Retail Chronicles Nov 1-15

RETAIL CHRONICLES Fortnightly Newsletter

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Big Basket- the growth story

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How FMCG is delivering high results with the help of Business Inteligence tools

05 PARLE- Survival in past & future

| Volume 3 - Issue 7 |

1-15 NOVEMBER 2018

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07 Memes- a new form of marketing

10 Retail News Pg 07

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Retail Lab SIMSR K J SIMSR, Mumbai Contact: +91 8896732500, +91 8449248227 retaillab@somaiya.edu

"I have learned to imagine an invisible sign around each person’s neck that says, 'Make me feel important!'"

Mary Kay Ash Founder, Mary Kay Cosmetics

Big Basket- The Growth Story

By Piyush Sinha In the fast-paced world, online shopping has become very popular and in the past few years, we have seen many start-ups making fortunes through it. India is the fastest growing the economy of the world where e-commerce industry is growing at an annual CAGR of 10%.

We have seen many start-ups in the area of the online grocery market in India and some of them have failed because of the existing ‘local Kirana stores’ which can be seen in almost every street of India and the supermarkets. Indians are known to be very choosy while shopping and when it comes to food we get even more conscious. We look for different varieties of food, compare it with the neighborhood stores and bargain heavily even for a slight reduction in the price of the product. There is a very tough entry barrier in the online grocery market of India. But there is a company which is making inroads in the urban cities of India at a very rapid pace.

Big Basket was started in 2011 and it was founded by initial owners of Fabmart.com. The CEO of the company is Mr. Hari Menon who is an alumnus of BITS Pilani. Currently, the Big basket is operating in 35 urban cities and is growing. They deliver more than 35,000 orders a day and the average value per order is Rs 1,500. It has a variety of products from over 1,000 brands. Big Basket is one of the leading grocery brands in India. Mr. Menon bases the success of the company due to its exceptional customer focus approach. The company offers same-day delivery in all cities, with 99.3% ontime delivery, 99.5% order fill rate and no questions asked return policy which contributes to high customer loyalty and excellent customer feedback. Big Basket has more than 40% of the sales coming from their own brands and the operating margin on these products is 35%, while the margin on the other products is 25%.

The company has innovated by offering products such as cut fruits and vegetables and continuous innovation with the help of technology.

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Features such as “Smart-basket�, predict what a customer needs often and reduces the time to order to within 5 minutes.

Big Basket had raised over $290 million so far from 11 investors. The company is focused on setting up new warehouses, strengthening the cold chain, setting facilities for reprocessing of Fruits and Vegetables and enhancing the Backend processes through increased investments in technology.

Big Baskets was recently in talks with its rival, Grofers for a possible merger and if the merger is successful, SoftBank group will invest further $60 to $100 million in the merged company. In other news it was reported that Amazon was in talks to acquire Big Basket, to strengthen its hyper-local delivery system and give a tough competition to Flipkart. If the current deal happens, the Big Basket Grofers merger is least likely to happening Basket has gained prominence in a very short span of time. The company has had an aggressive marketing strategy making Shahrukh Khan as its Brand Ambassador.

Big Basket employs around 5000 people and has a very healthy work culture, treating all the employees equal and valuing both the internal and external customers. There is an opportunity for the company to go global and grow multi fold. Though the company has been successful in penetrating into the urban cities but still the e-grocery accounts for 0.1% of the total grocery sales in India. The company has made penetration into the urban cities of India but the roads towards the Rural areas and small towns are still untouched and only time will tell whether the company will make its mark into these areas.

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How FMCG is delivering high results with the help of Business Intelligence tools By: Shubham Thakur When we heard about term FMCG the first thing that come into our mind is hardcore rigorous sales to gauge even the slightest change in consumer behavior, who need to deploy large army of people on field. Thanks to technology now we don’t have to worry about all those stuff as technology has made doing business in FMCG easier but it brings its own Business Intelligence tools helps them a lot. They challenges too. can plunge in to big chunks of data and can Technology hasn’t been an easy cakewalk for deliver meaningful information that can identify Consumer product goods companies. The first the opportunities for cost reduction, perform challenge is as number of data collection point has accurate demand forecasting and takes care of increased people have to think about how to deal other important elements necessary to keep a with big amount of data and how to make something supply chain run seamlessly. Efficient inventory useful out of it? Identifying what to sell based on keeping is critical to FMCG success. Demand customers need at their preferred point of supply economics, varying safety stock levels, purchase? Exploring and adopting new ways on basis of how consumers are buying? Optimizing product shelf-lives, segment behavior, lead times stock levels warehouse management & driving and cycle times & share-of-wallet for value through the whole supply chain? Identify the different product lines can impact inventory level. customers’ purchase journey and extracting A BI tool can help in accurate demand planning maximum profitability through all channels. and optimized inventory, providing with ability to Delivering personalized promotions and optimizing consolidate data from disparate sources and marketing expenditure. These are some of the main managing warehouses globally. Product quality issues that any organization which is operating in has both a short and long-term implications on organized retail sector is facing. It becomes cost and revenues. BI tools helps to explore the compulsory for CPG organizations to manage causes for degraded quality through a deep streamline, sort all information; making the data analysis of the production line and quality more intuitive and insightful in real time.Our new processes related to product development. With generation customers who are apparently techever increasing competition, regulations and savvy with ever changing needs are demanding supply chains have pushed FMCG businesses to value like never before; the borders between deploy the best of the BI systems. The dynamic countries are no more and causing expansion of nature of FMCG industry creates the need to operations and supply chain globally; retailers are make to the point and accurate decisions partnering for sharing the information and consumer whichmust be backed by data. The accuracy in insights; an ever increasing need for agile value decisions comes with comprehensive and fast delivery chains; a consistent fight for packaging, insights being accessible to decision makers. And marketing and delivering to keep up with ever these equipped decision makers and analyst are changing customer needs and expectations. A good making mark in FMCG and growing revenues for company needs a great differentiator effort reach their companies. the finish line.

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Parle – Survival in Past and future By- Onkar Joshi “Parle most sought-after brand in India when it The way people look at Parle is very different. comes to the confectionery market. It is approaching Parle-G has not remained a biscuit for its the 80th anniversary of its operations with pride. How manufacturer as well as its consumers. It is Parle has survived in such a competitive and something more than that. It has become a populated market, it is important to study, . habit. It has positioned itself as a way of maintaining its goodwill and taste. binding together which is the main reason people purchase it.

Parle began its manufacturing way back in 1939 in The price point is another main factor in Mumbai. It continuous to dominate the market which Parle differentiates from its rivals. through its flagship product Parle-G biscuits (Earlier Keeping its price as low as possible, Parle Parle Gluco). While the market is approaching the uses the rural market in India to sell its premium category products, Parle still continues to products. This affordability proposal has have a market share of about 20% in the 25kCrore taken the brand to grow significantly. There market. It holds the value of 5,000 cr in the same was a time when the dominance of the Parle market dominated by Britanniawhich primarily sells was threatened by the Britannia product, cream biscuits (bourbon) and cookies.

Tiger, which was mainly focusing the children in its marketing campaigns. Being children With some of the new entrants in the market such as main area of focus for the Parle brand, the unibic from Australia and some of the old competitors situation became worrisome for the Parle such as ITC and Britannia, Parle continues to be a brand till Parle took a decision to sponsor the strong player. During the 90s, when the premium television show ‘Shaktiman’ which completely sector biscuit market in India was only 5000 crores, rescued the brand by up surging its sales.

Parle used to have almost 70-75 % market share in Analysts also found out that the positioning of the glucose biscuit sector. the product as a glucose biscuit and dominance created in the market has made While analyzing the secret of Parle throughout these rivals of Parle to completely shift from the years, Researchers often tend to give credit to the glucose biscuits category to cream biscuits. market positioning of the Parle products. It has Recently Director of ITC agreed upon the perfectly positioned itself as a glucose biscuit which same thing that the sheer economies of scale is made for masses. Parle has done it through which Parle-G has cannot be matched by its keeping its price point at entry level and not competitors without affecting its own introducing much variety in the premium sector margins. biscuits. Even it has kept its vintage Parle girl affixed on packets.

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He also added that it is very difficult to compete with the brand at this price point, rather shifting to a whole new category would be more profitable.

Nowadays, Shifting of the consumers to the premium cookies and biscuits is threatening the brand. Being relevant to the customers in today's era is the main concern to the Parle. Though this is the negative side of the price point at which Parle is selling biscuits, some of the analysts have a completely positive opinion about the condition.

Researchers say that ‘Parle is to India what CocaCola is to America’. No matter how many players try to create impact, the emotional factor which has been introduced in the minds of customers in India about Parle will not get affected so easily. It will continue to be the ‘default biscuit’ in the kitchen which is served with Tea.

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But, yes, in the changing global scenarios, Parle has to compete with the new market players which can threaten and dominate the trends in the confectionery market for India. The improving economic conditions of India may worsen the situation for the company as it is not working in the premium sector considerably. Hence, being only reliant on the emotional factor and price will eventually drag down Parle from the market.

Knowing this, Parle is trying to stay connected with the new generation. It launched the campaign ‘Kal ke Genius’. The campaign was received well by customers on social media platforms. It has also launched ‘Parle-G Gold’ which is heavier and richer formulation than the Parle-g.

It is really a high time for Parle to look for ‘PARLE BEYOND G’.

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MEMES- A NEW FORM OF MARKETING

BY- SAGAR ANAM

IGone are the days of traditional advertising where placing a famous superstar as a brand ambassador would lure the customers to buy your products. The customer has now become smarter and the businesses need to come with innovative campaigns to market and promote their products to genx smart customers.

Well, that doesn't mean the TV ads do not make up on the marketing of the product, but it is all about targeting the right audience and marketing products in a better way to reach audience and make a lasting impact. Thus, a new form of Marketing has emerged for the young tech-savvy generation using social media fanatics- Marketing through memes.

Example can be seen in brands such as Durex using Joffrey's meme from English TV series – “Game of Thrones” promoting use of Condoms, brand Wash-Essential using the buzz meme of Anushka Sharma from Sui Dhaga movie.

Brands have also started realizing the impacts of retweets, likes and shares to increase their promotional activities. However, the memes not always make sure of a positive response, as they have some pros and cons. There are many examples where the memes of brands knowingly or unknowingly, hurt the sentiments of a part of the audience like the meme showing white successful men did not go as planned by the owners.

Examples of various brands using memes for marketing: 1. Denny’s

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Denny’s is well-known for its off-thewall social media content, characterised by memes, emojis and internet slang. In March, it jumped on the ‘zoom in’ trend, with a meme that asks users to zoom in on particular parts of an image, before revealing hidden messages and the eventual punchline: “Has this distracted you from overwhelming existential dread lol”.

The meme has generated 1,22,152 retweets and 172,548 likes till date, making it one of the most-shared brand tweets ever. The reason it generated so much engagement is that - it was new, fresh and original at the time, with Denny’s being one of the first brands to jump on the zoom trend.

Meanwhile, instead of coming across as inauthentic or try-hard, it’s perfectly aligned with the brand’s social strategy – something that consumers have come to expect.

It put a spin on the “Y U NO guy” meme for a billboard in San Francisco, cleverly capturing the attention of internet-savvy consumers as they drove by. This example is arguably a little lazy, merely jumping on another trend rather than creating anything particularly clever of its own.

However, its context is what makes it clever, with the combination of an offline medium and an online phenomenon resulting in a refreshing ad. It worked too, with reports suggesting that search traffic for HipChat went up 300% when the billboard appeared.

2. Hipchat Start-up company Hipchat showed just how popular memes have become when it used a viral online image in an offline advertising campaign.

The lesson to learn from above example can be following pointers which will help brands to use effective Meme Marketing:

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1. Memes can be boundary or wicket: Like newsjacking or slang in marketing, it’s important to recognise the potential pitfalls of jumping on the meme trend. It can be said that it might make a huge splash or die a death within days 2. Meme can shake up marketing: However, like Gucci shows, memes can be used as part of a creative and innovative campaign – if it involves more than overlaying a funny caption on Grumpy Cat.

I3. Using memes can further engage audience: Memes are so popular because they are an inherently shareable form of content. And as the Denny’s example demonstrates, they can further flesh out a brand’s humorous and quirky image.

Hence, join the new wave of meme marketing.

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Retail news at glance Softbank and Yahoo Japan JV to launch "PayPay" mobile wallet in collaboration with India's Paytm Apple's India profit zoom 140% to Rs. 896 cr. in FY18 Microsoft overtakes Amazon as second most valuable US company OnePlus partners with Reliance Digital for offline sales Iconic US retailer sears files for bankruptcy Reliance Jio, Reliance Retail overtake RIL petchem in sales Starbucks opens sign language store in Washington,D.C

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Retail Chronicles is a bi-monthly newsletter of Retail Lab, the Retail committee of KJ Somaiya Institute of Management Studies & Research, Mumbai. Images used in Retail Chronicles are subject to copyright.

Bharat Gupta Sagar Anam Shubham Thakur

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K J Somaiya Institute Of Management Studies & Research, Mumbai

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