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Rural retail market in India to grow tenfold in next 15 yrs

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The Indian rural market is expected to grow more than tenfold to become a $100 billion opportunity for retail spending in the next 15 years, The Nielsen Company has found.

Details of the findings were unveiled at Nielsen’s flagship Consumer 360 conference in New Delhi recently. The study showed that in more than half of the largest FMCG categories, rural India is now contributing more to their growth than urban. One of the key drivers of this trend appears to be the unprecedented growth of smaller packaging options in rural India.

“While the ability of lower priced packs to improve accessibility is known, their pace and presence has been unrelenting,” said Prashant Singh, vice-president, The Nielsen Company, India. “In addition, premium skin care brands typically associated with urban areas are growing nearly twice as fast in rural areas,” he added.

“The good news is that the opportunity needn’t overwhelm smart marketers. For instance, even a mere 2.5 per cent of villages, if selected correctly, can generate a 20 per cent jump in sales growth,” Singh added.

The rural market is currently worth approximately $9 billion in consumer spending in the FMCG space annually. The study findings show that food categories are currently driving the bulk of the additional $91 billion into the marketplace by 2025.

One of the most telling points is “the unprecedented pull of consumer demand fuelled by an overdrive of awareness and acceptability. This will allow and propel manufacturers to swing into full gear,” explained Prasun Basu, executive director and vice-president, The Nielsen Company.

On the consumption front, a third of rural consumers are eating biscuits for breakfast and one in six rural buyers of hair dye now uses colours other than black to indulge in the trend of externalised beauty that is picking up fast in rural areas.

“The rural consumer is no longer merely experimenting with urban products because of a phase of prosperity – rather, she is revelling in it and indulging unabashedly, providing gratification to her senses and her self-esteem,” said Basu.

“These findings have wide-ranging, practical implications for creating successful portfolio strategies and packaging formats that recognise these traits and appeal to rural consumers’ senses. Combined with a smarter selection of locations and targeted distribution plans, brands can transform their plans for growth dramatically and profitably to make the most of the next big rural opportunity,” added Singh.

– IndiaRetailing Bureau

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