Diwali sales push strategy in 2019 has been unique in many ways. Never before have we seen discount offers, and clubbed offers of Product A with accessory B, which were seen this Diwali.
However, in November too, there have been huge advertisements of after-Diwali offers by retailers such as Big Bazaar, Spencer and Reliance Fresh.
According to FMCG experts, after-Diwali sales discounts portends to pile up of unsold inventory due to sluggish consumption in June and September quarters.
“FMCG products have an expiry and before that they have to sell off the inventory. So, all the Diwali offer packs may be sold until Christmas,” said an analyst from a well-known brokerage firm.
Rural slowdown
The rural slowdown continues to have its impact on the sales in the FMCG space.
Last year, consumer sales were lifted by a long festive season and rural growth. But this time, companies have not had much to celebrate.
According to Nielsen India, the FMCG market has clocked value growth of 7.3 percent in (Jul-Sep) quarter, down from 16.2 percent a year ago.
Also, for the first time in seven years, rural growth dropped below urban. Rural grew at 5 percent in the third quarter (Jul-Sep), which is one-fourth as compared with 20 percent in Q3 2018, while urban grew at 8 percent as against 14 percent growth during the same period last year, suggests Nielsen India in its latest FMCG review report. Nielsen follows a calendar year period.
“Demand is impacted by rural sales, which contribute around 36-37 percent of the total FMCG sales. In rural sales, 60 percent spend on FMCG is on food items which include salty snacks and biscuits,” said an analyst.
Market research firm Nielsen India lowered its growth target for the FMCG sector.
The firm has estimated growth in 2019 to be in the 9-10 percent range, as against 11-12 percent estimated earlier. In 2018, the FMCG sector had a growth rate of 14 percent.
With such moderate growth forecast, the FMCG players may have to continue throughout their ongoing discount push till Christmas 2019 going into the new year.
That would help achieve competitive volumes for October-December 2019 sales reflecting Diwali, after-Diwali and Christmas.
Disclaimer: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.
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