Trade, E-commerce Propel Consumer Growth in Metropolitan Markets, Loans Boost Sector Demand

India's FMCG industry surged by 10.2 per cent in Q1 2023, marking a 2.6 per cent increase from the previous quarter. Stable inflation contributed to a moderate price drop, decreasing from 7.9 per cent in Q4 2022 to 6.9 per cent in Q1 2023, aiding the resurgence of consumption growth during this period, the latest report revealed.  

It highlighted that the current trade and e-commerce have driven consumer growth in metropolitan markets, adding that consumer, personal, and housing loans have boosted demand in the sector.  

Although, rural India which has a total share of about 40 per cent of the FMCG sector, saw an annual fall in demand due to inflation and uncertain monsoons. 

Due to urban incomes’ durability and wage inflation, urban demand drove total growth. Rural FMCG sales rose 6 per cent and urban sales 8 per cent between July and September 2023, TeamLease Services' report observed. 

The report noted a strong intent to hire in the sector. Mumbai, Bangalore, Chennai, Delhi, and Hyderabad are among the top five Indian cities that showcase a strong intent to hire in the FMCG sector.

Metros have the highest attrition rates (27 per cent), followed by Tier 1 and 2 cities (26 per cent), it added. 

It also highlights that collaborating with traditional Kirana stores through enhanced digital connectivity opens doors for mutual growth and market expansion. Kirana stores will continue to remain relevant in the foreseeable future.

However, Modern Trade and E-commerce, especially Quick-commerce will make rapid strides as there’s a distinct change in consumer behaviour being seen.

Kartik Narayan, CEO of Staffing, TeamLease Services Limited, said, "The report unveils critical insights into the evolving landscape of India's FMCG sector, offering stakeholders invaluable strategic guidance in navigating opportunities and challenges.”  

The report highlights challenges in the FMCG industry, including intensified competition in online retail leading to price wars and increased R&D costs for major players.