Keeping up with India’s fast-moving consumer goods sector
With more than 1.25 billion inhabitants, India is the second-most populated country in the world and the third-largest economy in Asia and Oceania (in terms of GDP).
India’s retail industry, which makes up 10% of its country’s GDP, is dynamic, fast-paced and more complex and connected than ever before. That said, India’s overall retail sector remains one of the least concentrated in the world with only five companies holding a combined market share in single digits.
Compared to retail markets worldwide, it’s an interesting space comprising of a few major chains, small traditional independents and open markets, hawkers and roadside vendors who still manage to dominate the sector. Simply put, India remains largely a traditional (unorganised) retail market where most buying and selling happens through neighbourhood mom and pop stores.
Keeping up with varied consumer demand, the main challenge for new retail groups (with a larger regional spread) entering the market is diversity. What’s more is that rural consumption has increased.
The fast-moving consumer goods (FMCG) market plays a vital role in the Indian economy. It is the fourth largest sector in India and according to new research out of the University of Debrecen in Hungary, in FY17 rural India accounted for 60% of the total FMCG market, 80% of FMCG categories are growing faster in rural India as against urban India.
India’s retail industry is no longer the urban-centric space it once was. While the main cities have been driving FMCG consumption over the past decade, it is the rural cities which are expected to drive growth in this sector over the next decade.
The retail opportunities are massive – total rural income, which is currently at around US$ 572 billion, is predicted to reach US$ 1.8 trillion by FY21. India’s rural per capita disposable income is estimated to increase at a CAGR of 4.4 per cent to US$ 631 by 2020.
India’s retail industry is no longer the urban-centric space it once was.
To get ahead and attract new and old customers, both brand owners and retailers will need a deep understanding of India’s retail environment… but it will be worth the investment. According to a BCG report, India’s consumer spending could go up to US$ 3.6 trillion by 2020 and India’s contribution to global consumption is expected to more than double to 5.8% by 2020.
India’s FMCG sector promises huge potential and is attracting global players thanks to the renewed focus on rural India and exponential growth rate.
Smollan is an international retail solutions company that can deliver real FMCG value for clients across five continents by covering every aspect of how a brand is managed at the point of purchase. Find out more here.