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Photo: Mint
Photo: Mint

Kiranas steal a march over large stores

  • FMCG sales were down 17% in the June quarter, compared with the year-ago period
  • In June, modern trade struggled with continued restrictions and lower footfalls due to social distancing norms

NEW DELHI : Shoppers of fast-moving consumer goods moved away from large department stores to obliging neighbourhood kiranas and online sellers in June, as they stuck to social distancing norms in the first phase of the Indian unlock.

Researcher Nielsen said that while kiranas suffered the most in the three months to 30 June on account of having to shut their shops during the lockdown, large grocers saw a spike in sales in April and May.

However, as India moved to unlock in early June, footfalls and sales in large stores dwindled—consumers clearly opted back for their traditional neighbourhood suppliers.

More neighbourhood department stores opened up in June, a month marked by a gradual improvement in supplies to small stores. In fact, the average number of days of store closure dropped from 11-12 days in April-May to five in June, Nielsen reported. That’s not all: neighbourhood grocers also showed improved sales as people, wary of stepping out for fear or contracting coronavirus, relied on their kirana shops to home-deliver goods.

In all, modern trade (large department stores), which accounts for 10% of FMCG sales in India, was down 5% year-on-year in the June quarter.

Meanwhile, e-commerce, that accounts for 3% of FMCG sales grew by 16% in the second quarter (Nielsen follows a January to December calendar year), while kirana formats were down 19%, but recovered in June.

Sales of FMCG via traditional trade channels or kirana stores still account for a bulk of sales at 88%. But the channel was severely impacted during the initial phase of the lockdown as supplies came to a standstill and stores were forced to work within restricted hours. It returned to growth in June.

Nielsen put down the sales spike at modern trade toward the latter part of March and early April to consumers using this channel for stocking up. However in June, modern trade struggled with continued restrictions and lower footfalls due to social distancing norms.

Companies corroborated Nielsen’s findings.

“With social distancing becoming increasingly prevalent, consumers favoured neighbourhood general trade stores as well as e-commerce platforms over modern trade during the quarter," packaged goods firm Marico Ltd said in its June quarter earnings.

FMCG sales were down 17% in the June quarter from a year ago, largely impacted by supply disruptions in April and May.

FMCG firms, too, are busy filling stock in traditional and e-commerce channels, where demand is high, said an analyst tracking the FMCG sector. Moreover, with kiranas delivering home and taking orders over WhatsApp, consumers have even fewer reasons to step out.

It could be a while before footfalls in modern trade stores stabilize, the analyst said, speaking on the condition of anonymity.

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