While I was enticed to write my
thoughts on Auto Industry as my experience with the sector has been for a
decade but am forcing myself to write on FMCG as I presently work in this
sector. As we are unfolding a new decade I thought it is the right time as well
to pen this down. Below are the future trends in FMCG for the decade thru my
lens:
1
Demographic
Inclusion
2 Disruptive
Distribution/SCM
3 Brand
Experience
4 Nurturing
Community (Key Accounts)
Demographic Inclusion – Most of business verticals within FMCG has
concentrated on most categories catering to certain demography of population,
now the rule will change with lot more category offering to other demographics.
For instance Mens grooming which unfolded in 2005 is yet to take full shape and
is estimated to be Rs.35K Market by 2022. A fashion jewellery startup recently claiming
30% of the business coming from men and the category is showing the highest
growth is a point to note. A noted men’s grooming start up getting series B
funding from a famous consumer VC is the proof that this category is rapidly
growing or rather tapping the potential of this category is in rigour. Similarly,
silver economy (exclusive products/services to consumers above 60 years of age)
potential market size is estimated to be Rs1L Cr is slowly making inroads and
birth of Rainbow Economy (LGBTQA specific products/services) after the landmark
judgement on Section 377 is another inclusion in markets of India.
Disruptive Distribution/SCM – ecommerce and modern trade has
already disrupted general retail trade to an extent by slowly capturing market
share. In FY 19, General trade recorded 89% where as Modern Trade and ecom
recorded 10% & 1% where as in FY 23 it is expected that market share will
be 83%, 12% and 5% respectively, growth of ecom is going to be phenomenal which
may reach 11% modestly before 2030 in all probability may displace modern
trade. Recent news of retail chain scion claiming ‘phygital’ is only way ahead
and a global retail giant rethinking on expansion of stores and positively betting
on e-retail summarizes the inference which I drew. But the biggest chunk of
sales - General trade or rather traditional trade will see a biggest
disruption. Reliance announcing to enter into FMCG by selling in-house brands
at kirana’s apart from own stores via distributors and the introduction of MPoS
in Kirana stores has some story to tell about the disruption. Unlike telecom
where the game was on Tariff predominantly to capture market share/subscriber
base or even for that matter revenue here the game would be on data and
distribution model to win over giants. Also to note is disruption which is
being made in agriculture sector where start ups are cutting middle men and
reaching agricultural products directly to retailers, when it can happen in
Agriculture sector why can’t a disruption happen in FMCG where cutting of
middle men could be far fetching dream of tomorrow.
Brand Experience: As consumers are becoming more aware and will have
more power to information, thanks to the mobile revolution brands have to turn
themselves to be experience led rather just product/service. Three ‘P’ as I see
could enhance Brand Experience – Premiumimization, Personalization, Being
Purpose driven. Premiumization, Middle class of our country is slowly expanding
this making the belly of the pyramid to bulge and bottom of pyramid to shrink. 30%
of consumers are ready to shell out more money for better quality/standard
products as Indian products are in general 10%-30% cheaper than global
products. Personalization, in this era of Hyper personalization personalized
products/services is going to be differentiator though scalability is going to
be a challenge. Recently an Agarbathi company launched personalized Agarbathies
basing on fragrance and length, yes you read it right. Now imagine the
potential of the personalization, it is going to gather a huge winning edge. A
global chocolate maker also launched an offering of personalization of
chocolate to individual choice of ingredients. Purpose driven brands, consumers
are more for purpose driven brands than the usual fad. 80% of purpose driven
brands have outperformed in the market. 88% of affluent and 69% of non-affluent
consumers like brands which give back to society.
Nurturing Community: Personalization taking its root stronger is a chance
for organizations to build and nurture community of its consumers for retention
and make their brands preferred ones. Effective key accounts management in B2B
is key differentiator for success of business, going a step closer to B2C
Automotive organizations success is defined by After sales also recent
springing of community of vehicle owners is great success story to relate for
FMCG. There could be a time where this is the only way retain the loyal
customer as continuous engagement of consumers could be a challenge without
such forums. Community formation/nurturing will be a strategy for sustainable
growth of brand revenue.
While there could be many more
which might be changing landscape for FMCG but I felt these four could take
front seat. All the aforementioned obviously will have technology as an enabler
but lets not forget the centre piece – Consumer Behaviour. Ofcourse consumer behaviour, core of any FMCG
company based on which product innovation is decided can never be unseated from
its prime space. It is anthropology which will enable organizations build
winning products and preferred brands.
Article References: Economic Times,
Financial Express, Business Line, The Hindu, Mint, BCG
Pics:
Google Images, Brand Experience from https://medium.com/@sam.mackisack/what-is-brand-experience-bx-2f7102a806f6
