A recovery in rural markets is prompting retailers and fast-moving consumer goods (FMCG) companies to increasingly tailor their strategies for the hinterland. This is showing up in more access packs of premium items from soaps to shampoos, biscuits to colas, taking the digital route for launches, content, messaging and commerce as well as setting up more stores in small towns and cities.
A joint report by consultancy Deloitte and the Retailers Association of India (RAI) notes that rural spending is likely to increasingly align with urban trends as spending is set to grow over the next few years.
Executives couldn’t agree more. “The attention for most FMCG firms will shift to rural areas as it gets back to the growth path,” Tarun Arora, CEO and wholetime director, Zydus Wellness, the maker of the Complan and Glucon-D, said on Friday. He also points to the trend of mass personalisation as spending patterns change and consumers in the countryside aspire for better products and services.
Even quick commerce, which has largely grown in top cities and metros over the last few years, is eyeing the next level of expansion into smaller cities, Deloitte says. It notes that q-comm will grow into a $40-billion market by 2030 from $4 billion now, galloping at the rate of 47% per annum in the next five years.“Quick commerce will evolve in the next five years and everybody will have space,” Hari Menon, CEO, bigbasket, said, adding the plan to go public in the next 18-24 months. BBNow, the q-comm unit, accounts for 80% of its business.
The Deloitte study notes that by 2030, food spending in rural households may drop from 51% to 49%, for urban, it is likely to see a decline from 42% to 40%. The shift away from food spending will mean more money for other interests such as eating out and travelling. “Packaged food and dining out may see increased allocation, rising from 9.4% to 11.3% in rural areas and 10.6% to 12.3% in urban areas,” Praveen Govindu, partner, Deloitte India, said.
Spending on consumer electronics and appliances is likely to grow as aspirational users gain access to financing options, he says. And travel and conveyance will rise, supported by higher incomes and a desire to have newer experiences.