REFORMATTING RETAIL IN INDIA
THE RISE OF MODERN TRADE AND TRENDS THAT WILL DEFINE THE FUTURE
Today, many Indian consumers can’t imagine life without the convenience of Modern Trade (MT). In fact, even when the term MT was coined back in the late 90s, it was expected that the nascent organised retail format would steadily fuel economic growth in the future. In spite of a great start, impediments like poor infrastructure slowed the sector down, particularly in the financially trying period between 2008 and 2016.While new players and formats were seen in the market between the end of 2015 and through most of 2016, it was a time of deliberation, deep contemplation and consolidation.
THE EVOLUTION OF FORMATS
The MT landscape in India comprises both local and national brands, which consists of chains and strong independent stores. Together, there are about 600 MT banner stores in India, with the top 20 contributing to ~75% of the business. According to Nielsen estimates the total number of organised stores is ~18,197, of these, 11,758 are banner stores.Such stores have grown by 19% as of MAT August 2018, is a clear indication of the burgeoning size of MT as a channel. Data reveals that supermarkets grew by a sizeable 25%, while hypermarkets grew by 15% in comparison in the same timeframe. The number of modern trade stores in small towns of less than 100,000 population, have also seen a sizeable increase, growing three times faster as compared to metros.
Of the 90 FMCG categories tracked, 43 of them have a higher MT contribution and make up almost 70% of total MT sales. Categories like Cheese, Breakfast Cereals, Packaged Rice, Hand-wash/ Body wash and Olive Oils have a much higher MT contribution, to the tune of 50%. Geographies aside, analysis of seasonal trends reveal that big sale events in January, May, August and during the festival of Diwali are a huge draw for consumers, taking the MT contribution to 17% from 15%. Categories like Washing Powders, Chocolate, Salty Snacks, as well as large packs of Packaged Rice, Diapers, Packaged Tea and branded packs of Deodorants are a big part of shopping baskets during events.