More shoppers in small town urban India
More shoppers in small town urban India, says Nielsen report
September 10, 2012 / 12:51 IST
By Avanish Tiwary
Turns out smaller Indian towns of less than one lakh people are the real growth drivers in the Fast Moving Consumer Goods (FMCG) sector according to a Nielsen India report released a couple of days back. Smaller towns showed a growth of 19 percent in terms of value against 15 percent in rural India and 12 percent in the metros.
The report says that the demand pull is strongest in the smallest of the Indian towns where people want to shop in style like in the metros. Last year, the growth in sales at per point of distribution was 16 percent whereas metros clocked only 11 percent growth.Out of 83 FMCG products, the middle India towns (population of 1-10 lakh) saw a 10 percent growth in same-store sales in 42 products against smaller towns (less than one lakh population) clocking same growth in 53 products.A quick look at the report and it becomes very evident that the taste of smaller towns in FMCG products is going through a strategic change, showing sophistication in their living style. Smaller towns which largely consume unpacked food products and home-made pickles saw an increase in demand for packaged rice, jams, jelly and marmalades. Products with which we do not associate smaller towns, like hair conditioners, after shave lotions, etc. also saw a growth in sales in the last quarter of 2011 compared to Q1 in the same year. The sales of cheese grew by whooping 103 percent in Q4 2011 over first quarter, same year.The reason smaller towns are spending more on high-end products is due to the increase in durable income of the Indian middle class. The other factor driving the demand is the increase in shopping malls and one-stop shops in smaller towns. Malls definitely make the shopping experience better and luxurious, luring shoppers to purchase more and more products.Online shopping websites have repeatedly said that the majority of buyers are from tier-II and tier-III cities who look for branded products which are not available in their towns. This hunger for branded products shows that the smaller towns’ appetite for malls and shopping complexes will only increase.We wrote about a CRISIL report released on August 29 that found that consumption in rural India is growing faster than in urban India for the first time in two decades. Ravi Kiran, Co-Founder of middle India focused growth advisory firm Friends of Ambition had said that “from a middle India focus, this should also encourage more companies in middle India to build brands because they are placed closer to the rural consumers. Most big brands are based in big cities.” Smementor@moneycontrol.com Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
