FMCG Sectors to Face Growth Temperance as Value-Seeking Customers Rise: Deloitte Report

Growth in sectors like beauty products, personal care, consumer electronics, and consumer durables may slow down, according to a Deloitte report. The "Future of Retail" report attributes this decline to the high volume of post-pandemic purchases, creating a high base for FY25.

Representative image

The report also noted a significant shift in consumer spending patterns. There is a noticeable rise in value-seeking buyers across various consumer businesses. This trend suggests that consumers are becoming more cautious with their spending.

Shift in Consumer Spending Patterns

While consumers may increase their spending on leisure activities, benefiting the aviation and hotel industries in FY2024-25, other sectors might not see similar growth. The report states, "Yet the growth in premium products has outpaced entry-level products in several sectors, including electronics and personal care."

Companies should understand customer preferences for premium products to drive growth. This insight can help businesses tailor their offerings to meet the demands of their target audience more effectively.

Replacement Purchases as a Key Driver

The survey highlighted that replacement purchases would be a significant driver for sales in FY25. Companies are encouraged to capitalise on this trend by retaining loyal customers and promoting replacements where product performance or perceived value improves through upgrades.

The report further suggests that Indian retailers can achieve incremental growth of 8-20% by optimising investments in customer, product, channel, and experience. Despite plateauing demand, there are opportunities for growth through strategic interventions.

Maximising Existing Assets

The key challenge and opportunity for retailers lie in growing like-for-like businesses by maximising existing assets and investments. The report states, "In our experience, through the execution of the right interventions, businesses can achieve incremental like-for-like growth ranging between 8 to 20%."

This approach involves sweating investments to extract maximum value from current resources. By focusing on enhancing customer experience and product offerings, retailers can navigate the plateauing demand scenario effectively.

Overall, while certain sectors may face growth challenges due to high post-pandemic purchase volumes, there are still opportunities for retailers to drive incremental growth through strategic investments and understanding consumer preferences.