of MAKRO and METRO brought forward a new buying pattern of C&C business. When they entered the
Pakistani market, they offered rock bottom prices on all products to attract clientele. Hence they were able to pull
consumers by giving huge discounts on the printed prices. Crowd filled the floor to experience the new shopping
environment that created a similar scenario to what was seen when any new multinational organizations opened their
branches in Pakistan. For example, when first KFC or McDonalds appeared in Pakistan, people used to stand in queues
for hours and hours to try it out. Similarly, majority of the small retailers and wholesalers made advances to purchase
from these international retailing chains and the distributors suffered huge losses.
The initial response to MAKRO and METRO was commendable. They purchased in bulk from the manufacturers at a
price less than the buying price of distributors and sold them to the small retailers and wholesalers at a price much
lower than the price offered to them by any distributor. Thus, they were able to capture the market. The companies had
a benefit to support these chains because companies had already seen the success of these chains worldwide and C&C
generated bulk sales of their products. The cost, in this regard, to the manufacturers was the huge budget that they had
to pay for the product registration, shelfing4
and promotional activities. The advantage to the small retailer was that he
obtained all the stock that he wanted at a competitive price, but the disadvantage was that he did not get the door step
delivery for his products. This entire situation emerged a new class to act as a substitute for the distributors, ‘the
mobilers’. The mobilers purchased from MAKRO and METRO at a cheaper price and sold these goods at a door-step
delivery to the small retailers at a price less than what was offered to them by the distributors.
3
HORECA, short term that IMT use for hotels, restaurants and Café.
4
Attractive display of products

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1.2 Third and fourth year analysis after the entry of MAKRO and METRO (2009-10)
In the third and fourth year, when the introductory prices offered by MAKRO and METRO cooled down, their growth
rate became steady instead of increasing. In effect, they created a consumer development team, which was against their
principles5
. This team surveyed the entire market and offered reduced prices along with all the incentives offered by the
distributors, credit as well as transportation facilities to the large local wholesalers of Akbari mandi. The companies also
realized that the initial huge sales were just the outcome of fancy buying6
. The distributors, who were responsible for
their brand establishment, were disturbed due to the arrival of these international chains because while the size of the
pie remained the same, these large organized wholesalers were taking the share of these distributors away. Hence, the
companies reduced their support of MAKRO and METRO by giving similar advantages to the distributors.
According to the consumer surveys we conducted in 2008-09 and 2010 at different branches of MAKRO and METRO
shown in Fig 1, most of the consumers who visited MAKRO and METRO belonged to the lower and upper middle class
families and over time had realized that going to these stores have disadvantages of unnecessary buying, time
consumption, non-availability of all product ranges, restriction on the entry of children below 12 years of age, entry
through cards only and also lower costs in grocery may be compensated by increase in costs in other household items.
Hence, they preferred going to these stores as long as they received hefty discounts, and altered back to their traditional
style of buying through the corner stores as soon as the introductory price offers ended.
This paper is organized as follows. Section 2 includes the objectives and importance of conducting the study and to test
the hypothesis that the distributors are being affected to a greater extent after the emergence of these organized
wholesalers. Section 3 discusses about data used in the paper, the strategies employed and the limitation of the data
set. Section 4 describes the findings from the relevant data and their credibility. Section 5 presents the
recommendations for the relevant FMCG companies to adopt a balanced way of approach towards both the distributors
and the global retailers. In conclusion, we prove that our hypothesis is true and the edible oil distributors are being
affected up to approximately 30% by the IMT.
2. OBJECTIVE OF THE STUDY:
The objective of this study is to test the hypothesis that the distributors are being affected by a greater extent after the
emergence of these global retailers. Also, an important aim of this paper is to answer the question, if distributors are
affected, will they continue to sustain or will they be completely eliminated if MAKRO and METRO further expands and
open up more branches in Pakistan? MAKRO revealed its expansion plans by stating that they want to construct 30
stores in Pakistan (Associated Press of Pakistan, 2008) and METRO, on the other hand, is looking forward to open up 20
retail outlets only in the province of Punjab. (METRO, Pakistan) The manufacturers claim that the distributors are not
being affected too much because of MAKRO and METRO; the maximum share of distributors that they have taken
ranges between 5-7% and it is more of a nuisance. The distributors, on the other hand, believe that the reduction in
their sales is solely due to MAKRO and METRO offering lower prices to the wholesalers and the small retailers. The
reasons for the actual drop in the sales of distributors is that the companies deliberately do price discrimination
between distributors and the IMT chain stores, and this has led to the creation of mobilers. Furthermore, the companies
incur additional costs for promotions, branding and merchandisers per annum to assist these chains in keeping lower
costs of the products. Also, the targets set by the companies are unrealistic in accordance with the market disturbance
5
The claim of these IMT stores was that “consumers come to them.” By creating a consumer development team, they were going
their own motto.
6
Sales generated by offering huge price cuts; far lower than the printed prices.

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in the year 20077
. Keeping in view the above-mentioned reasons, the distributor’s survival is at stake. The perception of
the organized wholesalers is that distributor’s system is an unbreakable network. No matter how much these chains try
to penetrate into this network, they will not be able to break it. In this work, we undertake an objective study of the true
impact of the entry of MAKRO and METRO on the local distributors.
This issue holds significant importance in the retailing sector of Pakistan. Though there have been other papers written
on this issue, we distinguish ourselves by analyzing actual data of the leading edible oil companies to test our
hypothesis. The manufacturers are much concerned about the optimal plan to retain both the distributors and the IMT
chains and to pacify the distributors to support the local economy.
3. DATA & STRATEGY:
The data used in the paper includes the primary data obtained from the two leading edible oil companies in Pakistan.
The entire data is based on the sales, in tons, of both Banaspati8
and Cooking Oil9
by General Trade (Distributors). One is
the distributor-wise data and the other is the product-wise data. The distributor-wise data is from Company-1 from
2006-2009. To study the impact of MAKRO and METRO on the distributors, only those distributors are taken which were
present during this period so an analysis of their sales before and after MAKRO and METRO could give a true picture.
The data of all the distributors is the monthly and quarterly data and the graphs show the trends in the sales of these
distributors separately as well as combined.
The product-wise data ranges from 2004-2010 and is the data on the sales of edible oil products including all SKUs10
of
Company-2. Only the premium segment brand of this company is taken since it is present throughout the mentioned
period. The lower brands of this company were either introduced later than the emergence of MAKRO and METRO or
immediately before it, so an analysis of their sales before and after cannot be drawn properly. Also, the data of IMT is
used to draw correct information regarding the transfer of share from the distributor to these international stores. The
graphs are drawn to show the product-wise trend in the sales of General Trade and the increase or decrease in the total
sales of the all products.
The analysis is based on the interviews conducted with the distributors, the manufacturers and the managers from these
retailing chain stores. The interviews were conducted with distributors from various FMCG products, namely oil, milk,
spices and beverages industry. Our sample had almost 25 distributors catering to different products. These distributors
were given same questionnaires regardless of the product they dealt in. The interviews with the 4 different FMCG
manufacturers included meeting all the personnel, involved in either the general trade or the IMT. However,
interviewing the members of the international retail stores was the most difficult task. Due to rigid and strict policies of
these global retailers, their personnel failed to answer majority of the questions satisfactorily. MAKRO, overall,
cooperated well and allowed us to do a consumer survey on the floor whereas METRO was more stringent in this regard.
3.1 Limitation of data and strategy:
7
During 2006-07, Palm oil prices increased worldwide. The prices of the edible oil changed around eight times during the same year.
So, distributors made artificial price sales due to the market instability.
8
Banaspati is the form of ghee containing high amount of unsaturated fats and cholesterol. It is cheaper than the cooking oil.
9
Cooking oil contains fewer fats than Banaspati.
10
SKU stand for “Stock keeping Unit.” This refers to the different versions of the same product. They may differ in packaging, weight
or size etc.

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The retail industry is composed of different small corner shops and wholesalers, which are scattered over a wide area.
This industry has small firms and micro-businesses, not properly organized; these are also not registered for tax
purposes. Hence, they enter or exit the market easily. (Aman, Hopkinson, 2010) Due to this structure, it is very difficult
to obtain the correct data sources. Either the data is not in an organized form or the data is held back because majority
of the owners of these small firms and micro-businesses do not pay taxes. The companies also refrain from giving out
their data due to their rigid policies. In this environment, it is almost impossible to obtain the correct data from the
sources without proper contacts.
The data from the IMT stores is impossible to obtain, so we only had to rely on the one-sided picture by depending on
the data of IMT provided by the companies. Though the IMT stores are organized, their rigid policies hamper studies
conducted in this area. Due to overall lack of cooperation and dishonesty in the retail business, there are not much
quantitative studies conducted on the retail sector of Pakistan.
The strategy adopted is simple and is based on the straightforward analysis of the sales of the products of these
manufacturers. Due to the lack of data and doubts on credibility of that data, we have restricted our focus to the
distributors and branches of MAKRO and METRO in Lahore. In case of Company 1, only the distributors of Lahore are
considered, and graphs are drawn to see the trend.
4. FINDINGS:
Graphs are drawn to determine the sales of distributors for every quarter from 2006-2009 for company-1. Fig 2 shows
the graph of only those distributors who were present during this period. Trend lines have been added to show an
increasing or decreasing trend of each of the five distributors and the variation in their total sales per quarter mentioned
by the slopes of these lines.
Overall all the graphs drawn show a downward trend with the exception of Distributor A. Furthermore, the maximum
sales of all the distributors occurred in the 3rd
quarter of 2007. According to the interviews conducted from various
distributors and manufacturers, the reason for the maximum sale during this time is that the palm oil prices increased
internationally; as a result, the import of palm oil became costly for the local manufacturers. During 2006-07, the palm
oil market became highly unstable and the prices of edible oil during this period changed around eight times and
resulted in artificial price selling. This is because before any expected price change was suppose to occur, the
distributors piled up the stock at the previous price and sold it at the new increased price. In effect, when the market
stabilized during 2008, there was a huge gap in the supply and demand. Inventories remained in the warehouses for a
longer time because of the limited sales as can be seen from the dip in every graph during this period. The distributors
after the artificial sales could not achieve the targets for the next years because the companies set up their targets
based on the artificial selling of 2007. Furthermore, the distributors faced problems due to the emergence of MAKRO in
the early 2007 and METRO, in the late 2007. The emergence of these chains hampered the sales of the distributors as
indicated by a decreasing trend in the graphs of all the distributors shown in fig. 2. At the beginning of 2006, the sales of
the Distributor B were 255 tons and in 2009, it ended its last quarter with 173 tons as shown in Fig 2. The slope is
decreasing at a rate of 6.0941 tons per quarter. Thus, the overall decrease in the share of Distributor B from 2006-09 is
32.15%. Distributor D started off with 325 tons of Cooking oil and Banaspati in 2006 and ended with the sales of 215
tons in 2009. The decrease per quarter in the sales of Distributor D is 7.32 tons. Overall, in the four years, the share of
this distributor was decreased by 33.85%. The sales of Distributor E showed a similar trend to what is seen in the other
two graphs. The total decrease during the same time period for this distributor is 34.375%.
Distributor A and C showed a bit abnormal trend. If we consider Distributor C first, we can see a sharp decrease in the
sales of this distributor to an approximately 79% in the four year time period. If we see the trend of other distributors,

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and claim the decrease due to MAKRO and METRO, then the slope should decrease, but at a lesser rate. The slope of the
graph for the sales of Distributor C is -20.745 tons per quarter. Hence, there may be some other reasons to support this
large drop in the sales. According to the interview conducted with this distributor, the cause of this huge decline is the
area cut because he could not achieve his target given by the company based on the artificial price selling of 2007.
Distributor A, out of all shows a positive trend. This means that the sales of this distributor have increased over time by
approximately 11.11%. The reason for this abnormality, as mentioned by him is the increase in the coverage area by the
company. So, if we go by normal estimates, with the normal market conditions as shown by distributors B, D and E, the
approximate decrease averages to 33%.
Fig 3 shows the total quarterly sales of all the above mentioned five distributors from 2nd
quarter of 2006 till 4th
quarter
of 2009. Overall, this cumulative graph shows a downward trend in the total sales. The slope of this 15 quarter graph is
-41.92, that is, during every quarter, the total sales of five distributors is decreasing by 41.92 on average, per quarter.
With this rate of decrease, the total loss in the share is 38.7%. Fig 4 shows the total sales of the company by all the
distributors including those distributors who entered or left during any time between 2006 and 2009. The trend line
shows that the slope of this graph is also decreasing with a rate of 35.5 tons per quarter which is flatter than the slope of
fig. 3. The reason for this change is that the total drop in the sales of the five distributors is compensated a bit by the
increase in the sales of the remaining small distributors11
. Hence, the initial rate of decrease that is 41.92 decreases to a
rate 35.5 tons per quarter.
The limited data of IMT provided by Company-1 was for the year 2009. We constructed pie charts for the quarterly data
to show the total share of the General Trade (GT) and IMT during this time as shown in Fig 5. By the end of 2009, the
total loss in the share of GT was approximated at 20%. The overall picture of Company-1 presented supports our
hypothesis, validating our claim that the distributors are being affected quantitatively by 25-30% on average due to the
emergence of MAKRO and METRO. Hence, it is an alarming situation and requires attention of the companies because if
at present only 4 stores of both multinational chains can take about 30% share of the distributors, if more stores open
up for the same chains or different, they can easily take over the market.
Similar to the graphs of Company-1, the graphs for Company-2 are also drawn. These graphs show a product-wise trend
between the different premium brands of the same company. The data used for analysis ranges from 2004-2010. For the
scope of our study, we have chosen only the premium segment brand, since it can give us an analysis of the situation
before and after the emergence of MAKRO and METRO.
Fig 6 shows the product-wise sales of the three brands of Company-2. Brands 1 and 3 represent different cooking oil
brands and brand 2 represents a particular Banaspati brand. All three brands show a particular trend of decreasing sales
over time. However, the loss in the sales of Brand 1 (cooking oil) is most during the period 2004-10. Brand-2 also shows
a downward trend, but its rate of decrease is less than that of Brand-1. Brand 3 (cooking oil) also shows a downward
slope, but due to the lack of awareness among the general public about this particular brand, the sales of this brand has
remained more or less quite low. Hence, we consider only Brands 1 and 2 for the purpose of analysis. Brand-1 has a
sharp decrease over time showing that as awareness increased, people became more health conscious and shifted from
using Banaspati, containing more unsaturated fats and cholesterol, to cooking oil containing less fats. Brand-1 started
with the sales of 1185 tons in 2004 and ended at 725 tons in 2010. The shift in the share of distributors is approximately
38.81% with the slope of -19.282. This means that on average, distributors of Brand-1 are losing 19.282 tons per quarter.
Lahore traditionally is Banaspati-oriented society, so there is still a high demand for Banaspati especially in the B and C
11
By small distributor, we mean those distributors who did not remain during the entire period of 2006-09. Either they entered late
or left earlier.

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class stores12
. Thus, the decrease in Banaspati is low in General Trade. Brand-2 started with 860 tons in 2004 and ended
with 710 tons in 2010. So, overall, there is a decrease of 17.4% in Banaspati sales during this time. The slope of the
trend line of Banaspati is -6.61, so every quarter the decrease in the sales of Banaspati by distributors is 6.61 tons.
Fig 7 shows three graphs of Company-2 representing the total sales of all brands by the general trade, the total sales of
Company-2 including the sales of the entire premium and lower segment brands, in addition to the sales of Company-2
through IMT. The graph of total sales through GT shows a downward trend, representing a shift in the share from GT to
IMT. This graph began with 2180 tons of total sales through GT and ended with 1550 tons of sales in 2010. Overall, the
company experienced a decline of 28.9% in its sales through the GT. The graph of Company-2 sales represents that the
sales of the company are increasing with the growth rate of 36.84% from 2004-2010. So, overall, the sales of the
company have a positive trend. Similarly, the sales of IMT are also increasing with a very steep positive slope of 44.472
tons per quarter. So, both MAKRO and METRO as a channel have a growth of 90.9% from the time of its emergence till
2010. The huge increase in the sales of IMT during this time is the result of increased awareness among the public. The
sharp drop in the sales of cooking oil (Brand-1) in GT is compensated by the sharp increase in the sales of pouch packs
(more economical and handy) of this brand through IMT. There is a shift in consumption from Banaspati to Cooking Oil
in case of IMT. This is because people who come to these A class stores of IMT are more health conscious as compared
to the people who purchase from B or C class stores of Lahore.
Fig 8 shows the yearly changes in the trends of the total sales of all brands of Company-2. Immediately after the entry of
MAKRO and METRO, the response from the Company-2 to the new retailing system was welcoming. Since they were
already disturbed by their distributors, they started aggressive support campaigns with these newly-emerged organized
wholesalers. During 2006-07, GT lost 240 tons because of the instability within the company. The next year, the true
impact of MAKRO and METRO started coming into play. With 920 tons as the initial sales of 2007, the sales of GT
dropped to 480 tons in 2008, showing a decrease of 47.8%. Part of this decrease was due to IMT and the remaining due
to the market instability after the artificial price selling period ended. The slope of this graph was -40.524, that is the
sales of the distributors were decreasing by 40.524 tons approximately per quarter. The graphs for the years 2008-09
and 2009-10 show a similar trend of loss in the sales of GT. In the year 2009-10, the total sales of Company-2 decreased
by 62.9%, which was a huge drop. Fig 9 shows the actual shares of GT and IMT as provided by Company-2. So, with the
help of Fig 8 and Fig 9, we can conclude that the hypothesis of this paper is true. Using the evidence provided by the
data of both the companies of edible oil industry, we now stand at a better position to support our initial assumption
that the MAKRO and METRO have impacted the sales of distributors up to around 30%. If these chains further expand or
other global retailers such as Walmart plan to enter the Pakistani retail market, the distributor’s future will be at stake.
Even if the distributors are not completely eliminated from the market, their share in distribution will shrink to such an
extent that either they will be forced to leave this business altogether or take distributions of those products which
offers them guarantee of their return on investment.
4.1 Credibility of findings:
The findings of this paper are based on the actual data figures from two of the leading oil companies of Pakistan. Both
these companies deal with the premium brands of edible oil, so it can rightly be said that they describe the market
12
B and C class stores, we mean those shops which are situated in the regions with people of low income groups who purchase in
small amounts.

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trend. However, the analysis completely ignores the situation in accordance with the middle and lower brands of edible
oil. According to the interviews conducted with the distributors dealing in lower brands of Cooking Oil and Banaspati,
the increase in the price of premium brand may make it costly for some people and make them shift to these lower
brands. However, the authenticity of this claim cannot be assured without any proper stats. This paper is based on just
the analysis of the situation in the oil industry due to the lack of cooperation by the manufacturers of other FMCGs. So,
these findings may not be applicable to other retail industries.
5. RECOMMENDATIONS:
The companies should find optimal ways to compensate for the loss of sales of distributors. This is because, for any
company, a distributor acts as a backbone because they are responsible for the brand establishment of their products. A
distributor may deal in multiple products, but he can only keep one brand of products for a particular industry and
cannot take distribution of competing products. Thus, his loyalty remains with the manufacturers and their products
whereas these global retailing chains only establish their own brand names instead of establishing any particular brand
of products. Thus, manufacturers can only rely on the distributors for their brand recognition.
It is beneficial for the companies to retain two distribution channels because if the channel of distributors is completely
eliminated, the companies will be blackmailed by the monopolistic dominance of MAKRO and METRO on retail market.
Furthermore, distributors pay in advance for the stock they purchase from the manufacturers, while the companies have
to provide at least 40 days credit facilities to MAKRO and METRO for purchasing bulk quantities of their stock. Moreover,
the manufacturers incur a great cost in terms of huge advertisement budgets and promotional activities, whereas the
distributors demand no such budgets for the promotion of the brands of manufacturers. In contrast, distributor’s claim
that if they are provided with the same facilities as MAKRO and METRO, they would be able to generate better sales
than the IMT stores. Distributors can reach every nook and corner of the city, thus providing more coverage for the
products of the manufacturers. On the other hand, only a small proportion of population can be catered by these large
wholesalers.
CONCLUSION:
The entry of the global retailers, MAKRO and METRO has given rise to a new competitive environment between the
distributors and the IMT. With increasing threats from these international chains, distributors are finding themselves
hard to cope with this competition especially when the FMCG manufacturers are moving towards easy selling system of
MAKRO and METRO because of the bulk sale of their products. The overall analysis presented in this paper shows a 30%
decline on average in the sales of the edible oil industry manufacturers. The manufacturers are now trying to help their
distributors by decreasing their costs on inventory and hence, increasing their return on investment. To sum up, the
distributors will only survive this intense competition if they receive enough support from the manufacturers.

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FIGURES:
Fig 2: The sales of Company-1 distributors who have been in the company from the beginning of 2006 till the end of
2009.
y = 2.1037x + 268.27
y = -6.0941x + 262.89
y = -20.745x + 384.9
y = -7.3236x + 325.86
y = -8.4453x + 333.75
0
50
100
150
200
250
300
350
400
450
Distributor A
Distributor B
Distributor C
Distributor D
Distributor E
Linear (Distributor A)
Linear (Distributor B)
Linear (Distributor C)
Linear (Distributor D)
Linear (Distributor E)
Fig 1: Consumer surveys conducted in the following years with lower middle class have consumption of FMCGs between
PKR 2,000-6,000, middle class have consumption between PKR 6,000-15,000 and upper middle class have consumption
above PKR 15,000.
30%
22%
33%
15%
CONSUMER SURVEY 2008-09
2000-6000
6000-10000
10000-15000
15000 & Above
25%
23%
15%
37%
CONSUMER SURVEY 2010
2000-6000
6000-10000
10000-15000
15000 &
Above

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Fig 3: The total sales of five distributors of Company-1, who were during the entire time from 2006-2009.
Fig 4: The sales of all the distributors who entered or left during any time of 2006-09 of Company-1.
y = -41.924x + 1580.4
0
200
400
600
800
1000
1200
1400
1600
1800
Total
Total
Linear (Total)
y = -35.504x + 2089.9
0
500
1000
1500
2000
2500
Total
Total
Linear (Total)

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Fig 5: The share of GT vs. IMT for Company-1 during the year 2009.
Fig 6: The product-wise data for Company-2 with Brands 1 and 3 as some brand of cooking oil and Brand 2 as some
brand of Banaspati.
y = -19.282x + 1198.4
y = -6.6139x + 876.51
y = -3.6378x + 111.98
0
200
400
600
800
1000
1200
1400
1600
1st…
2nd…
3rd…
4th…
1st…
2nd…
3rd…
4th…
1st…
2nd…
3rd…
4th…
1st…
2nd…
3rd…
4th…
1st…
2nd…
3rd…
4th…
1st…
2nd…
3rd…
4th…
Brand
1
Brand
2
Brand
3
SHARE OF IMT vs. GT FOR COMPANY 1 (2009)
85%
15%
1st Qtr
GT
IMT 81.26%
18.74%
2nd Qtr
GT
IMT 74.14
%
25.86
%
3rd Qtr
GT
IMT
83.50
%
16.50
%
4th Qtr
GT
IMT
80.82%
19.18%
Total
GT
IMT

13 | P a g e
Fig 7: The total sales of company-2 through GT and IMT, and the total sales of the Company-2 through all products.
Total GT
y = -27.397x + 2187.1
IMT
y = 44.472x - 15.316
Company-2 sales
y = 28.685x + 1889.8
0
500
1000
1500
2000
2500
3000
3500
4000
1stquarter04-05
2ndquarter04-05
3rdquarter04-05
4thquarter04-05
1stquarter05-06
2ndquarter05-06
3rdquarter05-06
4thquarter05-06
1stquarter06-07
2ndquarter06-07
3rdquarter06-07
4thquarter06-07
1stquarter07-08
2ndquarter07-08
3rdquarter07-08
4thquarter07-08
1stquarter08-09
2ndquarter08-09
3rdquarter08-09
4thquarter08-09
1stquarter09-10
2ndquarter09-10
3rdquarter09-10
4thquarter09-10
Total
IMT
Company-2 sales
Linear (Total)
Linear (IMT)
Linear (Company-2 sales)

14 | P a g e
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kkkkkkkkkk
Fig 8: Yearly total sales of all the brands of Company-2.
y = -23.891x + 861.58
-
200.00
400.00
600.00
800.00
1,000.00
1,200.00
1,400.00
Jul'06
Aug'06
Sep'06
Oct'06
Nov'06
Dec'06
Jan'07
Feb'07
Mar'07
Apr'07
May'07
Jun'07
Total 06-07
Total 06-
07
Linear
(Total
06-07)
y = -40.524x + 959.3
-
200.00
400.00
600.00
800.00
1,000.00
1,200.00
Jul'07
Aug'07
Sep'07
Oct'07
Nov'07
Dec'07
Jan'08
Feb'08
Mar'08
Apr'08
May'08
Jun'08
Total 07-08
Total 07-08
Linear (Total
07-08)
y = -12.607x + 673.41
-
200.00
400.00
600.00
800.00
1,000.00
Jul'08
Aug'08
Sep'08
Oct'08
Nov'08
Dec'08
Jan'09
Feb'09
Mar'09
Apr'09
May'09
Jun'09
Total 08-09
Total 08-09
Linear (Total…
y = -35.438x + 667.74
-
200.00
400.00
600.00
800.00
1,000.00
Jul'09
Aug'09
Sep'09
Oct'09
Nov'09
Dec'09
Jan'10
Feb'10
Mar'10
Apr'10
May'10
Jun'10
Total 09-10
Total 09-10
Linear (Total
09-10)
LAHORE
99%
1%
2006-07
GT
MT
74%
26%
2007-08
GT
MT
75%
25%
2008-09
GT
MT
53%
47%
2009-10
GT
MT

15 | P a g e
REFERENCES:
Aman, Asad, and Gilian Hopkins. "Changing Structures Of Distribution." Emerald (2010): 341-59. Print.
Associated Press of Pakistan (2008), “MAKRO cash & carry to invest $ 300 million in Pakistan; to
open 30 stores”, 24 June, available at: www.app.com.pk/en_/index.php?option=com_
content&task=view&id=42877&Itemid=38
MAKRO :::::::: BUY LIKE A PROFESSIONAL ::::::::. Web. 10 Jan. 2011. <http://www.MAKROpakistan.com/>.
"MCC | METRO Cash & Carry Pakistan." MCC | Home. Web. 10 Jan. 2011.
<http://www.METRO.pk/servlet/PB/menu/1005221/index.html>.
METRO India. Web. 10 Jan. 2011. <http://www.METRO.co.in/METROCCInternational

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