Fast Moving Consumer Goods (FMCG)

I) Challenges faced by FMCG Industry

#1. Inventory Management

One of the toughest challenges in the FMCG sector is undoubtedly inventory management. When there are inflationary pressures and sales slacken, dealing with non or slow-moving inventory becomes a real problem. The companies in this sector need to have strong inventory management systems especially ARS i.e. auto replenishment system & well defined planogram. In order to achieve excellence in inventory management most FMCG/ Supermarket businesses rely on Supermarket business consultants like Your Retail Coach, who can reduce their learning curve and facilitates to achieve goals faster.

#2. Brand Building and Connect

Brand building and maintaining strong content with the audience is becoming so important in the FMCG sector. While the goal of marketing has always been to connect better, the way this reaches differs. It is critical to understand that there need to be new ways and opportunities for connecting with the consumer. Companies must establish trust in consumers and use different channels to build rapport and establish a relationship. Only then will they be able to power their brands and fuel growth.

#3. Grievance Management

Addressing customer problems and grievances in a timely way has become very important for the FMCG sector. In the present atmosphere of social media activity and transparency, bad reviews or ratings can damage company reputation in seconds. The value of building a solid, trust-based relationship with customers involves solving their problems as quickly as possible and turning crises or complaints into opportunities for growth.

#4. Low Product Margins

Low margins on products and high operating cost has left with no choice but to target volumes or it can bring the FMCG business down.

#5. Supply Chain and Logistics Management

Efficiency in logistics and supply chain is another core challenge for the FMCG sector. The nature of the FMCG sector means deliveries need to be carried out on a constant basis, with the capability to adapt to seasonal fluctuations whereby peaks can be as high as 400% yearly. Products also have a limited shelf life on account of the fragile or perishable nature and changes in customer tastes. This accounts for continued supply chain efficiency by streamlining processes to meet price expectations and economies of scale.

Supply chain and logistics plays a very vital role especially for dark stores and online grocery supermarket retailers, where logistics accounts to almost 45% of customer dissatisfaction reviews and remaining 55% accounts for product and other service related concerns. Thus, defining SOPs for supply chain and logistics is not a choice, but basic necessity for FMCG e-commerce.

Massive players in the FMCG space must rethink warehouses, operations and supply chains to remain competitive in dynamic industries and service consumers as required. The competitive edge of this approach can be seen in warehousing operations of major FMCG players. As retailers have restructured the supply chain, manufacturers carry higher stock volumes to manage demands in service levels. Optimizing storage space efficiency has become a significant challenge, leading to advancement in new technologies like AGVS, ASRS, and mobile-device driven fulfillment solutions.

#6. Management of Fragile Goods

The FMCG sector also faces the challenge of managing fragile or perishable foods. Careful packaging and handling of delicate products are of critical importance here.

#6. CRM for Customer Retention

A highly competitive, dynamic business environment has necessitated that FMCG sectors need to not only attract but retain customers as well. Hence, the need is to build and maintain a one-to-one, lifelong relationship with a massive customer base. This has led to the emergence of CRM or customer relationship management. CRM is built on the philosophy of relationship marketing. It aims to create, develop, enhance and retain relationships with customers and enhance lifetime customer value and organizational profitability.

The goal is also to improve customer experience, enhance satisfaction and build loyalty for increased profits. CRM is a business strategy which can yield significant ROI for the FMCG industry. It adopts a customer-centered business approach to support effective sales, service and process and marketing.

#7. Adopting an Omni-Channel Approach

What is equally critical at this juncture is that multiple customer voices across different online and offline channels must form part of an authentic brand narrative. An omni-channel approach encompasses website channels, e-commerce models, and traditional brick and mortar store frameworks and much more, so that integrated marketing communication is facilitated and customers have the choice of choosing an FMCG provider on the channel they are most comfortable with. To facilitate an omnichannel approach, you need a consultant for super market operations who can understand how to innovate. Kirana business consulting is all about meeting the challenges and solving the requirements.

II) YRC: Your Strategic Partner for Growth in the FMCG Sector

If you need to start an online grocery store, or built your own supermarket retail chain, it’s time to choose a grocery business consulting service provider you can rely on. FMCG business consultant YRC has been a choice for many online and offline retailers, whether you need strategists well versed in CPG business analytics or grocery supermarket expansion.

The competitive environment for the FMCG sector necessitates a reputed FMCG consulting services provider. If you are wondering how to hire an FMCG business consultant who can meet diverse requirements, talk to YRC Retail experts. Your Retail Coach anticipates trends and technologies emerging as the future of the FMCG industry evolves.

This reputed consultancy assists organizations in the FMCG to leverage their brand value and build their business by ensuring campaigns, trade activities and sales systems are streamlined for maximum efficiency with the help of SOPs (i.e. Standard Operating Procedures). YRC Management Consulting ensures strong reporting systems and SOPs are in place to help your FMCG business expand by monitoring the “Business 3-s” i.e. staff, stock and sales.

III) About FMCG Industry

FMCG stands for “Fast Moving Consumer Goods” and CPG stands for “Consumer Packaged Goods” sold or consumed on an everyday basis. Consumers have a critical role to play in the FMCG sector as price bands of every FMCG product depend on consumption. Persistent, continuous and strong growth in the herbal and natural product segments has further caused accelerated the pace at which new launches are proceeding, by leading FMCG firms. Economic liberalization and transparent policies have piloted the economy towards the free flow of fast moving consumer goods. According to a Deloitte Report, the FMCG sector is one of the biggest drivers of global growth. The report further states the sector is set to grow at an impressive CAGR in the period from 2020-2023. So, if you are opening up a grocery mart or wondering “how do we establish a procedure to start our own supermarket,” consider that while the avenue for growth is limitless, so are the challenges.

Changing lifestyles, growing incomes and easier access have all driven growth for this sector. The urban segment accounting for a revenue share of 55% is the largest contributor to overall revenue the Indian FMCG sector generates. Further, the retail market in India alone is estimated to reach USD 1.1 trillion by 2021, from USD 840 billion in 2017. This will boost revenues of the FMCG companies (commonly known as Kirana Business in India), as modern trade will grow by 20-25 percent per year.

Fast moving consumer goods comprise three basic sectors – food and beverages, which holds 19% of the sector’s revenue. Healthcare accounts for another 31% and household and personal care account for the remaining 50%.

The FMCG sector is poised to grow at CAGR of 27.86 percent by 2021. FMCG companies are also poised to invest in energy efficient plants and food parks for capacity expansion and acquisitions in the domestic markets. Investment in the FMCG sector centers around sugar, food processing, cosmetics, and paper pulp industries.

Related Blogs