With multiple changes in trade and policy environment, the growth in Modern Trade (MT) sales has increased substantially in the last two years. In the last few years the important policy factors that contributed in the modern trade were the Demonetisation and GST. It is written in the history of Indian Modern Trade that, 2018 will be remembered as the year in which this channel breached the double digit mark in terms of contribution to total FMCG sales. While 10 percent is still much below other Asian peers like Indonesia, China, Thailand, Malaysia and Philippines, it’s the recent pace of growth and the imminent promise it holds for the future that has all the stakeholders excited. Demonetisation and GST Growth in modern trade (MT) sales (including brick and mortar retail banners, standalone MT outlets, and ecommerce) has increased substantially with many changes in the trade and policy environment, from the last two years. In the last few years the important policy factors that contributed to the modern trade were Demonetisation and GST. This coupled with new stores being added along with the companies’ focus on improving same store sales growth has led to sustained growth in MT. The Evolution of the Customer Consumer preference itself has witnessed a slight tilt towards modern trade, with increasing universe along with favourable policy changes. The most difficult thing to change in the world is consumer behaviour, said an expert. The Big Deal of 2018 The biggest deal in the ecommerce-retail space ever was the Walmart’s $16 billion acquisition of Flipkart. This deal is the evidence of all the above mentioned – accelerating pace of modern trade, huge potential for modern trade in India, expanding universe, evolving customer habits and the future of Omni-channel retail, this deal is it. It’s just a trailer of India’s modern trade potential that world’s biggest offline modern retailer buying India’s largest online retailer. What people have said? During this period, the opportunity to speak to some eminent experts in the field of modern trade, Damodar Mall, the CEO of Reliance Retail (India’s largest retail company) and Neville Noronha, the CEO of DMART (India’s most profitable retail company) and they sounded very optimistic about this space too. "The correct way to look at modern trade is, it is servicing 60 million consumers in India. These 60 million consumers have 2.5x per capita income. This makes Indian modern trade as big a market as Thailand," Damodar Mall told CNBC-TV18 on August 18. “Indian retail as an opportunity is phenomenal. It is unique in terms of three things constantly working and intersecting with each other. A) Large populations and phenomenal urbanisation/agglomeration towards large cities. B) A deep, vibrant and well entrenched entrepreneurial spirit among Indian traders. C) A strong affinity towards MRP understanding even among the least literate masses of the country," Neville Norohna told CNBC-TV18 on October 29. What to look for in 2019 The big data points to watch out for in 2019 would be:
- Another deal in Indian retail space (Amazon-Future).
- As FMCG companies ramp up innovation more products are on offer.
- Addition of new players and incumbents increases more store.