Posted by Ajay Kelkar on Sun, Dec 11, 2011
FMCG companies can use the data produced by Retailers very effectively. Organized Retail is still small in terms of sales contribution for most FMCG’s companies in India. But this will change over time & it would be interesting to see how Retailers & FMCG companies develop their relationships! Western countries have adopted these partnerships, calling them Efficient Consumer Response initiatives (ECR).
It’s amazing; P&G was always the bully till the early 1980’s. It used the enormous consumer data that it obtained through market research to bully retailers! Then retailer’s developed sophisticated Point of sale systems & began to bully P&G right back. Wall mart was of course the gorilla of the pack.
And yet surprisingly, in the mid 1980’s, this adversarial relationship between the two gorillas began to change! Cut to the present & Robert McDonald is the P&G CEO & a man on a mission: to make Procter & Gamble the most technologically enabled business in the world. To get there, the 31-year company veteran and former US Army captain is overseeing the large-scale application of digital technology and advanced analytics across every aspect of P&G’s operations and activities.
Here is what he says: “It would be heretical in this company to say that data are more valuable than a brand, but it’s the data sources that help create the brand and keep it dynamic. So those data sources are incredibly important. Therefore, we go to the extreme to protect whatever consumer data we get. It’s a board-level enterprise risk-management issue for us”
Hearing this from P&G is truly heretical-can data rival Brand equity in the P&G world!I wrote about this earlier. How companies store, transform & use their data will become as potent a marketing tool as Brand equity itself! Companies have huge amounts of data now and there is technology & skill sets available to decode it. If used powerfully enough, data about a customer can transform the customer experience!
http://blog.hansacequity.com/customer-management-blog/bid/41348/data-equity-will-rival-brand-equity-in-the-days-to-come
Here is another comment from Robert McDonald about P&G’s data partnerships: “For companies like ours that rely on external data partners, getting the data becomes part of the currency for the relationship. When we do joint business planning with retailers, for example, we have a scorecard, and the algorithm is all about value creation. Getting data becomes a big part of the value for us, and it’s a big part of how we work together. We have analytic capabilities that many retailers don’t have, so often we can use the data to help them decide how to merchandise or market their business in a positive way”.
P&G’s Gillette unit, for example, claims to have mined Wal-Mart data to develop promotions that increased sales as much as 19 percent. More than seventeen thousand suppliers are given access to their products’ Wal-Mart performance across metrics that include daily sales, shipments, returns, purchase orders, invoices, claims and forecasts. And these suppliers collectively interrogate Wal-Mart data warehouses to the tune of twenty-one million queries a year.
In India, the first meeting on ECR took place on 10 December, 1999. The attendees included representatives from J&J, Nestle and erstwhile FoodWorld & PwC. But I wonder how this initiative has developed or are we in the stage where FMCG companies are the bullies in the neighbourhood !!
I would love to hear your views about this!
Posted by Ajay Kelkar on Sun, Oct 10, 2010
Can Retailers work together? In markets such as India, we have gone through a land grab, where Retailers vied for prime retail sites or for customer footfall & share of wallet. Retailers also compete for Key people talent to grow their Greenfield businesses. Is it too early then to think about Retailers partnering with each other?
In an interesting initiative, Several dozen U.S. retailers are banding together to take on Amazon.com Inc. by striking at one of online shoppers' biggest concerns: shipping costs.
Under a cooperative program called ShopRunner, the retailers are mimicking Amazon by dangling a $79 loyalty program that offers unlimited two-day shipping. But in this case it's across all of the participants' online stores, whether it's Babies 'R' Us, Pet Smart, Dick's Sporting Goods, GNC or a host of others
Amazon and its retail competitors are vying for the highest-spending online customers. Those shoppers are the whales of the $140 billion U.S. e-commerce market, one of the fastest-growing parts of U.S. retail. Amazon, with a hefty 8% of the U.S. e-commerce market, is the biggest single online retailer in the country, according to Hudson Square Research. Retailers' willingness to work together under ShopRunner illustrates how seriously they take the threat from Amazon
Geoffrey Fowler has this interesting article in the Wall Street Journal:
http://online.wsj.com/article/SB10001424052748703843804575534062509989530.html?mod=WSJ_Tech_INTL_LSMODULE
Given that in India, organized Retail is still a small part of the overall retail trade, it presently accounts for close to 4 percent of total market. According to Assocham , Modern Retail trade will increase its share to over 30 percent by 2013.
Imagine the possibilities if Retailers got together to attract footfall! If they created “win win” coalition loyalty partnerships to give the consumer a better “bang for the buck”. Marketers could also use such partnerships to drive a lot of business focussed analytics to uncover insights that they could act upon. Banks & Credit/Debit card companies can hugely benefit from such partnerships.
The only problem in India for partnerships is the famous. "Indian Crab syndrome" story...would partnerships work in India? I would love your comments?