How fast the FMCG industry in India embracing Digital Transformations?
Over the decades passed, HUL or Hindustan Unilever Limited remains to be India’s largest FMCG company and has added a jewel in the prestigious crown of Unilever. Unilever provides the world’s second-largest consumer goods company, accounting for 8% of its annual revenues. HUL houses brands such as Lifebuoy, Dove etc. The food and beverages portfolio under HUL accounts to an 18% contribution to Rs 35,218 crore FMCG’s significant revenue. In international markets, the food portfolio plays a vital role, but in case of Indian markets, the food portfolio accounts for a mere 3% of the revenues made in India and the remaining 15% comes from the beverages.
New players like ITC Foods, which is not more than ten years into this business has surpassed the revenues of HUL at a business worth Rs 11,000 crore. ITC Foods aspires to become a Rs, 65,000 crore business by the year 2030.
How HUL is banking on digitisation for its business growth?
HUL believes that the emphasised need for businesses at present need to combine with the global capabilities along with research and development expertise keeping in mind the insights from the local consumers. To manage multi-country operations, the businesses need to maintain the right balance between seeking international leverage in terms of both innovation and R&D with local relevance for meeting the needs and aspirations of the consumer.
Digitisation dramatically changes the difference between consumer buying and consumer watching experiences. Global organisations such as HUL need to leverage newer capabilities and roll these out quickly across the markets in order to become a winner in the digital world. HUL has also created a global network of teams for the purpose of testing and rapidly rolling out different models of serving e-commerce channels in various markets globally.
HUL also looks to acquire momentum in the global and digital drive. HUL also spends a significant portion of its spend on media, including the online media, which holds the second position after television, which is predominantly at the first position in a total of the media spending. The firm also integrates social media and mobile for marketing the brands at the early stages.
The digital strategy of HUL is complementing the TV strategy, whereas the Internet platform is more of engaging the customers differently. It is also looking to go beyond the traditional ad agencies. HUL sets the benchmarks in terms of their digital efforts not just in the FMCG sector but also in other industries. They strongly believe the fact “it is not just about quantity and spending, but also the quality”.
• In the year 2011, the brand awareness of Wheel had increased by 25% and sales by three times in the regions of UP and Bihar
• An HUL internal study showed that YouTube has delivered the highest ROI in terms of brand awareness
• Unilever’s digital ad spending rose about 40% in 2012-13
On global levels, Unilever has partnerships with Samsung, EA Sports AND Sony’s Arcade Creative Group. The partnership with Samsung would help in involving advertising and content creation for smart TVs and mobile applications.
How is digitization benefiting Indian FMCG industry?
Benefits from Digitization in Future
The FMCG industry comprises of products that have a shorter shelf life and low-profit margins. The digital transformation in the FMCG Industry includes restructuring of the companies using their in-house technology to create more consistent customer experience, wherever and whenever the customer holds interaction with them. Whenever an Indian consumer visits any store such as Big Bazaar or Reliance Fresh, he sees a large number of options for what he is looking for. There are chances that there the consumer might opt for a particular brand of product to fulfil his requirement and next time, in case the same brand isn’t available he might look for another brand with more or less similar offerings. This can directly impact the loyalty of the consumer towards a brand. It can also become a challenging task for the store owner to forecast the demands of their consumers. Considering, the case of Big Bazaar, it receives a large foot-fall during any festive season or discount periods, but on other days, not much customers visit it. The customers often visit small stores which hold good relations with them to cater to their needs.
To enhance the customer experiences and smoother their operations, the FMCG Industry should head to digitization by keeping in mind the following-
Key Growth Drivers in FMCG
i. Providing more of personalized solutions based on previous data: The companies under FMCG Industry should look to offer more of the personalized solutions rather than generic solutions. This would help in increasing the customer base and loyalty. The companies can “trap” the buying patterns of their consumers and come up with the solutions that are best suited for their consumers. By showing relevant and personalized data, would definitely help in increasing the loyal customer base. The companies can create and send highly relevant messages to their loyal customers at the right time.
ii. Better Interaction with Customers: Be it an offline or online shopping, the interactions with the customers play an essential role. Interactions decide whether the customers would be “returning” or not to the concerned company in future. Excellent communication can hold the customers for longer, and one lousy interaction might just erode away all the customers. The companies must look to be interactive during the pre-sales phase, buying helping their customers with their needs and get the best product to their customer. During the post-sales period, the companies must interact with their customers regarding the performance of the product. The companies need to be interactive whenever the customer faces an issue in the post-sales phase. They must come up with the best possible solution and resolve them as early as possible. The customer interactions could take place through online reviews, social media channels etc.
iii. Improving In-house Operations: The method of digitization could also help the businesses to improve the operations that are carried out at their site. The digitization could drive less of human efforts and errors and enhanced efficiency in automation. The operational efficiency can be increased multi-folds when automation and robotics are assigned the manufacturing processes.
iv. Developing Newer Business Models: With the help of digitization, the businesses can look for developing newer business models based on specific consumer patterns and loyalty programs. Businesses can add on to their existing services and models, some original, personalized features to their loyal consumers. These business models might help the businesses to stand-out from their competition and ultimately leading to their own success.
v. Creating a Seamless and Multi-Channel Experience: The companies can start the transformation by capturing the channels used by their customers. It could include the device used for carrying out purchase and what exactly are they purchasing more often. The companies should look to provide a smoother and seamless approach to their customers so that their due need is fulfilled.
Thus, it is quite necessary for an industry like FMCG to opt for digitization techniques, where not only business matters but also the overall experience of the customer also holds a strategic position.
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