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FMCGs are those consumer products (not services) which we consume/use in our everyday lives and these products are purchased on a routine basis (daily, weekly, monthly but usually not more than a year). It can be food and beverage (like milk, tea/coffee, fruits and vegetables, dairy products, soft drinks, packaged snacks), hygiene products (like toothpaste, toothbrush, soap), office supplies, cosmetics, over-the-counter medicines (like bandages, antiseptic solutions). FMCG products are non-durable in nature and carry a shorter shelf life. The demand is always high for these products. They are readily available in the local retail stores and can be easily purchased. Some prominent FMCG companies in the world are Dabur, Unilever, Nestle, Procter & Gamble, PepsiCo, and Johnson & Johnson. It is very likely that in the last one hour you might have used a product manufactured by one of these companies.
FMCG Industry in the UAE
The nature of FMCG is such that its consumption will be always heading up with increasing population, improving income levels, penetration of organized retail, and growth of eCommerce. Mark all checked for the UAE and especially, for Dubai.
The easing up of the FDI restrictions in the country’s retail and wholesale sector has further boosted the confidence of foreign companies to intensify their presence in the UAE.
However, the on-going pandemic situation has slowed down consumer spending adversely impacting the performance of the country’s retail sector. Customer behaviour has tilted towards eCommerce; opening up new economic avenues for eGrocery business. With all of these factors and the overall economic scenario, FMCG companies are pushing hard with promotional campaigns and price discounts to regenerate the lost traction.
Challenges ahead for FMCG businesses in the UAE
Lower consumer spending
Despite impressive income levels and spending power, consumers in the UAE are yet to answer their purchasing calls in the old spree. The on-going pandemic has led people around the world to think critically about their consumption patterns. Also, the early phase of the COVID pandemic created an environment of uncertainty about jobs and income security. A tough challenge here for both online and offline retailers would be to revisit their merchandising strategy and create for themselves a brand positioning of care and responsibility.
Customers’ shift towards eCommerce
The COVID pandemic further reiterated the potential of eCommerce. With the new norms of safety, hygiene, and social distancing becoming commonplace, it was obvious for customers to lean towards online purchasing including goods of everyday usage. It is a reality that while big retail malls and retail spaces wore deserted looks, eCommerce and the working supply chains saved the day for us.
Brand reliability and customer retention
Once the new normal sets in, consumers will feel more comfortable with brands and stores they trust or are trusted by the majority around them. New retail stores or businesses with a poor consumer reflection will have a hard time attracting any decent footfall if they keep doing business in the old ways.
Operational efficiency in a new environment
With lower sales, high competition, low consumer spending, and a fight for margins, retail businesses dealing in FMCG products will also have to turn inwards and reassess their operations. A robust set of internal operations will not only help them cut costs but also deliver better customer experience.
How YRC can help: a glimpse
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