ITC clocks growth in online sales, expects festive season to push overall demand

FMCG major ITC is expecting the upcoming festive season to push the demand of products, including some discretionary items like perfume, confectionery and cosmetics, according to company chairman Sanjiv Puri.

The company is also witnessing a surge in its online sales, with e-commerce contributing around 4.2 per cent to its overall turnover.

"As far as the festive season is concerned, one should expect upwards (movement in demand). It would vary by categories. Overall consumption would see a lot of upticks," said Puri at a video conference with reporters.

He, however, said the demand would vary from category to category and in FMCG portfolio, in which ITC is operating.

"In the portfolio of FMCG, we are already seeing a fair amount of buoyancy as consumers are preferring trusted brands... They are looking for health products and hygiene products," he said adding at the moment the demand is "elevated" due to the coronavirus pandemic.

Certain segments are witnessing a recovery from the days of total lockdown while new opportunities and industry dynamics are getting constantly redefined in some verticals, he said terming it as "next to normal" stage for the industry.

The company has also witnessed fast growth in its online business in the wake of the pandemic and expect to continue the momentum.

"Online is growing very rapidly for us. We have scaled it fast though the aggregate number is not bing," he said adding "We are growing more than 100 per cent on the e-commerce."

ITC has doubled the business in online sales. In FY2019-20, ITC has got 2.3 per cent of its turnover from online sales and in the first quarter of this fiscal, it is around 4.2 per cent.

It had reported consolidated revenue from operations at Rs 10,478.46 crore in the April-June quarter.

Over its lifestyle retailing business, the ITC chairman said that it did not scale up in line with expectations.

"When we began to do a strategic review, we also found that the leverage of the institutional strength opportunity was very limited in this business as it has a separate distribution channel and it has not leveraged any of our back-end support," Puri said.

Therefore, ITC had to restructure the lifestyle business and now very few stores are open.

"Unless we get any specific business idea as to how we can mint this segment, we are not going to expand it or grow it," he added.

ITC said it is also witnessing a faster growth rate from the rural and semi-urban markets in comparison to the developed urban ones.

"We are seeing two trends at an aggregate level. One, there is a propensity for larger pack size because people are opting for a lower frequency of shopping and there are some products which are in demand in rural areas in smaller packs, which has been accelerated," he said.

When asked about recent consumer trends, Puri said that now some of the discretionary items like perfumes, confectionery and cosmetics have started to recover though they are still depressed.

"The demand for essential items and hygiene products still remained at a higher level," he said.