Do Month-end Sales Push to General Trade Help Consumer Brands Gain Incremental Sales?

Dum laga ke haisha. Zor laga ke haisha…Jeetenge hum…haisha

War cries like this are common in India’s consumer products sales teams, especially while trying to drive secondary placement of products in their kirana channel. Sales teams look at innovatives ways and try various marketing tactics to ensure only their products fill the retailers shelves. 

Marketing tactics could include giving aggressive ‘extra commission’ to retailers especially in the last week, buying prominent shelf space at the shop on a monthly rent, and paying for signage either in-shop or storefront. These tactics are adopted to ensure that you are able to place a very high volume of products. 

However, like a yo yo, this huge stock placement in the last week, leads to drop in sales from those brands to the retailer during the opening week of the following month. Cumulatively, these two weeks (the last week followed by the next month opening week) determine the net impact of secondary sales. 

Consumer demand though is often not as elastic as this secondary sales push leading to challenges like overstocking at kiranas. It results in slowing down of otherwise fast moving consumer goods offtakes and leads to lower ROI for the kirana. For products with short shelf life like ready foods, milk, idli and dosa batter etc., it could also lead to high returns, leading to loss for the brands. 

So in order to see this impact, we look at analyzing the net impact of these two critical weeks, not just for a given month but for a longer period of time. We have analyzed eight categories to understand the phenomenon. 

  1. Does month-end sales push drive growth? 
  2. Which categories indulge in month-end sales push?
  3. Which categories have made this work? 

a. Does month-end sales push drive growth? 

Summary analysis (Jan-Oct 2020) 

The net gain in monthly sales across all categories has been a measly 0.7% despite having an ~20% spike in kirana sales every month. 

2020 has definitely been an unconventional year. While normally, we would have seen a flurry of activity at the end of Mar-2020, the lockdown imposed during that time purged the surge. 

As a result, Feb-2020 showed the highest net monthly gain (~26%) followed by Aug-2020 (~14%). 

MonthSales change vs rest of the month (%)Net monthly gain
1st week of the monthLast week of the month
Jan-20-16.1%20.3%4.2%
Feb-20-26.1%52.8%26.7%
Mar-2013.3%-37.4%-24.1%
Apr-20-38.9%20.9%-18.0%
May-20-21.6%24.7%3.2%
Jun-20-17.9%17.0%-0.9%
Jul-20-15.2%20.0%4.8%
Aug-20-16.7%31.1%14.3%
Sep-20-16.7%17.2%0.6%
Oct-20-31.3%28.0%-3.3%
Avg monthly-18.7%19.5%0.7%

b. Which categories indulge in month-end sales push? 

Product shelf-life is among the key indicators to determine the extent of month-end sales push. Out of the eight categories we track, we’ve seen high volume of push especially for longer shelf life products.

Categories such as Dairy and other cold chain products see way less push. That is understandable since any returns from the market will only hit them directly. 

c. Who’s benefiting from this?

Only three categories have been able to drive positive monthly growth with this month-end sales push to general trade outlets, namely Consumer Durables and Homecare. 

In fact, some categories that were bouncing back from the effects of lockdown have leveraged this opportunity to drive in way higher growth than ever before. 

(Cumulative monthly growth rate from Apr-20 to Oct-20) 

Two of these three categories that have grown the most on account of the month-end sales push were struggling with just a fraction of their usual sales (down by upto 90%) in Apr-20. 

It’s great to see that these brands have been able to leverage age-old sales wisdom and marry it to their production capacities to ensure the market is well stocked with their products. 

Consumer durables has managed to go from zero in lockdown, as the worst affected category to ‘Hero’ now as we moved into the festive season. An approx 10.4% monthly growth is phenomenal but we need to understand that it’s on the backdrop of the industry having the hardest fall and bouncing back with double the vigour.

Homecare has leveraged this effectively to drive consistent growth while consumers initially went about sanitizing everything around them till finally they have been fatigued of doing this continually. 

Personal care, which suffered the effects of lower people interactions driven by the pandemic and the lockdowns, has in Oct-20 seen sales almost reach its pre-lockdown levels.

We must understand that this sales push is only half the battle won (ok, maybe a little more than half). Finally, the most important thing is to derive brand pull which when multiplied with availability creates winning brands in the market. 

BRAND PULL + AVAILABILITY = WINNING BRAND

To those of you actively involved in this business, I’d love to hear your perspective on this practice that’s part of the sales playbook for almost every Indian consumer products company.

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