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Business News/ Opinion / Online-views/  Indians do 10% of their shopping in modern stores

Indians do 10% of their shopping in modern stores

Modern trade's overall contribution to the FMCG industry was in double digits during the April-June quarter, thanks to demonetisation and GST: Nielsen

Modern retail is seeing retailers launch new stores and consolidate their footprints. Photo: Indranil Bhoumik/MintPremium
Modern retail is seeing retailers launch new stores and consolidate their footprints. Photo: Indranil Bhoumik/Mint

Mumbai: Since its advent in 2001 when the first Big Bazaar store opened in Kolkata, modern trade’s overall contribution to the fast-moving consumer goods (FMCG) industry has been in single digits. For the first time, following demonetisation and implementation of the goods and services tax (GST), modern trade have touched the double-digit mark, accounting for 10% of the overall revenue of the FMCG sector, according to market research and insights provider The Nielsen Co.

“Modern trade has picked up on the back of store expansion and even better activation through multiple big days/ weeks and general consumer promotion," said Sameer Shukla, executive director, Nielsen India.

Modern trade’s growth stood at 25% during the April-June quarter, compared with 16% in the July-September quarter last fiscal. Traditional trades growth also declined from 13% in the September quarter, and was in the range of 9 to 11% in the last three quarters.

According to Nielsen, stores that stock FMCG products, operate on self-service business model and provide shopping baskets or carts to customers are classified as modern trade stores. Under modern trade, stores with three or more outlets classify as banners, including names such as Big Bazaar and DMart. Standalone or independent stores with modern trade facilities also form a part of the segment.

For Marico Ltd, the maker of Saffola and Parachute oils, channels such as modern trade comprise 11% of India sales, and are growing at 39%. On the other hand, e-commerce, comprising 1% of India sales, is growing at four times the overall growth rate, according to recent report by SBICap Securities Ltd.

“Post GST scenario, general trade took time to adjust to the new norms and modern trade came up to speed very fast, improving its overall saliency from 13% a year ago to 15% of overall revenues now," according to Lalit Malik, chief finance officer, Dabur India Ltd.

In the last one year, rural growth, which had slowed down following demonetisation, was again growing three percentage points ahead of urban, said Prasun Basu, president, South Asia, Nielsen India.

Additionally, even urban retail is growing due to rising urban household incomes and increasing penetration of organised retail in urban centres. The share of urban retail is expected to grow from 49% in 2015-16 to 52% by 2019-20, according to a May 2018 report by Firstcall Research.

Modern retail is seeing retailers launch new stores and consolidate their footprints. For instance, in 2017-18, Avenue Supermarts Ltd, which runs DMart chain of stores, added 24 stores, taking its total count to 155, covering an area of 4.9mn sq.ft. In 2016-17, the retailer added 21 stores, taking the count to 131, spread across 4.06mn sq.ft.

Over the last few years, Kishore Biyani’s Future Retail Ltd has strengthened its footprint in western India with the acquisition of Hypercity Retail India Ltd. In the north, the company acquired Easyday chain from Bharti Enterprises and Big Apple. In South India, the retailer bought Nilgiris and Heritage Foods chains.

The last year also saw traditional trade stores converting to standalone modern trade stores, according to Chetan Sangoi, owner of Sarvodaya Super Market, a 45-year-old 2,500 sq. ft food and groceries store at Dadar West in Mumbai, which converted to modern trade 20 years-ago. “We are now seeing standalone modern trade stores come up in the interiors of Maharashtra, in places like Shrirampur, Umargaon, Lasalgaon, Malkhapur, Chikli."

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Published: 28 Aug 2018, 08:09 PM IST
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