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05 August 20225 mins read by Angel One
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Overview of the impact on the industry

During the first wave of the pandemic last year, rural India helped to cushion the consumer goods market. This time, a severe second wave of the virus may make that impossible. Due to local lockdowns and a shortage of staff for last-mile distribution in rural areas, demand has decreased. Furthermore, distributors and companies reported that villages across the country have implemented strict measures to limit outsider entry, making it even more difficult to supply products.

This is more likely to affect rural-focused businesses than others. Also, those whose portfolios include a significant portion of food, personal, and home care. The new virus mutations have spread to towns and cities, crippling hospitals, with record daily cases and deaths. Local restrictions have slowed demand for anything from consumer products to farm machinery, which is a barometer of the rural economy. Tractor sales fell the most in April compared to other vehicle types, reflecting the rural market’s declining buying power.

India’s hinterland was spared last year as the first wave ravaged the country’s major cities. Farm operation and demand for everything from staples to soaps remained steady. The pandemic’s second wave is even more contagious and deadly. People are concerned because hospitals in cities are overburdened. Villagers have taken it upon themselves to limit interaction with outsiders, according to a Maharashtra distributor who spoke on the condition of anonymity due to commercial concerns. According to him, supplies are dropped at the village’s border and collected by local shopkeepers.

Furthermore, they are currently only accepting essential products, according to an Odisha distributor. Also, discretionary foods like cold drinks and ice cream have seen a drop in sales, he claims. Mayank Shah, category head at Parle Products Pvt., said, “We’ve found that this problem has cropped up.” “However, we haven’t seen it become a major problem for us because our goods are still considered essential.”

According to a consumer goods distributor in eastern India, supply may absolutely dry up in the coming days as pandemic cases reach their height. In general, consumer demand has decreased. Retail and grocery activity has fallen to levels seen during the April lockout, according to a Credit Suisse survey. According to Google’s most recent results, mobility fell 14% between March 22 and May 3 compared to the baseline span of January 3 to February 6.

Consumer Goods industry in India – An insight

In the 2014-15 fiscal year, the Indian consumer durables market was worth about $10 billion, and it is projected to rise to $12.5 billion in 2015-16. As a result of the fierce competition in the industry, prices are falling. Despite the domestic demand, high-end goods are still imported. Similarly, components such as semiconductors are heavily reliant on imports.

The consumer durables market is dominated by cities, accounting for 65 percent of total sales. LED TVs, split ACs, and laptops are becoming more common in suburbs, while refrigerators and cell phones are becoming more popular in rural areas. The government’s initiatives, such as the National Electronics Mission and the digitisation of television broadcasting, as well as the establishment of electronic hardware technology parks, are expected to help the sector expand.

The complex taxation structure, the availability and quality of raw materials, competition from China and South Asian countries, and the high cost of financing are all challenges for the durables market.

The industry’s future

Today, the nation’s economy’s favourite child is the consumer goods industry. But what about the future of the company? Companies in the sector, whether multinational conglomerates or local want tobes, will expand if they find and create successful strategies for markets where they have the most opportunity, whether in the developing or developed world. They might follow the lead of a few local businesses who have dared to step outside their comfort zones to test new markets and are now reaping the benefits.

The development of strategies for controlling the prices of their inputs is one problem. Companies will expand thanks to technological advancements such as online purchases, 3D printing, and radio-frequency identification (which helps increase supply-chain efficiency). Companies must gradually, and more seriously, use social media to reach out to consumers, and companies must increasingly, and more seriously, use these channels for brand-building.

Government regulations are likely to tighten as a result of public pressure, as people are becoming more aware of health and safety issues, and businesses may need to keep an eye on the situation as well.

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