Technology has been a critical driver of change for FMCG companies, and 2020 may see them ramping up their technological transformation. These companies will focus on greater operational efficiencies, mainly in response to the slowing down consumption in rural areas. Retail Intelligence platforms will lead the technology pack to provide the data insights required by these enterprises to match production to consumption, increase outlet coverage and motivate field teams to ensure both satisfied retailers and consumers. Here are the top FMCG trends for 2020.

TREND 01: Migration of Linear Supply Chains to Connected Supply Chains

The distribution network of an FMCG brand is both its strength and a key differentiator in India. Brands have relied on an army of distributors, stockists and sub-stockists to distribute their products to retailers. But retailers have become tech-savvy and rely on online marketplaces to replenish their stocks. Brands have realised that by enabling the retailer, they can maintain an edge over everyone else.

In India’s push-based distribution, brands push products to distributors who in turn service a group of 200-250 retailers. If a retailer requires stock that is not available with a distributor, then the latter sends a request to the brand. The brand ships the inventory to the distributor, who then forwards it to the retailer. Wouldn’t it have been more efficient if the request had gone to another distributor who had the stock? Wouldn’t it be better for the ecosystem if it followed a connected supply chain where distributors connect with retailers and vice versa in real-time?

Bausch & Lomb, one of the oldest and largest manufacturers of eye care products and lenses in the world, was able to improve its customer service by migrating to connected supply chains. By implementing Bizom’s retail intelligence platform and Retailer App, they enabled approximately 6,000 retailers to place their orders and track fulfilment 24×7, 365 days on their mobile phones. The app improved order accuracy and brought predictability and accountability into the supply chain systems.

More brands will migrate to connected supply chain system to drive self-ordering from retailers, launch new products directly to retailers, passing differential commission and other outcomes.

TREND 02: A Tech-Focus will Help Boost Rural Growth

Rural consumption has slowed down. It was growing at 1.4-1.5x of urban but has dropped and in some cases trailing behind urban growth. Brands which had a lower footprint in rural, have posted higher growth rates than their peers. For instance, Nestle clocked a double-digit growth last quarter.

Depressed growth has been due to more than slowing down consumption. Wholesale distributors or local me-toos have traditionally fulfilled rural needs. So brands don’t know which outlet in which village is serviced by the wholesaler. It gives the wholesaler undue advantage where he can switch brands and loyalty for meagre benefits or reduce stock movement of particular a particular brand to provide a competitive advantage to another. Brands have often lost market shares due to inconsistent service from their rural distributors.

Digital solutions and retail intelligence platforms place the performance of a brand squarely in its hands. Brands can digitise not only their salesforce but also distributors to ensure direct servicing of outlets in rural. Mobile tech solutions like Bizom can help companies to drive growth and overcome challenges of low-speed internet connectivity, offline sync of data, and rural distributor digitisation through mobiles and smartphones. It is thereby making rural a primary lever of growth for brands.

Despite the gloom, brands expect rural consumption to bounce back by Q2 of FY2020. Mohit Malhotra, CEO of Dabur was quoted in a recent article saying, “During the second quarter of 2019-20, we have expanded our rural footprint to over 51,000 villages, up from 48,000 villages in June 2019. Riding on this expansion, rural demand continues to grow ahead of urban demand for Dabur.”

TREND 03: Gamification Will Come of Age

The digital world is chock-full of offers to lure consumers. Digital payment companies like Paytm are primarily known to offer cash backs on their apps. Google Pay made financial transactions fun by offering cashback through scratch cards. It gamified the experience for consumers. More and more brands are ensuring repeat customers by making transactions entertaining where completing specific tasks promises rewards through cashback, discounts or coupons. This is gamification.

The launch of Hershey’s Kisses brand is an excellent example of an FMCG brand that used gamification to increase its market share successfully. The brand leveraged the gamification tech provided by Bizom to encourage their salespeople to widen the placement of their products and increase offtakes. Rather than the age-old stick and carrot approach, Hershey appealed to the competitiveness of its sales force to drive placement and unlock rewards for themselves.

Another brand is Halonix, a lighting and electrical brand that used gamification to motivate its teams to achieve specific organisational goals. The approach has helped them to speed up growth and improve retail execution in its markets.

TREND 04: Increase Direct Distribution Focus

Direct distribution is expensive. However, unlike wholesale distribution, by taking charge of distribution, brands can ensure growth. Parle Agro, the maker of Frooti, was able to grow consistently at 25% in the last 15 years by leveraging direct distribution. They expanded their coverage to 1.8 Mn outlets and increased product depth through a larger portfolio of products including Appy and Appy Fizz to achieve their goals in record time.

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