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Monday, January 25, 1999

Business Inc interview: Samir Modi

Samir Modi Vice Chairman and Managing Director of the three-year old Modicare, that opted for the direct selling route to market its range of household and personal-care products, took charge as Chairman, Non-Traditional Retailing Forum, Federation of Indian Chambers of Commerce and Industry (Ficci) last month. The forum has a code of ethics and plans to play an active role in bringing about a legislation on non-traditional ways of retailing. In an interview with SWATI PRASAD, Modi discusses the future of non-traditional retailing.

Why did Ficci feel the need for this forum and how are its objectives different from that of the Indian Direct Selling Association (IDSA)?
In India, non-traditional retail is growing at an average rate of 15 to 20 per cent. It offers a big opportunity to the Indian industry as a whole. While direct selling is a form of non-traditional retailing that includes network marketing and door-to-door selling, our perspective is much wider.

It includes selling throughtelevision, door to door marketing and retailing through catalogues and mailers. Any mode outside the retail environment can be part of the Non-Traditional Retailing forum. As of now, we have 10 companies that include Asian Sky Shop, Otto Burlington, Modicare, Eureka Forbes and UTV.

Ficci has taken up this project because it feels that this emerging trend will be responsible for the success of many businesses and industries.

Through this forum, we can educate local chambers of commerce on these form of retailing, who in turn can promote it in their region. This way, complaint redressal can be much faster.

There is no legislation governing non-traditional retailing. Is the forum going to pressure government for such a law?
At the moment, we only have a code of ethics for our members. The forum is only about a month old. And then we also don't want a legislation slapped on us that is contradictory to our goals, like it happened in the case of China after a spurt of fraudulent companies there.Ficci is now working towards a code to prevent fly-by-the-night operations. Chit funds have given our trade a bad name.

What products, in your opinion, do better if sold through the non-retail channel? Why do these products appear over-priced?
The products have to be innovative in nature. Non-traditional selling offers various solutions to problems. The manufacturer saves on advertising cost. It offers business opportunity to middle-class persons.

Even though the break-even may be quicker in the case of some non-traditional retailing firms, the cost of reaching to the consumer is higher because the company adopts a different channel. But I feel that retailing and non-traditional retailing are not conflicting but complementary in nature.

The mark-ups do increase the price. But most household products sold through direct selling are concentrates. So the per use cost is lower. Several companies are in any case targetting the premium buyer, though companies like Oriflame are now widening theirrange to lure the middle-class buyer. Through non-traditional modes, the buyer gets a product demonstration and detailed technical information.

Eureka Forbes, for instance, could have gone for the retail route when it launched its products more than a decade ago. But the company knew that its products need to be understood by the buyer. People were unfamiliar with vacuum cleaners and modern ways to ensure safe drinking water in their homes.

How has Modicare grown over the years and what are your projections for the future?

Modicare has been growing at an impressive rate of around 20 per cent every month. We began three years back with a force of 400 consultants. Today, the company have over 1,45,000 consultants under its umbrella. We are adding 12,000 to 15,000 persons every month to the existing strength. During this year, we plan to launch colour cosmetics, skin-care products, lingerie and multi-vitamins.

We plan to cover 2,000 cities in the country within the next three to five years.Modicare would be adding several products to its range. And then our company would also tie-up with existing manufacturing firms. This way, we plan to cover a gamut of products ranging from crockery, cutlery, books, white goods, toys to scooters and cars.

Our arrangement with various companies would be such that the Modicare consultant gets huge discounts from these specified companies. Our consultants can then pass on part of the benefit to the buyer.

For example, last month Modicare tied up with Pizza Express. Under the arrangement, our consultants get a 15 per cent discount on the food. We plan to have a list of at least 10,000 items that our consultants would get at wholesale prices from different manufacturers.

This would be a win-win situation for the company, Modicare and the consultants. Companies can make use of our wide consultant network while our consultants can avail of their products at cheaper rates. This way, companies will start enjoying a wider customer base. And retailing andnon-traditional retailing will become complementary to one another.

How has the consumer's perception of non-traditional retailing changed over the years?
Earlier, the consumer was not able to understand non-traditional retailing. Today, an increasing number of people are enrolling themselves with one company or another for this form of selling due to the benefits it offers. For example, a few thousands of Modicare consultants are able to make Rs 3 lakh to Rs 4 lakh a month. Fifty per cent of our consultants are housewives while the other half are working persons.

Non-traditional retailing modes provide an alternative means of employment, opportunity and more money in the hands of the people. It's like a weapon. It gives people a lifestyle and choices.

Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.


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