Emami's Goenka says to up modern, e-trade share in sales to 26% in 3 years
Informist, Tuesday, Sep 12, 2023
By Avishek Rakshit
KOLKATA - Emami Ltd aims to increase revenue contribution from modern trade and electronic commerce sales channels by 6.4-7.4% over the next 2-3 years in order to cut down dependence on wholesale channels and have better control of distribution and boost sales.
The fast moving consumer goods company plans to do this via exclusive launches, tweaking portfolio, and marketing initiatives. "We expect to increase contribution from both modern trade and e-commerce to 25-26% over the next 2-3 years," Vice Chairman and Wholetime Director Mohan Goenka told Informist.
Currently, modern trade, which encompasses organised retail like big standalone grocery stores, supermarket stores, and other large format grocers, together with electronic commerce account for 18.6% of its total revenues.
"On the retail distribution part, we have almost reached 10 lakh (1 mln) outlets under direct coverage. Our next key challenge is to increase throughput from all our distribution channels of rural, general trade, modern trade, and
e-commerce," Goenka said.
The company, which sells personal care and healthcare products under brands like BoroPlus, Navratna, Dermicool, Zandu, among others, has a presence in a total 4.9 mln outlets, including indirect distribution channels.
It has rolled out Project Standalone Modern Trade, or Project SAMT, under which it aims to increase presence to over 6,500 standalone modern trade stores in top 50 towns across the country. Under Project SAMT, the company has already appointed specialist distributors covering around 4,000 standalone modern retail stores. Modern trade and electronic commerce are part of direct distribution model.
Industry officials say it is easier for a company to sell more products from a single point of sales if it has direct reach, and margin-accretive and innovative products find much more traction in modern retail and online sales.
On the contrary, wholesale channels mostly tend to pick up and sell those products that are already in demand and are averse to new products if not offered higher than normal margins.
"To sustain high double-digit growth from these two channels (modern trade and electronic commerce), we will continue to stay focussed on launch of channel-specific SKU (stock keeping unit) sizes and exclusive promotions," he said.
For instance, in the year ended March, the company launched more than 20 products, mostly online, in the domestic market, which accounts for around 83% of its annual revenue.
It is also set to soon launch a range of new healthcare products in retail and online segments under the Zandu brand and will use digital technology to target niche mainstream consumers. Sales of the 'Dermicool' brand of prickly heat powder will also be prioritised via modern trade channels.
"We have also seen a good a ramp-up in the direct-to-consumer business, which is zanducare.com, where our focus is not so much on the legacy products, but on launching digital first products. And we will continue focusing on launching more such digital-first launches in the coming quarters," Goenka said.
Besides, the company is also negotiating with retail chains in the country to come up with joint business plans to push sales from these channels.
Unlike its peers in the fast moving consumer goods industry, Emami has been a late entrant in capitalising on modern trade and electronic commerce. In a call with investors earlier, the company had said it started focussing on these channels over the last 8-10 quarters and has been witnessing 50%-60% sequential growth from these channels.
At 1407 IST, shares of Emami traded 1.5% lower at 558.95 rupees on the National Stock Exchange. End
