Festive Fervor Catches on! – Part 4

Nilgiri’s Festive Newness!

Cover-Story18Setting the stage for their festival initiatives Murali Krishnan, CEO, Nilgiri’s first shares an overall insight related to the dynamics of the industry, the effect it will have on bottom lines and what changes are expected to happen.

 

Overall Outlook

Cover-Story15“We do not see a large drop in volumes during Diwali to Christmas among household customers though there could be some preferences for Value packs. We are looking at new exciting launches during Diwali to keep the market enthused and to give larger options to customers during the season. The prices of key raw materials are going up. We see supply chain costs significantly impacted with the proposed steep diesel hikes. On consumption, we have seen an impact of cost cutting by corporate during last year season itself. Corporate had significantly brought down their budgeted expenditure on gifting to their customers and to their employees. We don’t see that coming down any further and we see expect last year corporate buying during season at sustained levels. This year the monsoon has been good and hence we expect the prices of the commodities to be stable which will help us to retain our Bottom-line. However if the cost of raw materials and Diesel increases, some impact could happen on bottom line.”  Highlights Murali Krishnan, CEO, Nilgiri’s.

 Murali’s predictions for the season:

  • The discretionary money available would continue to go to food and gifting and that is where we don’t see much of drop in Food and Grocery Retail where occasions like these are far and few.
  • Consumption patterns, new products all start getting picked up. The Kalkals, Chocolate Santa Clauses, range of cakes are all seasonal products which families enjoy together during these festive occasions.  Savouries, Beverages, Soan papdi remain a craze during Diwali as consumers take out time to spend with their friends and family members largely impacting consumption in these categories.
  • We don’t see any down trading on food as consumer is more and more sensitive when it comes to offering good high quality hygiene food.
Marketing Highlights
Overall the festive season observes a growth of 12% as compared to Non-Season.
Marketing Budgets – 1% of Top-line allocated as Marketing budget.
During festival season, the growth percentage in last two years over non festive season has been 18-20%.
Average footfall expected per store is 1000 to 1200 during the festive time.
Challenges faced –

  • Accurate Forecasting of Top-line & Bottom-line
  • It is difficult to predict Consumer Behaviour.
  • Walk-ins as per Forecast.
  • Adhoc orders from Consumers – Leading to Stock-outs.
  • Quick replenishment to avoid Stock-outs.
  • Competition in the catchment – Consumers having multiple choices.
  • Execution Issues at the Stores.
  • Liquidation of Inventory post festive season.
  • Reverse Logistic incase of return back to Companies

Nilgiri’s Festive Strategy

“We are coming with some very exciting launches, new packaging for some of our signature Private label brands, we are working closely with FMCG Brands for doing activation at stores creating excitement for shopper. Consumers are aware of the wide range of food products that Nilgiri’s stores carry and we are working towards ensuring just that.” Highlights Murali.

 Departmental Dictates!

 Marketing

Highlighting the top three initiatives marketing plans to undertake Ashok Sinha, Marketing Head, Nilgiri’s says, “Introduction of Lower Value Festive Pack. Work closely with leading FMCG Companies for Activation & Promotions. Launch of New Range products under ‘Nilgiri’s’ Brand viz Chocolate, Cookies, Eggless Cakes etc.”

Sharing as to what these initiatives will lead to Ashok says, “Overall we experience an average of 15 to 20% growth. But this year we are aiming 25% Top-line Growth and 15% Bottom-line Growth.”

 Visual Merchandising

“We spend on VM elements throughout year.  During the festive season we do not have separate budget for VM. We partner with the FMCG companies who invest in most of the VM elements. We identify hot zones in the Stores and decorate it with “Theme of Festival” by displaying Festival relevant category/product. The core responsibility of the VM elements is to create customer attention, interest, desire and conviction all of it leading to sales.” Highlights Ashok.

Buying & Merchandising

What is the buying and merchandising plan for the upcoming festive season?

“The Buying and Merchandising plan for the upcoming festive season are- Assortment Mix finalization, addition of New Festival Assortment to the master, ensuring that alternate Brands for Fast selling packs are planned and ordered.  E.g. Cadbury’s Chocolate Gift Pack & Nestle Chocolate Gift Pack.  Haldiram’s Savories and Bikaji Savories Information provided to Companies/Vendors – 2months prior to Festive season. Placement of purchase orders on time and track of Fill-rates. Buffer Stock to be maintained at the warehouse & stores and finally the offer List finalization” shares Ashok.

How do you manage shortfalls & excesses?

“Assortment which caters to the Festive Season is selected and their Sales Growth over the Season during the previous year is analysed and Projection for the current season is done. The same projection is shared with the respective Business partners so that Supplies happens as per that. Excess Inventory will be intimated to the respective Companies and Liquidation Promotion will be executed which will reduce the burden of Non-Moving and Paid-up stock.” indicates Ashok.

Visual Merchandising Highlights

Typical VM Process @ Nilgiri’s

  • Merchandise & Festive Assortment Display Presentation
  • In-Store communication
  • Feature Displays
  • Promo and Activations
Key VM elements used

  • Banners, Danglers, Posters, Promo Talkers, Leaflets & Handouts, Shelf Strips, Wobblers, Display
  • Stands, Festive Branded End-caps (Gondola). Focus and Festive Lights, Signage
Challenges

  • Space constraint @ Store
  • Maintenance of VM Elements
  • Wear & Tear of VM Elements.

Operations:

Share with us the key aspects of the operations plan for this festive season?

Cover-Story17“During festive season, we focus a lot on Catchment wise planning depending on demography; thorough analysis done of the new catchments that have been come up in last one year.  The festive assortment is finalized along with the merchandising team and sales forecast for these articles is firmed up. Hot zones are created in the stores to accommodate the festive VM elements and festive stocks.” Highlights Gopal Menon, Vice President – Operations, Nilgiri’s.

Buying & Merchandising Highlights

Categories that experience and average growth of 15-20% during festival season are:

  • Festive products like Kheer Mixes, Dussera/Ayudha Pooja, Onam Festive pack etc grows by over 100% and overall average growth of 15% plus.
  • The hot categories during festive season are – Cakes, Pastries, Sweets, Indian Sweet Mixes, Condensed Milk, Butter, Cheese, Sugar and Jaggary, Chocolates, Edible oil, Dals, Flours, Confectionery etc.
Challenges

  • Expected Walk-ins – Not happening.
  • Adhoc orders from Consumers which leads to stock-outs and timely Replenishment.
  • Competition in the Catchment providing Ladder pricing based on Volume.
  • Execution Issues at Stores.
  • Liquidation of Inventory post festive season.
  • Reverse Logistic incase of return back to Companies.

Marketing Checklist @ Nilgiri’s

  • Sale Forecasting.
  • Packaging Availability (especially for Value packs).
  • Coordination with Production Department.
  • Visibility & Communication elements – Design & Implementation. In-store communication viz Danglers, Posters.
  • Cake Booklet with pictures & pricing details for Corporate Bookings. Training to Store Staff.
  • Finalization of Activation & Promotions.

VM Checklist @ Nilgiri’s

  • Are window displays creative, attractive & inviting?
  • Is lighting effective?
  • Is all signage clear and professional?
  • Is the store interior clean, welcoming and comfortable?
  • Is merchandise presentation logically ordered and appealing?
  • Is high-margin merchandise placed in high profile locations?
  • Are displays appropriate for your target customers?
  • Overall, is the store appearance professional?

Operations Highlights

Crucial Months

  • The 3rd Quarter of the calendar year – October to December – covering Dusherra Diwali, Christmas & New Year.
Footfall managed

  • While the average footfall is 1200 per day per store during the festive season, the footfall on a particular day can go as high as 1500plus.
Challenges

  • Managing cash counter is extremely important to ensure fast checkouts for the customers.
  • Stacking & restacking and Replenishment of stocks can be challenging as the festive period is short.
  • Home delivery demand increases during the festive time and the customers expect the stocks to be delivered at short notice.

Buying & Merchandising Checklist @ Nilgiri’s

  • Minimum of 2 to 3 Brands of specific Festival Assortment maintenance.
  • Projection of Top-line – Product-wise for the Festival Season
  • Purchase Orders raised to respective Companies 1month advance
  • Track of Fill-rates so that Non-Availability situation won’t occur
  • Buffer Stock maintained @ Warehouse & Stores.
  • Special Pricing workout and  appropriate mode of Communication
  • Guidelines to Stores for Proper Display of Assortment with Promo talkers @ Store level.

Operations Checklist @ Nilgiri’s

  • Procurement of food & grocery for sale well before the season starts
  • Supervision of responsibility for display/offer counters
  • Plannogram administration
  • Fixing racks or locations for promotional SKUs.
  • Setting sale and staff performance benchmarks
  • Laying down clear policies & procedures for the festive season
  • Defining staff responsibility & segregating duties & responsibilities
  • Producing management information reports
  • Enhancing checks & balances
  • Establishing & reemphasizing channels for complaints & feedbacks

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