Indians' spending on FMCG in modern retail to be $5 bn by 2015

In what would be good news for organised retailers in the country, sales at modern trade stores have increased by 31 per cent this year over last year.

"The Indian consumer is clearly enjoying the modern trade shopping experience and is increasingly shopping there, as is evident from the increased spending a modern trade stores," Nielsen India Executive Director Roosevelt D'Souza said in a statement.

This is also a strong indicator of the growth potential of the modern trade format, he added.

"While modern retail represents five per cent of India's retail sales, Indian shoppers are expected to increase spending on fast moving consumer goods (FMCG) at modern retail stores from USD 1.8 billion (at present) to USD 5 billion by 2015," a study by the Nielsen Company said.

The report further said inflation is one of the key factors which is leading value conscious consumers to shop at the moderns stores, thereby driving up sales of private labels in the process.

"Inflation is also encouraging Indian shoppers to be more discerning with many seeking value through promotions, sales and private label brand purchases," it said.

According to the study, Indian shoppers spend over USD 100 million on private label items per year and is expected to increase to USD 500 million by 2015.

"Indian consumers have always been value conscious but now even more so, given inflationary pressure on the household budget," D'Souza said.

The access to both modern and traditional format coupled with an awareness of various deals being offered in the market, allows the consumer to make a more informed value for money shopping decision, he added.

Interestingly, compared to China, where the private label products contribute only one per cent to the total modern trade sales, in India private label accounts for about seven per cent of the total sales, the report said.

According to the report, the top five categories in private labels in India are packaged rice, floor cleaners, tissue paper, glass cleaner and packaged 'atta'.

According to the report by Nielsen, while the modern trade stores have seen good sales growth, traditional trade channels like the kirana stores have also remained poplar due to factors like convenience of access, credit, availability of home delivery and trusted relationship between shopper and local grocer.

Outlining the future trend, the report said tech-savvy Indians will increasingly engage with social media and networks as a way to discuss products and brands and seek value through group promotional website.

"Marketeers who understand the future of Indian retail environment and how consumer shopping behaviour is changing will thrive in this dynamic and expanding market," D'Souza added.