"In the short to medium term, this will open up somewhat of a direct-to-consumer channel for CPG players," said Kearney in a whitepaper titled ' How brands can thrive in the new normal'.
New Delhi : The Indian consumer packaged goods companies (CPGs) will need to "review and reset" their channel strategies and e-commerce which scored good growth during the lockdown will not be a game-changer, a report by Kearney, a leading global management consulting firm, said. In the COVID-19-induced lockdown, demand across e-commerce platforms saw a dramatic surge in volumes and value and grocery platforms such as Grofers and Big Basket saw a three- to five-times increase in daily demand but new players have also arrived in the form of hyperlocal delivery experts such as Zomato, Swiggy, and Dunzo expanding their services to the grocery category.
"In the short to medium term, this will open up somewhat of a direct-to-consumer channel for CPG players," said Kearney in a whitepaper titled 'CPG Perspectives: How brands can thrive in the new normal'.
Besides, modern trade will need to innovate to survive, and doorstep delivery will be essential, while general trade will continue to be the leading sales channel.
"General trade has shown tremendous agility by using digital platforms such as WhatsApp and Paytm for orders and payments and has even offered home deliveries," it said while highlighting key trends.
The recent launch of JioMart in partnership with WhatsApp in select areas around Mumbai in the coming quarters will provide an additional impetus by bringing the local kirana store onto the digital platform, it added.
"However, the prevailing issue of a severe cash crunch as a result of slowing consumer demand before COVID-19 will worsen in the medium term. Around 80 per cent of the medium and large retailers don't expect to make any profits by August. Even retailers with some cash to spare will prioritize investments toward essential items over discretionary items," it said.
The report also added that there will be a slight reversal in the consumers' buying behaviours towards value purchase due to tightening in finances across households, said Kearney.
Value offered for the price charged is now more important to retain customers and attract new ones for the consumer packaged goods companies (CPGs), said Kearney.
"The prevailing issue of a severe cash crunch as a result of slowing consumer demand before COVID-19 will worsen in the medium term. Around 80% of the medium and large retailers don't expect to make any profits by August," it said.
Even retailers with some cash to spare will prioritise investments toward essential items over discretionary items, it added.
Kearney had reached out to COOs and operations leaders across some of India's top CPG firms for the study, and found an overwhelming majority believe COVID-19 will have a significant long-term impact on their company's business continuity processes.
"More dynamic and agile planning with scenarios (demand and supply) would replace traditional sales and operations planning with a single view of the future," it said adding Focus will be on increasing digitization across the supply chain."
Commenting on the paper, Himanshu Bajaj, Partner and Head India, Consumer and Retail Practice for Kearney, said COVID-19 situation will bring significant changes in the industry dynamics both from demand as well as supply standpoint.
"There will be significant impact on consumer buying habits - while some trends will continue as before, others will change dramatically. Channel strategy will require critical decisions to be made to adapt towards new normal. Further, it will have long term implication on strategic choices for supply chain and the entire organizational model," he said.
"In the short to medium term, this will open up somewhat of a direct-to-consumer channel for CPG players," said Kearney in a whitepaper titled 'CPG Perspectives: How brands can thrive in the new normal'.
Besides, modern trade will need to innovate to survive, and doorstep delivery will be essential, while general trade will continue to be the leading sales channel.
"General trade has shown tremendous agility by using digital platforms such as WhatsApp and Paytm for orders and payments and has even offered home deliveries," it said while highlighting key trends.
The recent launch of JioMart in partnership with WhatsApp in select areas around Mumbai in the coming quarters will provide an additional impetus by bringing the local kirana store onto the digital platform, it added.
"However, the prevailing issue of a severe cash crunch as a result of slowing consumer demand before COVID-19 will worsen in the medium term. Around 80 per cent of the medium and large retailers don't expect to make any profits by August. Even retailers with some cash to spare will prioritize investments toward essential items over discretionary items," it said.
The report also added that there will be a slight reversal in the consumers' buying behaviours towards value purchase due to tightening in finances across households, said Kearney.
Value offered for the price charged is now more important to retain customers and attract new ones for the consumer packaged goods companies (CPGs), said Kearney.
"The prevailing issue of a severe cash crunch as a result of slowing consumer demand before COVID-19 will worsen in the medium term. Around 80% of the medium and large retailers don't expect to make any profits by August," it said.
Even retailers with some cash to spare will prioritise investments toward essential items over discretionary items, it added.
Kearney had reached out to COOs and operations leaders across some of India's top CPG firms for the study, and found an overwhelming majority believe COVID-19 will have a significant long-term impact on their company's business continuity processes.
"More dynamic and agile planning with scenarios (demand and supply) would replace traditional sales and operations planning with a single view of the future," it said adding Focus will be on increasing digitization across the supply chain."
Commenting on the paper, Himanshu Bajaj, Partner and Head India, Consumer and Retail Practice for Kearney, said COVID-19 situation will bring significant changes in the industry dynamics both from demand as well as supply standpoint.
"There will be significant impact on consumer buying habits - while some trends will continue as before, others will change dramatically. Channel strategy will require critical decisions to be made to adapt towards new normal. Further, it will have long term implication on strategic choices for supply chain and the entire organizational model," he said.
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