Processed food segment is a promising area

Nitin Seth, Joint M D, GD Foods, highlights Tops’ strategy for modern retail viz-a-viz local kirana stores.

Do you think retailers and FMCG can collaborate to take FMCG sector to the next level? Please elaborate on how this can be made possible.

Yes, both retailers and FMCG brands are interdependent for survival; retailers can’t sustain themselves without FMCG and similarly FMCG cannot reach its consumers without the help of retailers.

With the changing times and culture in our country, FMCG in the processed food segment is bound to reach new heights in terms of per capita consumption and deeper level of penetration. As a measure and foresighted strategy, we have added Instant Mixes to our product range. As the working women force increases, changing eating habits and trends are brought to light. In order to combat this, the packaged food category is equipped with solutions in terms of ready-to-cook and ready-to-eat food products.

Retailers help by making these products available to all irrespective of their locations and purchasing power. We at G  Foods are constantly trying to add new and innovative products in our product range to cater to masses in their meals from morning to midnight.

What initiatives are required to be taken from both the parties to create a win-win situation for all?

In order to create an ideal win- win situation for both, many initiatives can be taken. For example, the FMCG sector can give its retailers good margins, attractive schemes, more variety in their product range, timely delivery of products to outlets and multiple branding options that can help the retailer in keeping his shop attractive and consumer friendly. Towards the same, our new initiative includes portable display stands for retailers, which not only help keep the products in place, but also give the shop a well stocked and organised look and feel.

The retailers, on the other hand, can initiate by stocking all products being offered by a brand, pushing products to consumers based on their needs, providing a stock shelf, etc.

What challenges have been faced by FMCG players while doing the same?

India’s market for FMCG is highly fragmented, with a large number of unorganised players. The organised FMCG brands face stiff competition from the unorganised local players. There is a constant price war on between the two and the organised brands constantly strive to deliver the best quality products at competitive prices. A large number of consumers still buy non-branded items due to low pricing not realising that the quality is poor.

Considering the drastic socio-economic changes India is undergoing and the stiff competition brands face to grab opportunities, it is a necessity for brands to have sustainable strategies to grow their market share by increasing penetration and consumption and holding on to their existing consumer base are key challenges.

In terms of retailers, the challenge lies in acceptance of new products, lack of push methodology, shelf space made available and brand loyalty.

With modern retailers betting big on FMCG, what is your strategy to increase your penetration through these formats?

Multi-brand outlets (super markets, hyper markets) and departmental stores together define modern retailers. In this age, they are thriving on FMCG. We at GD Foods believe that it is very important for our brands – TOPS & Royal Taste – to be omnipresent, as this would add on our consumer base. In my opinion, the modern retail outlets are the next big thing in this segment. They provide an ambiance and a great shopping experience to consumers; have everything under one roof and offer good quality products below the MRP. 

Our strategy would be to identify the geographies to play in, where to participate in the retail value chain and what price points to offer, using modern retail.

How does your retail strategy differ for modern retailers and kiranas in terms of products to be sold at each format, credit period guaranteed, service teams, promotional tools, etc.

Nowadays, retailers are focusing more on private labels. Is it increasing your competition as these are comparatively sold at lower price?

Retailers focus on unorganised private labels because these are sold at lower prices and they get large profit margins in comparison to branded products. More number of players increases competition and thus prompts brands to produce superior quality products at competitive prices. The consumer definitely benefits from such healthy competition in any industry. 

Indian consumers still prefer to purchase from local kiranas when it comes to FMCG products. How can modern retailers incentivise customers to make FMCG purchases from them? 

Indian consumers still prefer to purchase from local kiranas because of the personalised experience they get from here. These shops have usually been there for generations and eventually become ‘family stores’. Modern retailers can encash upon the ambiance and experience they offer along with innumerable products across sections and price ranges under one roof. The products here are available at discounted rates (below MRP) and offer good savings; also, the consumers can touch and feel the products. Modern trade outlets are now open round the clock and have door step delivery option too.    

What percentage of your sales comes from modern formats? Is the share likely to increase in near future?

We have entered into modern trade only this year, and currently, 4 percent of our sales come from modern formats. Yes it is likely to increase in the near future.