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Uniglobe Case Study

Uniglobe faced challenges sustaining growth in its Filipino consumer market through its Small Local Stores (SLS) distribution channel. [1] SLS had the lowest profit margins of Uniglobe's trade channels despite high sales volumes. [2] Distributors invested heavily with low returns, making it difficult to sell new brands. [3] Options to improve SLS included reallocating SKUs from other channels, gradually transitioning SLS operations in-house, or spinning it off completely. [4] The recommended plan was a hybrid approach - initially shifting more small and medium SKUs to SLS to leverage higher volumes, then gradually transitioning SLS to an in-house operation over multiple regions

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Harish G Raut
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225 views7 pages

Uniglobe Case Study

Uniglobe faced challenges sustaining growth in its Filipino consumer market through its Small Local Stores (SLS) distribution channel. [1] SLS had the lowest profit margins of Uniglobe's trade channels despite high sales volumes. [2] Distributors invested heavily with low returns, making it difficult to sell new brands. [3] Options to improve SLS included reallocating SKUs from other channels, gradually transitioning SLS operations in-house, or spinning it off completely. [4] The recommended plan was a hybrid approach - initially shifting more small and medium SKUs to SLS to leverage higher volumes, then gradually transitioning SLS to an in-house operation over multiple regions

Uploaded by

Harish G Raut
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Case Background

Uniglobe Global Uniglobe Philippines Filipino Consumer Market


⁃ 83 million citizens - 30 % in
⁃ Manufactured Consumer ⁃ Started in 1989. Eventually
rural areas
Goods in Health and Beauty had 8 brands by the next ⁃ 32 % population below
care, paper, food and decade
poverty line
beverages, feminine and ⁃ Brand introductions through ⁃ Lower 40 % population
family care, home care Multifunctional teams
accounts for only 13.1 % of
segments ⁃ Highest Authority with the
national income
⁃ Regions : North and Central Country GM ⁃ Fragmented Retail market
America, South America, Asia ⁃ Showed stellar growth initially
with 93000 grocery stores
and Australia, Africa, The ⁃ Current Problem : Unable to
(very low volumes and low
Middle East sustain similar growth.
margins)
⁃ Operating style : Dilemma between cost cutting ⁃ Consumers: predominantly
⁃ Strategic goals - Global to increase profitability and
Price sensitive women who
level investing for growth
preferred to buy from small
⁃ Investment decisions -
stores, kiosks, etc. Preferred
Regional level
small and medium package
⁃ Implementation - Country
sizes
Level
CURRENT CHANNELS AND PERFORMANCE
• Started in 1995, designed to create a new distribution
channel that could profitably take the company’s products to
small, geographically dispersed, hard to reach retailers
• Expanded to retail van coverage for building underdeveloped
categories and educate shop owners
SLS(SMALL • Packaged branded and high-quality products in small sizes
• Objective was to make its branded products available to 80%
LOCAL of retail outlets.
• Managed by 3 national distributors, who had exclusive
STORES) contract with uniglobe
• Distributors were required to make all the fixed investments,
and were compensated based on a fixed percentage of total
volume sold
• Uniglobe assisted distributors in training their salesforce and
help in effective and efficient business
• Worst performer in terms of profitability as compared
to other trade channels
• Lower incremental margins despite volume sales
• Not successful in moving customers from small to
PROBLEMS large SKUs
IDENTIFIED • High capital investment and low margins for
distributors, and in turn low profits
• SLS designated to sell new brands, with low awareness
making it difficult to sell high volumes
EVALUATION OF OPTIONS
No Options/Parameters Profitability(Margin) ROI Consumer Reach Additional observation

1 Redistribute SLS Wholesaler Profitability will Will decrease from 15 % to 12 % Reach will decrease Negates the main idea of SLS. Reaching lower
volume to other increase due to 50 % increase in because of less volume in income segments and leveraging volume
wholesalers sales SLS

2 Shift Volume from Profitability increases to Returns can possibly increase Increases because of Leveraging volume and hence increased margin
Other Trade Channels $1.55/UM due to higher margins and higher volume in SLS for the 2nd largest segment SLS
to SLS volume

3 Distribute only lower Profitability decreases due to No significant difference in ROI Reach decreases due to Unhappy Distributors. Concept of testing and
margin SKUs through lower margins and less product less products and unhappy developing markets for new brands will be
SLS variety distributors affected

4 Incorporate the SLS Margins increase by 2.5% due to Will decrease from 15 % to 12 % Remains the same as Capital Expenditure increases but savings on
operation in-house savings from distributor margin before with increased distributor margin. More control and monitoring
control of company of the channel

5 Spin Off Long term Erosion of the already Can possibly decrease due to cost Reach can increase due to Lack of control. No distributor audits → Lack of
low channel margin of training of more distributors more distributors cost transparency
Hybrid approach of shifting SKUs from other channels to SLS with
gradual stepwise transition to an in-house SLS operation

Shifting volume from other SKUs to SLS


• Reallocation of Small and Medium sized Packages of Different
variants from other SKUs to SLS
• Leveraging increased volumes due to preference of small and
medium sized SKUs in lower income segment
RECOMMENDATION • Eg - For Detergents - Small and Medium package size
AND PLAN OF distribution can be increases to 25 % and 20 % from 16 % and 14
ACTION % by reallocating from Wholesale segment

Transition to In-house SLS operation


• Stepwise transition starting from a single region and then
gradually expanding to other regions based on the operational
margins and cost related with the activity
• Transition to be done being conscious of giving exclusive
retailers enough time to find alternative work
THANK YOU

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