HLL Is Reinventing Distribution, says M. S. Banga

Hindustan Lever Limited (HLL) is reinventing its distribution system, by redefining the approach to current channels and creating new channels. The objective is to touch consumers with a 3-way convergence of product availability, brand communication and higher levels of brand experience. The HLL Chairman, Mr. M.S. Banga, said this at the company’s AGM here today.

Mr. Banga said, “Our new approach to distribution is holistic and seeks a 3-way convergence of product availability, brand communication and brand experience. We are reinventing distribution -- creating new channels and redefining the way current channels are serviced. We are building key capabilities in training the large number of people involved in these initiatives. Through all these initiatives we are getting our brands closer to the consumer.”

Consumers today have an explosion of choices. They are seeking more information to make these choices. With growing choice and availability, enabling consumers to make informed choices in the crowded retail environment is a major challenge. Consumers also increasingly want shopping to become convenient and enjoyable. For companies, a key challenge is communication, with consumers being exposed to multiple and fragmented media vehicles.

“Creating direct consumer contact and communication at point-of-purchase thus assumes added importance for delivering brand messages and communication to both urban and rural consumers. We are proactively addressing these emerging trends, by approaching distribution and channels in a much broader way. We are thus going beyond delivering products and creating greater engagement and interaction around the purchasing experience,” Mr. Banga said.

Segmentation of General Trade: In redefining the approach to current channels, HLL has firstly segmented the general trade, and now addresses each channel – grocery stores, chemists, wholesale, kiosks and general stores -- with a differentiated mix of services. HLL is also emphasising on making brands prominently visible in the crowded stores. Greater interaction being key to touching consumers, HLL is using the point-of-purchase for a much higher level of direct contact, through in-store facilitators, sampling, education and experience.

Self-service Stores & Supermarkets: Secondly, HLL has proactively developed customer management and supply chain capabilities for partnering the emerging channel of self-service stores and supermarkets. Customer activation to drive trial and preference for HLL brands is another key thrust area. This is being achieved through initiatives like in-store promotions and sampling of products.

New channels: “We need to go further in creating touch points for our brands relevant to the scale and nature of the Indian consumer opportunity. We are thus creating a whole set of new channels, across all consumer segments in both urban and rural India,” Mr. Banga said.

Project Shakti: Among the new channels is Project Shakti, which is already operational in 11 states. The vision is to reach over 100,000 small villages, touching over 100 million rural Indians. Project Shakti provides micro-enterprise opportunities for women from Self-help Groups, making them direct-to-home distributors of HLL. The ‘Shaktiammas’ work as brand ambassadors for HLL, selling its products directly to village consumers at their homes.

Hindustan Lever Network: Hindustan Lever Network leverages the opportunity of Direct Selling, and already presents customised offerings in 11 Home & Personal Care and Foods categories. With a consultant base of over 250,000 entrepreneurs, it operates in over 1,500 towns and cities, covering 80% of the urban population.

Out-of-Home Opportunity: HLL is also aggressively responding to the rapidly growing trend of out-of-home consumption. The company is already the largest in hot beverages vending with over 15,000 tea and coffee vending points. This is being aggressively expanded in offices, the burgeoning services sector and, through specially designed kiosks, in the education, entertainment, leisure and travel segments.

Health & Beauty Services: To respond to the increasing consumer need for health and beauty services and products, HLL has pioneered Lakme Salons and Ayush Therapy Centres. Lakme already has 64 salons in 26 cities, servicing over 4 lakh consumers a year. The Ayush Therapy Centres provide easy access to authentic Ayurvedic treatments and products, addressing the ever-growing concern for health among consumers.

Mr. Banga underscored, “People and their skills are critical to the success of all these channel initiatives. We are therefore investing in building capability for training the large number of people involved in these initiatives.” Over 300,000 people are being trained across India, in over 1,500 towns and thousands of villages.

Mr. Banga concluded, “Our distribution initiatives create significant employment and vocational opportunities. Our countrywide network of 7,000 Stockists and 6,000 sub-stockists employs over 60,000 people. In our current channels, we work with the local retail trade which has dispersed ownership and already involves a large number of people. Our new initiatives by themselves create large vocational opportunities for people. Hindustan Lever Network aims to create over a million self-employed entrepreneurs. Project Shakti aims to engage 25,000 underprivileged rural women, giving them economic independence. Services, by their very nature, are employment intensive and will also provide significant employment. All our channel initiatives are thus completely aligned with the national interest and priority of employment generation.”