E-comm key for FMCG sector, but general trade here to stay: Experts

The Hindu Business Line , Oct 29, 2020

Speakers at FICCI event highlight the opportunities that Covid has opened up

With the accelerated adoption of digital platforms for purchases and payments by consumers in the pandemic times, the e-commerce and omni-channel strategies have become critical for the FMCG and retail sectors. Leading players believe that the e-commerce channel, especially in the grocery business, will continue to witness growth. At the same time, general trade and modern trade outlets are expected to continue to play a key role.

Speaking at a panel discussion at an event organised by FICCI on Wednesday, Sanjiv Mehta, CMD, Hindustan Unilever, said that while the growth of e-commerce channel is irreversible, the pandemic also led to a renaissance of kirana stores as consumers gravitated towards their neighbourhood grocery stores for convenience. “General trade, modern trade and e-commerce channels will co-exist. India is not a country where the general trade will disappear. The share of general trade channel may come down but it will continue to be the biggest channel. But I believe the general trade will get digitised,” he said.

Replying to a query on rural growth in the FMCG sector, Mehta said in the pre-Covid times, growth of FMCG in rural India had come down and there was a clear visible stress. But factors such as government’s schemes and a decent harvest have given a fillip to rural consumption in the pandemic times. He said that though it’s early to say whether this rural demand growth will sustain, if economic activity picks up and with the recent introduction of agri-reforms by the government, it may.

Opportunity in crisis

Mehta said that to be efficient and effective in the times of such crisis, brands will need to focus on assessing consumers’ unmet demands, understanding consumers’ behaviour, maintaining consistent supplies and offering seamless experience to consumers across channels. “Every crisis catalyses a new wave of change and Covid-19 has led to the adoption of digital as the new way of life,” he added.

As per industry estimates, the contribution of e-commerce channel to the FMCG industry has increased to about 3-4 per cent in the last few months from the earlier levels of 1.5-2 per cent. Madhusudan Gopalan, CEO & MD, P&G India Sub-Continent said, there has been a huge trajectory change on the grocery part of online retailing. “I think it’s fair to say that the trajectory will continue to trend up. What is unknown is whether the accelerated slope of growth in grocery will continue. But one can say with a fair degree of confidence that the salience will grow. This is not going to happen automatically and there is a lot of work to be done by online retailers and brands.”

Meanwhile, during the inaugural session of the event, Arvind Mediratta, MD & CEO, Metro Cash & Carry India, said that brick and mortar stores will continue to play an important role but will need to focus on technological innovations to enhance customer experience.

“Brick and mortar stores have a huge opportunity to embrace technology and offer the best of both worlds. With customers wanting cashless and contactless shopping experience, it has become pertinent for businesses to have an omni-channel approach. Use of Augmented and Virtual Reality, interactive kiosks for easy product information and self check-outs will pave the way for an immersive shopping experience,” he added.

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