Modern Trade _ how to suceed !


With organised retail growing leaps and bounds most brands be it in the FMCG space or the lifestyle space or the Apparels space have quickly formed a Modern Trade Team to focus on the Huge business that these Key accounts would deliver .
Having handled this business for sometime, in my last assignment with a MNC from a brand side and having worked in retail operations with one of Indias retailers ,I have to some extent the feel of what i think makes this piece work( am not saying have attained Nirvana on this ! ) .
These are my tips to succeed in this domain , of course doesn't guarantee anything , as each brand would be doing most of the same things ! so what holds the Key ? read on ...

Modern trade begins with a Lot of Info and thrives on a lot of info , its important to know whats happening at the client end , for this u need to quickly establish your moles in the system, who become your brand Evangelist at the clients end ,if the client is an important one then one standby mole would also be needed , essentially these people would update you , though not completely as to which side the wind is blowing and what are the internal discussions happening on which would be useful fo you as a brand ! so it goes without saying its all abt building relationships at the clients end .This is has to be effectively done both at the bottom end say a merchandiser /purchaser or section operations head to the highest level say a category head in retail , alll them need to have experienced some positive elements from the brand ( say eg ::active participation in their customer promo in terms of sponsorships , plus also whether the brand has said YES to most of their requirements ) .
I worked with a brand which was on a NO mode to any of the big retailers requirements ... believe me the large retailers don't care , if you are NO there are many brands who don't have NO in the dictionary at all !
So after information and relationship which is the key to success , guess , yes its Space , getting the right location is the key to succeed in any retail store , brands pay extreme premium to get this done , with each brand looking at this, this is all swung by hard negotiation for more margins etc by the retailers usually ,its worthwhile bargaining margins for prime space !

So information ,relationship and Space are the prime drivers of success in modern trade , but they are easily replicable , so what is the show stopper , of course MARGINS , there are brands paying higher margins and getting information ,space , and "bought "relationship working for them ! in this context brands have also started looking at producing separate product lines catering to this business , Levis Signature is a classic example of a brand created only for Walmart and in India too ,you find this brand in most of the hyper markets too .

The lower the cost ,higher the Margins that you can part to the retailers then you are tailored made for success , but most brands don't have that luxury , so its information , relationship and space that they work on for success ..

After all that one does , how does one measure success in modern trade ::
The KPIS are
Space share
Share of segment sales : data difficult to get normally however the Moles can help !
Gmrof data of your brand vs other brands , a lower gmrof data would sure be an indicator that the retailer would come for a margin bargain or a space cut that is Bad Modern Trade management for sure , more later on this interesting domain ! .....would like to get some feedback too

Comments

Anonymous said…
a very useful piece of info,would like to learn more....
cheers
manoj
Unknown said…
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