Despite rising inflation, spending on fast moving consumer goods (FMCG) in India is set to nearly triple to $5 billion by 2015, from $1.8 billion at present. While most of this spending is seen in modern retail stores where sales have gone up by 31 per cent, a report by the Nielsen Company also noted the continuing popularity of kirana stores because of access, credit and home delivery.
“While modern retail represents 5 per cent of India's retail sales…. Indian shoppers are clearly enjoying spending in modern stores,” said the Nielsen India Executive Director, Mr Roosevelt D'Souza, said at an event organised by the market research firm on Tuesday. For instance, 54 per cent of packaged rice and 42 per cent of breakfast cereals are bought in modern retail stores.
Mr Arun Maira, Member, Planning Commission, said keeping the global economic slowdown in mind, there was need for a new business model that created “inclusive capitalism” along with democracy. “India is a large market with very poor people,” he said and urged Indian industry to take the lead in developing an innovative business model to make it more affordable and accessible to all citizens.
Private labels continued to gain popularity. According to the Nielsen study, Indian shoppers spend over $100 million on private labels annually.
This is expected to rise to $500 million by 2015.
Compared with China, where private label products contribute only 1 per cent to the total modern trade sales, in India, private labels account for about 7 per cent of the total sales, the report said.