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Mumbai: Unilever‘s chief executive officer Hein Schumacher said its Indian unit Hindustan Unilever has “undoubtedly become one of Unilever’s strongest and largest operations”.
“The growth prospects of India as a country offer enormous potential, with the nation’s leapfrog into digital and favourable demographics seen in a younger population,” he posted on LinkedIn after a three-days visit to India this week.
HUL accounts for more than 11% of Unilever’s global sales and its second biggest market after the US in terms of revenue. The maker of Rin detergent, Dove shampoo and Lux soap is also the market leader in most segments it operates in India with nearly 80% of its portfolio either gaining or retaining shares. As part of his market visits, Schumacher met several customers and top executives of Nykaa, Reliance Retail, pharmacy chain Wellness Forever and kirana stores.
“Leveraging the digital wave, for instance, 1.3 million neighbourhood retail stores across India have been using Shikhar, our in-house app that has transformed how we engage and conduct business with our partners. Its success demonstrates the tremendous opportunity for the digitalisation of the value chain,” added Schumacher on his maiden visit to the country after becoming Unilever’s CEO last July.
HUL‘s internal ordering app Shikhar allows small neighbourhood stores to order directly from it but are still serviced by distributors. An Indian innovation adopted by several developing countries, the app generates nearly 40% of all sales for India’s biggest consumer goods company.
During his visit to the retail outlets, he focused on how a wide assortment of products were arranged even in limited spaces and how technology is playing a role there, said an executive. “Our in-house app has transformed how we engage and conduct business with our partners at their convenience. Its success demonstrates the tremendous opportunity for the digitalisation of the value chain,” he told retailers.
His trip comes at a time when the All India Consumer Products Distributors Federation (AICPDF) flagged concerns on HUL’s new margin structure, saying it will fight to reinstate the margins and even warned of a boycott of their products. HUL, however, said their terms of trade with distributors are bilateral and supply of their products remains uninterrupted.
HUL’s volumes, or the number of products it sells, rose 3% in the September quarter, indicating three-fourths of its growth was driven by demand instead of price hikes. HUL’s performance is considered a proxy for broader consumer sentiment in India. Last month, Schumacher at a Barclays Fireside conference said it should not be complacent about its market share and indicated its historical strong position in India may weaken with increasing competition.
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