Understood.
Next, I would like to talk about differences in Modern Trade between India and US and why it matters here. In US, the % of Modern Trade (MT) is much higher ( dont have the exact number but is more than 50%) as compared to India(around 10%). This means that MT companies like Walmart, Costco, Target etc excercise a greater control on FMCG suppliers. This is in the form of preferential supply of stock, better margins for MT companies etc. For eg, when Walmart raises a Purchase Order (PO) to P&G in the US, it gives an expected date of receiving at its Distribution Centre (DC) and the supplier is expected to adhere to this date. Walmart may even reject the supplies if the vendor doesnt adhere to this date. Compare that to India, where FMCG companies have more heft. Hence, they supply stock as per their convenience, which may not match with the PO expected date. If we are envisioning a future, where share of MT in India will go up, then these MT companies will start excercising more control over the FMCG suppliers, which will improve their margins in the long run.
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