In the post-COVID ‘new normal’, the Fast-moving consumer goods (FMCG) industry is undergoing a significant transformation in response to changes in customer behavior and demand for more convenience. To cater to the ever-increasing demand of the Indian consumer, retailers are adopting omnichannel strategy and accelerating adoption of digitization along with emerging new-age technologies in their operations.
Hit hard by the pandemic, the FMCG industry’s future will depend on adopting a multi-channel approach. Phygital retail or omnichannel distribution seems promising when online and offline channels are competing.
However, the good news is that the businesses have now largely stabilized and become immune to COVID-19 like disruptions, so FMCG players are expecting exponential growth that will be contributed by several factors including e-commerce, technology and understanding a conscious consumer in post-pandemic ‘new normal’.
Here are some major trends expected of FMCG industry for 2022:
E-commerce boom and its contribution to revive retail sector amid testing times
E-commerce had a groundbreaking impact on the FMCG industry across the world during after the pandemic outbreak as it encouraged online shopping more than ever. As coronavirus changed consumer habits, FMCG firms saw a surge in the contribution of e-commerce to their overall sales. The trend will further continue next year as it ensured that the retail sector thrive despite all doom and gloom.
Disruptive technologies like Big Data analytics, Blockchain and Artificial Intelligence (AI), among others were deployed by FMCG companies to gain a competitive edge and offer better experience to their customers. In addition to this, to meet the growing customer expectations, Internet of Things (IoT) sensors and devices and 3D printing technology is enabling FMCG companies to focus on direct distribution.
Understanding of the new consumer in post-pandemic world
Successful brands always keep customer sentiment and their overall satisfaction in mind. The consumer character in 2022 will consist of a huge population of millennials who would be focusing on self-development and a balanced life. This expectation can be met by focusing on customer experience and creating quality products that would give them health benefits as well as peace of mind.
FMCG Industry growth forecast
E-commerce for FMCG will reach USD 400 billion by 2022, which will represent between 10% and 12% of the global market for such products, as per Nielsen estimates.The Indian processed food market is projected to expand to USD 470 billion by 2025, up from USD 263 billion in 2019-20.By 2022, global FMCG e-commerce sales are set to become a USD 400billion opportunity.
As per a latest report, the Indian FMCG sector is estimated to be the fourth largest sector in the country. The household and personal care products account for about 50% of the total FMCG sales. The Food & Beverages sector is one of the largest in the FMCG industry in India and contributes to approximately 30% of the household spending in India.
Packaged food market thrived in India even during the pandemic as people became increasingly aware of consuming healthy and immunity-boosting food products. Other factors that have driven growth of this segment are rising income levels, preference for healthy and organic products and increasing urbanization. Leaders in FMCG and retail space will be distinguished by their agility to adopt new technology, creativity, and smart technology investment. This sentiment will also be fueled by strong customer understanding that is a timeless aspect retailers should always take care of.
This article is Authored by Amrinder Singh, Director, Bonn Group of Industries.