Mumbai, 29th November, 2024 – NielsenIQ (NIQ), the world’s leading consumer intelligence company, has released its latest “An Inside Look” survey report, showcasing the evolving retail landscape and challenges faced by small, medium, and large enterprises. The global study was conducted across 47 markets, representing approximately $26 billion in FMCG sales value.
Changing Retail Dynamics
The report highlights the growing dominance of online channels, with 60% of businesses indicating that online stores are their most critical sales platform. This trend is particularly prominent among medium-sized companies, where 67% rank online as their top channel, followed by small businesses at 51%.
Additionally, the report notes that convenience stores have seen high penetration in India at 48%, compared to the global average of 18%, with large companies leveraging this channel the most (58%), followed by medium-sized (54%) and small businesses (40%).
As Indian businesses increasingly leverage digital and convenience platforms, the report emphasizes that while traditional channels remain important for large enterprises, online and convenience stores now dominate the landscape for SMBs.
“Indian businesses are recognizing the growing importance of digital as a significant operational channel and are now crafting targeted strategies to win in this space. Consumers are embracing the unique benefits of e-commerce, driving increased traction for brands from emerging manufacturers across key FMCG categories. According to NielsenIQ Market Measurement, emerging manufacturers are achieving 1.5x higher growth in e-commerce compared to category averages in noodles, refined oil, biscuits, coffee, and packaged atta. These varied channel preferences across business sizes signal a broader retail shift in India and underscore the critical role of omnichannel strategies,” said Pallavi Suresh, Executive Director – Emerging Brands, NIQ India.
Traditional trade remains highly relevant for consumers, while e-commerce is increasingly gaining prominence in metro areas, driven by its convenience and diverse product offerings. According to NielsenIQ Market Measurement for the MAT ending September 2024, some of the fastest-growing categories include ready-to-eat products with a 52% increase, salty snacks and refined edible oils both growing by 41%, biscuits witnessing a 40% rise, and packaged atta growing by 39%. This trend underscores the evolving consumer preference for online shopping within the FMCG space.
Inflation Continues to Be a Concern for Small and Medium Businesses
The survey findings reveal that businesses are adopting key strategies in 2024 to navigate economic challenges. Leading the approach, 50% of respondents identified replacing materials with cost-effective alternatives as a primary measure to manage rising costs while maintaining profitability.
Additionally, 49% plan to increase investment in distribution, signaling a focus on strengthening supply chains and expanding market reach. Other strategies include reconsidering product lines by removing low-performing products (47%) and boosting marketing investments (47%), underscoring the importance of optimizing product portfolios and reinforcing brand visibility.
Finding the Right Pricing Strategy
Pricing strategies have become critical for businesses as 66% of small businesses, 67% of medium-sized enterprises, and 75% of large businesses grapple with inflation. Large companies are addressing these challenges by diversifying distribution channels, while smaller firms focus on cost management to safeguard their market position.
Growth Strategies for Indian SMBs
Despite economic pressures, Indian businesses are prioritizing revenue growth, category expansion, and diversification. 33% of respondents have identified revenue growth as a top priority, while 30% are focusing on expanding into new categories, and 25% are exploring product line expansions. Large enterprises are also enhancing their online presence by increasing product offerings across digital platforms, reflecting a clear movement toward digital-first strategies.
The report also highlights the growing reliance on data and insights. A notable 64% of Indian businesses are investing in market data to shape pricing decisions, compared to the global average of 45%. Additionally, 92% of large enterprises credit data and insights as crucial to their success, a sentiment echoed by 70% of medium-sized businesses and 51% of small businesses. This underscores the increasing importance of data-driven decision-making across businesses of all sizes.
