Ahead of festive season, FMCG players stocking up shelves of kirana stores | The Financial Express

Ahead of festive season, FMCG players stocking up shelves of kirana stores

Traditionally, FMCG companies offer attractive schemes to retailers around the peak seasons like festivals for stocking their products, to get visibility and also to stock the store for the company’s products.

Ahead of festive season, FMCG players stocking up shelves of kirana stores
Companies also keep reducing the schemes by a few percentage points by offering maximum discounts in August and then decreasing them every month.

Competitive intensity is on the rise among FMCG players, who are offering steeper schemes than others to make their way prominently on the shelves of kirana stores as the first normal festive season after two years kicks in.

Categories like personal care and packaged foods have seen a higher build-up of stocks during the last week of the month consistently over the last two months as a run-up to the festival season. This has also helped these categories to show growth in August-2022, according to data sourced from Bizom.

Commodities have also seen no month-end stocking in August 2022. This is due to the ‘very high’ stock push in July 2022 ensuring that kiranas are focussing on consumer off-takes before picking up further stock.

Traditionally, FMCG companies offer attractive schemes to retailers around the peak seasons like festivals for stocking their products, to get visibility and also to stock the store for the company’s products. This is done so that any consumer walking makes the choice to buy their product and this helps the brand gain market share.

However, this year, FMCG players point out that not just general trade, but even modern trade and e-commerce platforms are very aggressive. “Amazon, for instance never bought so much from us, they are also loading up their warehouses. There is a euphoria going on, and a lot of revenge loading going on,” Sunil Agarwal, chairman, RSH Global – popularly known for its brand JOY in the personal care category with face wash, lotions and creams told FE.

Adani Wilmar, India’s largest edible oil company said the company did a tie-up with Reliance Retail recently where it offered combination packs of its edible oil and rice. “Usually around Diwali, we offer Quantity Purchase Schemes (QPS) where on purchase of a certain number of cartons, the company gives a few cartons for free to the retailers so that the off-take increases, and even we want to push our products,” said Angshu Mallick, managing director & CEO, Adani Wilmar.

“Most of the brands have a 10-15% margin to the retailer on the MRP, so if a retailer buys 100 MRP product, he gets it for85. During the festive season, we go with say additional 10% margin in the form of schemes, which are variable, and it varies from brand to brand. This enables retailers to maximise their margins when they sell the products,” Agarwal of RSH Global said.

Companies also keep reducing the schemes by a few percentage points by offering maximum discounts in August and then decreasing them every month. Retailers with deep pockets and those who can stock more, try to buy during August and September, so that they can have decent margins on the products once actual sales happen during the season.

At NextG Apex, makers of Mamafeast—a breakfast range and Naturefest, a daily staples range expect to see an upswing of about 25-30% in festivity-led sales. “In order to augment our sales, we will also implement our strategies at both the trade and consumer levels as well,” said Amarnath Halember, executive director and CEO of NextG Apex India.

Mostly, these schemes are prevalent in categories with a higher shelf life than in fresh categories it could result in wastage and returns if there is not enough consumption.

“Overall, we do expect this strategy to play out very strongly in the coming months whereby brands will consistently look to maximise category market share by ensuring they offer good schemes to retailers for placement of larger quantities of stock,” said Akshay D’Souza, chief of growth and insights at Bizom.

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First published on: 15-09-2022 at 08:22 IST