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Fraud risks in the consumer products and retail sector

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The Consumer products business is among the fastest growing businesses in India, growing at a CAGR of 14.8 percent and expected to be worth USD 12.5 Billion in 20151.

The consumer opportunity in India rests on the changed business dynamics observed today – a large and growing youth population that is digitally savvy and knowledgeable, rising incomes and purchasing power that place importance on superior product quality, growing urbanization with emphasis on a ‘convenient’ shopping experience, emergence of organized retail that provides consistent quality in products and shopping experience, and relatively easy availability of credit to pay for purchases.

These developments have prompted a change in the way consumer products companies operate. For instance, the consumer product life cycle has been significantly shortened with customers expecting new variants every six months. This had led to changes in the marketing and sales cycles.

The proliferation of online sales models has resulted in increased dependence on third parties in the supply chain. Small and medium enterprises are now battling large established companies for a pie of the consumer market by adopting eCommerce platforms to market and sell their products, further driving up competition.

Such changes in business models and consumer preferences can expose consumer products and retail companies to the risk of fraud. In addition, the pressure to report consistent sales results amidst intense competition, and the need to comply with regulatory requirements, can push companies towards adopting unethical business practices to survive in the market…

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