India’s retail and FMCG sectors continue to evolve at a rapid pace, driven by urban demand, digital adoption, and shifts in competitive dynamics.
The FMCG sector has seen urban demand rebound in the March quarter, aided by summer-focused product stocking and easing retail inflation. However, rising agricultural commodity costs may lead to selective price hikes, impacting margins. Simultaneously, the quick commerce boom has tripled online FMCG shopping frequency, prompting brands to rethink distribution strategies while traditional retailers protest deep discounting. The AICPDF has urged FMCG companies to halt aggressive pricing practices or face “non-cooperation.”
The Indian retail market is projected to cross $1.6 trillion by 2030, with organised players expected to hold over 35% market share. Meanwhile, India's e-retail market has become the world’s second-largest, surpassing the U.S., though growth has slowed to 10-12%. Quick commerce leaders Zepto and Blinkit continue their meteoric rise, recording massive visitor surges in 2024, while Bluestone stands out in jewellery retail.
A fascinating trend is the rise of small and regional brands, which are now challenging FMCG giants like HUL and Nestlé. Whether this is a short-term shift or a fundamental change in consumer preference remains to be seen. Are Indian consumers simply downtrading, or is this the beginning of a new retail era?
Click on the headings below for insights on how these trends are shaping India’s retail landscape…
1. Bounceback: FMCG demand rises in urban markets during March quarter
Demand for daily groceries and personal-care items has rebounded, driven by increased stocking of summer-focused products, particularly in urban areas. Retail inflation easing may support stabilized demand, though FMCG companies might face selective price increases due to rising agricultural commodity costs, impacting volumes and margins.
2. Online FMCG shopping frequency rises 3x amid q-comm boom
Online FMCG shopping in India has tripled, driven by the rise of quick commerce. FMCG companies are adapting with new strategies, while traditional trade faces challenges from deep discounting practices.
3. AICPDF urges FMCG companies to stop deep discounting or face ‘non-cooperation’
The All India Consumer Products Distributors Federation (AICPDF) has written an open letter to the leadership of Fast Moving Consumer Goods (FMCG) companies asking them to stop deep discounting, and pricing practices that destabilise traditional retail. It has also urged them to introduce policies that guarantee fair margins and and treat general trade partners equitably.
4. India's retail market to hit $1.6 trillion by 2030, led by smaller players
India’s retail sector is on track to exceed $1.6 trillion by 2030 with organised retailers projected to capture over 35 per cent of the total retail market, exceeding $600 billion in value. While essential goods will continue to form the bulk of consumer spending, the next phase of expansion is expected to be driven by discretionary purchases, according to a recent report by consultancy firm Redseer Strategy Consultants.
5. India becomes world’s second-largest e-retail market, but growth slows to 10-12%
India’s e-retail market has reached a major milestone, overtaking the U.S. in 2024 to become the second-largest online shopping market globally. With 280 million online shoppers, India now trails only China, which boasts a staggering 920 million digital buyers. However, despite this impressive achievement, the industry’s rapid expansion has hit a speed bump.
6. Zepto, Blinkit, Bluestone emerge as India's fastest-growing retail entities: Comscore
According to Comscore's Year in Review report, quick commerce platforms Zepto and Blinkit have emerged as India's fastest-growing retail entities in 2024, with Zepto achieving a 188% year-on-year increase to 38.2 million unique visitors, and Blinkit experiencing an 81% surge to approximately 20.2 million unique visitors. Additionally, jewellery startup Bluestone registered a 47% year-on-year growth, reaching 1.9 million unique visitors in the same period.
7. Rise of small brands in India: Just downtrading or something more?
An unlikely war is on in India's vast consumer market, a war between hordes of little-known small and regional players and top FMCG companies such as Hindustan Unilever, Nestle and many home-grown giants. These small and regional players are growing faster than the biggies and even nibbling at their market shares.