You also want an ePaper? Increase the reach of your titles
YUMPU automatically turns print PDFs into web optimized ePapers that Google loves.
& Culture<br />
Structure<br />
Adani Wilmar: An<br />
of<br />
the smart<br />
Xiaomi<br />
for commoners<br />
TV<br />
Reality<br />
Augmented<br />
<strong>Retail</strong><br />
transforming<br />
Walmart-Flipkart<br />
& Bharat Bandh<br />
deal<br />
<strong>Retail</strong> Lab SIMSR<br />
K J SIMSR, Mumbai<br />
Contact: +91 8896732500, +91 8449248227<br />
retaillab@somaiya.edu<br />
RETAIL<br />
CHRONICLES<br />
Fortnightly Newsletter | Volume 3 - Issue 4 | 1-<strong>15</strong> September 2018<br />
Pg 06<br />
02<br />
FMCG Goliath<br />
06<br />
Pg 08<br />
08<br />
10<br />
Pg 02<br />
11<br />
<strong>Retail</strong> News<br />
Pg 10 Pg 11
Don't find<br />
cus<strong>to</strong>mers for<br />
your products,<br />
find products<br />
for your<br />
cus<strong>to</strong>mers!<br />
Seth Godin, Author, Entrepreneur
02<br />
Structure and Culture of Adani Wilmar:<br />
An FMCG Goliath<br />
By Nimish saxena<br />
About Adani Wilmar:<br />
Adani Wilmar Limited (AWL) is a joint venture<br />
incorporated in January 1999 between Adani Group,<br />
the leaders in International trading & Private<br />
Infrastructure and Wilmar International Limited -<br />
Singapore, Asia's leading Agri business group. The<br />
Ahmedabad(Gujarat) based company is the largest<br />
branded oil manufacturer and has managed <strong>to</strong> grow<br />
its revenue <strong>to</strong> ₹18,000 crore, becoming the<br />
largest edible oil company in the country with a<br />
share of about 19.5 per cent within <strong>15</strong> years<br />
The joint venture incepted with the commissioning<br />
of India's first port-based refinery at<br />
Mundra, Gujarat. Today, Adani Wilmar owns<br />
refineries in 17 strategic locations across India, has<br />
8 crushing units and 19 packing units. Collectively,<br />
this <strong>to</strong>tals <strong>to</strong> a refining capacity of 10300 <strong>to</strong>nnes a<br />
day, seed crushing capacity of 7485 <strong>to</strong>nnes a day<br />
and packaging capacity of 8500 <strong>to</strong>nnes a day.<br />
Adani Wilmar has a range of premium edible<br />
oils, Vanaspati, packed Basmati Rice, pulses,<br />
Soya Chunks and also the first National Brand in<br />
Besan. It also has a range of cus<strong>to</strong>mized<br />
speciality<br />
fats for institutional cus<strong>to</strong>mers. The product<br />
portfolio of Adani Wilmar spans under various<br />
brands<br />
such as - Fortune, King’s, Bullet, Raag, Avsar,<br />
Pilaf, Jubilee, A-Kote, Fryola, Alpha and<br />
Aadhaar.<br />
Fortune is the most prestigious brand in the<br />
Adani Wilmar’s portfolio. Fortune became the<br />
no.1 brand in the market within just 2 years of its<br />
launch (in the year 2000) and still continues <strong>to</strong><br />
be a<br />
leader. Following the success it achieved<br />
domestically, Adani Wilmar <strong>to</strong>ok its branded<br />
Edible oil <strong>to</strong><br />
markets beyond India and is now exporting its<br />
products <strong>to</strong> more than 19 countries in the<br />
Middle-<br />
East, Australia & New Zealand, South East Asia<br />
& East Africa.
03<br />
Sales and Distribution:<br />
For a company <strong>to</strong> hold such a diverse portfolio<br />
and <strong>to</strong> sustainably grow its profits the sales<br />
and distribution system plays a crucial role.<br />
Company’s responsibility is <strong>to</strong> ensure optimal redistribution<br />
of the products among the retailers in<br />
the assigned area. They must ensure that all the<br />
brand-packs of all the products<br />
manufactured/marketed by the company are<br />
available in as many<br />
retail outlets as possible in their area. If s<strong>to</strong>ck<br />
exhaustion happens in any of the outlets,<br />
company is<br />
likely <strong>to</strong> lose end-consumers. The Indian<br />
consumer rarely marches a mile <strong>to</strong> buy a product<br />
- he is<br />
likely <strong>to</strong> switch, and even if he is not inclined <strong>to</strong><br />
do so, the retailer will instigate the switch as he<br />
would hate losing a cus<strong>to</strong>mer <strong>to</strong> his competi<strong>to</strong>r<br />
down the street. This implicitly means<br />
distribu<strong>to</strong>rs<br />
should be s<strong>to</strong>cked with sufficient quantity of all<br />
brand-packs, gearing them for seasonal<br />
fluctuations<br />
and production vagaries.<br />
At Adani Wilmar the distribution channels are<br />
segmented according <strong>to</strong> the target market, dividing<br />
it in<strong>to</strong> two categories:<br />
General Trade:<br />
Traditional trade is associated with a spread-out<br />
distribution network of small retailers,<br />
dealers, s<strong>to</strong>ckists, wholesalers, and distribu<strong>to</strong>rs. It’s<br />
an intricate network which serves<br />
localized cus<strong>to</strong>mer demand through regular orders<br />
with short lead times and varying fill<br />
rates.<br />
Modern trade:<br />
Modern Trade (MT) consists of supermarkets and<br />
hypermarkets that retail Fast Moving<br />
Consumer Goods (FMCG). This route aims at<br />
catering masses in urban location via one s<strong>to</strong>p<br />
shops.<br />
These two distribution channels have several<br />
stages depending on how many organisations are<br />
involved:<br />
Channel 1 contains three stages between producer<br />
and consumer - a C&F agent, distribu<strong>to</strong>r and a<br />
retailer. After a product is manufactured, it has <strong>to</strong><br />
be sent <strong>to</strong> the market for sales & distribution.<br />
A<br />
C&F (Carry & forward) agent acts as a link between<br />
company and distribu<strong>to</strong>rs and transfers the s<strong>to</strong>ck<br />
from the former <strong>to</strong> the latter. The Distribu<strong>to</strong>rs then<br />
distribute the products in the market through<br />
retailers.
Channel 2 contains two stages between producer<br />
and consumer - a wholesaler and a retailer. A<br />
wholesaler typically buys and s<strong>to</strong>res large quantities<br />
of variety of producer’s goods and then breaks<br />
them in<strong>to</strong> bulk deliveries <strong>to</strong> supply retailers with<br />
smaller quantities.<br />
Channel 3 is called a "direct-marketing"<br />
channel, since it has no intermediary levels. In this<br />
case the<br />
manufacturer sells directly <strong>to</strong> cus<strong>to</strong>mers. Fac<strong>to</strong>ry<br />
outlet s<strong>to</strong>re is the prime example of direct<br />
marketing channel. Many holiday companies also<br />
market direct <strong>to</strong> consumers, bypassing a<br />
traditional retail intermediary - the travel agent.<br />
The company, in order <strong>to</strong> have real time visibility<br />
and moni<strong>to</strong>r the sales force’s activity has<br />
opted for SFDC with SAAS model. This enables<br />
the company <strong>to</strong> moni<strong>to</strong>r any exception on mobile<br />
devices based on policy defined as per<br />
organization security guideline and fix it.<br />
The company’s sales structure is<br />
represented by the following<br />
framework:<br />
Sales structure complementing distribution<br />
channels:<br />
Adani Wilmar has the largest distribution network of<br />
edible oil in India. The FMCG giant has a sales<br />
force of more than 600 people and 4000 distributers.<br />
The Sales force process at Adani Wilmar involves<br />
multiple levels of planning including Annual Tour<br />
Plan (ATP), Monthly Tour Plan (MTP) and Daily<br />
Sales Route (DSR).<br />
Every salesman plans his daily <strong>to</strong>ur based on his<br />
MTP and visits a number of agreed outlets<br />
for taking orders. During each outlet visit, the<br />
salesman is supposed <strong>to</strong> push new product and<br />
scheme, check on how the company’s product is<br />
displayed at the outlet, review sale of the previous<br />
order and take new orders. The distribu<strong>to</strong>r delivers<br />
the order after the salesman files it in the system<br />
manually.<br />
ZSM: Zonal Sales Manager<br />
RSM: Regional Sales Manager<br />
ASM: Area Sales Manager<br />
ASE: Area Sales Executive<br />
DSM: Distribu<strong>to</strong>r Sales Manager<br />
04
05<br />
Company Culture:<br />
Adani Wilmar is home <strong>to</strong> over two thousand<br />
employees who claim it <strong>to</strong> be one of the best places<br />
<strong>to</strong><br />
work at. The organisation claims <strong>to</strong> have a missiondriven<br />
culture, transparent leadership and a<br />
strength-based work environment which encourages<br />
employees <strong>to</strong> play <strong>to</strong> their strengths. Adani<br />
Wilmar felicitates its employees for their long<br />
association with the firm with incentives and awards<br />
like ‘Star of the Quarter’, Annual Awards etc. and<br />
aims <strong>to</strong> nurture young innova<strong>to</strong>rs with initiatives<br />
like ‘I have an Idea’. They strongly believe that<br />
learning is a never ending process and hence<br />
encourage the employees <strong>to</strong> take up initiatives that<br />
can help them grow internally as well as in their<br />
career through various platforms such as<br />
‘eVidyalaya’, Harvard Manage Men<strong>to</strong>r (HMM) etc.<br />
Having said this, the firm is aware that<br />
recreational activities and team outings are<br />
essential <strong>to</strong> keep the employees motivated and<br />
function well as a team. In light of this the<br />
company organizes several initiatives such as<br />
Sports Event, Family Fiesta and Outbound<br />
Training etc. throughout the year.<br />
Finally, though attributes like being a process<br />
driven company, having an open door policy <strong>to</strong><br />
maintain transparency and smooth operation<br />
through cohesiveness tells a lot about what<br />
Adani<br />
Wilmar is all about, what really defines their<br />
culture is their Values – Courage, Trust &<br />
Commitment;<br />
which enables them <strong>to</strong> embrace new ideas and<br />
businesses, believe in their employees &<br />
stakeholders and stand by their promises while<br />
adhering <strong>to</strong> high standards of business.
06<br />
‘Xiaomi’-The<br />
Smart TV for<br />
Commoners<br />
-By Piyush Sinha<br />
Television is a very important invention in the<br />
his<strong>to</strong>ry of mankind. It was invented by a Scottish<br />
scientist named ‘John Logie Baird’ in the year<br />
‘1924’. The first television transmitted recognizable<br />
human faces and moving objects on a screen. It has<br />
covered a long journey since then. Now television<br />
has become one of the most important means of<br />
entertainment. More than 80% of the world families<br />
own a TV and around 229 million TV sets were sold<br />
in the year 2017. Companies like Netflix have<br />
entered the list of fortune companies just by selling<br />
their products <strong>to</strong> the media industry.<br />
The current Indian television market is dominated<br />
by companies like ‘Samsung’ and ‘Sony’. There is<br />
also an electronic technology giant which has<br />
stepped up in<strong>to</strong> the Indian market. ‘Xiaomi’, the<br />
Chinese giant has become a major player in the<br />
mobile industry in India.<br />
In just 5 years from having a negligible presence,<br />
it has become the highest selling mobile phone in<br />
India occupying a market share of 31%. It has<br />
become popular in India by selling low budget<br />
mobile phone providing lot of features in its<br />
range. Xiaomi works on the pricing model of 5%<br />
net profit. It capitalizes on the ‘Economies of<br />
scale’. The pricing strategy of mobile phone is a<br />
huge success in India but will this strategy be<br />
successful in the Television market?<br />
According <strong>to</strong> a Company executive, Xiaomi will<br />
start selling its Mi TV through multi brand s<strong>to</strong>res<br />
by Diwali, apart from the exclusive Mi home<br />
s<strong>to</strong>res and e-commerce websites. Currently Mi<br />
has 3 TV models in India of screen sizes of 32,<br />
43 and 55 inches. Xiaomi India is looking at<br />
proving more unique and innovative product line<br />
<strong>to</strong> its cus<strong>to</strong>mers at honest pricing. “Following our<br />
honest price capping, all our Mi hardware<br />
products have been capped at a net profit margin<br />
of 5% thereby allowing our cus<strong>to</strong>mers enjoy the<br />
best of the innovative offering at a truly<br />
accessible rate,” said the executive.
07<br />
With the entry of Xiaomi selling televisions<br />
aggressively it will be a <strong>to</strong>ugh time for its competi<strong>to</strong>rs.<br />
We can expect a decrease in the price of television.<br />
The availability of quality television at affordable prices<br />
will enfold as a big Diwali bonus for its cus<strong>to</strong>mers. In<br />
the near future we can also expect Mi television<br />
models being sold online in just a few seconds. Xiaomi<br />
has captured the Indian Mobile phone market<br />
exceptionally well and now it’s time for them <strong>to</strong> prove<br />
their worth in the Television industry. It won’t be a<br />
cake walk though, as its competi<strong>to</strong>rs are closely<br />
observing every step of the company. But, Xiaomi is<br />
expected <strong>to</strong> rule until a new idea disrupts the market<br />
and its legacy.<br />
Xiaomi’s 55 inch TV is sold at just Rs 44,999 while<br />
43 inches smart TV is sold at Rs 22,999 and 32<br />
inches at Rs 13,999. The company has<br />
reformulated the smart TV pricing in India which<br />
forced not just the prominent brand <strong>to</strong> reconsider<br />
their prices but also the price-aggressive online<br />
television companies <strong>to</strong> further drop their prices.<br />
The company is primarily targeting consumers<br />
aged between 18-40 years for the television,<br />
though purchasing a TV set is a family decision.<br />
The company is attracting its cus<strong>to</strong>mers through<br />
its varied features and attractive design. A majority<br />
of its cus<strong>to</strong>mers are the ones who are pricesensitive.
Augmented reality<br />
transforming <strong>Retail</strong><br />
I<br />
n recent years, the worlds of augmented reality and<br />
retail have collided spectacularly from shoppable<br />
windows <strong>to</strong> the products that come alive in our hand.<br />
The retail landscape is overcrowded and cus<strong>to</strong>mers<br />
are becoming insensate <strong>to</strong> traditional marketing<br />
methods. That’s where augmented reality comes in.<br />
What is Augmented reality?<br />
by Bharat Gupta<br />
Augmented reality (AR) is a type of interactive, realitybased<br />
display environment that takes the capabilities of<br />
computer generated display, sound, text and effects <strong>to</strong><br />
enhance the user's real-world experience. Augmented<br />
reality combines real and computer-based scenes and<br />
images <strong>to</strong> deliver a unified but enhanced view of the<br />
world.<br />
Brands and retailers are considering new and<br />
innovative ways in which they can capture cus<strong>to</strong>mer<br />
attention because of the shoppers turning <strong>to</strong> a blend of<br />
online, mobile, and bricks-and-mortar shopping for their<br />
convenience. Augmented reality can now realise stuff<br />
that we couldn't have even imagined a few decades<br />
back. It is so powerful that it can even convert abstract<br />
things <strong>to</strong> concrete and can set life <strong>to</strong> posters, images or<br />
even a product tag.. Cus<strong>to</strong>mers can see brands and<br />
their s<strong>to</strong>ck in an exceedingly new way and engage with<br />
them on a completely new level.<br />
Furniture and lighting is the major retail type in<br />
the planning and designing application. AR is<br />
increasingly being used by furniture retailers <strong>to</strong><br />
help cus<strong>to</strong>mers visualize the select products at<br />
their desired place. This helps cus<strong>to</strong>mers <strong>to</strong> buy<br />
furniture and relevant stuff according <strong>to</strong> their<br />
home or office spaces. The significant example<br />
of a practical application of AR can be found in<br />
the Swedish based launch - IKEA .The firm has<br />
magnificently applied AR in their catalogue <strong>to</strong><br />
provide the user a real-life envision of their<br />
product of interest.<br />
This technology used in their application even<br />
appropriately measures the dimensions of the<br />
household products accordingly <strong>to</strong> the size of<br />
user's room. Adding <strong>to</strong> this ,the cus<strong>to</strong>mers can<br />
even get a 3D visualisation of over 2000<br />
products before making a mind <strong>to</strong> purchase one.<br />
This technology has thus proven <strong>to</strong> capture the<br />
vital theme-Cus<strong>to</strong>mer satisfaction". 08
Even the concept of AR has flourished <strong>to</strong> the<br />
clothing brands.Topshop along with the alliance with<br />
Kinect has restablished AR aided dressing rooms .<br />
So a buyer can get a realistic picture of their product<br />
of choice on them even without trying them on!<br />
Similar applications of AR is seen in the Lenskart<br />
application, where one can easily try on numerous<br />
number of spectacles and decide what fits them<br />
best.<br />
Even the cosmetics and beauty brands have bought<br />
AR in<strong>to</strong> the retail experience. AR apps from<br />
Sephora, L'Oreal and others help users shop with<br />
confidence and virtually test beauty products at<br />
home via their smartphone.<br />
Beyond usability, these apps gives shopper a<br />
delightful experience which helps in gaining<br />
cus<strong>to</strong>mer loyalty by making the online shopping<br />
experience fun, which is part of the value of visiting<br />
in-s<strong>to</strong>re. The AR apps gives an immense source of<br />
data in terms of understanding what consumers like,<br />
what they like less in terms of colors, looks, textures.<br />
For their marketing and their labs, it's a great source<br />
of insight in terms of trends and it helps them deliver<br />
makeup collections.<br />
China’s largest online grocer, Yihaodian, has set<br />
up 1,000 invisible retail s<strong>to</strong>res in parking lots,<br />
parks and popular public places.<br />
How does it work?<br />
As soon as pedestrians open up the retailer’s<br />
app, they can visualize a complete grocery s<strong>to</strong>re<br />
with multiple passages. As they pass through the<br />
aisles, they can pick and add products <strong>to</strong> their<br />
carts and as soon as they’re done, the products<br />
get delivered <strong>to</strong> their homes.<br />
Let me quote Apple CEO Tim Cook’s views on<br />
AR:<br />
I regard it as a big idea, like the smartphone …<br />
Augmented reality … will have a far bigger<br />
impact than smartphones ever did. I think AR is<br />
that big, it’s huge. I get excited because of the<br />
things that could be done …”<br />
The single most important technological<br />
advancement that would truly change the future<br />
of retail can be summed up in two words:<br />
Augmented Reality (AR).<br />
It's time <strong>to</strong> say "Hello<br />
AR"!<br />
11 09
Walmart-<br />
Flipkart deal &<br />
Bharat Bandh!<br />
by Subham Thakur<br />
Saturday on August 18, 2018 Walmart announced<br />
their purchase of 77% stake in India’s biggest online<br />
retailer Flipkart. Flipkart is market leader in Indian E-<br />
commerce segment, since Walmart has bought<br />
stake in Flipkart it gives direct entry <strong>to</strong> Walmart in<br />
Indian retail sec<strong>to</strong>r. This is not the first time for<br />
Walmart they have done it in past also in china by<br />
investing 500 million with JD.com in Dada-JD online<br />
grocery s<strong>to</strong>re. With this Walmart and Flipkart is<br />
competing neck and neck with Seattle based US<br />
tech giant Amazon. Amazon is second in terms of<br />
market share in Indian E-commerce. Walmart is<br />
world’s largest grocer but Amazon is giving it fierce<br />
competition with its deep discounting and gigantic<br />
cash reserve. In second quarter of fiscal 2017<br />
Amazon registered 31.1% year on year growth while<br />
Walmart’s market share rose by only 0.5%.<br />
After this announcement traders association has<br />
shown their great heartburn. On August 19, 2018<br />
Confederation of All India Traders (CAIT) held their<br />
annual general meeting at Nagpur. CAIT secretary<br />
general Mr. Praveen Khandelwal said the deal has<br />
“violated Press Note No 3 of 2016 of Government<br />
and is a combination with a sinister design <strong>to</strong> control<br />
and dominate the retail trade through the passage of<br />
e-commerce”. He claimed that it will create an<br />
uneven level playing field and wipe out many small<br />
players in retail industry. Due <strong>to</strong> their business<br />
module they can provide deep discounting,<br />
preda<strong>to</strong>ry pricing schemes and loss funding. Let’s<br />
see what is Press Note No 3 of 2016 of Government<br />
of India? According <strong>to</strong> that act FDI up <strong>to</strong> 100% under<br />
au<strong>to</strong>matic route is permitted in Business <strong>to</strong> Business<br />
(B2B) e-commerce model. (B2B) e-commerce model.<br />
No FDI is allowed in Business <strong>to</strong> Consumer (B2C) e-<br />
commerce<br />
.<br />
model. However in B2C FDI is allowed in<br />
some of the cases like if products are manufactured in<br />
India then it is allowed <strong>to</strong> sell through e-commerce<br />
channel, single brand Brick and mortar s<strong>to</strong>re is allowed<br />
<strong>to</strong> have e-commerce as their channel for distribution<br />
and An Indian manufacture is permitted <strong>to</strong> sell its own<br />
single brand products through e-commerce retail Indian<br />
manufacturer would be the investee company. Which is<br />
the owner of the India brand and which manufactures in<br />
India, in terms of value at least 70% of its product in<br />
house and source at most 30% from Indian<br />
manufactures.<br />
According <strong>to</strong> them there are two types of business<br />
models Inven<strong>to</strong>ry based and Marketplace based.<br />
Inven<strong>to</strong>ry based e-commerce model is where inven<strong>to</strong>ry<br />
is owned by company and goods are directly sold <strong>to</strong><br />
consumer by e-commerce channel. Marketplace based<br />
e-commerce model is where e-commerce is just acting<br />
as facilita<strong>to</strong>r between buyer and seller. Here our Flipkart<br />
is like Marketplace model. It also claimed that no<br />
discounting is allowed and that no inven<strong>to</strong>ry ownership<br />
directly or indirectly is allowed by e-commerce<br />
marketplace model.From this deal not only Walmart is<br />
getting benefited Flipkart is also getting handful.<br />
What happens on 28th of September is even bigger<br />
matter but Indian organized retail is going <strong>to</strong> see some<br />
of the fascinating changes and great discount offers<br />
also. So happy shopping guys!<br />
11 10
<strong>Retail</strong> news at glance<br />
Paytm mall deepens partnership <strong>to</strong> counter Flipkart,<br />
Amazon and may buy 10% stake in Future retail.<br />
Foodpanda <strong>to</strong> hire 60,000 delivery riders in 2 months.<br />
Da Milano continues <strong>to</strong> expand its presence, opens s<strong>to</strong>re in<br />
Aerocity.<br />
The Coca-Cola company <strong>to</strong> acquire Costa.<br />
PepsiCo enters in<strong>to</strong> agreement <strong>to</strong> acquire SodaStream<br />
International Ltd.<br />
Rangriti signs Parineeti Chopra as brand ambassador.<br />
Ac<strong>to</strong>r Sooraj Pancholi will be launching his own active<br />
clothing brand next year.<br />
11
Our Team<br />
Content Head<br />
Raveena Gupta<br />
Junior Team<br />
<strong>Retail</strong> <strong>Chronicles</strong> is a bi-monthly newsletter of<br />
<strong>Retail</strong> Lab, the <strong>Retail</strong> committee of KJ<br />
Somaiya Institute of Management Studies<br />
& Research, Mumbai. Images used in <strong>Retail</strong><br />
<strong>Chronicles</strong> are subject <strong>to</strong> copyright.<br />
Bharat Gupta<br />
Piyush Sinha<br />
Nimish Saxena<br />
Shubham Thakur<br />
Design Head<br />
Debashish Sarmah<br />
Design Team<br />
Ayush Pangoria<br />
Sachin Ghosh<br />
Shiva Tadas<br />
Surabhi Upadhayay<br />
/retaillabsimsr<br />
@<strong>Retail</strong>_LAB<br />
retail_lab<br />
K J Somaiya Institute Of<br />
Management Studies &<br />
Research, Mumbai<br />
retaillab.simsr@somaiya.edu<br />
+91 8896732500<br />
+91 8449248227