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FMCG Retail - Grocery Stores, Departmental Stores, Supermarkets, Dark Stores, Quick Commerce

FMCG Consulting / Grocery Supermarket Business Consulting

About the FMCG Retail Industry

What is FMCG retailing…FMCG retailing is nothing but the sale of grocery and other products of daily use or routine consumption to retail customers via various retail channels. Businesses that sell FMCG/CPG products via these retail channels include local grocery stores, departmental stores, supermarkets, hypermarkets, and the eCommerce mode. But it must be noted that when we say FMCG products, it not only includes food items. It can also use other household items like cleaning and laundry products, toiletries, stationery, over-the-counter drugs, etc. The three main segments of the FMCG industry are household and personal care, healthcare, and food & beverages.

Importance of FMCG retail…It is because of the presence of grocery stores, departmental stores, supermarkets, and hypermarkets within our (online or physical) reach that the common man is able to fulfil his routine household needs. From any remotest village to an uber-metropolitan city, this utility of FMCG retailing makes our everyday life possible and a service of essential nature. The pandemic of 2020-21 was a stark reminder of this reality.

FMCG retailing as a thriving industry and business…Throughout history, the demand for FMCG products has never seen a downfall with a few exceptional instances. Consistently increasing population and urbanisation make FMCG a flourishing industry and its retailing a reliable business opportunity. In delivering grocery store consulting services, we have consistently witnessed that today there are multiple grocery stores in every urban locality or its vicinity. If we talk about the big cities and towns, there are more departmental stores and supermarkets than ever. Purely eCommerce-based retailing in the form of quick commerce, dark stores or eGrocery stores is also on the rise in the urban markets. International FMCG retailing brands are going global and setting up stores in other countries. But all these aspects also make FMCG retailing a competitive space. The competition has gone cross-channel.

Future of FMCG retailing… Going into the future, certain basic areas of work like business modelling, business planning, operations management, customer orientation, use of digital and industrial technologies, channel strategy, etc. will continue to remain as significant as ever. What has changed and will keep changing with time is improvising these elements for better alignment with the contemporary business environment of the FMCG and retail industry. For instance, omnichannel is all set to become a standard in the FMCG retail industry. It is not far from here that customers would be shocked if, say, a departmental store is not offering them the convenience of a seamless multi-channel experience. This will be similar to how we feel today when a sizable retail store does not have the option of digital payment. With cross-channel competition already setting in, cross-channel standards have also become applicable. So, if quick commerce retailing can deliver within 15-30 minutes, other channel players become vulnerable to such standards.

Challenges in the FMCG Retail Industry

Cross-channel Competition

Drawing from what we discussed above, now FMCG retail business is immune from cross-channel competition. Physical retailers are now adopting eCommerce. Not doing so costs them to lose their market share to online players with the right planning, strategies and operations. However, it is not easy for all online players like dark stores and eGrocery stores to break into the market share of brick and mortar FMCG retail. And this includes even international and national brands with local presence in one form or the other. Many FMCG manufacturers have adopted the D2C route. But their performance, which otherwise goes well with the traditional distribution strategies, fails to make an impact with the independent eCommerce route. This is also true for departmental stores and supermarkets that are successful in the brick and mortar format. And in such situations, there is no harm in taking external assistance from an experienced supermarket or departmental store consultant.

Quick Commerce Businesses


Q-Commerce emerged with a lot of hype but its growth trajectory has not been as impressive as expected. Logistics and operational planning and strategies have proved to be a big hurdle for them. Q-commerce is possible in densely-populated, urban markets which limit the number of regions they can target. Traffic congestion in big cities makes sticking to such short delivery timelines extremely challenging. Concerns are often raised from many sections of society regarding the safety of the delivery partners who are on the roads attempting to make such delivery timelines possible. But still Q-commerce FMCG retailing poses a serious competitive threat to all other channel players.

Brand Positioning

With the homogeneity of products and services, brand positioning is a challenge for FMCG retailers. This even applies to local grocery stores that have very little scope for differentiating their business from the competitors in the same locality. The same is true for all new entrants in a market whether they come in the brick & mortar format, eCommerce, or omnichannel. On the contrary, the big brands have an upper hand when it comes to brand positioning irrespective of the distribution channel. With existing customer awareness, it is easier for them to attract customers. With a presence in multiple markets, they are also able to generate volume sales and offer greater flexibility in pricing. That further enhances their ability to promote their brands.

Supply Chain Disruptions


In FMCG retailing, retail businesses are dependent on smooth production, supply chain and logistical activities. And all these functions are external to them; carried out by manufacturers, distributors, and logistics services providers. Any mismanagement on the part of these entities has a bearing on the FMCG retail sales. For example, when an FMCG manufacturer fails to procure the raw materials on time, it affects its ability to produce and fulfil the demand. As a consequence, retail FMCG stores have to keep their shelves empty or fill up with other brands or products. They may even lose customers if such mismanagement becomes chronic. Supply chain disruptions also take place due to hikes in oil prices, protests in the transportation industry, the impact of changes in taxation, inter-state regulation conflicts, etc.

Synchronised Inventory Management

In the FMCG industry, all the entities involved in the supply chain – from production to retail must work with a certain degree of collaborative precision for synchronised inventory management. A manufacturer cannot push more goods into transit than what its distributors could handle. The same principle applies between distributors and retailers. A majority of small and medium retailers work with limited space for merchandising and stocking. On the other side, retailers must also understand that it takes time for distributors to fulfil their reorder demands. They must have a good estimate of this time requirement which also depends on the ease of production, availability, and delivery of the products in question. That is one of the reasons why many experienced supermarket business consultants stress the importance of professional inventory management even in small and medium businesses.

Customers’ Preference for Branded Products

Retail customers always carry a preference for popular and branded products. In any given product category, active brands are limited in numbers. For example, in infant cereal, Nestlé is a global market leader. Historically, customers from all over the world have shown a strong association with Nestlé’s products. In this particular category, retailers have no option but to go for this brand. When a company enjoys a dominant position in a market with little or no competition, it can dictate the margins. This is true for all dominant brands. So, despite lower margins, retailers still have to go for the products of these brands because of the unflinching demand and popularity. With their limited customer base and store space, small scale retailers are less enthusiastic about merchandising such products.

Unwarranted Price Escalation

The pricing strategies adopted by the market leaders at the macro level carry repercussions in the local markets. Many successful local brands imitate the pricing strategies of the domestic market leaders when their products are similar. Any unwarranted price escalation, without any corresponding value addition, by any company, whether it is an MNC or a local brand, is not good for customers. Such practices create scopes of margin flexibilities. Apparently, it may sound great for retailers because now they can offer discounts more flexibly. But when the same strategy is applied by all retailers, no one stands to gain. The same product from the same brand gets sold in a given market at slightly altered prices by retailers. For customers, this paints a doubtful scenario as to how FMCG companies and retailers are charging them.

Poor Layout in Stores/Warehouses/Distribution Centres


The first curse of having a poor layout is inefficient utilisation of precious space be it at a store, warehouse or distribution centre. A retailer never realises the potential of having a well-planned layout until s/he has one. A good layout plan lets retailers stock more goods in the store. It ensures smooth movement of staff and customers in the stores. It makes the shopping experience more intuitive for customers. For example, the checkout counter should not block the entrance of a store. Or the use of proper banners providing directional guidance to customers in a store or supermarket minimises the need for such enquiries. The veterans of supermarket consulting realise the significance of a good layout plan for supermarkets and other such large-format retail outlets. Layout planning is an important component when we begin to answer how to set up a supermarket. However, a majority of retail businesses are still operating detached from the contemporary standards of retail management. This pulls down the overall performance of the industry. As supermarket consultants, this makes our job both interesting and challenging at the same time.

Why YRC

We are retail and eCommerce business consultants with 10+ years of experience. We have worked with more than 500 clients in more than 20 industries. From market research and business planning to retail operations management and audit processes, our services and solutions cater to unique and specific business requirements for all retail and eCommerce brands and businesses. YRC has a service presence in the Middle East, South Africa, and India with more expansion projects on the rolls. Here’s a glimpse of some of our services and how we could help your FMCG retail business reshape its planning, strategies, and operations to emerge as a contemporary and competitive brand.

In FMCG consulting, before we move to recommending, designing and delivering any solution to a client, we undertake comprehensive market research activities. Every business comes with unique potential and vulnerabilities in a given market environment. For example, different channels perform differently for different products. In some areas, vegetable sales might be more popular via outdoor physical markets where the scope of price negotiations is high. In some other areas, customers may prefer buying fruits and vegetables from the local supermarkets. So, the best channel strategy for a business could not be derived without ascertaining the product-channel performance.

We help FMCG retailers develop unique and competitive business models that are effective to counter cross-channel competition in their target markets. Our retail store consultants work on creating unique value propositions based on a detailed assessment of the strengths and weaknesses of the business. These assessments go a long way in helping businesses adopt the right brand positioning in a competitive market. They will also map the value chain and internal capability requirements so that clients could know how the UVP could be created and delivered.

Many traditional brick and mortar grocery stores seek growth and expansion and transform their business into a bigger format. We offer assistance to such grocery stores in transforming their business into mini-supermarkets or any larger format depending on their goals and market potential. In projects like these, we offer the full range of our retail and supermarket business consulting services as per applicability. From concept to implementation, an expert and dedicated team of FMCG business consultants is engaged to carry out the entire project.

Retail SOP development and implementation is one of our core services. Here, we bring all the operational activities of a client’s business into a realm of planned and defined framework. Every process and operation is defined using SOPs. Nothing stays outside the scope of definition. So, no operational activity ever goes out of planning. Whether it is an internal activity like inventory management or an outbound activity like CRM, every process is defined in terms of the flow of work, roles and responsibilities, standards of performance to be maintained, and deadlines to be adhered to.

If any retail client has specific requirements, we also design and deliver such services and solutions. For example, some retailers seek to improve the layout planning of their stores and warehouses. Our expert planners carry out detailed assessments of the available space and align them with inventory purchase planning. Sometimes implementing certain SOPs also become necessary even in small spaces to ensure optimal space utilisation.

To know more about our FMCG business consulting services for physical and online businesses, drop us a message and our team of retail and FMCG experts shall coordinate a call back with you at the earliest.

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We work only for Visionaries.

PROCESS AUTOMATION

The idea of having Ecommerce Consultants on-board from the beginning itself points towards reducing the involvement of the promoters in daily operations. Ecommerce Businesses willing to be a brand reaping profits & sustaining the competition must ensure that most of their processes should be automated. The more the manual intervention, the more would be the errors.

In Ecommerce business, you get only 1 chance to impress the customer & if you mess up there, you lose the customer for long.

Process automation in respect to all the activities pertaining to customers from order receiving to order fulfilment is a must for a seamless experience for the customers.

Task Management is another grey area where most deadlines fail as 90% of the tasks are assigned manually & are forgotten, unheard, misunderstood or mistaken.

YRC Team of Ecommerce Management Consultants helps to make maximum of the processes system-driven to ensure minimalistic manual intervention.

VIDEOGRAPHY & PHOTOGRAPHY

No matter how good your product is, the customer would know only if it looks good.

Photography includes the following steps:

  • Cataloguing your products
  • Cataloguing your images
  • Backup your images (A few cloud storage solutions include Dropbox, Google Drive, Bitcasa, Apple’s Cloud Storage etc.)
  • Choose the right camera & lens (You may also outsource the photography to a third party agency)

DIGITAL MARKETING

Digital Marketing includes SEO & SMM. SEO i.e. Search Engine Optimization includes activities like back-linking, meta tags, blog-writing etc. to ensure your website ranks on the 1st page on Google Search.

Next comes SMM i.e. “Social Media Marketing” which as the name suggests including promoting your products on all the social media sites, email marketing, influencer marketing & several other BTL activities.

These activities are going to be recurring & would decide the traffic on the website, the conversions, whether the right target market is tapped, the likes, the views, the orders, the reviews & much more. YRCs Ecommerce Consultants create a budget for digital marketing right from pre-launch to launch & for each month thereafter.

Building digital marketing strategies in coordination with the agency, selecting them to signing them off would be the role of YRC.

This ensures seamless coordination, detailed interactions & desired execution as it is always advisable to work with a single agency than multiple of them.

IT INTEGRATION

Selection of the right software for smooth functioning of back-end operations right from production to webstore display would be suggested and integrated by YRC Team.

YRC’s Team defines SOPs of Product Movement, maps it with the locations & people. They then create a blueprint of all the features required in the software & help in shortlisting & selection.

IT Integration involves connecting your offline inventories with real-time online webstore so when a sale occurs, inventories get deducted real time across offline as well as online platforms.

This helps in accurate inventory management, maintaining the MOQs, re-order levels & achieving the optimum inventory levels.

Some popular software include unicommerce, viniculum for your front-end website management & Genisys for your entire back-end Purchase, Production, Accounting, Invoicing etc. management.

WAREHOUSE & LOGISTICS PLANNING

  • How many cities or countries you wish to sell in?
  • Where should your Warehouse be located?
  • Should you have one warehouse in each country or city?
  • Should you be having your own delivery team in your base city?
  • Would the 3rd party vendors be reliable? What happens when they lose or misplace your product during delivery?
  • How should I manage the logistics if my goods are coming from different countries?
  • How should the goods be stored and barcoded?
  • How much space do I require for warehouse?
  • I am sure several such questions must be haunting you while you think of starting your own fashion ecommerce brand.

 

At YRC, our warehousing and logistics experts can help you devise a strategy for all of the above mentioned queries and much more.

We design the layout of the Warehouse considering the inward, goods processing, software entry, barcoding, outward, goods return, scrap storage, goods stacking & much more.

Logistics route plan is devised considering the manufacturer to your warehouse and from there to last mile delivery locations.

UI & UX DESIGNING

This Step involves 03 distinct parts:

Part 1: Choosing the right Platform:

From several platforms available in the market right from Shopify to magento, woocommerce, prestoshop, wordpress etc. you must choose the one that fits best for your business

Part 2: UX Designing:

“UX” denotes User Experience, which if put in simple language is building the functional requirements of the website.

UX Designing includes designing the features required in the website, customer journey map, website features, the browsing features, navigation features, ecommerce order management process flow, checkout cart features, catalogue management, ecommerce payment system, cross selling features & much more.

“As per statistics, 68% of the customers abandon the carts before payment”

An interesting UX ensures the customer sticks on to the website for a longer time.

Part 3: UI Designing:

UI stands for User Interface, which means designing the look and feel of the website. UI includes using the right colours, elements and the entire aesthetics of the website.

A good User Interface ensures the user completes the task that he has come for. It navigates the user through the journey of the brand in the simplest but most effective way.

The UX designer maps out the bare bones of the user journey; the UI designer then fills it in with visual and interactive elements.

If User experience is the bare bone, user interface wraps it up with an attractive cape.

At YRC, our team if experts can help you develop the entire User Journey to ensure it is engaging!

SAMPLING & PRODUCTION

This step follows the “Designing” Phase, whether you have an in-house design team, freelance designers or an outsourced design company. It is one of the most exciting phases, as here you see your designs turning into products & your ideas turning into reality.

In most start-up cases, production is outsourced i.e. brands tie-up with the established manufacturers/ job-workers to get their products manufactured.

Sampling involves multiple 04 Stages, Fit-Sample, Prototype Sample, Pre-Production Sample & the Production Sample.

Prototype Sample is the first sample provided to the buyer. It can be in any fabric/ colour. This sample is just to understand whether the product design looks equally great in reality.

Fit Sample, as the name suggests is prepared to check the fit of the garment i.e. the various sizes, length, width etc.

Pre-production is made by the actual production line. Here the stitching quality and other aspects related to manufacturing are checked. This is the last stage where rejection can be accepted.

Production Sample is made before the production which is the replica of what is going to be finally produced.

Once you are through with all this, you are good to go ahead & get your goods manufactured.

PRODUCT DESIGNING / SOURCING

Product Designing or Sourcing is the heart of the Ecommerce Fashion Brand.

Product Designing / Sourcing can be done in several ways, as follows:

  • In-house Design Team
  • Freelance Designers
  • Outsourced Design Team
  • Ready Product Sourcing (From Manufacturer or Wholesaler)

At YRC, we evaluate your business strategy & business model to arrive at the decision, which of the above ways would be best-fit for your business. In certain cases, product sourcing may be a combination of the above.

These are the people who are going to build your brand! Whether they are the designers or merchandiser, your brand look is going to be in their hands.

If you are designing each garment from the scratch, the sourcing would play crucial role in developing design identity of your brand.

Sourcing includes fabric, trims, lining & all the raw material required to build the garment.

BRANDING

Branding is the “Look of the Brand”, right from logo to tagline, the colours used, the brand story, the brand communications on social media, the packaging & all the other aspects which speak directly or indirectly to the customers. Branding constitutes the look & feel of the brand & hence must be thoughtfully planned to match with the product that we are selling.

Branding must appeal to our target audience. Example : A golden colour logo depicting finesse, art, richness, premium, however beautiful it may be individually cannot go with a brand selling affordable kids wear products. So, your logo must be in-line with your brand positioning, whether you are an expensive brand or a luxury brand or a value for money brand, it must be depicted from your “Branding”.

It is an integral part to attract the target audience.

ORGANOGRAMS & SOP’s

Organogram is the “HR Blueprint” of the business which is created at the onset, to map out the team required across each function at various stages of the business. At the launch, only key people need to be got on board to ensure the project gets started & at this stage, all of them need to multi-task. Similarly, certain financial as well as operational goals are set for addition of the further team. Example, for the operations team, we hire 1 operations manager during the pre-launch phase & we add 1 more only when the business kicks-off & we reach a volume of selling more than 1000 pcs/ month or a turnover of more than 0.1 million USD.

SOPs are Standard Operating Procedures, a bible to run the entire organization right from Sales, Purchase, HR, Order receiving to Order fulfilment, Inventory Management, Accounts, Warehouse, Logistics, Supply Chain, Production & all the other relevant functions for the business. Business must be organized from its first day of operations; only then the tasks can be delegated.

At YRC, we design the organization structure, the processes, and approximate time taken to execute each process, job profile of every member within the organization, their KRAs, KPIs & the Reporting Structure.

CRITICAL PATHWAY

Critical Pathway Analysis (CPA), is a project management technique which cannot be overlooked while launching an ecommerce fashion brand. Brand launch process is cumbersome with multiple inter-dependent & time-bound tasks involved, which need to be tracked to ensure the project remains on track.

CPA outlines key tasks across the project, their turnaround time (TAT) & the dependencies of tasks upon each other. It identifies the sequence of tasks, their interdependent steps from inception to completion, their criticalities, and their dates of onset, target dates of completion along with the key responsible person for the respective activities. Critical Pathway helps in understanding the unimportant & not urgent tasks which may jeopardize the execution of the project because of an unexpected snag! It also maps out the potential bottlenecks which might be posed because of the dependencies of tasks upon each other & cases where the next task cannot be commenced before the completion of the previous one.

CPA detects the minimum & the maximum time involvement of a particular individual or team to execute the task, thereby arriving at the overall deadlines associated with the project.

At Your Retail Coach, we design the Critical Pathway & review it periodically to ensure the project is on track & the progress is measurable.

BUSINESS STRATEGY & BUSINESS PLAN

Business Strategy includes the vision, mission, goals, business model, business plan & strategy for all the functions within the organization.

Business Strategy is a well-defined plan that outlines who, what, where, why, how & when for the company; for example, who would be the target market, how to attract the target audience, when to launch new products, where to operate from, how to handle competitors, what would be the USP, what would be long term goal of the organization & several other answers to the 5Ws of Strategy.

Business Strategy aligns the organization towards a common goal. Business SWOT helps company to identify & overcome their weaknesses & focus to sharpen the strengths. Business strategy forecasts future risks and helps business in building skillsets to overcome the potential threats.

YRC’s Business Plan focuses on creating a “Blueprint” of the business, thereby deriving the feasibility of the concept & gauge whether the opportunity is lucrative to invest time, energy & effort. Business Plan creates cash flow understanding i.e. building inflow & outflow cash projections from Week zero to week 60 i.e. 05 year projection. Business Plan calculates the capital investment, operating costs, one-time costs, recurring costs & all the other numbers relevant to obtain the breakeven sales, return on investment, return on capital, internal rate of return & several other ratios. Business Plan is also one of the important requirements if you are targeting the “Investor Route”. Fund raising becomes extremely transparent & channelized. With business plan panned out clearly, the business will know until what point must it be stretched & where to stop, which reduces the probability of unplanned investments.

MARKET RESEARCH

Starting the concept of Ecommerce Fashion brand with Market Research ensures we get detailed understanding of the industry & this research report also acts as a social confirmation for your concept. Market Research helps in understanding the target locations, their population, potential online buyers for your product, competitors for each category, and top selling products of the competitors, competitors’ price range, offers & their responses & much more. Market Research helps in thorough understanding of your brand position as compared to our competitors. It helps in identifying gaps in the market, in your category along with the scope of the said product in the desired market. This will help in validation of your concept & prevents you from making the same mistakes as your fellow brands, eventually saving your time, energy & efforts. This phase is also a make or a break phase, as the market research study may at-times come up with some eye-popping numbers & statistics which might compel you to re-think on your product or category that you are planning to sell or alter your entire concept itself!! Market Research Reports analyse the competitors’ webstore for their traffic, conversion & sales. This is extremely valuable information to derive our inventory budgets & projections, which takes us to our next phase.