Impact Of Covid-19 On Fmcg Industry

IMPACT OF COVID-19 ON FMCG INDUSTRY A study on impact of COVID- 19 on ​ FMCG industry and consumption of FMCG products by consumers in Mumbai. Bhumika Jain, SYBAF Priya Ghiya, FYBFM Jai Hind College, A Road, Churchgate, Mumbai, Maharashtra

ABSTRACT The COVID -19 pandemic hit the global economy, India’s real GDP decelerated to its lowest in 6 years. One of the major sectors impacted by this is ​fast moving consumer goods (Fmcg).​​The fast moving consumer goods (Fmcg) sector is an important contributor of the Indian economy. FMCG products are consumed by all sections of society. The majority of consumer’s income is spent on these products. This sector has shown amazing growth and is the fourth largest sector of Indian economy . Because of Covid-19 and announcement of lockdown lead to increasing demands for FMCG products massively owing to panic buying by consumers and companies having to increase production. The consumers are likely to curtail their discretionary spending which would significantly impact the sector’s growth further. However, if the supply and logistics disruptions are This paper focuses on how Covid-19 has impacted the FMCG industry and consumption of FMCG products by consumers in Mumbai. Objectives

Method: 1. Participants - Participants who participated in our study are people of Mumbai. The percentage of females in our survey were 68% whereas men were 32%. 2. Research Design: We have used chi square testing to find the hypothesis. The hypothesis is H0: The no. of people expenditure increased is independent of the storing necessities during lockdown. H1: The no. of people expenditure increased is dependent on the storing necessities during lockdown.

3. Measures: The collection of primary data was carried out with the help of a questionnaire through survey method. The secondary data collection is from the internet, magazines and reference books. 4. Procedure: Online Google form was created to get the reviews of people on how they are impacted and then we analysed the results of the questionnaire and gave suggestions . INTRODUCTION The Covid-19 has a huge impact on the economy and one of the major impacts is on the FMCG sector which is the 4th largest sector of India. Because of COVID-19 government declared a lockdown which has resulted in an increase in demand and consumption of FMCG products massively. Owing to this panic buying by consumers the companies need to increase the consumption. Retailers’ supply-chain difficulties have largely arisen as big shifts in consumer behavior and stepped-up health restrictions have rippled back through their operations. One noteworthy shift has been an abrupt swing in purchasing patterns. Sales of non discretionary products like household, food, beverages and personal-care products have increased, while sales of discretionary items, like furnishings,clothing and footwear have tailed off. In order to increase production the key problem is shortage in the workforce. The workers can’t go on work because of lockdown and the transportation of goods has become difficult because of restriction in movements by the state government which is disrupting the supply of products.Workforce is a problem when it comes to manufacturing as well as delivery of the product.Retailers have started taking measures to keep movement of goods to store shelves and consumers’ houses. Retail leaders are trying to create transparency. Also they are working on building rapid-response capabilities to mitigate the short-term fallout from the crisis.In this research paper we are focusing on challenges and opportunities faced by the FMCG sector and how consumers are impacted through it.in this article on the five actions retailers are taking to resolve the immediate challenges that COVID-19 presents to supply-chain workers, business partners, and operations. (In a subsequent article, we will examine how supply chain leaders at retail companies can chart a path to the next normal, building resilience and returning the supply chain to full effectiveness while reimagining and reforming supply-chain operations to improve their performance.)

IMPACT OF COVID-19 ON FMCG SECTOR 1.COVID-19 Retail market is a Guerrilla warfare: Ideally, the normal retailing norms say that the FMCG salesman does a fixed number of outlets in a day. And now things are very different. Mr. Japheth pointed out that the sales

team had no knowledge of the market during the lockdown. Few retailers have opened their shops, few haven’t. In this case, identifying and hitting the right retailer is the key. 2.MOM and POP stores are winning the lockdown battle: Mom and Pop stores or the Kirana stores are winning the battle for their agility. Many retailers are visiting his depots to collect their orders so that they can meet the demands of the customer. Super Markets have not been very agile in reacting to this situation. The retailers are winning the battle by not only keeping the essential commodities but also delivering the supplies to the end consumers within 4-5 km radius. These gestures will bring a strong and long term customer loyalty towards them. 3.Consumers are not brand-conscious: The consumers are not being brand conscious at these times. They are picking up on availability at the retailer’s end. Having said that, he mentioned that if a consumer is able to find the brand of their preference - they are buying it in bulk. 4.Managing internal and external communication is the key: In this time of mayhem, the central government’s directive can be misinterpreted by the state government and local authorities. There are various instances where local police stopped the vehicle delivering essential supplies. Renowned FMCG consultant mentioned that in this event of crisis managing clear communication with the team is essential. 5.Post lockdown Brands will have to take credit exposure: In order to survive in the market after the lockdown, brands will have to provide credit to their channels to get the products in the market. This is important otherwise, their competition will eat on to a big chunk of the market. Post-lockdown priority should be to use credit as a tool for product placement. 6.Work from home will be the new culture: FMCG as an industry has been a laggard in promoting work from home but currently they have no choice but to increase their efficiency using telephonic and web based interactions. Soon this will become a new culture. 7. Backend Operations are a big hurdle: The labour supply has stopped and raw materials are scarce. Taking a cue from this point, packaging material is a huge issue in the current market.The suppliers and labour force is the only solution that may help in maintaining long term relationships. 8. FMCG Supply Chain will be redefined:

The idea which seems impractical one month back will look seemingly doable. Like for example using retailers to deliver online subscription services or perhaps using the right tool to engage key stakeholders of the supply chain. As we can see the effect on FMCG because of covid-19, this impact will take a considerable time to erode from the markets and consumer’s minds. The FMCG companies need to convert these challenges into opportunities for better business models. Opportunities for FMCG brands amid CoronaVirus Outbreak It is surely a dark phase for the entire country. The Coronavirus outbreak has undoubtedly disturbed the Indian economy. Having said that, there are hidden opportunities wherein brands can capitalize to keep them in good shape amidst the pandemic. It is the best time for brands to win customer’s trust but they’ve to take certain steps in the right direction. First of all, all brands should engrave customer-centricity into their business model. The companies should ensure proper sanitation and disease protection at their brick-and-mortar outlets. FMCG companies should attract customers to prefer digital shopping over physical shopping. Furthermore, it is crucial to winning customer’s trust in this rough phase and brands need to go extra miles for that.

Primary Data A questionnaire was distributed among 259 people. The questions are as follows:1. Did you face any problem with the availability of necessity goods due to the outbreak of covid – 19 in Mumbai city? (example : food and beverages , toiletries , household stuff)

2. Did you store any necessity products due to the announcement of the covid – 19 lockdown?

3. Has your expenditure increased on the necessity products due to the covid – 19 lockdown?

4. Do you think that the current production of necessity goods is enough to sustain the Indian population?

Kai Square Test H0: The no. of people expenditure increased is independent of the storing necessities during lockdown. H1: The no. of people expenditure increased is dependent on the storing necessities during lockdown. Level of significance: 5%, Degrees of freedom= (2-1)*(2-1)=1 OBSERVED FREQUENCY TABLE

Expenditure increased/ storage of necessities

yes

no

Grand Total

yes

121

34

155

no

64

40

104

Grand Total

185

74

259

We can now calculate the value of chi square statistic: EXPECTED FREQUENCY TABLE

Expenditure increased/ storage of necessities

yes

no

Grand Total

yes

110.714

44.2857

155

no

74.2857

29.7143

104

Grand Total

185

74

259

(OBSERVED-EXPECTED)^2/EXPECTED

Expenditure increased/ storage of necessities

yes

no

yes

0.955576

2.38894

no

1.42418

3.56044

Chi-Square​= 8.32913 p = 0.00390143 CONCLUSION AND INTERPRETATION: Since, p<.05 there is a significant relationship between people’s expenditure increasing with the fact that they are storing extra necessities. Discussion