HUL Is Digitising Kirana Stores To Know What You Buy
Hindustan Unilever Ltd. is deepening ties with kirana stores as it looks for direct consumer insights to continue building an agile supply chain.
India's largest consumer goods maker is tying up with mom-and-pop outlets to create what it calls Drachma stores. The company is digitising the billing system and offering loyalty points (to be redeemed on future purchases) to consumers buying HUL's products from these outlets.
The consumer goods major has already started offering the points to customers of stores where such systems are installed, a Mumbai-based retailer who has the set-up, told BloombergQuint on the condition of anonymity.
Millions of neighbourhood stores are a key cog of India's $883-billion retail sector with consumer goods companies getting about 90% of their sales from this channel. Companies like HUL, however, don't get direct insights on buying behaviour as distributors route shampoos to staples to different corners of India.
HUL, however, has been strengthening its digital backend to create supply chain to cut down time it takes to supply goods to stores. Tying up with retail outlets will give it insights into not just which of its products a customer buys but also the items of other companies.
According to HUL's website www.ushoployalty.com, the loyalty points programme is live in 11 cities, including Delhi-National Capital Region, Mumbai, Chandigarh and Jaipur, with the company tying up with approximately 25,000 stores. It has set up 10 UShopGo stores across the country, where customers can build their shopping carts—like in an online retailer—by scanning the products across brands and make payments within the UShop app.
Here's how the loyalty points system works.
Customers can buy any HUL product from the Drachma stores, and earn UShop loyalty points, or UPoints, depending on offers and discounts active at the store. For every Re 1 spent on purchasing HUL products, a customer earns one UPoint.
Consumers can buy non-HUL goods, too, at the stores but won’t receive UPoints for such purchases.
The UShop points will be credited to the customer’s UShop account and can be redeemed on subsequent orders, across partner stores.
HUL didn't respond to emailed queries on its partnership with kirana stores.
According to a Phillip Capital report, HUL said at its investor day conference on Sept. 9 that it's planning to use data at all levels of its supply chain to optimise operations.
That includes e-commerce and its UShop pilot where demand is generated; Shikhar app for retailers to place inventory orders and to also help raise working capital for general trade through banks and financial institutions; and last-mile delivery.
The UShop, born after the pandemic accelerated digital shift, is being tested in Delhi and Mumbai. “UShop will meet the needs of our online shoppers, allowing them to buy some of our brands with the trust of authenticity and promise of proper service,” the company had said in an emailed response to BloombergQuint earlier. Direct relationship with consumers will help “build more personalised brand experiences”.