Many years ago, an engine oil major, a much-loved brand in India worked with us to answer an important question, ”What next?“ Why? Because each new car brand was endorsing their own or partner engine oil brands. Also, the experience had changed from one where a customer went explicitly to get the oil they wanted to one where the car company just changed the oil whenever the car went for service.
This company went out to create a very successful direct servicing connection with their customers.
It is now time for FMCG brands to think about customer experience of their products. The kirana (grocery) store in urban Indian markets is slowly disappearing. Indian shoppers are increasingly ordering online, driving the brick and mortar kirana store to rethink their business models. There are several reasons for this. First, the grocery retail in India forms 60% of the total retail market. Secondly, it is a hyper-local business. Preferences for fruits, vegetables, ingredients and other goods vary according to locality, even in the same city. Thirdly, grocery has another added charm; these are essential purchases with high repeatability. However, there is more, it’s a high margin business for online retailers if they can capture the customer base and introduce private labels.
However, the customer experience in most grocery categories has a long way to go. For instance, if I say, unpolished dal a specific brand will pop up in your head. They created the category, backed it with their strong trustworthy name and made me aware that this was a healthier option. It’s the only brand I look for when either ordering online or in my sporadic grocery store visits. And, there is significant difficulty in ordering it. Grocery shelves have many companies claiming to offer unpolished dal. Since the brand that I actually want is impossible to get most of the time I look for substitutes. A lot is being written about the private labels started by grocery retailers and I wonder if high margins is all there is to it. Could it be that the unpolished dal company only thought about advertising and forgot about the many other touchpoints urban consumers now look at.
Could it be that the unpolished dal company needs a refresh of the consumer journey?
The journey map for a new grocery brand needs to factor that customers are increasingly aware that good food and good health are directly correlated, and while they will make an effort to seek out the brand they trust, they also want convenience and better service. Which is perhaps why the engine oil brand is still going strong after 15 years and the unpolished dal with great advertising is struggling to be visible to me.
However, what does all this mean for the traditional FMCG businesses? Traditionally, the FMCG sector has seen itself as a brand company. Most product manufacturing was either outsourced or restricted to the company’s centralised factories in a few locations. The company distributed these to the kirana stores and focussed on creating customer pull through advertising and promotions. The store owners created the customer experience and not the brands. The kirana store owners understood what customers wanted, how products could be upsold and made mattered.
With the ability to capture customer mindshare and stickiness, the grocery e-tailers will now have disproportionate control over distribution channels. They can quickly move customers to their private labels. Additionally, e-tailers already own consumer data and know their preferences. Creating relevant communication is easy for them.
How can the FMCG company compete?
The answer perhaps lies in rethinking the retail experience in the form of customer journeys and building a direct customer-company connection. Knowing your customer is the first rule of customer marketing, and in a data-driven world, perhaps it precedes everything else. However, aggregating databases with customers name, number and email with customers social updates is mostly ineffective. The lifestyle preferences of the customer and their needs have to be an ongoing journey of better understanding and better services.