Companies forced to look at how to sell more from the same outlets: Satyadeep Chatterjee

Interview with MD, consumer goods and services, Accenture

Retail fragmentation is not new, but what is new is the way in which companies have to look at how they grow, Satyadeep Chatterjee tells Ritwik Sharma

Retail in India is highly fragmented and consumers vary widely in their preferences. How should fast moving consumer goods companies deal with this in a slowing market?

India has around eight to 10 million outlets. The best companies would have a direct reach of three-four million. Typically, they would each have around 5,000-4,000 distributors, and 1,000-2,000 sales officers. The biggest companies will have 3,000-4,000 salesmen. But despite all the investments in infrastructure, they, at best, go to three-four million outlets. So you have two challenges. One big challenge is how you maximise reach. The other is how you ensure that you are able to maximise your sales in your existing outlets. Retail fragmentation is not a new story, but what is new is the way in which companies now have to look at how they grow. In the past they were focusing on expanding into small towns and rural areas. But that growth is not coming anymore. So now companies are forced to look back at their urban centres.
 

Both retailers and the shoppers are evolving. You have new and emerging competition in the likes of Sri Sri Ravi Shankar and Patanjali Ayurved. In the last 12-18 months, companies are focusing on driving sell-out. Increasingly, companies are realising that retail is fragmented and so is the media. Therefore, sales people are also donning a new hat, saying how I can influence consumption or how I can drive throughput at the point of sale.

How critical will it be for companies to tap into mobile and digital technologies and e-commerce, especially to target the new generation of consumers who are connected 24X7?

The question before FMCG companies is how do you drive your product from the company warehouses to the distributor, the retailer and therefore to the shopper. But the route to market focus is largely about how can I ensure I am able to reach the outlet with the right assortment and then sell-out. Coming to digital, that's another set of offerings that we have, to be able to help companies sell more into the store. For one, today most orders are taken on a handheld, so unlike earlier years where you had a pen and paper, most FMCG companies have moved on to handheld with an app or a sales force automation tool. We have a technology called NewsPage. It's an Accenture-owned global software with close to 80,000 users across 50 countries, especially designed for emerging markets like India. The large companies in India are using our technology to capture information on a handheld which then flows back to the distributor who then prints the invoice and services the stock. So that's one area where digital has been around for quite a while. The new technologies we are bringing - that clients are asking us to provide - are retailer self-service app. How you get your information about products and schemes to three-four million outlets is a big challenge.

We talk about markets being global and local at the same time. In a country like India, does it apply uniformly and does it cause firms to decentralise functions?

For a long time people thought of India as "a" market. Most MNCs have made India a region, which means the CEO has powers to drive execution locally the way he wants to. Traditionally in India, most FMCG companies will have regions - north, south, east, west and maybe central. What you are referring to is what we call in Accenture as market archetypes, which is to say instead of looking at it geographically, break up any market to maybe four-seven archetypes where you are able to organise your sales teams, plan your go-to market, drive your sales and marketing investment in line with what that market requires. You can do it by socioeconomic parameters, profile of the shopper and so on. You can have internal parameters like whether the category is salient or not salient in the market. That's a big step that except one or two companies, no other company in India is considering. Because it's a big change - your regional offices will change, structures will change, your thinking, environment have to change. The second is, even if I change my market, do I have the information to be able to analyse what is required in the market?

A couple of our clients are looking at segmentation of outlets that is not just traditional but also based on analytics - what is the outlet purchasing, and not just one but all others in the cluster. You can actually tell the salesman he should be selling a particular kind of product into an outlet. Today there is no way of doing a classification if you don't use analytics.

What are the main steps to tailor a company's approach and product to suit local sensibilities while sticking to a global model?

The best in class example is what we do for a large beverage manufacturer in North America, and this is the end of the journey where we have outlet-level transaction data that we also have in India. We have census data, and being in the US you also get a lot of data for special clusters. Today with a reasonable amount of certainty we are able to help this client target a certain assortment to an ethnic group and within that group, based on their socio-economic status. So for Hispanics earning above a certain value, they like a certain flavour of the product, and therefore that product is what you are pushing into the outlet. Can it be done in India? The technology is the same. We have the capability in terms of analytics. It's a question of companies catching up in terms of helping us gather that data.