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Lever kicks off distribution revamp

Mumbai, June 29: Hindustan Lever (HLL) will revamp the way it reaches products to customers as part of a larger drive to shore up its tepid topline growth.

Having pioneered FMCG distribution in India in the 1940s, it has now decided to reorient tried and tested channels in a way that touches consumers at the point of purchase.

“A key challenge for consumers and our brands is the crowding of stores with multiple brands and packs,” HLL chairman M. S. Banga told shareholders at the annual general meeting (AGM) today. “An average store stocks 1,500 packs, which is an increase of over 50 per cent in the last three years,” he added.

Driving the new sales strategy will be Hindustan Lever Network, the company’s direct-selling arm that peddles personal care, home and food products through 2.5 lakh consultants. The firm has a presence in over 1,500 towns, covering 80 per cent of the urban population. Direct selling is one of the fastest-growing channels — a Rs 2300-crore business expanding at the rate of 20 per cent annually.

One of Lever initiatives in this area is Project Shakti, which aims to enlist 25,000 underprivileged rural women as “shaktiammas” to sell products in the outbacks — from where Lever gets 50 per cent of its sales.

“Project Shakti is operational in 11 states across the country. Our vision is to reach over 100,000 small villages, touching over 100 million rural Indians,” Banga said.

In cities, Lever will ride on boutiques like Lakme Salons — a one-stop saloon where customers are groomed — and Ayush Therapy Centres to rev up sales. These will be backed by plans to instal 15,000 coffee and tea vending machines in offices. “We are expanding on these lines aggressively,” Banga told shareholders.

In an attempt to fend off competition from regional players, Lever has initiated the Shakti Pracharini, a rural health, hygiene and wellness campaign steered by women. Lifebuoy Swasthya Chetna sends the message across on the importance of hand-wash and personal hygiene.

“This is one of our largest interactive programmes and has covered over 20 million rural children across seven states,” Banga added.

Explaining the new mantra, Banga said: “Our new approach to distribution is holistic and seeks a three-way convergence of product availability, brand communication and brand experience. We are creating new channels and redefining the way the existing ones are serviced. We are training a large number of people involved in these initiatives. These are helping us in taking our brands closer to consumers.”

Lever’s self-service stores will also get a leg-up under the new scheme. The idea is taking shape in Mumbai, but will be taken to cities like Hyderabad later. These stores account for 20 per cent of branded FMCG sales.

Quality, too, will be high on the agenda. In the last three years, Lever invested Rs 400 crore in this area. “We’ll ensure our products are affordable. That’s why, we are adjusting our prices. We’ll take every step to get a large share of the market. If necessary, we have to forego the short-term for the long-term,” the Lever chief said.

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