Ecommerce to contribute 5% or $4 billion to FMCG sales by 2022 – Nielsen

Source: ETRetail.com, Dec 04, 2019

Mumbai: Nielsen expect ecommerce to contribute about 5% to overall fast moving goods market, and treble sales to reach $4 billion sales by 2022. At present, online account for 2% of FMCG sales at $1.2 billion and while the market researcher anticipates all channels to grow, general trade contribution could shrink by 400 basis points, almost entirely taken by online sales.

“This is in half the time that brick and mortar retail took to evolve. That said, these channels are not cannibalizing each other, and all continue to grow with e-comm outpacing modern trade and traditional trade,” said Sharang Pant, Head-Retail Measurement Services and Retailer Vertical, South Asia, Nielsen Global Connect said

Consumers are also buying more of higher-priced groceries online in metros now. For instance, one in four rupee spent on diapers is online while it controls 12% of skin cream spends. Within consumer basket, food accounts for 44% of online sales followed by personal care at 40%. Interestingly, the study shows that market leaders in toothpaste, utensil cleaners and packaged tea segments saw their share fall online during April-August compared to a year ago, indicating opportunity for challenger brands in the ecommerce space.

“In this rapidly evolving world of commerce, India’s FMCG industry is now making its presence felt in the e-comm channel – appealing to consumers’ need for convenience, and in sync with increasing smartphone and internet penetration,” said Prasun Basu, South Asia Zone President, Nielsen Global Connect.

While India emulates contributions from developed markets like Canada, Scandinavia and Western Europe where online account for just 1-3% to sales, markets such as China and South Korea have a significantly higher ecommerce contribution of 17% and 20% each.

Indian clothing market likely to be worth $53.7 billion in 2020

Source: The Hindu Business Line, Dec 04, 2019

Mumbai: Stalwarts in the fashion industry are not looking forward to 2020. With most executives across apparel and clothing and the wider fashion world bracing for a slowdown in global economic growth, the only beacon amidst the gloom appears to be the Indian market.

The McKinsey Global Fashion Index forecasts that fashion industry revenue growth will slow further in 2020, down to 3-4 per cent, slightly below predicted growth for 2019. The most optimistic region is Asia (read China and India), although only 14 per cent of executives surveyed expect an improvement in conditions.

The staggering rate of store closures that has rocked the retail industry over the last couple of months, is expected to continue in 2020. Forever 21, the US retailer that helped popularise fast fashion in the United States (US) as well as in India, has filed for bankruptcy.

Diesel USA also filed for bankruptcy, as did Gymboree, the children’s clothing retailer, available in India.

Clothing retailer Gap said it would spin off its more successful Old Navy brand into its own company while closing about 230 Gap stores around the world, or roughly 50 per cent, even as other retailers including Victoria’s Secret and JCPenney are shuttering dozens of locations, including those in India.

As anxiety and concern continues to be the prevailing mood across the fashion world with slower growth putting pressure on margins, the digital shake-out gathering pace and consumers demanding more on sustainability, there are increased expectations from India.

Despite the current slowdown in the economy, the Indian clothing market is expected to be worth $53.7 billion in 2020, making it the sixth largest globally, according to the fourth annual State of Fashion report by The Business of Fashion and McKinsey & Company.

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Services PMI expands for first time in three months

Source: Business Standard, Dec 04, 2019

New Delhi: Showing recovery, the Purchasing Managers’ Index (PMI) for services expanded to 52.7 in November as against 49.2 in October. This is first expansion after three months.

PMI is calculated on the basis of responses from purchasing managers in 400 companies. It is prepared by IHS Markit. Index below 50 shows contraction while above that means expansion.

According to a report prepared by IHS Markit, Indian service providers signalled a moderate rebound in business activity during November, with the return to output growth accompanied by a renewed rise in new business intakes, faster job creation and strengthening business confidence.

Meanwhile, pressures on operating margins intensified, with cost burdens increasing at a more marked pace than average selling prices. The upturn was associated with a pick-up in demand, improved technology and rising client numbers.

However, the headline figure remained below its long-run average of 54.2. The modest expansion of services activity was achieved by growth in three of the five categories monitored by the PMI survey, namely Consumer Services, Information & Communication and Real Estate & Business Services. Activity fell at Transport & Storage and Finance & Insurance firms.

Overall volumes of incoming new work increased to the greatest extent in four months, following a stabilisation in October. Companies that reported higher sales generally cited better demand conditions.November data signalled a ninth successive rise in new business from international markets, with the pace of expansion accelerating slightly from October.

Government plans new scheme to revive 24,000-MW gas power plants

Source: The Economic Times, Dec 05, 2019

NEW DELHI: The government is working on a scheme to salvage 24,000 MW of stressed gas-based power plants, built at an investment of over Rs 1 lakh crore, by importing natural gas and bundling the output with cheaper solar energy.

The power and petroleum ministries are working on the new proposal. The earlier scheme entailing subsidy has been shelved. The proposed new scheme will offer no subsidy and hopes to help operate the power stations at 90% capacity by selling the bundled power.

A senior government official said the earlier proposed e-regasified liquid natural gas scheme (e-RLNG), which involved an e-auction, was successful when there was electricity shortage in the country. He also said that in the later tranches, the scheme did not garner much interest from the developers.

He said bundling of solar power with an equal amount of gas-based power is expected to result in lower cost of production than blending domestic and imported gas-based power.

Power Trading Corp of India (PTC India) has been asked to work on the proposal, an official said. The gas is proposed to be imported by GAIL India with concessions and haircuts by central and state governments, power companies and gas transporters to make it affordable.

GAIL has indicated to the power ministry that it can import LNG for about $6 per unit, and deliver it to power plants for $8 a unit, which includes re-gasification, transit and taxes, sources said. With this, power can be generated at about Rs 4 per unit. The power ministry’ plan is to blend this with the assumed average renewable energy cost of Rs 2.75 per unit, expecting the blended rate will find enough takers among distribution companies under the merit order despatch rule, according to sources.

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E-pharmas come to a halt as regulator makes licence must

Source: ETRetail.com, Dec 04, 2019

NEW DELHI: Stopping online sale of medicines, the drug regulator has issued orders prohibiting any such sale without a valid licence.

The order is likely to force e-pharmacies to shut operations as in the absence of any regulation or law for online sales of medicines, neither the Centre nor state authorities can issue license to e-pharmacies.

In an order to states and Union Territories, the Drug Controller General of India has asked authorities to be vigilant of online sales and take immediate action in case of violations. TOI has reviewed the order and the letter sent to state drug controllers. The proposed regulation for online sale of medicines is still under consideration of a group of ministers (GoM) headed by defence minister.

Unless the regulations are finalised and notified by the health ministry, there are no provisions under the drug law for the drug regulator or state authorities to issue licenses allowing e-pharmacies to operate. In its letter to states, the Centre has cited “the order” by the Delhi High Court issued on December 12, 2018, in the matter of Dr Zaheer Ahmed Vs Union of India. The Court had ordered a ban on the sale of drugs online across India, in response to a petition filed by Delhi-based dermatologist Ahmed.

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Walmart-owned Flipkart invests Rs 2,839 crore in India wholesale entity

Source: Business Standard, Dec 04, 2019

Bengaluru: Flipkart India, the wholesale entity of the Walmart-backed e-commerce company, has received Rs 2,838.84 crore from its Singapore-based parent entity, Flipkart. The investment comes at a time when the government is coming up with National E-commerce Policy that could have a huge impact on online retailers such as Flipkart and Amazon.

According to the company’s regulatory filings, Flipkart’s parent entity was issued 815,761 equity shares through a rights issue at a premium of Rs 34,799 per share. The board of directors of Flipkart India passed this resolution on November 28.

In September this year, Flipkart India received Rs 1,616 crore and in January it obtained Rs 1,431 crore from its Singapore-based parent entity. The funding is expected to help Flipkart take on the Jeff Bezos-led Amazon, with which it is in a fierce battle for dominance in India’s online retail market as well as competition from the yet to be launched e-commerce business of Mukesh Ambani-led Reliance Industries.In October this year, Amazon infused about Rs 4,472.5 crore in its various business entities in India, including seller services, digital payments, and retail. The e-commerce market in India is expected to touch $200 billion by 2028, from about $30 billion last year.

Realty firm M3M signs MoU with Swedish firm to develop smart city

Source: Business Standard, Dec 03, 2019

New Delhi: Realty firm M3M group on Tuesday signed an agreement with a Swedish company to develop a smart city project in Gurugram, Haryana, that has a potential to attract foreign investment of USD 2 billion.

The smart city project is being proposed on 165-acre land that M3M India bought in 2016 from Sahara group for Rs 1,211 crore.

M3M group, which is also developing Trump Tower project in Gurugram, proposes to invest around Rs 2,500 crore, which includes the land cost of entire 165 acre valued now at around Rs 2,000 crore and the construction cost of first phase of around 25 acre, its director Pankaj Bansal told reporters here.

M3M signed an agreement with Sweden-based Urban Systems urbs AB to develop smart city project in Gurugram.

The agreement signing took place during the India Sweden Business Leaders Roundtable and in the presence of King of Sweden, Carl XVI Gustaf.

Ibrahim Baylan, Minister of Enterprise, Sweden, Ann-SofiGaverstedt, Deputy Director Trade Promotion Policy and Sustainability, Teknikfretagen (The Association of Swedish Engineering Industries), Will Sibia, Chairman, Urban Systems urbs AB and Basant Bansal, chairman of M3M were also present.

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