Despite rising inflation, spending on fast moving consumer goods (FMCG) is set to nearly triple to $5 billion by 2015 from $1.8 billion at present, says a report by market research firm, the Nielsen Company. While most of this spending is seen in modern retail stores, the report also noted the continuing popularity of kirana stores because of their access, credit and home delivery mechanism.
Sales at modern trade stores are up 31 per cent since last year across the socio-economic spectrum, the report said.
"The Indian consumer is clearly enjoying the modern trade shopping experience and is increasingly shopping there," said the Nielsen India Executive Director, Mr Roosevelt D’Souza, in a statement released at a Nielsen event here on Tuesday. For instance, 54 per cent of packaged rice and 42 per cent of breakfast cereals are bought in organised retail stores, the report said.
"While modern retail represents 5 per cent of India’s retail sales, Indian shoppers are expected to increase spending on fast moving consumer goods (FMCG) at modern retail stores from $1.8 billion (at present) to $5 billion by 2015," a study by the Nielsen Company said.
Addressing the gathering, Mr Arun Maira, Member, Planning Commission, said keeping the global economic scenario in mind, there was need for a new business model that works for "inclusive capitalism" along with democracy.
"India is a large market with very poor people," he said, and asked Indian industry to lead the transformation of the business model through by innovation to make it more affordable and accessible.
Private labels
According to the Nielsen study, Indian shoppers spend over $100 million on private labels annually. This spend 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 label accounts for about 7 per cent of the total sales, the report said. The top five categories in private labels are packaged rice, floor cleaners, tissue paper, glass cleaner and packaged ‘atta’.
Outlining the future trend, the report expected tech savvy Indians to increasingly engage with social media and networks as a way to discuss products and brands.
Impulse buying
On the Indian consumers buying instincts in the backdrop of rising inflation, Mr Raj Hosahalli, Executive Ddirector, Nielsen India, said most consumers were cutting down spending on non-essentials such as eating out, holidays and entertainment. The good news for the FMCG sector is that grocery sales were not impacted.
He said the FMCG sector was banking on ‘impulse’ buying, which continued to show an uptrend. "Indian consumers have always been value conscious, so the FMCG sector will have to redraw marketing and pricing strategies in both rural and urban areas to sustain consumer interest," he added.