Major retailers in the country have run out of Reckitt Benckiser’s inventories. Future Group, Aditya Birla Retail and Spencer’s among other retailers have stopped fresh orders from Reckitt Benckiser after the company slashed the retailers’ margins.
Most retailers have stopped placing orders with Reckitt Benckiser from February 11, 2011 and ran out of inventories a week ago. Instead of Reckitt owned brands, the shoppers were offered private labels or Hindustan Unilever’s Domex or Lifebuoy hand wash.
“There is a continuous dialogue with Reckitt to restore margin immediatel,” said Thomas Varghese, CEO, Aditya Birla Retail. “We’ll be happy to put the Reckitt Benckiser products back on the shelves provided the margin requirements are met.”
“We have exhausted Reckitt Benckiser inventory and there are no fresh orders placed. Overall the sales, wherein Reckitt operates, have remained identical to the previous month and consumers are buying private labels,” said Mohit Kampani, vice-president merchandising, Spencer’s Retail.
“Retailers have been struggling and pushing for higher margins. Every FMCG company is facing the same pressures and looking at squeezing costs in different ways. Reckitt has taken a retrograde step to cut margins unilaterally,” said Varghese.
Though, the retailers and manufactures claim that the input costs have gone up in past, putting pressure on their margins, both the parties are passing the buck on the each other to improve efficiencies. At present, the contribution of modern retail for sale of FMCG products is estimated to be around 8-10%.
Reckitt did not respond to Hindustan Times’ questions. The possibility of an announcement can be expected in a few days, said a source related to the development.