Hindustan Lever (HLL) is hopeful that reduction in prices of its premium brand Surf will drive up the sales. A little earlier, Procter & Gamble (P&G) had also slashed the prices of its detergent brands, Ariel and Tide, to make them more affordable and to encourage higher usage or upgradation. At the same time, leading distributors differ from what retailers feel about the possible increase in volumes.
A re-distribution stockist of HLL in Mumbai expects the sales volumes of the company’s detergents to increase by at least 20 per cent. Thus the stockists stand to benefit even though their income per pack in value terms will decrease. However, stockists’ margins (five per cent) will continue to remain the same on all brands.
On the other hand, retailers in Mumbai are uncertain about any sharp increase in sales volumes of detergents. In that case, the income in value terms will fall with margins remaining the same (six per cent). Some retail shops in central Mumbai have not received the new packs with revised MRPs.
Re-distribution stockists are appointed by the company, who, in turn, liaison with the retailers. Such stockists are totally governed by the rules and norms framed by the company. HLL and P&G follow this system in Mumbai.
Whereas, it is learnt that Nirma, the mass market detergent major, operates by appointing wholesellers who are not strictly governed like the stockists.