Saint-Gobain is fast moving into the B2C space: Will it succeed?

It is not uncommon to see businesses that start out by focussing on selling products or services to other businesses (B2B) to harbour ambition to eventually sell directly to the end user. Going straight to the end consumer — or B2C — makes immense business sense. You can get immediate feedback from the buyer, sell at a potentially higher profit margin, and have more control over the way you interact with the target audience. All this is, however, easier said than done. The entire organisation and its various processes have to be changed to face and satisfy the new target audience.

Can Saint-Gobain manage that transition?

The $47-billion, three-century old French float glass major Saint-Gobain, which has been present in India since 1996 when it acquired a majority stake in Grindwell Norton, is looking to increase its turnover three-fold, from the current Rs 7,000 crore or so, over the next decade in India. To achieve this, moving closer to the end customer is imperative, it reckons. The Indian operations, which contributes hardly 1 per cent of the global revenue, will be the group's main engine for growth going forward and this market will also be developed as a hub to cater to demand from other emerging countries across the globe. “We see immense opportunity in India to use our expertise in sustainable building solutions to enhance human habitats,” says Pierre-André de Chalendar, chairman and CEO of Saint-Gobain Group.

Saint-Gobain has had a rather long history in the country. Its manufacturing footprint in India was registered in the year 2000 with a new facility to manufacture float glass at Sriperumbudur, near Chennai. Later it expanded the production capabilities to Rajasthan, Gujarat and is now looking to set foot in Andhra Pradesh. Till now, the company has invested Rs 7,500 crore in the country. Today 95 per cent of company’s local sales are of products manufactured at Indian plants.

The company claims that it manufactures 50 per cent of the total quantity of float glass made in the country while the other half is produced by four other players. The company’s share in the float glass exported from here is even higher, a whopping 90 per cent.

Today the market for float glass in India stands at upwards of 2 million tonnes, growing at around 7-8 per cent annum. The company has a significant presence in the B2B segment already. “We are just about beginning to address the B2C segment. It is, however, a long journey and digital is going to be a big help,” says B Santhanam, managing director, Saint-Gobain India.

The company’s B2C strategy will rest on a few factors. Besides developing readymade products that buyers can pick up off the shelf, the company will also have to train its people in dealing with consumers and in finding out what they really want and offer customised solutions. “If the value chain is not improved, there is no point on developing a product in the B2C space,” says Santhanam.

In Saint-Gobain’s case, the value chain includes contractors, architects, fabricators among others. Santhanam notes that in a window, for instance, the contribution of glass to the overall cost is less than 10 per cent. The bulk of the expenses go into labour, equipment and so on. So a big focus for the company will be training people down the chain to reduce wastage and keep costs under control.

The company will use digital tools to train engineers and architects. It has also tied up with 25 diploma institutions across Tamil Nadu, Gujarat, Maharastra and Rajasthan to run programmes on processing, fabrication and installation of glasses. For engineers it will have a separate programme. It has also tied up with the National Programme on Technology Enhanced Learning. India is the first market where the company is developing and testing out its development modules. Digital technology will help the company connect the dots and create a network, consisting of service providers who will address specific customer requirements. In something that has become par for the course, customers can now place orders, track status, receive shipment notifications, register complaints among other activities.

The other plank of its B2C strategy will be offering bouquets to consumers. Besides glass, the group is also into building materials including gypsum, roofing products, tile fixing mortars and the like. The company hopes to bunch its products to offer “solutions” for the building and construction industry, says Santhanam. “We want to be a complete solution provider and this could be done by combining glass, gypsum, other materials and electronics to offer innovative solutions for building exteriors and interiors,” he says.

Saint-Gobain claims 50 per cent of Indian consumers or one in two people recollects the brand as one of the top three in construction building materials. With such high recall, marketing to the retail buyer won’t be a big challenge, the company reckons.

India is a key market for Saint-Gobain. While its revenue contribution is small, its contribution in product development, application innovation, and trying out new strategies is significant, says the company. With India as its innovation hub, the company has been able to expand its services in other emerging markets.

The company’s research centre at the IIT Madras Research Park, Chennai, was set up in 2015-16 at a cost of Rs 150 crore with a talent pool of over 100 scientists and engineers. Since its inception, it has delivered over 60 new products, 65 patents and over 30 value-added products for business units. For example, the company developed a new clip system that has eliminated plywood, tapes or glue for fixing a mirror or glass to the wall. This is cheaper and also easy to use.

It also has an IT services unit in Mumbai that provides digital IT services to the group's global operations.