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FMCG sales in modern trade stores slow down in June

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Neighborhood kirana stores returned to growth in June as Indian entered Unlock 1.0 phase, but sales of fast-moving consumer goods (FMCG) though small stores, modern trade or large format grocery chains struggled with continued restrictions and lower footfalls, market research firm Nielsen said.

In its quarterly update on the FMCG sector Nielsen said that while traditional trade channels suffered the most in the June quarter, on account of store closures during the lockdown, modern trade, on the other hand, saw a spike in sales in April and May.

However, as India moved to unlock in early June, footfalls and sales in large stores dwindled.

It also helped that more general stores opened up in June, and the month was marked by a gradual improvement in supplies to small stores. The average number of days of store closure dropped from 11-12 days in April-May to five days in June, Nielsen reported. Neighbourhood grocery stores also showed improved sales as people, wary of stepping out for fear or contracting covid-19 infection, relied on their kirana shops to home deliver goods.

In all, modern trade, that accounts for 10% of FMCG sales in India, was down 5% year-on-year in the June quarter. Meanwhile, e-commerce, that contributes 3% to value of FMCG goods sold grew by 16% in the second quarter, while kirana formats were down 19%, but showed recovery in June.

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