FMCG and retail sales increased in June as consumers extended their credit cards.
Sales of fast-moving consumer goods (FMCG), durables and retail sectors have seen an uptick in June as inflationary pressures ease and rural markets begin to revive.
The improvement comes after a difficult April-May period, when unseasonal rain, overstocking and a discretionary slowdown hit sales, according to data from retail intelligence platform Bizom and the Retailers Association of India (RAI).
Estimates by industry experts suggest that FMCG sales may grow 4-5% in June and durables by 2-3%, while retail sales could increase 8-9% on the back of aggressive offers, sales and promotions by apparel, fashion and lifestyle majors ahead of monsoon.
“June is trending well from a secondary and tertiary sales perspective. This is heartening because it shows that there is demand on the ground and consumers are opening their purse strings,” Akshay D’Souza, chief of growth and insights at Bizom, said.
Data from Bizom for April shows a year-on-year (y-o-y) decline of 8.4% in FMCG sales and 17.9% in consumer durables. May saw a 1.4% sales growth in FMCG and a decline of 12.1% in durables. Retail sales, meanwhile, grew 7% y-o-y in May against 6% each in April and March, respectively, according to RAI.
“As consumers are now getting into their normal routines, the retail sector is witnessing moderate growth over the previous year,” Kumar Rajagopalan, chief executive officer, RAI, said.
Apparel and jewellery retail, for instance, has seen a sales growth of 9% in May, while quick-service restaurants and food and grocery retail saw sales growth of around 7-8% during the month. The weaker categories included footwear, sports goods and furniture retail, which saw year-on-year sales growth of 2-3% in May.
Yet, the April-June period for organised retailers is turning out to be better than the March quarter. Segments such as quick-service restaurants and apparel were hit hard in the March quarter by a slowdown in discretionary spends, as inflationary pressures remained high, said experts tracking the market. The FMCG sector, too, was impacted due to slowdown concerns in rural areas.
A just-released report by brokerage Motilal Oswal said June would see better revenue trends for retailers as they pass on gains from lower commodity prices to consumers to ensure demand remains strong.
“Last year, a strong post-pandemic recovery resulted in limited end-of-season sales. However, this year softening raw material prices could be passed on to keep demand momentum going,” the brokerage said.
That trend was visible during the recently concluded end-of-season sales of Ajio and Myntra, two of the country’s top fashion retailers. The two players offered deep discounts (50-90%), tied up with top brand ambassadors (Shraddha Kapoor for Ajio and Shah Rukh Khan for Myntra) and big brands and ensured seamless delivery across the country.
On Monday, Ajio, which is part of Reliance Retail, said order volumes during its Big Bold Sale spiked 40% this year versus last year, and 50% of the total orders were from tier 2 and 3 markets, which was a first.
“It is encouraging to see the growing uptick from the non-metros during the shopping season,” Vineeth Nair, chief executive officer (CEO), Ajio, said. “With over 1.5 million customers shopping more than once during the sale, Ajio’s reach has grown,” he said.
Rival Myntra from the Flipkart group said its end-of-season sale had recorded nearly 50% growth in customer numbers during the sale versus last year. While 45% of the growth came from metros such as Bengaluru, Delhi, Mumbai, Pune and Hyderabad, 55% of the demand came from non-metros, Myntra said.
