Business

Who is fuelling FMCG retail trade growth in India? Check out the performance points

Updated : January 27, 2020 06:44 AM IST

The urban areas, particularly the top 17 metro cities’ contribution to modern trade, is at 25 percent.

India’s top 29 metros contribute 72 percent of the MT business, of which 85 percent comes from the top 10 metros.

If all that Diwali shopping has not assuaged your need for spending money, then don’t worry, other festivals will come around in the new year, like clockwork. Nielsen has pegged the FMCG retail trade, also called modern trade (MT), at Rs 41,416 crore.

This was despite infrastructure being quite a hindrance in the 2008-16 time period. Now, the figures are likely to be dismal considering that the infrastructure may not be the only obstacle to the smooth flow of business.

But to some extent, Nielsen’s report states that demonetisation and Goods and Services Tax (GST) helped this sector by enabling digital payments on a large scale. A few other takeaways from the report are:

1. The urban areas, particularly the top 17 metro cities’ contribution to modern trade, are at 25 percent with the national contribution being 10 percent, and the pan-India urban areas contributing 15.3 percent.

2. Region-wise, South India leads with a 22 percent contribution. West continues to be the second-largest market, which will be followed by North India and the East Indian region will bring up the rear.

3. What will ramp up demand all over India is continued improvement of digital payment technology, pricing between stores and sites will also be a key denominator until another differentiator can be spotted and monetised. Also, omni-channel shopping is a reality whereby people will shop both online and offline, depending on their convenience and where the best offers are available.

4. Estimates show that the total number of organised stores is 18,197. Of these, 11,758 are banner stores. Out of these banner stores, the top 600 alone contribute 75 percent of the business.

5. Smaller towns have seen the retail trade grow three times faster as compared to metros.

6. Supermarkets grew by 25 percent, while hypermarkets grew by 15 percent in comparison in the same timeframe.

7. India’s top 29 metros contribute 72 percent of the MT business, of which 85 percent comes from the top 10 metros. Out of these 29, as many as 24 have an MT contribution that is higher than 10 percent.

8. Cities like Lucknow contribute 27 percent, and with Kochi contributing 38 percent, these two cities have increased their contribution by 9 percent and 3 percent respectively.

9. Chennai’s share has been 40 percent, and Pune’s 35 percent and these two are amongst the top 10 metros where the share of modern trade has increased by 5 percent and 3 percent respectively.

While consolidation may make business sense, keeping customers happy should be the ultimate goal, and that’s what all these retailers should stay focused on.

Manali Rohinesh is a freelance writer who explores financial and non-financial subjects that pique her interest.

Who is fuelling FMCG retail trade growth in India? Check out the performance points

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