Retail firms in FMCG alliances

With numbers clocked by modern retail stores constantly growing and the fact that the urban rich are contributing to sales coffers of FMCG players, most big-ticket companies are beating a hasty path to their fancy doors.

Subhiksha Trading Services managing director R Subramanian said his discount retail chain has entered into an exclusive alliance with Pepsi as well as Annapurna Salt in Tamil Nadu.

This suggests that almost 145 Subhiksha stores do not stock Coca-Cola and Tata Salt. Market observers admit that as time passes by MRT (modern retail trade) players may not flaunt their alliances, but they may be open to experimenting with the strategy selectively with certain low-priority categories like spices/masalas, atta, juices, fruit drinks and cooking oils, among others.

However, for the moment, MRT is aggressively pulling all the stops for marketing alliances in running exclusive promotions, launches and trials. Spencers store, for example, is currently running an 'Ek Mein Anek' on behalf of HLL involving 30 of its power brands.

According to this, consumers pick up HLL products worth a certain amount for which they are not just entitled to discounts but also gifts and prizes through lucky draws.

"We are already noticing a rise in sales and the average bill amount of consumers," said K Radhakrishnan, vice-president - merchandising, Spencers.

He also cited the case of 'Smiley' promotion run for HLL last November, which on an average managed to record 35 per cent increase in sales for its power brands. Similarly, Big Bazaar's sales - thanks to a recent promotion drive - went up almost 100 per cent for one of the major toothpaste brands.

It is not that promotions are the only option. FoodWorld chief operating officer Sunil Chandran, for instance, said the strategy is to work with companies and get them to launch their products at out stores.

"This is a win-win situation as our consumers get to see a new product first at our store, and the brands benefit as the companies get an exact feedback. ITC, for example, chose to launch its pasta range first with us."

Chandran also validated the trend where companies tend to benefit with targeted marketing promotion, though certain specific stores, on an average, see an increase in sales of up to 25 per cent.

This is a telling statement in these competitive times, and points to a beginning being made, which in various ways has a bearing on the way FMCG players will choose their marketing mix.

Sanjeev Agrawal, president - marketing, Pantaloon, said, "Our power to work with consumers cannot be matched. Just look at numbers; we have nearly 50 lakh customers walking in to Big Bazaar stores every month, and we have 22 stores across the country."

In fact, spread is assuming importance for companies. Firms like HLL and Britannia India have gone on records staying promotions and alliances are unique based on the region and the nature of customers that each of these stores attracts.