Big Bazaar: DreamLine, Kryo, Pure, Premium Harvest, Tasty Treat, Clean Mate and Care Mate
Reliance: Reliance Select
Subhiksha, Spencers, Food World : Same label
[The Ecomonic Times Oct. 4:]
Big Bazaar isn't alone in this display of bravado. Almost every retailer in India that has acquired a certain size and scale has private label brands, which allow them to enter new categories faster than traditional marketers. And as organised retail grows in scale, Indian retailers are leapfrogging ahead, experimenting with various kinds of private label strategies.
Private labels serve many purposes.
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- Plugging a need gap -- for instance, Big Bazaar's label DreamLine is aimed at providing shoppers the entire gamut of home improvement solutions under one brand.
- Retailers are also spurred to launch private labels given the low penetration of most categories in India.
- Then there is the aspect of supply chain efficiencies.
- Private labels also help in cutting down on intermediaries
- Dropping cost
- Better margins for retailers
- More customer discounts
According to a Euromonitor study, the global private label market was estimated to be worth $1,411 billion in 2005, and is growing at 6 percent per annum. Organised retail currently forms only about 3.59 percent of total retail in India, but its share will leap to 28 percent by 2017, according to a study by Technopak Analysis. And a 2007 study by Technopak says that overall, private labels already form 19 percent of the total market share in India.
Future's private labels account for 20 percent of the food category, while overall, the share of private labels for the group is pegged at about 10 percent.
Given the nascence of retailing in India, one would assume that players are looking only at generic private label brands. But segmentation is already taking place even within own labels -- from pure generic brands to premium brands being retailed on the shelves. For instance, Big Bazaar has four different private labels strategies -- opening price point labels, promotional labels, trade-up labels and even deep-discount labels.
In clothing, it is 100 percent for players like Tesco, Sainsbury's and Asda, says George. "Starting from a pure 'value' play, it has now become 'quasi branded' like Tesco Value, Tesco Finest," he says, adding that the private label product hierarchy in Tesco is being managed like a brand, with sophisticated analysis being put into space, pricing, promotion and strategies.
The emergence of private labels is giving smaller brands -- especially in functional driven categories where emotional connect plays a negligible role -- a chance to compete with the big boys. For example, Food Bazaar has 'adopted' labels like Wow Premium sanitary napkins and insecticide spray Quit, manufactured by Asian ITG, a manufacturer for brands like Mortein.
Subhiksha has recently moved to third party brands, which include brands sold exclusively at Subhiksha and made to quality specifications approved by the retailer. This covers groceries sold under the Subhiksha name as well as other products typically sold by national FMCG companies.
Retailers are looking at ethnic merchandising depending on the demographics of a store location, and bringing non-national brands into right ethnic catchments. For example, Spinach retails Kolkata-based Zarna Ghee (manufactured by Sunderman Dairy) and Kerala-based Curry Milk in Mumbai. Subhiksha retails south Indian pickles in RK Puram at Delhi.
There is hardly any special advertising created for own labels, except for the odd leaflet or two. Most retailers rely on shelf space and signages, and techniques like sampling and active merchandising at the store, for promoting their brands. Subhiksha and Spinach believe the key is inducing trials, though the store can only influence trial, but the product has to take over and deliver. He also feels it is essential that the packaging and look and feel are as good as if not better than national brands so customers don't have reason to view the products with suspicion.
The real challenge, however, will be for retailers to take own labels outside their stores and make them national brands -- something that Future Group has announced it will do. DreamLine and apparel brand Buffalo are the two labels it has mandated for national roll-out, and the responsibility of taking these labels across various other channels rests with Future Brands. Malhotra says the rollout will be a learning experience, given that the brands will move out of the protected environment of the stores. "It will give us an understanding on whether private labels can stand on their own," he explains.
Another trend on the anvil is exclusive co-branded labels in the form of joint venture between manufacturers and retailers. "Co-branding is evolving, though more work needs to be done before the level of comfort is arrived at," says Shahra.
Retailers, however, know that a balance needs to be struck between private labels and branded products from traditional marketers.
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