Selling fast moving consumer goods in Iran's retail universe poses unusual challenges to brands. We explain how to sell successfully and how to activate brands at the point of sale in Iran's traditional retail environment.

1. How to
Sell FMCG in Iran
Sales and In Store Activation
June 2016

2. THE IRANIAN GROCERY RETAIL IS
DOMINATED BY TRADITIONAL TRADE
300,000 Traditional Trade outlets 800 Modern Trade stores
91.5% of total market sales value 8.5% of total market sales value
Source: Euromonitor

3. THE STORE UNIVERSE IS HUGE AND
HIGHLY FRAGMENTED
Total Traditional Trade outlets
≈ 300,000
Hypermarkets
(12)
Discounters
(328)
Supermarkets
(438)
Coops
(19)
Total Modern Trade outlets
≈ 800
Food/
Drink/
Tobacco
Specialists
(117,814)
Other Grocery
Retailers
(4,537)
Small
Grocers
(175,825)
Source: Euromonitor & Certius

4. KEY FACTS ABOUT TRADITIONAL TRADE
Source: Certius
SHOPS
Small stores - average 48 m2
sales area
Limited assortment depth and
crowded shelves
SHOPPER
Daily shopping trips
Often follow shop keeper’s
recommendation
SHOP KEEPER
Is main decider and influences shopper decisions
Decides based on margin and payment terms
Brands mostly run push-in discount promos
POS
Chaotic shelf layout and brand presentation
POSM limited due to space restrictions
Difficult to run sell-out consumer promotions

5. KEY FACTS ABOUT MODERN TRADE
• Main player Hyperstar
(Carrefour)
• Owner: Majid Al Futtaim
Hypermarkets LLC
• Market share in MT: 22.9 %
• Branches: 5
The three main MT shop formats in Iran are hypermarkets, supermarkets and discounters
• Key player Refah
• Owner: government owned
banks
• Market share in MT: 20.5 %
• Branches: 215 branches
• Key player Ofogh Koorosh
• Owner: Golrang Industrial
Group
• Branches: 277
Source: Euromonitor & Certius
Hypermarkets Supermarkets Discount
• Key player Shahrvand
• Owner: Tehran Municipality
• Market share in MT: 13,3 %
• Branches: 32

6. THE TWO MAIN CHALLENGES FOR BRANDS ARE
ACHIEVING COVERAGE AND MANAGING THE POS
Source: Euromonitor & Certius
• Difficult to have high coverage due to huge number of
outlets and geography (wide distances, dispersed
rural shop universe)
• High distribution costs
• Biggest Iranian Distributors cover a part of the
universe
Golpakhsh Aval: 145,000 outlets
Sayesaman: 120,000 outlets
Daya Group: 102,000 outlets
Golestan: 100,000 outlets
Coverage
Brand
Activation at
the POS
• Small sized stores, crammed shelves,
uncooperative shop keepers and the big
number of stores make it difficult to properly
activate brands at the POS
• This results in low brand visibility, lack of
impulse triggers, and difficulties in running
sell-out promotions to shoppers

7. Outlets (Modern Trade, Traditional Trade, Discounters, Food/Drink/Tobacco, Horeca etc.)
PRINCIPAL
Third Party Distribution Mixed Direct
MT only
PRINCIPALPRINCIPALDISTRIBUTOR
General Distributer
DistributorsLocal
Wholesalers
Sub-
Distributors
Local
Wholesalers
Distributors
Local
Wholesalers
Local
Wholesalers
TO ACHIEVE ADEQUATE COVERAGE FMCG PRODUCERS
FOLLOW FOUR DIFFERENT ROUTE-TO-MARKET MODELS
Source: Certius

8. THE MODELS DIFFER REGARDING REQUIRED
RESOURCES AND CONTROL OVER OPERTIONS
SALES & DISTRIBUTION
National
distributer
TPD ¹)
Mixed
Direct
STRENGHTS WEAKNESSES EXAMPLES
• Simple, fast
• Tight control
• Low investment
except for training
and monitoring
• Tight control
• National alignment
• Wide coverage
• Full control
• Little control
• Dependence/risk/conflict
management
• Local knowledge needed
• Own structure and resources
on the ground needed
• Transparency can be an issue
• Difficult to drive sales at
required speed and intensity
• Local knowledge needed
• Substantial structure &
resources on the ground
needed
• Local knowledge needed
• Substantial structure &
resources on the ground
needed
1) Third Party DistributionSource: Certius

9. THERE ARE SIMPLE RULES AND TOOLS
TO ACTIVATE BRANDS WELL ON THE POS
VisibilityCategory planTrade TermsSound understanding
• Understand the shopper
• Understand the
shopkeeper
• Competitive margin
• Competitive commercial
terms
• Shelf rental, fridges
• Shelf devices
• TT adequate in-store
displays
• Promoters in A customers
• Sales incentives tied to
visibility
• Must-stock-SKU list per
customer class
• Simple planogram
• Merchandising in stores
• Sales incentives tied to
category plan specifics
Source: Certius

10. SUCCESS DEPENDS ON CHOOSING THE RIGHT
PARTNER AND EVOLVING YOUR RTM MODEL OVER TIME
Deploy needed
resources:
your partner/
distributor and your
own structure
Agree business
KPIs & Service
Level Agreement
Monitor execution
via KPIs
Adapt or change
RTM model
according to
evolving business
strategy and
market conditions
Clarify business
ambition &
strategic objective
Define clear market
entry strategy
Sales and
distribution
strategies
Choose adequate
RTM model
Source: Certius

11. SUMMARY
• The Iranian retail universe for FMCG is highly fragmented and complex.
• Brands face two key challenges (among many others):
• How to achieve sufficient coverage (numeric distribution)
• How to activate brands on the point of sale to generate sell out
• There are four basic route-to-market models which require differing levels of
resources and capabilities and which in turn convey varying levels of control over
the sales and distribution operation.
• The choice of the right RTM model must be routed in a clear business vision and
strategies.
• Some simple tools are at producers’ disposition in order to activate brands at the
POS. The main challenge is getting execution right within the limitations of your
RTM model.
• Evolve your sales & distribution approach and change your RTM model as your
business ambition and market conditions change. You might enter Iran with a
general distributor and end up with your own direct sales & distribution system.

12. We will be happy to help you.