This is significant because Nielsen had earlier pointed to a recovery in the second half of 2020, which the agency now admits will be "restrained".
"After the lockdown months of April and May, there was pent-up demand among consumers, which resulted in a spurt in sales in June and July. This has now settled down, as reflected in August. We see this continuing into the forthcoming months, though we will keep close tabs on how consumption evolves during Dussehra-Diwali," said Sameer Shukla, executive director, retail intelligence, South Asia, Nielsen Global Connect.
Nielsen's observations came within days of Sanjiv Mehta, chairman and managing director of Hindustan Unilever (HUL), saying that the government would have to step up spending to improve demand even if that meant stoking inflation.
"Growth and controlling inflation have to move in tandem. There is a risk of inflation, but the bigger risk is the economy going into a tailspin," Mehta had said during an interaction organised by the Federation of Indian Chambers of Commerce and Industry.
Earlier this month, Mehta's peer Sanjiv Puri, chairman of ITC, had said the near-term outlook for the FMCG market remained "uncertain" as consumer trends evolved against the backdrop of the pandemic. "There is a shift to larger-basket purchases, value packs, and infrequent shopping frequency as consumer behaviour is more value-seeking," he said during the company's annual general meeting.
The only bright spot here was the growth of e-commerce, said Nielsen, with online sales in August ahead of pre-Covid levels visible in the channel. Shukla said e-commerce continued to see a steady adoption among consumers, with first-time FMCG shoppers growing.
In the last nine months, for instance, the value share of FMCG within e-commerce increased to 12 per cent, Nielsen said, thanks to the steady shift of consumers online during the pandemic. But mobile phones continued to contribute 48 per cent, fashion 18 per cent, and appliances and electronics 17 per cent to e-commerce sales, it said.
“Our recent survey among CXOs shows that most of them are now focussed on e-commerce than they were before the pandemic. And many are paying attention to last-mile delivery,” said Shukla.
Traditional and modern trade owners, he said, were optimising shelf space to improve sales.
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