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e-commerce: E-commerce surge to be biggest consumer trend; India has massive potential but next few quarters crucial: FMCG chiefs

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New Delhi: The biggest consumption trend for fast moving consumer goods companies will be the surge in shopping on e-commerce platforms in the coming year, while consumers will continue to remain cautious about shopping at physical stores, top Indian and global executives representing the sector said at the CIIFMCG summit on Wednesday.

They added that India has massive potential for growth, but next few quarters would be crucial for sustained economic revival.

“The switch to online shopping is massive. This change will stick, irrespective of unlocking,” said Reckitt Benckiser global chief executive Laxman Narasimhan. The British consumer goods giant which makes Dettol handwash and Lizol and Harpic disinfectant cleaners saw over 50% growth in its e-commerce channel over the previous year in the September quarter.

Executives said consumers who switched to online grocery shopping in peak lockdown months are not likely to revert to supermarkets soon, with convenience and persisting concerns about the virus continuing to influence buying trends.

“Very early we realised that the consumer will take to e-commerce; so we beefed up our teams, engagement and offerings (for digital channels) and increased our speed to the market,” said ITC chief executive, personal care, Sameer Satpathy. For the diversified FMCG-and-hotels company, e-commerce is now four times of what it was before the pandemic struck. “We bet on e-commerce for increasing our speed to the market. It helped us in putting out innovations in the market faster,” Satpathy said.

Citing innovation as a key growth driver in the pandemic months, Satpathy said the company which launched over 40 new products during the Covid period, now earns 30% of its turnover from the new launches.

Company executives said an entirely new set of consumers and categories are fuelling online sales, while consumers from two and three-tier markets are also contributing to the strong acceleration in e-commerce.

Mama Earth, a four-year-old personal care brand which already has 85% of its revenue coming from online channels became more aggressive in terms of investing in the channel, said Varun Alagh, founder, Mama Earth. “Covid has helped us grow at a faster pace and acquire more customers,” Alagh said.

Fitch Ratings said in a report that full year revenue for food and grocery retail could decline 5-10% on account of pandemic-induced lockdowns and overall slowdown.

On prospects of demand revival, executives said while growth potential in India is massive, the next two-three months are critical to see if economic revival is here to stay. Biscuits giant Britannia managing director Varun Berry: “Demand outstripped supply in the first three months of the pandemic, when consumers were indoors.”

But demand has been more realistic since and the company is keeping a close watch on macro economic factors, with consumer cautiousness persisting, Berry said.

“Consumer behaviour will be muted for impulse products as they don’t go out of home much,” said Anil Viswanathan, director marketing (chocolates) at Mondelez India, the country’s biggest chocolate maker.

However, with consumers snacking more at home, Mondelez is experimenting with alternate avenues, he said.

On Tuesday, Fitch Ratings raised its forecast for India, forecasting GDP to contract 9.4%, on the back of a sharper rebound in the second quarter. This is lower than its earlier 10.5% contraction forecast.

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