Senior executives said several consumers continue to buy online rather than venturing into stores for fear of catching the infection, while several brick-and-mortar stores are still shut due to liquidity issues.
India’s largest fast moving consumer goods (FMCG) company Hindustan Unilever, that sells products in over eight million retail outlets, said a fifth of stores in its direct coverage are yet to open.
“But that doesn’t mean that if a store has not opened, demand is lost. Many modern trade outlets continue to remain shut, leading to the rise of the omni-channel. Even when modern trade stores reopen, there might be some initial hesitation because of crowds,” said HUL chairman Sanjiv Mehta.
B Sumant, executive director at ITC Ltd, said the conglomerate has seen robust growth in sales of its FMCG products on e-commerce platforms with customers preferring the convenience and safety of home delivery during these challenging times.
Online contributed just 1% of groceries sales in the country until mid 2017, which nearly doubled to 1.9% by 2019. Industry estimates this may shoot up to over 4-5% this year.
According to the latest Nielsen report, online contribution to India’s FMCG sales rose nearly 50% year-on-year in the March quarter as consumers increasingly shopped from e-grocers, while local grocer’s share fell 220 basis points, entirely overtaken by ecommerce and modern retailers.
BK Rao, senior category head of India’s largest food company, Parle Products, said demand for online purchases during lockdown shot up by even 100x, but companies could not fulfil it due to worker shortages and supply disruptions.
“But now that those issues are solved, there will be a big jump in sales,” he said. He said for Parle, online contribution has doubled to 4% of overall sales.
Puma India MD Abhishek Ganguly said e-commerce sales have grown 40% over last year. “Several first-time online buyers who bought essentials are now buying other categories,” he said.
Even consumer electronics brands said e-commerce contribution to overall sales doubled to 8-10% from pre-Covid average and could go up further, said Godrej Appliances business head Kamal Nandi and president of industry body CEAMA.
Several companies such as LG, Samsung, Xiaomi, Vivo, Godrej Appliances and Panasonic have taken initiatives to take their offline stores online.
LG Electronics India head for online business, Deepak Taneja, said online sales in a few categories like television, washing machine, mobiles has grown two times from pre-Covid days.
Mobile phone sales tracker Counterpoint Research estimated that e-commerce share in total smartphone sales will account for 45% in 2020 and sales volume decline in online will be lower at 5% as compared to 19% in offline stores. Last year, online accounted for 38-39% of overall sales.
A Morgan Stanley report estimated the immediate impact of Covid-19 will likely fade in a few months, but it could significantly alter the dynamics of India’s digital economy.
“We see a large online shopping base in the country going forward as Indians refrain from going to stores/malls to buy their daily needs. We also see online penetration in fresh and grocery increasing, which has the power to lift the overall size of the Indian e-commerce industry,” the report said.