Friday, February 11, 2011

The modern trade vs The brands - the saga continues.

I read with a lot of interest the series of recent articles carried in Economic Times on the ongoing and perpetual battle between the brands at one end and the modern retailers on the other. It started a few days back with the news that Reckitt was keen on reduction of margins for the modern retail outlets (by about 2% or so).

What made it particularly interesting for me was that about 2 years back (thats when modern trade was really modern in India), I had a longish meeting with the then brand custodian of one of the Reckitt brands who was spending majority of her marketing funds on "creating"a category for her product at the modern trade. We discussed issues around eventual private labeling, shrinking margins, cost charged towards display, lack of traditional trade focus etc. however, perceived higher and better quality of consumer engagement ensured that she stuck to her decision of pouring very serious monies in modern trade to create a category - irony was that the largest amount was on the Future Group.

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