Retailer-Brand Partnerships for Creating New Categories and Deepening Market Penetration

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The riveting session at India Food Forum 2022 touched off on some of the game-shifting insights that could act as a bulwark and an inspiring template for future retailer-brand partnerships besides helping to launch products that are a great market fit and meet consumers’ evolving needs and demands

Mumbai: The opening Day of the 15th Edition of India Food Forum hit off on a high note with with the word go: An electrifying Round Table comprising leading food and grocery retailers and some of the most illustrious food brands across India, who converged to knock heads together on discussing some of the major collaborative breakthroughs and game-changing insights that helped to propel food categories into the next high-growth orbit, turbocharge category sales and helped script memorable success stories for both brands and retailers.

The riveting session touched off on some of the game-shifting insights that could act as a bulwark and an inspiring template for future retailer-brand partnerships besides helping to launch products that are a great market fit and meet consumers’ evolving needs and demands. While almost all new products are based on market-and-customer insights, there exists a greater opportunity to launch products that also meet the emerging and future needs. “Today, we are seeing the rapid emergence of a customer segment that is extremely curious, experimental, and ready to try out new products that come wrapped in a shimmy of novelty and are designed to tap into customers’ evolving needs and aspirations, which helps the latter to upgrade themselves with contemporaneous international trends ,” observed Vallabh Saudagar, SVP & Group Business Head (FMCG & DBFE), Reliance Retail. He added that it is a very promising trend that both retailers and brands should come together to mine and collaborate down the line.

Saudagar’s comments came like a bolt of inspiration for the distinguished assemblage at the Round Table, whose incisive insights and experienced-laced observations set the tone for a galvanic session replete with a wealth of learnings and observations that retailers and brands can take to heart when collaborating on launching and distributing new products in the market.

Shaisav Mittal, Director, Lovely Bake Studio, one of the largest manufacturer, retailer and distributor of Indian sweets, gave an example of how his company partnered with Reliance Retail to grow and deepen the penetration of Indian sweets produced by his company. “During one of our recent discussions with the Reliance team, we learnt that they want to promote sales of sweets throughout the year and not limit the sales to just the festive occasions. Thanks to our years of experience in the sweets business, we were able to share with them our consumer insights of the business. Our discussions crystallized into a path-breaking idea, which was to come up with miniaturized sweet boxes that could be sold right at the retailer’s cash counters. The innovation was to come up with small packs with 2-4 pieces of sweets, weighing about 50-100 gm with a price-point in the range of Rs 49-99. The move resulted in customers picking up the sweet box placed strategically around the cash counters, just the way they picked up chocolates and energy bars. In no time, the downsized sweet boxes were flying off the shelves, sales rocketed, and the experiment proved to be a win-win for the retailer, brand, and customers besides helping to expand and deepen the category for Indian sweets.”

In a wonderful instance of creating consumer convenience promoting a category, Nadeem Jafri, Founder and Chief Mentor of Ahmedabad-based supermarket chain Hearty Mart, recounted an interesting category innovation that Hearty Mart introduced at its stores. Jafri said that his retail customers prefer good quality products at an economical pricing. But they tend to avoid experimenting with unfamiliar, new brands or products, which they haven’t used in the past. This is where a bundling or a cross-bundling strategy helps to introduce new products on the shop-floor and create demand for the same.

He narrated how when he introduced a premium brown bread with an introductory retail offer, the store staff waited for a few days expecting to see good uptake of the product. But due to the pricing of the bread – it was a premium bread and prices were higher than the other breads available at the store – along with non familiarity with the brand, the product movement was very slow.

“We introduced a product-bundling strategy and branded a section of the shelf as ‘Breakfast Basket’. Here, the new premium brown bread was bundled with a 100-gm pack of popular butter, a small pack of cheese spread/ cheese cubes and a bottle of jam/ ketchup. We priced it smartly, showcasing expected savings due to this bundling of products. This helped the premium brown bread make inroads in the consumer households of our regular customers and it eventually resulted in developing a regular demand for the product.”

Pointing to another case of innovative retailing at his store, Jafri recalls the period six years ago when demonetization was being implemented resulting in the sucking out of almost 86% of Indian currency from the market and leaving people to face a severe cash crunch. “We introduced an ‘ideal daily ration kart’ at Hearty Mart – it was a subsidized ration kart for our regular customers, which would help them purchase their daily ration at an economical pricing. The product mix of the daily ration kart was selected based on the purchase pattern of our customers, but it didn’t necessarily include established brands. The product mix was economical and offered lots of savings, which was the need of the hour then. We created buzz around the ration kart by circulating the information amongst our customers via WhatsApp and SMS. We continued with this scheme for two months from November 2016 to January 2017. Not only was the concept lapped up, it also helped us in enhancing our image as a concerned and customer friendly retailer with the customers showing their appreciation for this proactive step.”

In an inspiring story of category creation, and how brands can innovatively use their retailer platforms for launching brilliant marketing programs, Rahul Khandewal, Asso. VP – Organized Trade, Godrej Consumer Products, pointed at how in the post-Covid era, the need for launching products that conform to the sensibility and sensitivity of the more informed consumers has become more acute than ever before. “Thanks to Covid, the digital evolution and revolution in India has hastened and leap-frogged by some 5 years, impacting several categories. One such is the air-freshener category, which until Covid struck, was largely relegated to bathroom use in India even though it has been more popular for use in the living rooms world-wide. Through our consumer research, we introduced our Airmatic room freshener product in the Indian market, which diffuses the fragrance automatically without the need for spraying it manually. Through our partners in retail, we devised a strategy to further propagate its market reach and penetration, which was less than 2% in India. The efforts have borne fruits with small shopwners, more households, showroom owners, offices picking up the product with a greater frequency and a higher willingness. In just 5 months after we put in place a new consumer-connect strategy for the product, its sales uptake increased 10x of its earlier value.”

In a somewhat contrarian example, Aditya Tripathi, Founder, Cold Love Ice Cream, pointed out how his company, launched in January 2020, has been able to steer and drive appreciable growth without banking on modern-trade retailers. “At a time during the Covid era, when modern retail found itself off the deep end, we were able to grow our business by leveraging our website and digital prowess and by taking an approach that hewed closely to the D2C playbook. As a start-up with a modest budget and limited resources, we reached out to a few modern-trade retailers but we found their terms and conditions very restrictive and difficult for a new brand to comply with. Till date, we have not used modern retail to grow our business but we have grown substantially in the territories that we operate in. But going ahead, I do feel that at some point of time, we will have to lean on modern retail and I wish that the issues I have highlighted could be taken up for a wider discussion and possible resolution.”

Koti Reddy, Head – Buying & Merchandising, Ratnadeep Supermarket, narrated how the retailer’s partnership with Marico breathed fresh oxygen into the tepid sales of peanut butter, which is a niche category in India. “Even today, it is a very low-penetration category with just about 0.1% market distribution. Marico and Ratnadeep partnered to together expand the peanut butter category when the brand launched its Saffola peanut butter. We came up with a strategy wherin we placed peanut butter at every cash till at our stores, offering a 50% saving on the purchase. Since this scheme took off, we have seen over 15x volume growth and sales for the category has jumped above 50%.

The lengthy but pulsating session saw many other retailers and brands offer their buoyantly incisive takes on successful brand-retailer partnerships that have helped categories leap to new heights and gain consumer mindshare and wallet share. Their observations and thoughtful comments lit a fire for India’s food and grocery industry to react and to keep further test-bedding new ideas to boost category expansion and commercialisation efforts for both brands and retailers.
Among the other speakers who contributed their powerful insights were: Abhinav Garg, GM – F&B, The New Shop; Anil Kankariya, Founder, Navjeevan Plus; Azim Mohammad, MD, Metto Supermarket; Kirit Maganlal, Founder & CEO, Magsons Group, Goa; Rajesh Agarwal, CFO, Ghanshyam Supermarkets; Aanchal Gambhir, Director, BLG International Hing; Prashant Peres, MD – South Asia, Kelloggs’s; Amitabbh Singh, Sr VP , Patanjali Ayurveda; Anand Nagarajan, Co- Founder, Shaka Harry; Saptarshi Lahiry, Director-Trade Sales, Abbott Nutrition Int. (India); Siddartha Juneja, Head – Omni Channel, Mondelez; Vipul Mathur, VP, eCommerce & Modern Trade, Hindustan Unilever; Smerth Khanna, Business Head – eCommerce & Modern Trade, Dabur India; and Gaurav Gambhir, MD, Shubh Foods.

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