Who says FMCG Business was Recession proof !!!!!

The Global economic Melt down has dealt a body blow to all the Sectors as a whole,but the fmcg sector used to boast that they are immune.!!! Likewise the FMCG sector would have come out unscathed by the bloodbath followed by the collapse of the gigantic investment banking company, lehman brothers.But life is not a cake walk.Its true that in India, the impact on fmcg business is not so hard as compared with our western counterparts, but the jostle came in a form of several joblosses in the financial, real estate,IT and other sectors,besides the salary cuts across the industries.The personal care category was Hit due to the lower disposable income.The negative vibe flowing across the country, badly affected the consumer behaviour especially in the high end products. The challenge for these fmcg giants are not reviving from the current downturn but to maintain the past growth records.Here Godrej has taken a lead through its personal care segment booking around 500 crore from a single category.So these compaies should come up with varoius innovations in their product category as well as customer service in order to negate this effect.

CHANNEL DESIGN AND STRUCTURE: HUL

Channel Design

Hindustan Lever Limited (HUL) has two types of channel selling ‐

I. Regular (traditional) retail channel,

ii. Direct Selling Channel in the name of Hindustan Lever Network (HLN).

HUL has a well entrenched high distribution model which comprises of C&F agents, Redistribution Stockists, wholesalers and retailers (as shown earlier). Hindustan Unilever's distribution network is recognized as one of its key strengths. Its focuses on Product availability, Brand communication, and higher levels of brand experience.

Channel Structure

Typically, the goods produced in each of the HUL's 40 factories are sent to a depot with the help of a carrying and forwarding agent (C&F agents). The company has its depot in every state of the country. The C&FA is a third party and gets servicing fee for stock and delivery of the products. In each town, there is at least a redistribution stockist (RS) who takes the goods from the C&FA and sells them to retail outlets.

The HUL management realized certain problems with the existing sales model. First, the model was not viable for small towns with small population and small business. HUL found it expensive to appoint one stockist exclusively for each town. Secondly, the retail revolution in the country has changed the pattern the customers shop. Large retail self service shops are becoming commonplace.