In recent years, the Fast-Moving Consumer Goods (FMCG) business has maintained a consistent rate of growth and returns on investment. It is the only industry that has grown despite the pandemic.
However, in 2022, there has been a movement in customer behavior, trends, purchasing patterns, and more, affecting this industry. According to CRISIL, a research firm, the FMCG sector’s revenue would expand at roughly 7-9 per cent this fiscal year, compared to 8-9 per cent the previous year, which was driven by price increases due to the partial pass-on of increased input prices.
Following pandemic-induced global and national lockdowns, there have been numerous innovations that have transformed the FMCG business. The global pandemic has raised consumer demand for internet services. This has prompted FMCG businesses to pursue a direct-to-customer strategy and digital channels for product distribution.
Furthermore, consumer demand has evolved in the recent decade to a more sustainable and environmentally friendly front. As a result, large FMCG companies have changed their approach in order to supply customers with more ethical and environmentally friendly items. Growing digitalisation and changing e-commerce preferences: The proportion of sales generated by e-commerce is rising rapidly.
The Covid-19 pandemic pandemic has significantly altered customers’ purchasing patterns online. To increase consumer involvement, brands are now developing their online presence. The world of e-commerce is significantly impacted by social media as more products are offered on social sites like Instagram. In order to accomplish this, FMCG companies aggressively use a variety of channels while utilizing mobile and headless commerce to sell their goods.
Additionally, greater connection in both urban and rural areas is boosting demand for FMCG goods on e-commerce portals. In addition, the increase in consumer disposable income in rural India presents enormous growth possibilities for businesses.
Retail sales are gradually moving to digital channels in India. Through social networking or online shopping sites, many small businesses are expanding their customer base. Traditional trade retailers are implementing a range of strategies to fulfill consumers’ increased desire for convenience, including digital payments, expanded assortments, faster delivery times, apps, and exclusive deals.
Shifting the narrative towards Sustainability:
Consumers are becoming more aware of climate change and its consequences for the environment. As a result, people pay more attention to firms’ social actions and seek out those who provide more responsible product options. As sustainability becomes more important.
FMCG firms must consider not only how they market and package their products, but also the materials they utilize. To suit consumer demand, an increasing number of FMCG firms are providing compostable, recyclable, and reusable packaging. Furthermore, vegan and cruelty-free components are becoming more popular not only in food but also in non-food items such as skin care and cleaning supplies.
Ever-evolving consumer preferences:
Customers’ preferences when buying for FMCG items switched to health and wellness-related products in 2022. Customers may modify their purchasing preferences and spending habits to select healthy and affordable options as inflation rates and concerns about a global recession rise.
Capturing the Ready-to-cook market:
The ready-to-cook (RTC) and ready-to-eat (RTE) food category has seen a boom in demand in recent years. The segment is being driven by the increased accessibility offered in terms of effectiveness, as well as the little effort and skill necessary for preparation. Because of the ease of preparation, these meals have gained in popularity among working people and millennials. Rising income levels, a taste for healthy products, and more urbanization are among factors driving the expansion of this market.
Even while obstacles remain in the near term, the overall picture for the FMCG sector appears to be optimistic. To succeed in a post-pandemic environment, FMCG businesses will need to carve out a niche in their segments and position their business model, strategy, marketing, physical presence, and operations. Leaders in FMCG and retail will be distinguished by their adaptability to new technologies, inventiveness, intelligent technology investment and the ability to retain consumers using strategic communication.
About the author:
Krishnarao Buddha is Senior Category Head at Parle Products