Marketing

HUL’s precision marketing at scale

Vinay Kamath Thomas K Thomas October 3 | Updated on October 05, 2021

The FMCG behemoth’s CMD Sanjiv Mehta on how it is using personalisation to change the assortment at every store

Sanjiv Mehta, Chairman and Managing Director of Hindustan Unilever, says there have been some irrevocable changes in consumer behaviour due to the pandemic. In this interview, he talks about what these changes were and their impact on corporates.

In what ways have consumers and consumerism changed in these past two years of the pandemic?

The way I look at it, there are some behaviours which have been adopted at a fast scale and are bound to stay and there are some which are transient in nature.

If you look at it from the lens of health and wellness, there is a growing consciousness today to look after one’s physical and emotional health and mental wellbeing.

This is something which is bound to remain.

Also, take hygiene. We used to invest a huge amount of money in market development in taking the message of handwash to villages across the country. Now, thanks to the pandemic, people are adopting it. And I think it’s going to stay.

When you look at shopping habits, there are two things which have stood out. One is e-commerce.

The other is the resurgence of the neighbourhood store. People have realised the benefit of proximity. And whenever mobility has been curtailed, modern trade has taken a beating.

How were the markets impacted differently between the first and second wave of Covid-19?

If you see between the first and the second wave, when things opened up, people again flocked to the modern format stores. In India, shopping for many people is an experience in itself. On a weekend, you take your children all dressed up to the mall, eat fast food, watch a movie, do your shopping and come back. So this impact on modern trade is transient. I believe people will go back to modern trade, but concern for health and wellness will remain.

What about more consumers going digital during the pandemic?

Digitising is not going to go back, maybe the same pace of change may not be there. Take e-commerce; once people have tasted the benefit of assortment and convenience, they’re bound to stay with it.

At the beginning of the pandemic, we had also seen two kinds of behaviour.

People who were not very well off, increased the number of shopping trips. And they went in more for lower unit price packs.

Others were worried if stocks would last and went in for pantry loading.

But during the second wave, because the factories did not shut, we did not see any scramble for pantry loading.

What impact did these kind of behaviours have on corporates?

Two years ago, in an investor conference, there would be not many questions asked to us on environment and sustainability. In the last two years, the interest on ESG has gone up significantly. So words like biodegradable, net zero, all those which were a bit alien for the people, are now becoming common language.

Companies are very conscious about their environmental footprint, and people have realised that for the pandemic, you have a vaccine. But, for climate change, there won’t be any vaccination.

You say that digital machine learning is becoming core to some of the work you’re doing. Could you share some of your current experiments in this space?

The first thing we did when we started to reimagine HUL’s journey is create a platform where disparate data can be brought together. And you are able to slice and dice it on your fingertips.

Then we moved to creating some very powerful models, which would enable us to optimise value and maximise growth. These are all machine learning led models; the more data you have, the better they become.

Now, we are moving to a stage where every investment we do, we are looking at the attribution to growth. Take grocery stores. A store in South Mumbai and a store in Dahisar should be having a completely different assortment.

In the past, our algorithms were based on what you sold.

Now the algorithms are moving to who the consumers living in the vicinity are, what would be their living standard measure? what are the categories they’ve adopted? and therefore, what should be the assortment?

This will help to customise the assortment in each of the millions of stores. The other is looking at it from the lens of personalisation. One would be able to do precision marketing at scale. We are also reconfiguring our entire supply chain: the number of factories, the multiple categories that we manufacture in the factories, the number of fulfilment centers and the locations depending on where the demand is. And most of these factories are now highly digitally enabled.

So, the value chain, which was linear in nature: plan, source, make, market and deliver, is now becoming more circular.

So, it has become more just in time?

Our vision is that what you sell today, we manufacture tomorrow. It will take some time for us to reach there, but we are progressing towards that. One more thing, which we measure closely, is days between runs. Earlier, you would have longer runs because that’s what brought in efficiency. Longer runs would also mean you will have to store inventory. If you look at how to optimise your supply chain, on one axis, there could be capacity. On the other axis, there could be inventory. And on the third axis, there could be information. If you have information closest to the consumer, then you could optimise on the other two axis. You need lesser inventory and lesser capacity and you could still ensure a very high rate of fulfilment.

Published on October 03, 2021

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