FMCG, retail and e-commerce in India are growing rapidly

by Julia Pott

In October 2024, the Federation of Indian Chambers of Commerce and Industry (FICCI), together with management consultants Deloitte, published a report on the Indian retail sector. The report SPURring growth in FMCG, retail and e-commerce sectors in India proves that the Indian consumer goods industry is boosting the overall economy and examines the development of the FMCG sector, brick-and-mortar retail and online retail in India. In this context, influencing factors such as consumer trends are examined and tips are formulated on how retailers can participate in the growth spurt.

India's economy is on a strong growth trajectory, with the FMCG (Fast Moving Consumer Goods) sector playing a key role in boosting the consumption-driven economy. Studies forecast India to have the world's highest per capita income growth of 5.4% per annum between 2024 and 2033, driven by factors such as increasing urbanization, technological advancements in manufacturing, rising incomes and other macroeconomic developments.

After a pandemic-related decline, the Indian FMCG sector is currently experiencing a strong recovery, with growth peaking at 12.2% in mid-2023. While urban markets continue to account for the majority of sales, rural regions are also recovering. Easing inflation is also contributing to this.

In addition, consumer behavior in India has changed significantly as a result of increasing digitalization and higher disposable incomes. Almost half of the population now has access to the internet. This opens up new business opportunities and promotes the digital transformation of the economy and the retail sector.

The e-commerce sector in India is experiencing impressive growth and is proving to be a driving force for innovation and economic development, especially in the post-pandemic period. Online retail in particular is digitizing, improving customer experiences and developing new business strategies.

E-commerce is becoming increasingly important in both large and smaller cities. Technological integrations such as artificial intelligence, big data and personalized experiences are now essential for the success of companies in the digital environment.

New business models such as direct-to-consumer (D2C), quick commerce and subscription-based services are enjoying great popularity. The demand for fast delivery (“quick commerce”) is growing particularly strongly in rural regions and smaller towns. According to surveys, 37% of consumers prefer quick commerce services for food and beverages, as purchases are often made spontaneously. In contrast, traditional e-commerce is preferred for categories such as home goods, beauty and personal care.

“India's food and beverage sector is a critical engine behind the country's impressive 8.2 percent growth in FY 2024, driven by evolving consumer preferences and heightened spending. The shift towards packaged goods is catalyzing expansion not just within F&B but also across key sectors like packaging and logistics. This synergy is reshaping the industrial ecosystem, offering new opportunities that are integral to India’s continued economic trajectory”, states Nadia Chauhan, Co-Chair of the FICCI FMCG Committee and Joint Managing Director of Parle Agro.

• Quick commerce surge for food and beverages, prompting faster deliveries and localized e-commerce strategies
• Rising demand for India’s authentic regional cuisines in the packaged food sector
• Growing demand for sustainable products and willingness to pay a premium for eco-friendly packaging, ethically sourced products and sustainable food options
• Rising demand for healthy food choices and willingness to pay a premium
• Shift towards natural products and less processed options
• Expansion of private, cost-effective label brands of Indian retailers

• driving faster product innovation and devising effective expansion strategies using data from D2C platforms, POS, CRM or social media
• deploying GenAI (generative artificial intelligence) use cases to enhance consumer experience and improve overall productivity
• enhancing in-store experiences and promoting upgrades and complementary products
• optimizing the omnichannel consumer experience and driving personalization in product recommendations and content
• offering innovative loyalty programs, customized subscriptions and rental models
• exploring partnerships with quick commerce platforms and increasing delivery speed
• converting online browsers to in-store buyers to improve conversions and drive higher bill values

The future of the Indian FMCG, retail and e-commerce sectors remains promising. Technological innovations, digital transformation and the expansion of logistics and payment systems offer enormous opportunities for growth. The retail sector can thus respond to the needs and wishes of consumers in a targeted manner and shape the market in a future-oriented way.