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5.1.08

Spears-Heading a concept

I was on my rounds of visiting Stand Alone Modern Trades in the city and came across this very interesting concept. Stand Alone Modern Trades is a name given to the channel that falls between a General Trade and Modern Trade and is more popularly called a Supermarket. These behave like teenagers- They expect footfalls of a General Merchant - they have a regular clientele that shops daily, expects home delivery at times, has loyal customers in its locality, and they expect Cashfalls (deals and margins) of a Modern Trade outlet..basically a cusp that is often found to be a challenge for the evolving FMCGs.
So here is one concept within a concept- a pvt. owned company called SPEARS. This one is a philantropist with a profit motive (now decipher what you want). The concept goes as such: Maps outlets in big residential areas and those that have decent TOM (top of mind) recall. Taps on their weakness/inability to bargain with FMCGs for smart deals. They then promise the local store an upfront amount like Rs. 10K for sporting their name, a commission on sales on the SKUs supplied by them and lay certain norms to run the outlet. By doing so, SPEARS gets to sell their coverage to the FMCGs in return for great margins (currently from HUL and Dabur)!! So basically a FRANCHISE model superimposed on FAT DEALERSHIP being followed here. Seen from a practical standpoint - this model is only as strong as the strongest link!! Till the FMCGs strike their own deals with the SAMTs in a concerted manner.. :). However not precluding an option to grow inorganically...till FMCGs are fully geared to combat the retail explosion and fight for space...!

1 comment:

Vivek Manjeri said...

Good post as usual. The educational value of your blog is increasing. Kudos
Jerry