What is a Cash & Carry Store?
The simplest way to understand Cash and Carry (CC) is to see it as ‘Wholesale in Retail without Credit’. Cash and Carry stores are B2B stores where goods are sold in cash and wholesale/large quantities to registered customers. The customers are business or non-business organisations. Ideally, CC stores are not for individual retail customers. CC stores are self-service outlets. Some C&C brands also offer membership benefits. The concept originated in the early 1900s. Another way to look at Cash & Carry is to see it as a one-stop shopping location with the looks of a hypermarket or warehouse for bulk purchases at low prices. The product categories sold in CC stores include:
Reasons behind the popularity of Cash & Carry Stores
Bulk Purchase at Retail
One of the salient features of the Cash & Carry business model is offering bulk purchases. It is an ideal solution for customers whose requirements are in large quantities. It would not be ideal for someone to go to a supermarket and empty the shelves. This is the gap which CC stores fulfil. For example, you want to make purchases for a big corporate event in your company. If your company is a registered customer of a nearby CC store, it can make big volume purchases from that store.
Wide Merchandising
CC stores are also known for their extensive merchandising portfolio. From needles to air conditioners, you will find almost anything of routine consumption. Well, you may not choose to buy 100 ACs for your office from a CC store. The example is only to highlight the extensiveness of merchandising in CC stores.
Competitive Prices
Because CC stores sell directly from the manufacturer, they can price their products more competitively than small or medium-scale retailers. In a Cash & Carry business plan, as middlemen like wholesalers or distributors are eliminated from the value chain, the saved benefits could be passed on to customers.
Eliminates Credit
The Cash and Carry business model gets away with credit requirements. All transactions are cash-based (no credit or pay later). Revenue could be fully accounted for on an actual basis. There is no need for the finance or accounts team to do follow-ups.
The Drawbacks of Cash & Carry Stores
When it comes to shopping at cash and carry stores, there are some pitfalls one should remain aware of.
Almost every CC brand has limited return policies. This means they do not accept returns on food items. So, as a customer, you need to be doubly sure of what you are buying and that too in bulk.
Some Cash and Carry brands require membership. Customers have to first register themselves as members by paying a membership fee. One may still buy as a non-member but the benefits available to members may not be available. And one such benefit is discounted pricing. If you do not get the discount, the reasoning for purchasing from a CC store is eroded. Even if you take the membership, you may not be a frequent buyer which will not justify the cost-benefit of having a membership.
Finally, CC stores are marred by the same old problem of all popular retail stores – long queues for checkout. And without automation, this problem continues to haunt every CC business model.
Three Leading Cash & Carry brands in the world
Costco Wholesale
Founded in 1983 in Seattle (Washington), Costco Wholesale is one of the largest CC chains in the world. Today, with annual revenue of over USD 150 billion, Costco is one of the largest retailers in the world.
The Costco outlets offer an extensive range of products - groceries, electronics, home appliances, furniture, and more. It is a membership-based warehouse club with operations in twelve countries and 800+ locations worldwide. The company is known for its low prices, bulk purchasing, and high-quality products.
Costco’s business model is based on - selling a limited variety of products at low prices. Its warehouses are designed to be efficient and cost-effective with an emphasis on low pricing for its members. The company is committed to providing its members with products and services of superior quality. This has earned them the reputation of being an excellent service provider with a strong commitment to sustainability and ethical business practices and initiatives for waste reduction, energy conservation, and support to local communities.
Summing up, Costco’s triumph to become one of the most respected retailers in the world can be attributed to its focus on creating and delivering value-based offerings to its members. The brand has done this by keeping the prices low, maintaining the quality of products, and superior customer service.
Metro Cash & Carry
Founded in 1964, Metro Cash & Carry is a German-based, transnational wholesale chain with operations in over twenty-five countries worldwide. The product categories offered include groceries, stationery, electronics, and household items. The company’s brand positioning is one-stop-shopping destination for businesses for a wide range of merchandising at competitively economical prices. Running on a B2B model, the company caters to businesses such as offices, hotels, restaurants, and offices, among others. Apart from store presence in major markets, the brand is also making inroads into the eCommerce mode.
Walmart
Walmart Cash and Carry is a division of the global retail giant - Walmart Inc. As a membership-only wholesale club, it caters to small and medium businesses and individuals for their bulk purchase quantities within competitive price brackets. The brand offers an extensive range of products - groceries, cleaning, electronics and equipment, stationary and other office supplies, household items, and so on. A benefit comparable to all major Cash and Carry brands, Walmart CC also offers products with attractive price labels. The reasons are the elimination of middlemen from the value chain and bulk sourcing. The benefits are eventually passed on to the customers. Walmart also offers a host of benefits to its members. This includes – free delivery, discounts at selected fuel stations, easy checkout, etc.
The Future of Cash and Carry Brands
The Cash & Carry business model provides a solid answer to ‘wholesale as retail’ i.e. fulfilling the bulk purchase requirements at the level of retail. This is the essence businesses and aspiring entrepreneurs need to grasp first.
Cash and Carry is highly suitable for urban market regions where there is a large presence of business and non-business organisations with bulk purchase requirements. So, local demographics with local economics play a strong role in evaluating market prospects and preparing a Cash and Carry business plan.
There are only a few big names in Cash and Carry. The benefits are quite hom*ogenous. And if that continues to remain the case, any brand that comes first and captures a given market region will have the edge.
And when it comes to operations management, SOPs for Cash and Carry operations are a must.
FAQs
What is a Cash & Carry Store? What is the concept of Cash and Carry?
The simplest way to understand Cash and Carry (CC) is to see it as ‘Wholesale in Retail without Credit’. Please read the first section of the blog.
Why is it called Cash and Carry?
Cash and Carry is called so because all purchases are only via cash/digital equivalent and no credit is allowed. The addition of the word Carry is to signify checkout.
Why Cash and Carry stores are popular?
· One-Stop Shopping Destination
· Bulk Purchase at Retail
· Wide Merchandising
· Competitive Prices
· Eliminates Credit
What are the disadvantages of Cash and Carry stores?
Some of the disadvantages are:
· Restricted/Limited Return Policies
· Some stores require membership
· Long checkout (without automation)
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