admin
March 13, 2023
Tushar Goenka, Financial Express
March 13, 2023
Flipkart Supermart, the online grocery delivery platform of the Walmart-owned ecommerce company, is betting on regional brands to unlock the next phase of growth. Over the past few months, the e-tailer has been listing brands and making them more readily available in cities where their recall value is high.
The regional push targets staples and is pronounced across categories such as atta, tea, pulses, among others. So, instead of offering, say, just the Tata brand of tea, Flipkart also showcases local favourites like Nameri Tea for the residents of Assam. Similarly, instead of selling Nestle’s Maggi and ITC’s Yippie noodles across the country, Flipkart will also let customers pick brands selling Korean noodles, popular among north east teenagers.
The shift in focus is vital in a country whose grocery bill totals $600 billion, of which offline sales account for a staggering $592 billion, while online is a much smaller $8 billion. Further, of the total grocery bill, the share of regional brands at around 60% is much higher than organised national brands that stood at 40%, according to rough estimates from EY.
So far, the plan seems to have worked for the company. Smrithi Ravichandran, head of grocery, says her unit has grown 2.5X between June 2022 and February 2023.
The reason for this shift in focus is easy to understand. In Ravichandran’s own words, “The Indian palette changes every 150 kilometres.” Consider this. The kind of toor daal consumed in Chennai is different from that consumed in Madurai. That is, even within a single state (Tamil Nadu in this case) there is a huge difference in preferences. And that is true for most categories.
Next, look at the potential. Ravichandran’s department sees about 65-70% of its orders coming from Tier 2 and beyond, with metros and Tier 1 cities accounting for the rest.
Analysts believe Flipkart’s initiative is a step in the right direction. Says Devangshu Dutta, CEO, Third Eyesight, a retail consulting firm, “Focusing on regional brands makes eminent sense not just to cater to tastes in a particular geography but to also serve consumers who have moved away from their hometowns and might find it difficult to buy their chosen brands.”
That said, catering to regional preferences is easier said than done. “If one has the same selection even for the same state, it doesn’t help. But there is a cost in catering to that varied choice and we’ll need to operate more fulfilment centres,” Ravichandran adds.
From what to how
Flipkart’s plans to double down on the regional selection in grocery will mean partnering with some of them. Here consumer data available with Flipkart will come in handy, says Ravichandran.
Angshuman Bhattacharya, national leader, consumer product and retail, EY India, believes that by offering more regional brands in categories like atta, Flipkart will deepen penetration, giving smaller players a chance to tap a wider customer base. “Smaller, regional brands will be hungrier for growth and may end up offering healthier margins than what a nationalised player would do,” he adds.
In this, Flipkart’s approach is similar to that of Future Retail under Kishore Biyani, who underscored the importance of a regional brand-led strategy. “The Future Group had launched around 10 private labels of atta and that is no easy feat. A regional brand-led focus might prompt Flipkart to toy with the idea of launching its private labels at a later stage. Or it may even end up asking the regional brands to package staples under its brand, thereby yielding much higher margins,” Bhattacharya of EY points out.
Flipkart isn’t drawing the line just yet. The company will invest in technology to tell customers about the origin of the products they order. “Conscious consumerism is another aspect we will focus on. So, on the packet of a toor daal, consumers will have traceability regarding where and when exactly the daal was harvested,” Ravichandran adds.
This journey will not be a cakewalk for Flipkart. Analysts point out that to be able to partner with Flipkart and address its customer base of over 450 million, smaller brands must up their supply chain spends. That apart, there is always the fear that if the e-commerce giant does not get the desired results, it might discontinue such tie-ups, leaving the regional players in the lurch. Flipkart must allay these fears right at the outset.
(Published in Financial Express)
admin
November 4, 2022
Christina Moniz, Financial Express / BrandWagon
November 4, 2022
Direct-to-consumer (D2C) lingerie brands, often credited with transforming the category and the way women shop for innerwear, are expanding their offline footprint in response to growing demand from tier-II markets and beyond. Zivame, whose journey began online just over a decade ago in 2011, has grown its offline presence to over 120 stores and also sells through over 4,000 partner outlets. In its recently concluded Grand Lingerie Festival, Zivame saw its sales grow three times,with a 120% increase in new customer acquisition. “Tier-II markets are showing massive potential and though tier-1 remains our highest revenue contributor, we are seeing significant revenue baseline shifts in tier-II locations,” says Khatija Lokhandwala, head of marketing at Zivame. The company has announced that its focus will be retail expansion in the second half of this fiscal, going beyond metros and tier-I markets.
Another decade-old D2C player in the innerwear segment, Cloviais eyeing the immense opportunity presented by smaller markets with aggressive expansion plans in place. “Clovia currently has 45 exclusive brand outlets in the country and has been diversifying its product range, with plans to open 130 outlets by the end of this fiscal. Ours has always been a mass- market brand, and most of the repeat customers come from tier-II and tier-III markets,” explains Pankaj Vermani, founder and CEO, Clovia. He notes that over 65% of its customer base is from the non- metro markets, and average order values are 20% higher in these cities compared to the metros. Earlier this year, Reliance Retail Ventures acquired an 89% stake in Clovia’s parent company (Purple Panda Fashions) for Rs. 950 crore. Vermani adds that Clovia will ben- efit from the conglomerate’s scale and retail expertise, driving up growth and love for the brand. Reliance Retail had picked up 15% stake in Zivame back in 2020.
Shaping the market
The women’s innerwear market in India is set to double to reach $11-12 billion by 2025, according to a report by RedSeer. Aside from the key segments of bras and panties, ancillary products like athleisure, sleepwear, swimwear and lounge wear are also boosting the lingerie category’s growth in the country, as is evident from the widening portfolios of leading brands. The online segment for women’s innerwear is expected to become a $1 billion market by 2025.
Experts believe there is a large opportunity for companies to grow since 60% of the $6-billion women’s intimate wear market in India is unorganised, and the category is still largely underserved.
“The lingerie market is an example of improving supply feeding into a growing demand, and the increasing demand expanding the opportunity for more brands to step in. Larger cities, with their higher income profiles and demand concentration, are the logical first-choice market for companies such as Zivame,” points out Devangshu Dutta, CEO, Third Eyesight.
The competition in the large cities is greater, with a plethora of Indian and global brands, which is why Dutta recommends that e-commerce led companies should push aggressively in smaller markets to drive sustained growth.
The fact that D2C brands have better data sets at their disposal to glean insights about Indian women and their concerns when buying innerwear has also worked in their favour.
“Intimate wear shopping can be overwhelming for a lot of women. Finding the right size and choosing styles for their specific needs requires an environment free of embarrassment and judgement. At Zivame, we help women choose the right size and perfect fit, ensuring a private, comfortable and discreet shopping experience,” says Lokhandwala.
While lingerie can sometimes be prohibitively expensive, Vermani points out that Clovia’s feedback-led design approach helps it keep pricing competitive.
The brand creates each product in small quantities, and uses technology to predict future sales based on customer feedback, thereby determining the right quantities for production. He states, “With this approach, we have created a fashion brand that is low on cost, high on consumer appeal and efficient in inventory, leading to better margins and cash flows.”
(Published in Brandwagon, Financial Express)
admin
September 5, 2022
Akanksha Nagar, Financial Express
September 5, 2022
Can you give a brand a second shot at life?
Reliance Retail Ventures certainly thinks so. It has acquired Campa-Cola for an estimated `22 crore from Delhi-based Pure Drinks Group on the assumption that it will not only be able to revive the five-decade-old brand but can also use it to springboard into the dog-eat-dog soft drink market in India.
It will not be a cakewalk surely. The ones who were fans of the brand—which was launched in the 70s—have moved on, and younger customers have little or no association with the brand.
Samit Sinha, managing partner, Alchemist Brand Consulting, believes that Reliance must have been very keen on getting into the soft drinks category as a part of its overall strategy of retail expansion. In any case, it hasn’t had to shell out a bomb for the brand so it is a less audacious gambit than starting from scratch. There is one other factor that might work in its favour—which is the formula, the taste of which had near widespread acceptance in its heyday.
Sandeep Goyal, managing director, Rediffusion Brand Solutions, who is handling a similar resurrection of Garden Vareli sarees, says giving an old brand like Campa-Cola a new life will be far from easy—the Campa-Cola generation is now in their sixties and therefore there is very little monetisable value in the nostalgia.
RESURRECTION RULES
Breathe life into an old brand if:
1. The market presents an opportunity to refresh the brand without compromising on its core promise
2. There are positive connotations for the brand that can be built upon in the current market context
3. The company has the resources and inclination to be a “caretaker” or “steward” of the relationship that had been created between the brand and its customers
Courtesy: Devangshu Dutta, CEO, Third Eyesight
Launch versus resurrect
From the looks of it, Campa-Cola will have to fight sip for sip, bottle for bottle.
Rohit Ohri, chairman and CEO, FCB Group India, who had managed the Pepsi account for more than a decade, says it will be difficult for a new brand to find space in a market dominated by multinationals like Pepsi and Coke. While the residual equity can help get the foothold, the real challenge would be to woo a younger consumer set.
Naresh Gupta, co-founder and CSO, Bang In The Middle, concurs: “When you try to resurrect a brand, you do it knowing that the brand isn’t doing well or has been out of circulation. That is big baggage for the brand to wipe out. Often the residual awareness and following are limited to the audience that is less likely to be your core audience today.”
There is also the fact that young people in the metros are moving away from colas, preferring healthier drinks or niche artisanal products instead. At the same time, soft drink is an impulse category and needs a large dose of salience to fly off the shelf.
Gupta says Reliance can try and build on the Indian-ness that Campa-Cola exudes. His guess is the old brand will be used as a calling card in trade and there would be a host of new launches that build upon it. “Campa-Cola may fuel a lot more fresh fizzy drinks launch from Reliance,” he adds.
That said, just the sheer time an old brand has spent on the shop-shelves would give Campa-Cola an edge over any new brand that its current owner might want to launch. An old brand can appear to be proven, experienced and secure, while a new brand could be seen as untested, raw, and risky. An old brand may have had a positive relationship with the consumer but may have been dormant due to strategic or operational reasons. In such a case, reviving the brand is clearly a good idea, says Devangshu Dutta, chief executive, Third Eyesight.
Reliance could have launched a new brand but if the existing brand has residual awareness or connection, it could be the pivot around which other brand properties can be built. Here, the new owner also has the benefit of having a wide retail network. As on March 31, 2022, Reliance Retail operated 15,196 stores across 7,000-plus cities with a retail area of over 41.6 million sq ft. This, if nothing else, will give Campa-Cola a start any new brand will die for.
(Published in Financial Express)
admin
July 24, 2022
Written By Akanksha Nagar
Urban Company aims to bring quality, innovation and affordability to the unorganised beauty services market
As the pandemic started hammering the business, a sizeable number of beauty professionals who worked at salons jumped onto the up and coming tech-enabled home services marketplaces.
The bulk of the Indian beauty services industry remains unorganised and fragmented, dominated by expensive salon brands or small players that offer dubious products, inconsistent service and unsolicited advice. With a push from the pandemic-led restrictions, there has been a sudden rise of a clutch of organised, on-demand players that offer professional beauty care services in situ. Urban Company, for one, has witnessed a big rise in service calls in recent months, driven by rising aspiration levels and disposable income, and the growing demand for standardised and safe in-home services. The segment contributes over 40% of the total revenue for the company already. As per published documents, the firm posted a 13.8% increase in revenue from operations to `239 crore in FY21 compared to `210 crore in FY20.
According to Expert Market Research report, the Indian beauty and personal care industry attained a value of `54,558 crore in 2020, and is set to grow at a CAGR of 11% in the 2022-27 period. Of this, the Indian salon market, which stood at `55,000 crore in FY20, is expected to touch a whopping `2 trillion in FY25, at a CAGR of 28%.
Numbers aside, the spread of the Covid pandemic forced the industry to switch to reverse gear as many salons shut down permanently or closed down unviable outlets just to stay afloat. Enrich Beauty which had salons in cities like Mumbai, Delhi, Bangalore and Ahmedabad, for instance, shut down five salons since 2020, bringing the total count down to 83.
As the pandemic started hammering the business, a sizeable number of beauty professionals who worked at salons jumped onto the up and coming tech-enabled home services marketplaces. Says Anand Ramanathan, partner, Deloitte India, “Service aggregator marketplaces have helped increase organisation and bring standardisation in delivery.” It was a win-win for both the customer and the brand. Brands could directly engage with the end consumers and the customer was assured quality—of both the products used and the services rendered.
Mukund Kulashekaran, chief business officer, Urban Company, says the fundamental shift in the beauty service market has been in terms of improved quality. As long as the market remained fragmented, there was zero investment in training or upgradation of services, or in product innovation. None of the small regional players really had the wherewithal to take that leap.
Focus on quality
Urban Company devoted a lot of time and attention to training the service providers while also pursuing innovations to raise the standard of the products on offer. While it uses a number of high-end brands, it has also begun to develop its own to make its services more accessible and compete on a larger scale. It operates three levels of salons: the luxury (average ticket size `2,500), the mid-mass premium (`1,200), and the classic, which is at the economy end of the spectrum (`750) and uses proprietary products for the classic and mid-mass premium segments.
Quality is assured by continuous testing and keeping a sharp eye on customer feedback. There is also significant investment in training and automation. It currently has an in-house team of over 200 full-time trainers across 50 cities. It is stepping up investments in technology to both improve product quality and to act promptly on feedback.
The firm had introduced in-home hair and nail services for women amid the pandemic, which, Kulashekaran says, has scaled quite well. Demand for men’s salon services, launched right before the pandemic, has increased from 20,000 transactions pre-pandemic to as high as 150,000 transactions per month. It launched a Skin Clinic for laser and advanced facials in seven cities and has signed on more than two million clients already.
In terms of geographical spread, while the top ten cities account for more than 80% of its revenue, non-metros are rising fast in terms of revenue share.
Long haul
The company prioritises brand-related communication rather than performance-related. The focus is more on the video medium than the click-through media. So the focus area is TV, but YouTube in case of a targeted campaign.
In the next stage of expansion its communication strategy will be key. Jagdeep Kapoor, founder, chairman and MD, Samsika Marketing Consultants, says that while expanding beyond metros the brand has to be less urban in terms of perception and imagery and take into account the culture and taboos, and the differing definition of beauty.
Samit Sinha, managing partner, Alchemist Brand Consulting, says to keep up the pace of growth the brand has to invest in its service providers, and not just its customers. This is a business model that will not be difficult to replicate. The trick will be to incentivise the beauty care technicians so that they are able to offer high-quality services to the customer and have little reason to join a rival brand. The thing to remember: Like most other service businesses, beauticians too can bypass the company and establish direct relationships with customers — a phenomenon that has plagued the ride hailing and ride share services in India.
BOX: Staying on track (Insights from Devangshu Dutta, CEO, Third Eyesight)
Three factors that will determine success
• The customer sees the aggregation platform as the “provider” of service, rather than a listing agency. So the company needs to totally own the customer experience, end-to-end.
• Ensuring quality of service consistently is the biggest enabler for growth.
• Over time, UC has moved to this “ownership” of the experience, which does mean additional investment, but also pays off in the end.
Three factors that might undo the good work:
• If it doesn’t keep working on customer experience ownership, it could slip
• Margins/commissions need to be reasonable, otherwise, service professionals may abandon the platform
• Given the high customer acquisition costs, it has to drive repeats rather than one-time or low-frequency purchases.
Source: financialexpress
admin
December 23, 2021
Devika Singh, Moneycontrol
December 23, 2021
Male grooming products startup The Man Company, known for its online-first strategy, is looking at offline expansion for its next leg of growth. The company, which operates 28 exclusive brand outlets in the country, plans to launch 60-70 more stores by the end of this fiscal to gain presence across at least 100 locations.
“A lot of growth will come from the offline channel for the next one year at least, especially in Tier II and III cities where launching exclusive stores is a good way to introduce the brand to the consumer as shopping malls are weekend destinations there,” co-founder Hitesh Dhingra told Moneycontrol.
The company, backed by fast-moving consumer goods (FMCG) major Emami which holds a 48.49 percent stake in it, is also looking at introducing its products in more multi-brand outlets. The Man Company is present in 1,200 multi-brand outlets which include lifestyle stores such as Shoppers Stop, Central and Lifestyle as well as hypermarkets, supermarkets and pharmacies. The company plans to be in 2,500 multi-brand outlets by the end of financial year 2022-23.
It currently draws about 70 percent of its sales from online channels including its own direct-to-consumer (D2C) platform and online marketplaces and 30 percent from offline channels. The startup’s strategy is focused on expanding its base in Tier II cities and beyond, which account for 50-55 percent of its sales even on online marketplaces.
“Out of our 28 exclusive brand outlets, only five to six are in top 10 cities and the rest in Tier II and smaller towns. For the new store openings also, we are going to adopt a similar strategy and only 10 percent of the new outlets will be in large cities,” said Dhingra.
The offline way
Several D2C brands have been eyeing the physical retail channel as they try to scale up and tap a wider set of consumers. Brands in the women’s beauty and personal care segment such as Mamaearth, Sugar Cosmetics and Plum Goodness are expanding their presence in the offline retail format. Plum, for instance, is looking to launch 50 exclusive brand outlets in the next two years.
Male grooming startups, too, are following a similar trajectory. For instance, Bombay Shaving Company and Baeardo are launching their products in more and more offline stores.
Devangshu Dutta, chief executive of retail consultancy Third Eyesight, said it makes sense for digitally-native companies that have achieved some brand recognition to launch in offline format for the next phase of growth. Brands in the 1990s for example, he said, who wanted to establish an identity, entered new formats or channels besides the existing ones. Similarly, digitally-native brands need not restrict themselves to online platforms alone, he added.
But he pointed out that these brands will have to address challenges such as ensuring availability of their products in offline channels. “In the online segment, companies can cater to customers with limited stocks. However, in the offline channel, they need to ensure availability of products across stores,” he said.
New categories
Apart from new retail categories, The Man Company has plans to enter categories such as sexual wellness and personal appliances. It has tied up with a marketplace for the launch of personal appliances such as beard trimmers and shavers and the category will be launched exclusively on the platform. The sexual wellness products, too, will be introduced on its D2C platform and later to other marketplaces and offline stores.
“We always launch a product on our platform to test it and get consumer feedback and, based on the response, we introduce the product to the wider market,” said Dhingra.
Launched in 2015, The Man Company caters to the men’s grooming segment and claims to have developed more than 65 stock keeping units. According to Dhingra, the company which competes with Beardo, Bombay Shaving Company and Ustraa will double its sales to Rs 100 crore by the end of this financial year.
Male grooming startups have of late attracted attention from FMCG companies. Marico last year completed the acquisition of Ahmedabad-based Beardo by buying an additional 55 percent stake in the company. It had acquired an initial 45 percent stake in 2019. British consumer goods giant Reckitt Benckiser Group invested Rs 45 crore in Bombay Shaving in February 2021. LetsShave and Ustraa are backed by Wipro Consumer Care.
According to industry estimates, the male grooming market in India was valued at Rs 15,806 crore in 2019 and is expected to cross Rs 36,402 crore by 2025, growing at a compound annual rate of 15-14 percent. Though growth was hit by the pandemic, experts are still bullish about the segment.
(Published in Moneycontrol)
