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Outsourcing tackle

Kanika Goswami | June 8, 2008
When the old have the agility to take on the young: it's a formula that people love. So when the 114-year-old Indian company Dabur outsourced its IT in order to stay quick-footed, plenty of industry watchers held their breath.

While these stores are targeted at women, they seek to create a fun and fashionably colorful environment that is not alienating to non-core customers -- particularly men. The stores will be affordable and classy and will provide all the top mass-market brands. The product mix at the stores will cover pharmacy and OTC (over the counter), personal care, baby care, cosmetics, general merchandise and confectionery. Beauty and wellness products are key parts of the stores, with sizeable shelf space allocated to both leading Indian and international brands operating in this space. The new u stores offer the entire range of beauty, health and wellness products under one roof. In the future, we also intend to have a private label presence.

Dabur India is investing Rs 140 crore into this venture, and is confident that the venture will report profits in its fourth year.

Why did Dabur outsource its entire IT infrastructure?
To ensure a constant flow of IT talent -- even during phases of expansion. Since we planned for rapid expansion, IT had a critical role to play. If we want to continue being on the leading edge of technology, the people we need will always be in high demand. Attrition could be a huge problem and we would not be able to maintain bench strength. But, an outsourcing partner can.

One of your strategic intents is to provide consumers with innovative products within easy reach. How?
Dabur has initiated a program to improve distribution effectiveness. Under it, we have organized sales teams on the lines of channel expertise (separate teams for modern trade, grocers and chemists) in urban markets and exclusive rural teams in six focus states. Today, the servicing needs of the industry are vastly different from what the traditional stores can provide. The exciting new formats also open up opportunities for brand activation at the point of purchase. The system uses vastly different and superior selling skills. A team with appropriate skill sets has been put in place to respond to the needs of modern trade and the results are most encouraging.

The channel strategy has been devised to focus on key segments based on strategic attractiveness and total-cost-to-serve principles. To address the complexities posed by the rapid ramp up of modern trade, our traditional distribution system -- stockists servicing all outlets irrespective of format -- was overhauled. Since the servicing needs of these outlets are different, Dabur configured exclusive modern trade stockists in large towns to service these stores. Direct supplies are also available to distribution centers with formats like Cash & Carry and large national chains. And with a company sales team,Dabur is geared to meet the servicing needs of emerging formats.


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