ITC Sets up Store Locator to Give Sales a Big Push - The Economic Times
November 26, 2013
Craving a pack of Dark Fantasy biscuits? A few taps on your smartphone, tablet or laptop can guide you to the nearest store that has the chocolate cookie range on its shelves.
ITC has mapped more than 20 lakh stores - including organised retail and kirana outlets - across India with near real-time information on the availability of its fast-moving consumer goods (FMCG) on an online platform that the company hopes will revolutionise distribution and consumer engagement in the Indian market and help it gain ground on market leader Hindustan Unilever.
The initiative is one more way to get close to the consumer and push sales of premium products, said Sanjiv Puri, the Kolkata-based conglomerate's divisional chief executive in charge of FMCG trade marketing and distribution. "ITC's product portfolio includes a large number of premium products like Dark Fantasy Choco Fills, Delishus cookies, Aashirvaad multi-grain atta and Fiama Di Wills shower gels that are available in select outlets. In order to provide consumers convenient access to FMCG products, the store locator has mapped stores across 150 cities and towns," Puri said. ITC plans to link its inventory billing at the outlets to the network so that buyers aren't disappointed by stocks running out when they get to the stores. "We can use this (information) highway for more intense consumer connect," he said.
The company soft-launched the store locator in May and has recorded more than 29,000 hits since then. It now plans to publicise the concept extensively, promoting it at point-of-sale counters and on FMCG packaging to drive adoption. The store locator will help promote ITC products, since the purchase of food products is impulse driven, said Mohit Kampani, president and CEO of hypermart chain Spencer's Retail. "It is another effort on ITC's part to do things differently in the FMCG domain. However,this would be an expensive thing to maintain and its success will eventually depend on how much sales ITC can drive through this initiative," he said. Analysts and trade experts believe the initiative will help support aspirational purchases and reduce the possibility of consumers switching to rival brands, but this alone may not be enough for ITC to overtake Hindustan Unilever (HUL) to become the country's largest FMCG firm.
'ITC Must Expand Further'
HUL directly reaches more than 55 lakh outlets, while companies such as Colgate-Palmolive cover more than 35 lakh outlets, said a senior executive at a leading food and grocery retail chain.
"In comparison, ITC needs to further expand direct penetration beyond 20 lakh outlets to compete effectively," he added, requesting anonymity.
Innovation in the FMCG industry always pays dividends, said Emami director Aditya Agarwal. "However, a direct consumer interface like what ITC is doing would make sense only when a company has a range of premium products, much like an Apple laptop. It won't make sense for deep-penetrated products which are easily available," said Agarwal. Companies such as Emami said they may look at such a strategy only when they launch a premium product. The store locator, the first such initiative in the Indian FMCG industry, will benefit the company, said Abneesh Roy, associate director, institutional equities research, Edelweiss Securities. "However, ITC needs to make its supply chain system robust so that there is no stock-out situation at the store when the consumer visits, which then can be disastrous," he said.
The system will appeal more to diehard fans of ITC's premium products, said Roy, since Indian consumers in general would rather visit the store to choose a product rather than going online to find a store and then paying it a visit. ITC more than halved losses in its decade-old, non-cigarette FMCG business to 81.26 crore with sales of 7,012 crore in the year to March. The company overtook HUL in branded food and beverages sales in FY13.
