FMCG, retail companies in India chalk fresh strategies amid sluggish consumption demand

As part of their efforts to navigate through the troubled waters against the backdrop of sluggish consumption demand in the overall economy, businesses in the Fast-Moving Consumer Goods (FMCG) and retail space are preparing strategies for the upcoming quarter of financial year 2025.

In the second quarter, many FMCG and retail companies witnessed the heat of sluggish consumption, which was even visible on their balance sheets. Going further, the anticipation is that the third quarter of the current fiscal year will not bring much respite, and consumers' purchasing power is likely to remain constrained, Nomura said in a report. The report further added that inflation in select pockets owing to food prices and some commodities (such as palm oil) may affect the spending power of the consumer.

It highlighted that most companies could pass on commodity costs post-COVID-19 until 2025 due to high demand for their products; however, given slow demand, the tide has turned, and expectations are that margin risks may arise mostly due to higher competition.

Any rise in commodity prices would be difficult to pass on in such a scenario, it added.

FMCG and retail companies are navigating a challenging market environment either by adjusting their pricing strategies or expanding product lines.