Business Insights 24 Mar 17 Rashmi Kapse

Digitization and automation has re imagined traditional sales and distribution in the FMCG sector in India. Recent business trend suggests that innovation has been a key driver in reviving FMCG growth. In fact, Gartner report suggests that the FMCG industry is the 4th largest sector in the Indian economy currently. According to ASSOCHAM report, the retail market is optimistic and slated to grow from USD 49 billion currently to USD 104 billion in 2020. This growth is attributed to several factors such as increase in the share of organized retail, embracing digitization and engaging customer driven experiences.

The retail industry depends upon insights and information into customer behavior and preferences. In this context, technology plays a significant role as a necessary business enabler to deliver superior customer experiences. Hence, emerging technologies such as SFA is viewed as one of the key drivers to shape the FMCG sector this year. This article also aims to explain how FMCG giants are utilizing IT to surmount business challenges and optimize their expectations.

With the advent of automation, the sales and distribution channel is undergoing major changes that has redefined the sales process mechanism. It has simplified challenges such as access to data insights, competition information, inventory control and sales processes. The FMCG companies are adaptive of newer technologies that is thriving on big data, social media and predictive analysis. It helps them understand customer requirements based on their buying behavior in order to stay ahead of the curve.

The retail digital game-plan

The retail industry is stepping up its digital game in 2017-18 by aggressively plugging the gaps in the supply chain and distribution channels. It is implementing a proper system to manage inventory, consolidate their online presence with websites and mobile application. In addition, it is also investing in state-of-the art R&D facility that is equipped with advanced technologies. Several organizations have identified automation as focus factors to improve customer experience. Industry experts believe that digitization is an important organizational tool to ensure repeat buying and brand extensions. Therefore, it can be safely assumed that the FMCG sector is leveraging on data for improving distribution networks and business tasks.

However, experts also feel that the industry will face several revenue related challenges this year. Dealing with complex tax structures and managing availability in the complex distribution set-up are some of them. As the sector is fairly unorganized, retail businesses face competition from local players. Factors like account of presence, fixed product lines, shrinking margins, marginal expenditure to marketing and exemption on excise duty.

The Bigger Picture

Despite obstacles, the future of the Indian FMCG industry looks promising. This can be accounted to higher disposable incomes, growing population, awareness and a consumption-driven society. Dominant factors such as online services and mobility are key considerations to contribute for the growth of the FMCG sector. Therefore retail players must focus on building capacities in digital marketing and advanced technologies to grow in the business.  

In order to battle it in the long-term, FMCG companies need to be adaptive to emerging technologies, proactive to deal with crisis situations and flexible deploying strategies to stay competitive in the market. A major catalyst accelerating the growth of the sector is digitization. An efficient FMCG business will therefore require superior infrastructure support, effective distribution network, automated sales processes and efficient supply chain management.

Rashmi Kapse

Rashmi is a Content Specialist at FieldAssist. After spending 11 years in the Executive Search business she decided to change tracks and follow her passion for writing. For the past 8 years, she has been writing on Sales Tech, HR Tech, FMCG, Consumer Goods, F&B and Health & Wellness.

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