Private labels on an upswing

Private labels are amongst the key trends that will see an upswing this year. The power of private labels is being explored by retailers all over the world. Read further to explore this new albeit popular concept.
Private Label products by Vishal Mega Mart

Private labelled products are characteristically those which are manufactured or provided by one company and sold under another company's brand. Also known as store brands or own labels, private labels are owned by the retailers themselves. 

Prologue of PL
Retailers who do not wish to be at the mercy of big brand names and want to fill in the gap to keep their shelves packed have taken to introducing their own labels. Often positioned as low cost alternatives, they are usually initiated to attain higher gross margins as compared to branded products. The purpose for the introduction is also traced to fill in the lacunae prevailing between the supply and demand of the customers’ requirements and offer enough merchandise on the shelves. 

Categories and brands
Private labels are now prevalent across various categories of retail ranging from groceries to apparels and even consumer durables. All the big names in retail like Pantaloon Retail, Bharti-Walmart, Reliance Industries, HyperCity Retail, Vishal Megamart, V Mart, Shoppers’ Stop, Spencer’s Retail and Aditya Birla Retail have taken this road. Future Brands has also been expanding its private label portfolio. Future Group's trademark brands include 12 apparel, four FMCG and two household products labels. Private labels contributes around 30 per cent of its sales in FMCG and 25 per cent in personal care in the group's major formats, including Pantaloons and Big Bazaar. Hypercity too has developed a suite of exclusive brands across all categories. They are available only in Hypercity and deliver increased value to customers by offering quality, uniqueness and a good price. They have brands under the categories of food, homeware, sports, appliances, clothing, footwear and accessories. Vishal Mega Mart has private labels under the category of consumer durables, apparel, accessories, and FMCG & Grocery. Aditya Birla Retail has more than 400 products in its private labels. RPG’s Spencer’s Retail has private labels under the category of quilts, handloom towels, dining accessories and electronics. V Mart has products under the category of apparel, footwear, accessories, and FMCG & Grocery.

Benefit gained
When we speak of private labels, the first advantage that comes to mind is that of monetary gain. Private labels in food and groceries carry margins of 25-35, while private labels in apparel and accessories offer more than 40 per cent margins. However, that is just one of the primary benefits for a retailer. It gives the retailers a platform to negotiate on the lines of prices and credit policies with branded players who had been dominating the scenario all these years. It also gives retailers the opening to bring in exclusive products that have not been branded before. 
Retailers always wish to maintain and increase footfalls through the lower-priced offerings at their stores. Offering a value proposition to the consumer in a price sensitive market especially like India will work in the stride of a retailer. It is the customers trust and confidence in a store that decides the fate of the private label. Private labels do not involve large marketing and advertising costs which in a way also adds up to the profit margins. 

Considerations while launching PL
The idea of launching private labels and the advantages are tagged along can entice a retailer to delve into this diversification. However, they should not forget that as two sides of a coin, private labels surely has certain disadvantages that require due considerations. It is not easy to launch a private label as it demands a huge sum of investment and time. Brands do not build up over night; they take their own time to make their place in the market. Branded foods come with an assurance of quality, which is an extremely significant facet that needs to be considered by the retailer for their own labels. 

Way forward
Private labels are brands and here to stay. They are gradually breaking out of the shackles of prejudices that cheap being not good and, are gaining significance. With time, they sure will garner a noteworthy share of the sales pie! 



 

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