Covid-19 is accelerating consumer shift towards online, say top FMCG cos

Live Mint , Oct 28, 2020

The covid-19 pandemic is accelerating a consumer shift to online in a big way, the country’s top consumer goods companies and retailers said on Wednesday, even though they maintained that India will continue to see several retail formats co-exist.

“We’re seeing a huge trajectory change on the grocery part of online retailing. A lot of folks predict that this accelerated trajectory is here to stay, I think it’s fair to say that the trajectory is going to continue to increase... Whether that accelerated slope will continue or not is a matter of conjecture, but I think one can say with a fair degree of confidence that the salience will grow," said Madhusudan Gopalan, chief executive officer and managing director, P&G India Sub-Continent, at the three-day FICCI-Massmerize virtual conference that started on Wednesday.

Gopalan, whose company sells brands such as Ariel detergents and Olay face creams, said e-commerce will grow when online retailers and brands work together.

Retailers and makers of fast-moving consumer goods, struck by the covid 19 lockdown, were forced to re-look at the ways they reach consumers, especially as demand for goods of daily use continued to be high. Since then, several consumer goods companies have identified clear trends and chased those—including heightened usage of hygiene products and expanding their reach to shoppers on e-commerce and the humble grocer.

Covid is leaving a long-lasting impact on consumer behaviour globally, said Sanjiv Mehta, chair of FICCI’s FMCG committee and chairman and managing Director, Hindustan Unilever Ltd.

“There are certain trends which are becoming very discernible—covid cocooning, e-everything, clean living, the fetish for cleanliness, contactless culture, health and well-being, value seeking. These are very clearly behaviours which I believe are there to stay even after the crisis is gone."

Mehta said the move toward e-commerce is now “irreversible".

However, the top boss of India’s leading packaged consumer goods company argued that unlike other markets, India’s retail trade will continue to see general, modern and e-retail co-exist. But he pointed to “digitization" of the country’s small retail stores.

“But there is one unique aspect of India—the grocery channel in India is unique in many ways. The second is the cost of distribution in the grocery channel is absolutely fine, it is not something that is very high…And during this period, we have seen the benefit of proximity. People have gravitated towards the nearby neighbourhood grocery, because of sheer convenience."

As a result, India is not a country where general trade will disappear. “The share of general trade may come down. But people will make a fatal mistake if they write an obituary of general trade. No, it’s not going to happen even after 10 years, the biggest channel would still be general trade. But I would believe general trade would be a digitized general trade, it would be a connected trade," said Mehta.

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