MNCs replicate India retail model; empower kiranawallahs, spread sales network in other emerging markets
MUMBAI/NEW DELHI: JochenZaumseil, managing director of L’Oreal’s Asia Pacific zone, spent nearly a day interacting with neighbourhood store owners in Bangalore last week during his quarterly visit to India. The idea was not just to make products such as L’Oreal Paris colour repair shampoo and Garnier men’s fairness cream available in more shops but also to take the experiment of dealing with small grocers to other developing markets.
Satyaki Ghosh, director of consumer products at the Indian arm of the French cosmetics giant, says, “We are now in different stages of moving from few distributors in emerging countries such as the Philippines and Indonesia to several of them similar to how we operate in India, where we have over 750 distributors serving millions of retail outlets.”
And L’Oreal isn’t alone. Indian units of consumer goods firms, such as Unilever, Danone, Kraft, Coca-Cola and GlaxoSmithKline, all plan to take some of the learnings from Indian grocers to other marketswhere their products are mostly available only in well-lit, spotlessly clean modern retail outlets. Interestingly, this move to empower kiranawallahs in other markets comes at a time when Opposition leaders in India have taken to the streets saying the government’s decision to allow foreign investment in multi-brand retail sounds the death knell for corner shops.
French food giant Danone says people in Europe now buy more from small shops than before. “In Europe, proximity trade is increasing significantly. People don’t want to spend two hours for shopping anymore and are starting to buy again from small stores from their neighbourhood,” says Eric Soubeiran, Danone’s bottom-of-the-pyramid director. “What we can learn from India by serving efficiently proximity trade can be applied to developed country,” he says.
While exporting ideas from Indian business to other markets isn’t new, what has changed is the increased aggression on distribution of products in India. Hence, the focus is on the largest distribution channel-kirana stores.
World’s third-largest consumer goods firm Unilever even set up a Customer Insight and Innovation Centre in Mumbai five months ago to study how consumers shop for FMCG products-its first such hub in India and seventh in the world. The centre will be used by several group companies in developing and emerging markets to understand how people shop in both neighbourhood stares as well as modern trade.
Warm Regards / Ganesh Srinivasan
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