ITC augments investment in e-commerce, accelerates digital transformation

ITC Ltd has augmented its capability in emerging modes such as e-commerce and modern trade channels with "sharp-focused investments" and is also accelerating innovation with platform centricity and "digital-first" brands in the wake of the COVID-19 pandemic, according to the company's annual report for 2020-21.

Witnessing a shift in consumer behaviour after the pandemic, the Kolkata-based diversified firm has also enhanced its play in the market, reaching out to customers through e-commerce channel partners, its own ITC e-Store and even engaged D2C channels such as Dominos, Swiggy, Zomato and Dunzo.

Besides, the company is also working on cutting-edge digital technologies including artificial intelligence (AI), machine learning (ML) and industrial internet of things (IoT) to enhance productivity, driving efficiency and reducing costs.

"The pandemic boosted the e-commerce channel as consumers sought to fulfil their needs from the safety of their homes during the lockdown period.

"Significant increase in internet penetration, the growing popularity of digital payments, attractive loyalty programmes, a wide assortment of products and faster deliveries continue to drive the rising salience of this channel," the company's directors said in the report.

The impact of these multi-dimensional interventions are evident in the substantial margin expansion of 640 basis points (bps) in segment Ebitda over the past four years, it added.

Ebitda stands for earnings before interest, tax, depreciation and amortisation.

The company witnessed doubling of its business from the e-commerce channels in the pandemic-hit FY21, which contributed to 5 per cent of its FMCG (fast-moving consumer goods) segment revenue.

Stating that the "pandemic has given wings to the trend of digitalisation that was already gathering momentum", the report said.

It added that accelerated digital transformation is integral to the company's future-ready strategy and is increasingly being harnessed to enhance competitive advantage.

Cutting-edge digital technologies are being increasingly deployed across key touch points spanning consumer experience, smart and agile manufacturing and supply chain operations, employee experience and intelligent insights platforms, it added.

"Foundational initiatives such as the 'DigiNext' and 'Young Digital Leaders Forum' have been implemented towards steering your company through its digital journey and fostering a data driven and 'digital first' culture across the organisation," the directors stated.

Anticipating the increase in consumer preference for 'contactless shopping' and home delivery, ITC "proactively engaged" with e-commerce platforms and aligned the supply chain to deliver the right SKUs (stock-keeping units) and product assortments.

"The rapid growth of modern trade and e-commerce channels, 'out-of-home' and 'on-the-go' consumption and the growing importance of chemists and speciality outlets in recent years, has warranted crafting of differentiated market/outlet specific strategies to seize the emergent opportunities," it said.

While, engagement with direct-to-consumer (D2C) channels such as Dominos, Swiggy, Zomato and Dunzo has augmented product availability.

"During the lockdown phase, in tune with the trends of increased at-home consumption, need for sanitizing products in the 'health and hygiene' space and the consumer need for health and wellness content, purposeful communication sharply focused on these need spaces were rolled out," said ITC.

Through its innovative model 'ITC Store on Wheels', it is directly covering over 900 residential complexes across 13 cities.

Besides online, ITC has also worked to enhance its direct and indirect reach, which has been stepped up significantly.

"Market and outlet coverage were expanded to 1.3x and 1.1x, respectively, compared to pre-COVID-19 levels.

"The stockists' network was nearly doubled to sharp target rural markets to drive growth, mitigate the impact of disruptions in the wholesale channel and effectively service emergent demand," the annual report said.

ITC's 'FMCG-others' segment continues to leverage digital technologies and platforms enhancing consumer experience.

"Strategic interventions in this area are aimed at delivering delightful brand experiences seamlessly across touchpoints through personalised journey mapped to individual's needs, preferences and context," it said.

The businesses continue to increasingly leverage 'Sixth Sense', the marketing command centre and consumer data hub, which is an AI-powered hyper-personalised platform backed by a robust partner ecosystem for content and data to gain insights on market trends and consumer behaviour.

While talking about its own direct-to-consumer channel, ITC e-Store, which was launched just prior to the lockdown in March 2020, "The initiative has been well received by consumers and plans are on the anvil to rapidly scale up the same in the ensuing months."

It has collaborated "with the leading e-commerce platforms on all aspects of operations i.e. category development, marketing, supply chain and customer acquisition".

"This was augmented by development of exclusive and relevant pack assortments, capability building to execute plans to drive 'digital-first' brands and platform discoverability through jointly curated campaigns," said ITC.

Besides, ITC is empowering employees using advanced analytics with AI and ML capabilities.