Traditional trade continues to be the mainstay of the Indian FMCG sector but consumers are increasingly adopting digital channels, leading to new formats and strategies by companies, Godrej Consumer Products India & SAARC CEO Sunil Kataria was quoted by news agency PTI as saying.
The evolution of online and direct-to-consumer approach is “blurring” the retail formats as they are “merging and crisscrossing”, he told PTI, adding that even the retailers are struggling with the trend.
Now an “end to end” consumer funnel has emerged at one omni space and “these models are impacting the established FMCG value chain, which has been built in so many years,” Kataria said at a virtual FMCG summit organised by the Confederation of Indian Industry (CII).
Indian companies which had “painstakingly built” the stockist and wholesale model would now have to redefine their approach, he added.
Kataria also said he expects the digital transformation in the traditional trade and kirana channels, which happened largely in tier-1 and -2 cites, to percolate down to rural areas.
“If we have technology usage which will disrupt the wholesale in rural, it will benefit the company, kirana and especially the rural kiranas…,” he emphasised.
It will make the kirana stores richer and serve rural consumers very well, unbundling the value chain.
“I am really waiting for the rural tech disruption to happen in a big way,” he added.
Speaking at the session, Damodar Mall, chief executive officer – grocery retail at Reliance Retail, said the large FMCG companies have learned from new distribution opportunities.
“Never in the history of the FMCG trade in this country I have seen so much capital, technology and talent being directed to modernise the traditional kirana channel,” he noted.
Shopping is changing after the pandemic and distribution should also transform, he said.
“A Rs 1,000 of sales through any modern retailing channels actually earns more money for the brand than the Rs 1,000 sales from conventional and order replenishment channel like the traditional kirana. We must embrace modernity as a whole… the faster we collaborate, the faster we all are going to be winners,” he added.