A recent NielsenIQ study reveals that 60% of FMCG companies now consider e-commerce their most critical sales channel, with nearly three-fourths of mid-sized companies prioritizing online platforms. The report underscores the growing influence of digital channels in reshaping retail strategies across India.
Emerging manufacturers have experienced 1.5 times higher growth in e-commerce compared to category averages, particularly in segments like noodles, refined oil, biscuits, coffee, and packaged atta.
“Indian businesses are increasingly recognizing the significance of digital platforms as a key operational channel, driving targeted strategies to thrive in this space,” said Pallavi Suresh, Executive Director – Emerging Brands at NielsenIQ India.
The study also highlighted a broader retail transformation, with omnichannel strategies becoming critical. Convenience stores are gaining traction, boasting a 48% penetration rate in India—significantly higher than the global average of 18%. Large FMCG companies dominate this channel (58%), followed by medium-sized enterprises (54%).
NielsenIQ data shows ready-to-eat products surged by 52% in 2024 (till September), followed by salty snacks and refined edible oils at 41%, biscuits at 40%, and packaged atta at 39%.
Inflationary pressures are prompting FMCG businesses to adapt through cost management and strategic investments. Key measures include:
- Cost Optimization: 50% of companies are substituting materials with cost-effective alternatives.
- Distribution Expansion: 49% plan to enhance distribution investments.
- Product Line Adjustment: 47% are removing underperforming products.
- Marketing Investments: 47% are boosting marketing efforts.
These measures reflect the sector’s agility in maintaining profitability and leveraging growth opportunities in the evolving retail landscape.