The store brands or in-house brands are brands owned by a retail store & are termed as Private Labels.

The store brands or in-house brands are brands owned by a retail store & are termed as Private Labels.  Private labels usually deliver better margins for retailers, making a lucrative case for investment in them. The phenomenon has not yet become a significant part of any retailer’s revenue in India — but is expected to change in a big way in 2018.

Earlier, store brands were perceived to stock cheap, low-quality, generic products and operating in categories that do not have a high brand recall. However, over the last five years retailers saw this perception changing across big markets in the US, UK and Europe.

An economic downturn gets more consumers into buying products that are reasonably priced and offer value for money even if it means not having a big brand’s logo slapped on the package. This has driven retail giants like Walmart, Target, Costco and Whole Foods to grow their private labels portfolio aggressively.

 In August 2017, Amazon acquired Whole Foods and its complete range of private labels. Shortly after this news, the Private Label Manufacturers Association, a non-profit that represents 70 countries, shared a report which said that retail majors saw a 4.6% growth in sales of in-house brands in 2016, while that of established brands went up by just 1.1%.

By mid-2017, one of Flipkart’s private labels, SmartBuy, accounted for half the sales of cables and chargers on the platform. Amazon is making inroads with private labels like AmazonBasics, Solimo,    Myx, Symbol and Echo.

At last count, the company had over 30 in-house brands in its fold globally. Data and analytics firm OneClickRetail has said Amazon.com’s private label business may have clocked over $400 million in sales in 2017. Morgan Stanley expects the figure to top $1 billion by 2019.

BigBasket, an online grocer, expects private labels to bring in 40% of its revenues in 2017-18. On the brick-andmortar front, Future Group wants private labels to account for two-thirds of the products sold in its stores, and Godrej Nature’s Basket aims to increase the contribution of private labels to its sales from 15% last year to 25% in the near future.