Rural market outperforms urban areas in consumer demand in second quarter: Report

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Reverse migration and limited supply-chain interruptions in the hinterland helped small towns and villages to outstrip cities and drive demand for consumer items during the last quarter. Rural consumption climbed 58% YoY, more than double the rate of urban consumption that grew 28% for the quarter ended September, The Economic Times reported, quoting from the latest report from Bizom, a sales automation service that transacts with 7.5 million retail establishments.

The broader market has rebounded too, with total sales increasing by 46% in the third quarter, according to the report.

Urban market less damaged due to rising online sales

Picture this, higher agricultural income and minimal retail disruption during the 2020 lockdown, and migrant workers coming home have all helped rural markets develop faster in the last two years. However, during the second Covid-19 wave earlier this year, villages experienced a jump in infections, causing cities to outpace villages in June.

Due to the rising online sales, improved performance of modern trade and chemist stores, and little closure of general trade outlets at the time, the urban market was less damaged.

Krishnarao Buddha, senior category head at Parle Products, is quoted as saying that the rural market has been outdoing urban market, except for a short blip a few months ago, on demand front as they faced no supply chain issues.

The  key enabler for growth has been the strong presence of kirana outlets and increased people mobility that is fuelling higher growth across categories,  Akshay D’Souza, chief of growth and insights at Mobisy Technologies, which owns Bizom told the newspaper.

The strong consumer recovery wasn’t limited to low-cost consumer products. According to market intelligence firm GfK India, small towns with populations of 1 to 5 lakh expanded by over 8% in terms of value across all consumer electronics and appliances in July-August, compared to 5% growth across India

“As we move into the festive period and beyond, we expect these markets may maintain or increase the salience across categories during the festival season, Nikhil Mathur, managing director – India at GfK, is quoted as saying. “Premiumisation is driving the growth with average selling prices (ASP) growing faster than all-India,” he added.

Between July and August of last year, sales of laptops in smaller towns increased by 43%, compared to 30% for the entire category.

Globally, the smartphone market shrank by 1%, but smaller markets witnessed a growth of 2%. Even in the washing machine market, the total market rose by 3%, but smaller towns grew at twice the rate by 7%.