Aggressive Discounting Backfires in the FMCG Sector, Emkay Global Warns
Emkay Global's report indicates aggressive discounting in the FMCG sector is harming brand perception as consumers associate price cuts with low quality. Unlike general merchandise, FMCG buyers prefer value-driven, appropriately priced products, affecting the sector's growth amid competitive pressures and economic challenges.
- Country:
- India
Emkay Global's recent report reveals that aggressive discounting in the Fast-Moving Consumer Goods (FMCG) sector is tarnishing brand perception. The financial management firm highlights a consumer trend: heavy price cuts now suggest inferior product quality, in stark contrast to general merchandise, where discounts are crucial for driving sales.
The report emphasizes persistent price hikes and frequent discounts are damaging FMCG brand images, inducing 'hygiene issues' even as companies aim to enhance retail margins. Unlike high-priced general merchandise, the FMCG sector, characterized by low-cost and quick-selling products, is negatively impacted by aggressive discount strategies.
Emkay Global further notes the FMCG sector's muted performance in the fourth quarter of FY25, driven by sluggish urban demand, increasing competition, and broader economic pressures. In Hyderabad, the rise of quick commerce has affected traditional and modern trade channels, as this new avenue offers better consumer control and sales impact.
(With inputs from agencies.)
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