 Private label brands which were first introduced 100 years ago in few

product categories, had seen an impressive growth in past few decades

 Products (or services) which are generally manufactured or

provided by one company under another company's brand.

 Store brands or private label brands are brands owned, controlled, and sold
exclusively by a retailer.

 The biggest change in the last decade or so has been the entry of premium
private labels they are no longer saying, “buy us because we are cheap”,
instead today they are saying “buy because we are best”.
 Differentiating factor for a retailer
 private brands worldwide were always
conceived to take on category leaders
 private labels are large in developing markets —
they account for 40 per cent of Wal-Mart sales
($126 billion or Rs 5,16,600 crore), 50 per cent for
Tesco and are eating into a larger chunk of the
organised retail sale in developed markets
 changed the balance of power between brand
manufacturers and retailers,
Also Known As: store brands, private label branding, private-label goods,
in-house brands

A private label can be classified as:

 STORE BRANDS

The retailers name is very evident on the packaging i.e, it carries the retailers name
such as westside, food world, big bazaar.
 
UMBRELLA BRAND

A generic brand, independent from the name of the retailer

Example: splash (life style), bare (pantaloon).
 Identificati
on of need
gap

To create
unique
Changing merchandise
consumer
habits
Need for a
private
label

Creating
To earn customers
more loyalty
margin
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
PROS
• Exclusivity & differentiation
• Bring customer loyalty
• Better margin
• Better control in deliveries
• Brand equity
• Freedom in pricing strategy
• Increase bargaining power with
both national brands and PL
factories
CONS
• Inventory risk
• Higher R&D expense
• Higher marketing expense
• No markdown or return
allowance from branded
suppliers
• If product fails, will create
negative image
• Quality control, complex
production & import issues
 Shopper Stopp : STOP, Kashish, LIFE,
Vettorio Fratini, Elliza Donatein, and
Acropolis
 Westside : Gie, 2F4U
 Aditya Birla Retail :‘More for You’ food and
grocery chain
• In India, the growth of private labels has
been phenomenal and is slowly gaining more
store space.
• Store space: Nearly 40-50% of the store space
is dedicated to store brands. These products
shared the shelf space with other branded
products.
• A number of store brands: This is especially
true for apparel. Shoppers Stop has several
in-house brands.
 Price tag: These products are usually priced
substantially lower than the other brands.
 Cater to a number of categories: In these
stores, the store brands were not limited to
a particular category
• Private labels are increasingly posing a threat for fmcg
companies in India, according to a new consumer report
published by Datamonitor in December 2009
• Findings:
» while the adoption of private labels began with a value
proposition, consumers perceive these store brands are
offering quality on a par with national brands.
» The increased scale of operations of retailers is shifting the
bargaining power from fmcg companies to retailers. The
growing adoption of private labels can compel fmcg
companies to reassess their trade margins or relationship
with retailers.
» Retailers, which started launching their private labels as a
value alternative to national brands, are now mirroring
these national brands with respect to product packaging
and claims. They are also offering these products at a
lower price.
» Retailers are launching products with tiered pricing to
cater to a wider audience too, while holding on to their
store positioning.
 The adoption of private label brands has been rapid in
the household care segment, say researchers, and the
increased satisfaction level of consumers buying
products in this segment has helped in building
retailers’ credibility.
 Datamonitor expects that a customer satisfied with a
private label brand in a low involvement category such
as household care will have a greater propensity of trial
in other categories such as food and beverages and
personal care.
 Private labels have become increasingly more accepted by the
public as quality has increased and retailers have expanded their
offerings of private label goods. Many consumers now seriously
consider private labels as acceptable alternatives to national
brands.
 Private label goods are generally much cheaper to produce than
branded goods, due to the lack of advertising and marketing
expenses The cost difference is usually large enough that retailers
can offer customers lower prices while still making higher profit
margins themselves. Lower prices can be enticing to customers
and increase a company's competitiveness.
Private labels are slowly becoming the
protagonist in the big Indian retail growth story.
Taking cue from the West, Indian retailers are
also churning out newer ways to increase their
profit margins—one such initiative is the
introduction of in-house brands. With Indian
customers increasingly accepting these private
label brands, they would soon be major
contributors to the profits of Indian retailers.

modern retailers have mustered the courage of

pricing their products on a par with branded
players
Thank You