FMCG and Retail Sales Increased in June as Consumers Stretched their Purse Strings

  • June 21, 2023
FMCG and Retail Sales Increased in June as Consumers Stretched their Purse Strings

As inflationary pressures relax and rural markets start to recover, sales of fast-moving consumer goods (FMCG), durables, and retail sectors have increased in June. According to statistics from retail analytics platform Bizom and the Retailers Association of India (RAI), the rebound follows a challenging April-May period when unseasonal rain, overstocking, and a discretionary slowdown hurt sales.

From a secondary and tertiary sales viewpoint, June is going nicely. This is encouraging because it demonstrates that there is actual demand and that customers are loosening their purse strings, according to Akshay D'Souza, Bizom's head of growth and analytics.

Bizom data for April reveals a year-over-year (y-o-y) fall in FMCG sales of 8.4% and in consumer durables of 17.9%. FMCG sales increased by 1.4% in May, while durable goods sales dropped by 12.1%. In contrast to 6% growth in each of April and March, retail sales increased by 7% year over year in May, according to RAI. According to Kumar Rajagopalan, CEO of RAI, "as consumers are now settling into their regular routines, the retail sector is witnessing moderate growth over the previous year."

Retail sales of clothing and jewelry, for instance, increased by 9% in May, while sales of quick-service restaurants, food, and groceries increased by around 7-8% in the same period. Shoes, sporting goods, and furniture retail were the weakest segments in May, with year-over-year sales increase ranging from 2 to 3 percent.

However, organized merchants are finding that the April to June quarter is more favorable than the March quarter. As inflationary pressures remained strong, market watchers said that sectors including quick-service restaurants and clothing were impacted hard in the March quarter by a decrease in discretionary spending. Due to worries about a downturn in rural regions, the FMCG industry was also hurt.

According to a recently issued estimate by stockbroker Motilal Oswal, merchants will see stronger revenue trends in June as they pass along benefits from reduced commodity costs to customers to maintain robust demand.

Last year, despite a robust post-pandemic rebound, there were few sales towards the conclusion of the season. To maintain the pace of the demand, however, softening raw material costs this year may be passed on, the brokerage added.

The recent end-of-season sales of Ajio and Myntra, two of the leading fashion stores in the nation, demonstrated this tendency. Deep discounts (50–90%) were provided by the two businesses, who also partnered with well-known brand ambassadors (Shraddha Kapoor for Ajio and Shah Rukh Khan for Myntra) and major corporations to guarantee smooth delivery across the nation.

Ajio, a subsidiary of Reliance Retail, said on Monday that order volumes during its Big Bold Sale increased 40% from the previous year and that, for the first time, 50% of all orders came from tier 2 and tier 3 markets. "It is encouraging to see the growing uptick from the non-metros during the shopping season," said Vineeth Nair, CEO of Ajio. "With over 1.5 million customers shopping more than once during the sale, Ajio's reach has grown," he said.

Rival Myntra, part of the Flipkart group, reported a roughly 50% increase in customers during its end-of-season sale compared to previous year. According to Myntra, non-metros accounted for 55% of demand while metro areas like Bengaluru, Delhi, Mumbai, Pune, and Hyderabad contributed 45% of the rise.