Direct Selling shows a robust growth

Direct selling took a jump of 24 per cent this year, according to IDSA - Ernst & Young Annual Survey findings 2009-10 released at its 3rd Knowledge Forum, in Chennai.
direct selling report 2010

Retailers are witnessing an adrenaline rush as direct sales peaks a robust growth of little less than a quarter at INR 4,120 Crore (US$915 million) for the fiscal year 2009-’10. The industry has exhibited a robust 24% growth over the previous year (2009) of which the organized sector accounted for INR 3,750 Crore (US$835 million) and the unorganized sector for INR 370 Crore (US$80 million), increasing from INR 3,027 Crore (US$670 million) and INR 303 Crore (US$65 million) respectively in 2009.

 

Key findings:

•    Product coverage has increased with four different product categories covered by more than 30% of the surveyed companies, compared to two categories last year.

•    The 4 product categories are health and personal care, household goods & consumer durables. Where health accounted 74% growth, personal care stood at 66%.

•    Whilst fewer companies are present in the category of household goods and select consumer durables. showing strong growth of 24% and 12% respectively.

•    South India leads in the direct selling activity followed by Western India.

•    Smaller towns emerged as key markets at 38% of overall industry value.

•    New trends emerged - Rural focus, advertising and web based ordering.

•    Direct Selling Industry is expected to reach INR 7100 Crores (US$1,580 million) by 2012-13.

 

Mr Pinakiranjan Mishra, Partner & National, Retail & Consumer Product Practice, Ernst & Young informed, “Companies are increasing product coverage to boost revenues”.

 

Mr Mishra further quoted, “Companies increased their product coverage with 4 different product categories being marketed by more than 30% of the surveyed companies as opposed to 2 different product categories last year. However, encompassing nearly 47% of the entire market size, health is the most prominent category involving nearly 35% of the major direct selling companies. Health and personal care categories have seen robust growth of 74% and 66% respectively”.

 

Mr Yoginder Singh, Chairman, IDSA happily announced the strong growth trajectory and turnover of Indian Direct Selling Industry to INR 7,100 Crore (US$1,580 million) by 2012-13 and that this growth would be manifold once we have a clear regulatory framework on direct selling.

 

He further added, “South India remains the hub of the direct selling activity followed by West India. Presence of a large base of Independent Sales Consultants combined with a high level of awareness of the direct selling concept has contributed to the growth of direct selling in south India. Maharashtra has emerged as the number one state for 33% of member companies with West Bengal and the North Eastern states entering the top four states of 47% member companies”.

 

Also that,Revenues from Tier-II cities and others reported a robust growth. Increasing from 14% of the overall market in 2008-’09 to 38% this year. However, the share of metros reduced from 57% to 38% in the same period. The contribution of Tier-I cities also went down from 29% to 24% of the total market in the same period”.

 

Lastly he said that, Companies need to continue building trust and lasting relationships with customers to enlist long-term customers who will remain loyal to the brand in a market where choices are plenty. Direct selling companies also need to continue interacting with the Government to ensure mitigation of challenges faced due to lack of regulations. Our   focus is very clear we will continue to spread awareness about this industry in forums just like this one today.

 

Ms Chavi Hemanth, Secretary General, IDSA said, “A key impact made by direct selling activity is visible in the number of Independent Sales Consultants (ISCs) currently participating in the industry. Over 3 million individuals are involved in direct selling activity across India compared to 1.8 million last year. 2.1 million ISCs were women up from 1.2 million last year, indicating the industry’s significant role in taking in and empowering women”.  She also stated that women form the core of the industry worldwide, with 67% in Asia /Pacific, 82% in Europe/Africa and 83% in America/Canada.

India's economy during this fiscal is poised to grow by 9%, the highest in 3 years. India is also the 6th largest country in terms of Purchase Power Parity. It has an immense young population base which is ready to experiment.

 

The growth shown in direct selling this year will continue in the years to come. She affirmed that the growth registered today is because of the foundation laid by ethical companies while starting the direct selling business in India and formation of the Indian Direct Selling Association (IDSA).  She also mentioned that the bigger companies will consolidate and the startup companies will add to the pie of direct selling industry.

 

 Mr Ajay Khanna, Vice Chairman, IDSA concluded the forum and stated the importance of the Indian market for the global players evident in the capital investment that these organizations have earmarked for their Indian operations. He confidently said that the immediate future will see hectic activity in the direct selling space, with market players diversifying into new and nascent product categories in a bid to capture market share. He thanked Ernst & Young and members of the media for joining us.  He requested the media to be a part of the growth trajectory of the industry by reporting facts.Well, with the recent growth trajectory, a new lease of life seem to have infused in direct retail!

 

Sourced from IDSA


 

 

 

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