On Thursday, Research Firm, Nielsen reported their analysis of sales in the fast moving consumer products sector. In it, they stated that both large and small-scale grocery stores across India and their e-commerce competition faced a severe blow during the first phase of the nationwide lock-down. This sharp decline was attributed to insufficient staffing, shortage of items from recognizable brands that came along with a sudden break of distribution, in the last week of March.
Nielsen reported that modern trade channels, including e-commerce vendors, had a strong run with “unprecedented growths” as shoppers clamored to stock up on essentials, in the weeks preceding the lock-down. “Consumers did quite some pantry loading in that period,” said Prasun Basu, president, South Asia Zone, Nielsen Global Connect. Although, in the wake of the lock-down announcement, on March 24th, most trade channels witnessed a sharp fall, especially in its first week.
Nielsen did a weekly analysis of sales across channels including modern trade, local grocery, and e-commerce retailers, comparing their weekly growth rates in the month of March to the same weeks of previous years. Before the lock-down, the 1,240 grocers and chemists that Nielsen surveyed, from all across the country, had posted persistent growth rates.
Moreover, this report is from Nielsen’s second round of analysis on the impact, coronavirus had, in the FMCG sector. They claimed, “Both modern trade and traditional trade channels show similar patterns, with the first week of lock-down, leading to a sharp decline in growth preceded by a surge in growth in the previous week. E-Commerce and Cash & Carry (organized wholesale) channels also saw growth turning from high positive to negative territory between the last two weeks of March.”
Traditional retailers or small-scale local grocery stores, that form a bulk of FMCG sales in India, saw sales surge by 10% in the third week of March. However, they saw an 8% dip in the week ended on March 29th, when compared with the same week in 2019. For the first week that ended on the 8th of March, those traditional traders reported a 15% surge in sales.
On the other side, modern trade stores saw a sharp 63% jump in sales, in the third week of March, but reported only a 6% growth in the last week of March.
Nielsen said constraints in replenishment of stock, a disruption in movement of distributors that are key suppliers of goods to retail stores, and lack of retail staff dented supplied heavily. Furthermore, they reported that E-grocers reported a substantial jump in sales in the first three weeks of March, at 87% and 85%, respectively. But, closed-down warehouses and restrictions in movement, forced some to halt fresh orders, temporarily, at the cost of customer trust. Consequentially, their sales sharply fell by 64% in the last week of March.
Typically, retailers get anywhere between 10 to 12 salesperson visits per week . They take orders, and ferry stocks back to these stores. However, post lock-down, their visits dropped to two in a week. This prompted retailers to visit distributors and wholesale markets to ferry goods, into their own stores. This bumped up the retail costs as retailers faced “severe constraints of stock replenishment due to the severe hit in company salesperson visits,” Nielsen stated.
As a result, consumers also struggled to find their preferred brands in stores and pharmacies. This was especially true for products such as hand sanitizers, salty snacks, ready-to-eat items such as instant noodles, biscuits etc.
8 out of 10 retailers in urban India didn’t receive adequate stock of products, Nielsen claimed. They also had issues with their sales staff not being able to turn up for work as some struggled with public transport, and others left for their home-towns.