Downscale outlet development and coverage improvement: L'oreal

Abstract

L’Oreal has been facing a unique issue in improving its effective coverage in its Chennai region. In company terms, effective coverage is defined to be the number of retail outlets that had been billed at least once in the past three months. In Chennai city L’Oreal’s effective coverage is only around 3500 stores while it is very high for competitors like HUL and P&G. The company’s Chennai operation is handled through one CFA (Carry and Forwarding Agent) and 6 distributors. The ‘Modern Trade’ division catering to large retail chains does not go through the distributors and is handled separately. Even while the company’s products (Garnier, L’Oreal and Maybelline brands) enjoy a good market share in Chennai, it has been suffering in terms of effective coverage. L’Oreal has been having difficulty in penetrating in to the smaller retail outlets. The addition of a new outlet is considered successful only when the store starts to place repeat orders. This project is aimed at understanding the difficulties faced by the distributors in opening new stores and identifying ways to tackle this issue.