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, ³buy us because we are cheap´, instead today they are saying ³buy because we are best´.   

factor for a retailer € private brands worldwide were always conceived to take on category leaders
€ Differentiating

labels are large in developing markets ³ 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,
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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

Changing consumer habits Need for a private label

To create unique merchandise

To earn more margin

Creating customers loyalty

50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0%

PROS
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CONS
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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

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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

Stopp : STOP, Kashish, LIFE, Vettorio Fratini, Elliza Donatein, and Acropolis € Westside : Gie, 2F4U € Aditya Birla Retail :¶More for You· food and grocery chain
€ Shopper

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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

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Private labels are increasingly posing a threat for fmcg companies in India, according to a new consumer report published by Datamonitor in December 2009

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Findings:
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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.

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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 margins³one 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

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