A recent NielsenIQ study has revealed that more than 60% of Fast-Moving Consumer Goods (FMCG) companies now view e-commerce as their most critical sales platform. In fact, nearly 75% of mid-sized businesses are prioritizing e-commerce as their top sales channel, reflecting a shift in consumer behavior and the growing importance of digital retail. The report highlights that emerging manufacturers in India are experiencing 1.5 times the growth in e-commerce sales compared to category averages. Key FMCG segments, such as noodles, refined oil, biscuits, coffee, and packaged atta, are particularly witnessing a surge in online sales. This trend underscores the fact that digital channels are playing a vital role in business growth in India’s FMCG sector.

Ms. Pallavi Suresh, Executive Director for Emerging Brands at NIQ India, noted that businesses in India are increasingly recognizing digital platforms as essential to their operational strategies. Many are adopting targeted strategies to leverage the growth of e-commerce, which has become a key component of omnichannel retail strategies. These shifts in channel preferences are also indicative of a broader retail transformation in India, where businesses are integrating digital and physical retail to offer seamless shopping experiences to consumers.

The study also sheds light on the rising significance of convenience stores in India, with their penetration reaching 48%, well above the global average of 18%. Large FMCG companies are leading the way in leveraging this channel, with 58% of large enterprises adopting convenience stores as a sales platform. Following them, 54% of medium-sized businesses are utilizing this channel, with small businesses relying more heavily on online platforms. While traditional retail still holds sway for large enterprises, small and medium-sized businesses are increasingly turning to online and convenience stores, which are becoming the dominant channels in the Indian FMCG market.

The market measurement data from NIQ further reveals that the fastest-growing FMCG categories in FY24 (up until September) include ready-to-eat products (+52%), salty snacks and refined edible oils (+41%), biscuits (+40%), and packaged atta (+39%). This growth highlights the growing demand for convenient food products and staples in the Indian market, driven by changing lifestyles and increased consumer preference for easy-to-consume goods.

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In response to inflationary pressures, the report shows that 75% of large businesses, 67% of medium-sized businesses, and 66% of small businesses are adjusting their pricing strategies. To protect their market position, companies are focusing on cost management and operational efficiencies. Specifically, 50% of businesses are replacing materials with cost-effective alternatives, 49% are investing more in distribution networks, and 47% are reviewing their product lines and marketing strategies. These measures are critical to managing rising costs while maintaining competitive advantage in the market.

In conclusion, the Indian FMCG sector is undergoing a profound transformation, with e-commerce becoming a primary sales channel and emerging brands driving rapid growth in digital sales. The growing role of convenience stores and the ongoing shifts in pricing strategies and product offerings reflect the industry’s efforts to adapt to inflation and changing consumer preferences. As FMCG companies embrace digital and omnichannel strategies, they are positioning themselves for future growth in an increasingly connected world.

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