A guide to activation strategies in general trade for Internet First Brands (IFBs)

Indian consumer goods space has seen a rapid rise in the entry of new-age Internet First Brands (IFBs) across segments like spices, masala, snacks, beauty and personal care, home care, etc. General trade remains the mainstay of FMCG sales in the country despite the surge in q-commerce in the last few years. Despite double-digit growth seen by major FMCG brands in organized trade, traditional trade still accounts for ~85% of FMCG trade pan-India. Brands will always look to access as much of the economic strata of population as possible and carrying out distribution via general trade allows them the opportunity to do so. We have come across many brands that are doing well in organized trade but struggle to scale up in GT. This difficulty is driven by increasing competition, lack of visibility due to space constraints, limited data availability, etc. Thus, Internet first brands cannot neglect the opportunity in general trade in order to scale up their brand. Moreover, owing to better unit economics, offline channels can help IFBs drive profitability compared to organized trade.

Internet-first brands need to consider several factors to expand their physical presence in traditional trade outlets across regions. General trade allows one to reach new customers across the economic strata, presence in stores strengthens brand recognition and increases sales volume and brand reach.

Winning in traditional trade depends on mastering five areas:

Understanding where your TG lives is key to figure out where to start first in traditional trade. Identify the right clusters, shops and keep tabs on consumption patterns. Traditional trade landscape in India has a variety of store formats like 24x7 outlets, pharmacies, grocery stores, Cat A general stores, self-service stores, pan shops, etc. Different store formats typically cater to varying groups of audiences. Internet first brands need to identify the store format that matches their target audience. It’s essential to adapt your product, pricing and communication to the segment. For example, a healthy-for-you snacking brand entered general trade by placing limited number of SKUs with hero flavor variants catering to the local micro-market which was scaled in a progressive manner across cities. Further, as they deepened penetration within a city, the player launched lower priced variant targeted towards Cat B/C stores.

Several brands have navigated this landscape by understanding customer needs and local preferences. Mamaearth has shown significant aggression with its offline expansion strategy. In the past 2-3 years, the brand has expanded into 100+ exclusive outlets across cities, strengthened distribution reach to 2L+ retail outlets as well as marked its recent entry into the CSD channel under the Ministry of Defence. Epigamia has tapped into the need for protein consumption as well as consumer shift towards “good-for-you” products, clean labels and functional benefits by expanding into over 25K outlets over 30 cities. Max Protein offers nutritious snacking options that align with the increasing interest in active fitness and wellness. These brands exemplify how strategic positioning, understanding regional preferences, and addressing consumer concerns can drive success in India's vibrant FMCG market.

This emerging reality poses an interesting opportunity for IFBs to rethink the traditional Go-to-market models. To win in this segment, companies need to re-imagine the way they operate today.