Initiated a joint business plan

FMCG companies have taken a number of strategic initiatives to boost their sales via organised retail. In an exclusive interaction with  Sunil Kataria, Chief Operating Officer - Sales, Marketing and SAARC, Godrej Consumer Products, highlighted their operational strategy with these organised retailers.  

How can organised retailers and FMCG companies collaborate to  aggressively expand sales of these products?

FMCG  companies have carved their niche with their ability to understand changing patterns of consumer behavior, while modern chains have access to considerable scope of consumer data, and the resulting opportunities  for analytics.

We  have  collaborated  with many   prominent  retailers including Easyday and Reliance Retail, and  initiated a scheme – ‘ Joint  Business  Plan’ which allows senior managers of both the partners to work together to achieve operational goals. In addition, we have also invested in back-end IT and it permits seamless flow of information between an organised retailer and us.

Retailers are increasingly focusing on private labels, in a bid to improve profitability. How does it impact your partnership model?

Private labels are relevant to a certain category of consumers, but that has not impacted our product categories and our partnership with organised retailers.

How do you define your relationship between modern chains and neighborhood stores?

Over  the years, FMCG and unorganised retailers have developed a symbiotic relationship on a pan India basis.

However, modern chains are different, as they are present in select cities and their operations tend to be consolidated in certain localities. And, while considerable emphasis has been placed on a collaborative model between chains and FMCG companies, I would like to point out that we are still developing this model, and there is considerable scope for further improvement.

How  does your  retail  strategy differ between modern chains and kirana stores?

Modern retail offers considerable scope for ‘engagement’ with the consumer, as well as a wide scope for cross selling of products like soups and soaps. In addition, the SKUs offered at modern chains differs substantially from kirana stores, and there is only a 30 per cent overlap in merchandise mix between these two distribution channels.

Apart from that, we work jointly with retail chains to reduce supply chain costs as well as pilferage in the ‘system’,  but unorganised  players with virtually no technology have distinguished themselves with services like a ‘personal equation’ with consumers and home delivery services.

In addition, there is a vast difference in terms of credit period and allied commercial terms between organised retail and kirana.