SESSION 12:DISTRIBUTION CHANNEL

Distribution channel of lux

HUL’s distribution network is recognized as one of its key strengths -- that which helps reach out its products across the length and breadth of this vast country. The distribution network of LUX is no different. The need for a strong distribution network is imperative, since Lux has to gain the visibility and has to capture the minds of indians everywhere. It has 2000+ suppliers and associates 7,000 stockists and direct coverage in around 1million retail outlets across India. To meet the ever-changing needs of the consumer, LUX has set up a distribution network that ensures availability of all their products, in all outlets, at all times. This includes, maintaining favorable trade relations, providing innovative incentives to retailers and organizing demand generation activities among a host of other thingsThe first phase of the distribution network had wholesalers placing bulk orders directly with the company. Large retailers also placed direct orders, which comprised almost 30 per cent of the total orders collected. Today, the goods are transferred from the factory to the company warehouses and are sent to the distributor from there on a daily basis. From the distributor, the stock reaches the market through daily sales. Typically, these include the salesman registering the order of a retail outlet and delivering the goods the next day. Recently it has changed its traditional way distribution and came out with a new strategy of distribution. It‘s because of the change in buying pattern of the consumer due to more disposable income. There are different channels of distribution like Modern Trade, which covers all chains of super markets, who get the stocks directly from the company.Wholesalers and second leg of big retail outlets called Super Value stores come under the surveillance of the distributor along with the mass retail outlets. There is also this new concept in the it’s distribution channel called Kiosk. Kiosk is a small shop that sells only sachets and low priced items (below Rs.10/-). Kiosk also does not come under the surveillance of the distributor. In addition to the ongoing commitment to the traditional grocery trade, it is building a special relationship with the small but fast emerging modern trade.

The Distribution in Rural Market:

The strategy of distribution should take into account the purchasing habit of the rural people. While consumables are purchased in the village shop or Shandies or in bigger villages, the consumer durables are purchased only in Mandi centers, large towns or near by cities. In villages beyond the reach of the distribution system, the shopkeepers make their own arrangement for the procurement. Most of them commute to the nearby town to get the supply. But the expenses incurred resulted in the village shopkeepers charging consumers more than the maximum retail price. Generally, the village shopkeeper invest their funds in purchases and rarely ever get credit facilities, which if available is made available for very short duration only. Since the quantum of purchase by the village shopkeeper is very small, the margins are also very meager. The ultimate consumer product reflects the lack of distribution network.