RETAIL/KIRANA SPECIAL...MNCs to take India Retail Model Abroad

MNCs to take India Retail Model Abroad 

Globals companies empower kiranas; spread sales network in other markets

Jochen Zaumseil, 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 GlaxoSmith-Kline, all plan to take some of the learnings from Indian grocers to other markets where 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 bottomof-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. “These learnings are compiled from all the work that we do in India and other key markets, and our effort is to continuously take our repeatable models across as many markets, as quickly as possible,” Punit Misra, vice-president of global customer development–route to market and traditional
trade channels at Unilever, says. “On the basis of these learnings, we have created repeatable models and tool kits, which are being taken across to all the relevant markets,” he says. Chocolate maker Kraft Foods has taken the low-cost refrigeration solution for small retailers developed in India, the Visicooler, to other markets. Sunil Taldar, director, sales and international business, at Cadbury India Ltd, says, “For us, India is a one of the key markets to develop and exchange learnings for the Asia region. Learnings from India have high potential to be replicated.”
Earlier this year in January, the British £5-billion GlaxoSmith-Kline Consumer Healthcare flew down close to 250 top executives across 30 countries, headed by its global president Emma Walmsley, to understand how its India arm operated in the retail landscape. “This was done precisely so that GSK’s markets globally could experience firsthand GSK India’s best practices in driving reach, coverage efficiency and doing consumer activations across fragmented trade,” says Zubair Ahmed, the India MD of the maker of Horlicks and Foodles.
The GSK global meet, internally called ‘how to win’ was the first such meet in an emerging market. Walmsley had told ET at that time that she visited grocery and chemist stores in cities like Agra and Mathura to personally take feedback of how brands like Horlicks and Crocin anti-fever drug were doing. “I wanted to listen to them...our people sitting in London or New York can't decide what consumers here want.”
Despite modern retailers flooding the streets with large format stores in the last six years, traditional stores still account for around 90% of overall retail trade in India. No wonder, big retailers such as Future Group, Reliance Retail and Bharti Retail have smaller formats or convenience stores to cash in on the opportunity to be at residential areas closer to end consumers.
SAGAR MALVIYA & RATNA BHUSHAN ET121002