The Hindu Business Line : The cross migration of retail

Chennai June 20 Consumption of major FMCG categories increased from Rs 68,000 crore in 2000-2001 to Rs 93,000 crore in 2005-06, according to recently released Central Statistics Office data.

However, the scorching pace of rural consumption makes urban sales hikes seem like a mere crawl. Top industry executives say that the rural market share in a number of categories has touched 40 to 50 per cent. Turnover of fruits and vegetables, too, went up 35 per cent, to Rs 1,80,000 crore.

Real consumption

Real consumption fell a bit, but prices rose, much faster than in the case of FMCGs. Wholesale price indices put online by the Economic Advisor to the Ministry of Finance report a 10-15 per cent price hike for perfumes, cosmetics and toiletries, toilet soap and detergents; and a similar drop for toothpaste.

Large hikes in fruit and vegetable prices are typically accompanied by a tilt towards higher income, urban groups. And from the chain-of-middlemen-dependent petty traders towards corporate retail chains which, if they can generate and sustain the volumes, can source farm produce directly from farmers.

So are fruits and vegetables going to become the staple food of corporate retail chains? Probably not. But they will increase their share at the expense of FMCGs, whose producers, already at war with each other, now have to battle corporate retailers as well.

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