One of the things I observed during the pandemic was the number of new brands I saw at the local Kirana stores near me; It was like the pandemic had actually spurred FMCG retail instead of slowing it down!
What it did do, is shift consumer habits in a way that created the demand for completely new sub-categories in everyday products. And that’s where many FMCG start-ups found their true calling. Even though many brands took the D2C route to reach their consumers, a lot of them recognized the power of the traditional retail network in India, considering Kirana stores account for almost 90% of FMCG retail sales in India.
Working up-close with many of our start-up clients, I observed these 4 things that – if done correctly can definitely accelerate the growth trajectory of any startup that wants to take the offline route. Let’s have a look .
1. Urban or Rural?- Where to start first?
A recent Nielsen report mentions that the rural market continued to perform with strong growth of 14.6% in the Jan-March 2021 quarter and the metro markets have registered a positive growth after two quarters, despite the onslaught of the pandemic.
These numbers indicate that it’s a great time to be present in the Indian Kirana retail network. But where should you start selling first? To answer that question, figure out where your TG lives. Does it live in the Metros and urban cities? Semi-urban and satellite towns? Rural areas? Getting this part right will actually solve 50% of your worries.
What you need to keep in mind is to not spread too thin too far. If your product appeals to the urban population, don’t start with a thousand pin-codes. Start small with maybe 4 metro cities and then slowly build your presence.
If you have a product that caters to the masses, it might be a good idea to first create brand awareness and establish your customers’ needs in a few satellite cities and towns neighboring the metros you are already in. Once you have that understanding & experience, it will be easier to expand your rural penetration.
Like how Sleepy Owl did by reaching customers via their own website and other online platforms and then tying up with HoReCa customers and Tier I retail stores. As Ajai Thandi, Co-Founder of Sleepy Owl puts it, “We have a pretty solid approach to every market. We identify the right clusters, shops, and keep tabs on consumption patterns. We’ve learnt a lot with Delhi and Mumbai markets and we’ll use all of these to chart our future in other urban cities and Tier II markets.”
2. Get the right distribution partners
Whether you are a digital-first brand that wants to go offline or you’re a new brand exploring a retail presence, it is extremely critical to maximizing the efficiency of your distribution channels. For D2C brands, being more digital will definitely give you visibility and targeted customers, however, retail sales can get you good volume and enhanced growth.
And that means identifying distributors who want to work with you because they believe in your product, not just because of the margin structures. Your distributors are the ones who will create that market penetration for you.
When Kapiva, an emerging leader in the modern ayurvedic nutrition industry launched their products in general retail, Shrey Badhani, Co-founder of Kapiva had a clear strategy for identifying the right distributor partners. “ We needed to be thoughtful about the scale we wanted to play in and therefore we had to find distributors who understood our future plans, and had experience working with brands like us. A tactical issue was that our products are bulky, so we realized that food distributors were more suited to our needs than pharma distributors.” Today Kapiva is present in more than 6,500 retail outlets across 12 cities. By the end of 2021, they hope to cover more cities and expand their reach to nearly 10,000+ outlets.
A key lesson here is to partner with distributors who have the ‘right-fit’ as well as the financial muscle to see you through your journey. Ideally, they need to have the hunger to grow as you grow. Off late, I’ve seen the distribution landscape get more organized with the advent of specialist distribution companies who ensure local Kirana stores and mom & pop shops stay fully stocked, whether there is a pandemic or not.
3. Know what’s happening in the field
When you are selling your products online, it’s easier to analyze your customers’ demographics and target them accordingly. But when you transition from online to offline distribution, you need an equally strong data backbone to support your retail expansion and growth.
If you are still running on excel sheets and fragmented data, trust me, it will be a long and slow journey because you will only see a partial picture of where you stand. To get ahead of the competition and establish a strong brand in the retail space, you need automation tools like Distributor Management System, Sales Force Automation, Smart Analytics, etc. that can give you real-time visibility on your products, markets as well as your sales team’s performance. Make sure you have the right arsenal to support you on this journey because general retail is a much tougher battle, and data will be your biggest respite.
Here is an example: A few months ago, a beverages start-up found it challenging to manage its sales operations. The founders realized that they will need to invest in a smart automation solution to have visibility of all their sales flows. After identifying the right technology partner who could offer flexibility in billing and provide great customer support, the start-up grew 10 times in outlet base, expanding across geographies within 6 months of deployment, and more than doubled their sales force productivity!
As you can see, it is very important to have an eye on your on-field sales team and their productivity, because if you don’t, you are unable to get market visibility. As Shrey adds, “ If you don’t have automation at all, it’s hard to do it once. To do it regularly is even harder! Sales Automation has helped us frame our GTM better. It allows us to segment our customers across different store categories – pharmacies, department stores, Kirana stores, etc. We have higher visibility on our marketing activities, and we have a clear line of communication between the sales team and the managers.”
4. Get your Positioning and Customer Preferences right
Kirana shops and Mom-and-pop outlets help brands to reach a wider customer base and quite possibly create an ever-growing target audience. Therefore it becomes critical to keep a pulse on the market, to be able to predict near-future trends and respond to customer demand much better and faster than your competitors.
Much the same way, when Coolberg launched in 2016 as India’s first crafted zero-alcohol beer brand, it was very clear it wanted to be a brand of choice for Millennials and teetotallers all across the country. While the obvious route was to start with HoReCa, subsequent market surveys revealed there were untapped markets in Tier II and Tier III cities that were prime for launching their products. Using the Instant Survey feature in the SFA field app, Coolberg was able to get accurate market intelligence that helped it launch new SKUs in the Rs 10-15 range to onboard customers in smaller cities.
In my experience, I have observed that when Founders and Leadership teams of consumer companies recognize the importance of adopting automation at an early stage of expansion, they are able to build transparency and accountability in their sales culture as well as achieve better ROIs than others who deployed it much later.
Success stories like these excite me because they give me a glimpse of the progressiveness and the passion of Sales teams in the FMCG space. Having a great sales strategy can complement that passion and turn it into exponential growth and success.
So when start-ups and emerging brands talk about ambitious plans of expanding their retail reach, what they really need to do is to get these 4 basic requirements right in their sales strategy. And of course, use the right technology solutions to beat longstanding challenges in General Trade and build a strong, robust FMCG brand.