Gillette takes Gamble, to shave off its sales channel

Gillette takes Gamble, to shave off its sales channel

Author | Source: The Economic Times | Tuesday, Jan 24,2006 7:42 AM

Gillette takes Gamble, to shave off its sales channel

As part of Gillette's transition to the P&G distribution system, P&G will begin buyback of stocks from the former's dealers soon. As a result, Gillette's own robust distribution network will cease to exist.

“The sales team has been issued instructions to do the settlement of stocks from Gillette distributors before March,” said a company source. Gillette India MD Zubair Ahmed declined to confirm the move. “While we do not comment on speculation or rumours, we are happy to confirm that GIL will make a transition from its current distributor structure to P&G distributors,” he told ET.

Most of the sales staff is being laid off and with Gillette's headquarter relocating to Mumbai in July, whatever is left of the Gillette sales team, will sit in the P&G office in Delhi. The transition process is expected to be completed by March this year. It is, however, not clear if the Gillette Gurgaon office would be wound up. “Appropriate plans are being worked and we will share details as they are available,” Mr Ahmed said.

Gillette India has over 700 distributors across the country. While severing relationship with existing dealers and distributors would be a difficult decision, analysts believe it could leave many disgruntled and affect sales during the transition period.

It would be interesting to see what course Gillette's pricing takes post integration. A substantial chunk of the shaving major's sales comes from promotions and this may not go down well with the P&G system. Meanwhile, the mood in the Gillette office in Gurgaon is visibly tense with people uncertain about their future.

ET has learnt that staffers who have been asked to relocate to Mumbai are undecided, many thinking of quitting as they have houses in Gurgaon. The company allays these fears by reiterating its commitment to support the affected employees by providing them competitive VRS packages, counselling and services of placement agencies.

For the employees who will be relocating to Mumbai, the company would make their move as smooth as possible. The company intends to help through steps like arranging “look, see and reconnaissance visits” to Mumbai, schooling and housing assistance to employees and their families

As far as effect on sales is concerned, he added that the P&G distributors are equipped with the best in class-personnel and state-of-the-art technology to ensure efficient inventory management, higher sales productivity and breakthrough visibility at point-of-purchase across urban and rural markets.

“This will significantly increase GIL's direct coverage, enhance its wholesale coverage and thereby help service more retailers and reach more consumers efficiently,” Mr Ahmed said.

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