Fast moving consumer goods (FMCG) company Marico is looking to partner with start-ups, especially in the area of data mining. This is being done to achieve efficiencies in demand forecasting, which is a high-potential area for the company going forward.
Saugata Gupta, managing director, Marico Ltd, did not respond to an email seeking details.
However, research analysts Krishnan Sambamoorthy and Vishal Punmiya at Motilal Oswal Securities Ltd (MOSL) confirmed the development in a company note.
"The focus on technology helps to not only make working capital and cost structure leaner but also generate significant data for analysis (for e.g. demand forecasting). The company (Marico) is looking to tie up with start-ups offering data mining analytics," the analysts said in the note, adding that Marico is also in the process of establishing a cell for analysing data.
"Currently, Indian retail throws up a tremendous amount of data, which is cumbersome and not used to its full potential. The company, thus, is partnering with start-ups which could potentially help it analyse data even more effectively. The company has recognised that consumer behaviour analysis is far more useful than conducting surveys," said the note, which also stated that Marico management will be offering loyalty programs on a much larger scale going forward.
Interestingly, Marico was the first among peers to undertake sales automation.
"It was also first off the block to develop distributor and salesmen software (the company actually has a patent for the latter). Auto order management right up to the lowest levels allows sales personnel to focus more on marketing. Even the distributor employees covering the van routes in remote areas are provided with handheld devices, which help them in data analysis. The data analytics prowess is superior to peers, enabling the company to effectively manage inventory, forecast demand and ensure a leaner working capital and cost structure," the analysts said in the note.
Marico's interest in start-ups can be easily gauged by its recent decision to acquire a strategic stake (45%) in a male grooming start-up Zed Lifestyles that sells a range of products under the brand Beardo.
The FMCG, which owns brands like Parachute, Livon, Saffola, Set Wet, Nihar, etc, currently distributes its products through 4.6 million outlets, of which approximately 900,000 are reached directly and the rest via distributors.
The MOSL analysts further noted that the company is far better placed than many consumer peers in the FMCG universe. "However, we believe that there is still significant room for Marico to expand both its direct and indirect reach, given its wide mix of product categories and brands that range from premium to lower-end," the analysts noted.
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"Currently, Indian retail throws up a tremendous amount of data, which is cumbersome and not used to its full potential. The company, thus, is partnering with start-ups which could potentially help it analyse data even more effectively. The company has recognised that consumer behaviour analysis is far more useful than conducting surveys," said the note, which also stated that Marico management will be offering loyalty programs on a much larger scale going forward.
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