×
Home Companies Industry Politics Money Opinion LoungeMultimedia Science Education Sports TechnologyConsumerSpecialsMint on Sunday
×

HUL’s biggest national roll-out may add Rs320 cr sales in first yr

HUL’s biggest national roll-out may add Rs320 cr sales in first yr
Comment E-mail Print Share
First Published: Tue, May 11 2010. 11 00 PM IST

Go-to-market: The firm will extend the new concept to the top 80,000 stores of the one million retail outlets that it reaches out to directly. Indranil Bhoumik/Mint
Go-to-market: The firm will extend the new concept to the top 80,000 stores of the one million retail outlets that it reaches out to directly. Indranil Bhoumik/Mint
Updated: Tue, May 11 2010. 11 00 PM IST
Mumbai: Consumer goods firm Hindustan Unilever Ltd (HUL) could add around Rs320 crore to its revenue, following the roll-out of its most ambitious trade initiative called Perfect Stores, said an executive at Technopak Advisors Pvt. Ltd, a retail consultancy firm.
For HUL, India’s largest packaged consumer goods company by revenue, it is one of the largest and fastest roll-outs of a marketing strategy to get back its lost market share.
In the first three quarters of fiscal 2010, HUL’s revenue was Rs13,208 crore.
The maker of Lux, Wheel, Dove and Kissan tomato ketchup, HUL is rolling out the Perfect Stores concept across 80,000 stores in 72 cities with a population of at least 100,000 in the next six weeks. The objective is to raise sales in these stores by 30%. All these stores will have similar in-store display and merchandising.
Go-to-market: The firm will extend the new concept to the top 80,000 stores of the one million retail outlets that it reaches out to directly. Indranil Bhoumik/Mint
Since the average size of a neighbourhood grocery store is around 200 sq. ft and sales per sq. ft are Rs6,000 a year, typically one such store has a turnover of Rs12 lakh a year, according to Raghav Gupta, president of Technopak Advisors.
If HUL products account for 25% of such sales, then the sales of these products at one such store will be to tune of Rs3 lakh a year, he said.
Going by Gupta’s calculation, if this initiative leads to a 15% increase in sales, then HUL products will record a rise of Rs45,000 a year in each of these 80,000 stores. The overall increase in sales of HUL products at these stores will be Rs360 crore and, after removing the retailers’ margin, the growth will be Rs317 crore.
Gupta, however, has taken a conservative estimate of 15% rise in sales while the company itself expects a 30% rise.
Perfect Stores is the last mile of HUL’s go-to-market strategy that was started about three years ago. The company aims to rationalize its distribution network, make it more efficient, deliver stocks to retailers faster and reduce inventory on their product shelves.
Traditionally, HUL took time to react to competitive pressures as it had a pipeline of stocks to exhaust. It typically took 10-12 weeks for price cuts to reach its customers. With a quick turnaround of stocks, the company is aiming at a zero or, at the most, one-day stocking level.
Ahead of the roll-out, it ran a pilot in January-March in Coimbatore, Tanali (Andhra Pradesh), Chandigarh, Bhubaneswar and Thane.
Now, the Perfect Store concept has been extended to the top 80,000 stores of the one million retail outlets that HUL reaches out to directly.
The company’s joint venture Hindustan Unilever Field Services Pvt. Ltd, which was formed for modern trade channels with Smollan Holdings, an in-store execution and field services firm in South Africa, in November 2007, has now been extended to cover general trade.
The national roll-out began early this month, and in the first week, HUL created around 20,000 Perfect Stores.
“The creation of Perfect Stores has been made possible due to a three-year history of the stores sales,” said Suhas Jain, a supervisor at Mumbai with HUL.
“There has been an increase of 30% in sales in Perfect Stores,” said Hemant Bakshi, executive director (sales and customer development) at HUL.
The focus on general retail trade is among one of the many initiatives that the Anglo-Dutch Unilever’s Indian unit is looking to double its revenues.
Over the year, it has been engaged with rival Procter and Gamble Co. in price wars and legal battles over washing powder supremacy.
General trade accounts for 97% of the overall consumer packaged goods industry in India and grew at a rate of 13% in 2009 in value terms over a year ago, according to Nielsen Co., a market research firm.
The organized retail trade industry’s growth slowed to 14% in calendar year 2009 compared with 52% a year ago, as per Nielsen.
Following the collapse of Lehman Brothers Holdings Inc. in September 2008 and the global meltdown, quite a few firms in the Indian organized retail industry faced trouble.
For instance, Subhiksha Trading Services Ltd has shut shop and Vishal Retail Ltd has been posting losses for three quarters in a row. Others such as Aditya Birla Retail Ltd and Reliance Retail Ltd are yet to report profitability.
“We will do what is right for both modern trade and general trade as both continue to grow rapidly,” said Bakshi.
However, not everybody is convinced about the success of this initiative.
Vinod Shah, owner of GR Super Store in Andheri West, a Mumbai suburb, has seen his revenue decline by 40% from Rs5-7 lakh per month to Rs4-5 lakh per month in the past few years due to the growth of modern retail in the suburb. GR Super Store is being converted into a Perfect Store.
“When a consumer comes in, there is an increase in sales with better display and merchandise assortment,” he said. But not many consumers are visiting his shop these days; 60% of his sales are over the phone. Declining footfalls is Shah’s biggest worry and he isn’t sure whether the facelift can woo the consumers back to his shop.
sapna.a@livemint.com
Comment E-mail Print Share
First Published: Tue, May 11 2010. 11 00 PM IST