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The differentiating factors in merchandise for retailers these days are the private
labels. The transformation of store brands/ private labels has built a WHOLE NEW
SCENARIO. The UK and Belgium lead the list of private labels with over 43 percent
in terms of volume. Private labels range from aluminum foil, tissue paper, to
apparel, food and groceries. This is found most suitable for supermarkets, hard
discount stores and specialty stores. The growth is found to be almost more than 60
percents worldwide, more than manufacturer’s brand but these private labels lack
in quality over market leaders.
Indian context
The old mom and pop store now provides home made wheat flour (Atta), rice
spices, and even wafers (namkeen). Sweet shops in India like k.c. das rasogulla of
Kolkata and panchi petha of Agra , chirag din of Mumbai. In apparel.
Spencer’s RPG group has ready to eat food with 25 % private labels.
Big bazaar hypermarket. Generates a turnover of 200 crores from private labels.
Nilgiri in Bangalore offers private labels in Dosa and Idli
These days most for the space is occupied by private labels mainly known as type 1
labels type 2 private labels have more value added to them. In terms of packaging
branding and contents.Ex- dadi ma pickles , smart choice jam both by Spencer’s.
More examples
As the competition is pacing up retailers all the retailers are left with similar kind of
merchandise, services and store ambience. Under these circumstances the only
differentiator for a retailer becomes the private labels and I strongly believe that in
the coming time the private labels will be the pivotal on which branding strategies
will be formulated by retailers.
My findings on this are – the reduction in price beyond a limit does not lead to
increase in sale thus an optimal price gap between market leader and private
label has to be determined. On the other hand quality perception can be
increased in the consumer’s mind by providing detailed description on the
package and by touch feel and fragrance/ aroma. This will help retailer to
build the gap between product categories and secure him a better price
margins.
Retailer can offer free sample trial this will enhance familiarity with the store
brand. Eventually these customers who are satisfied will become the ardent
brand advocates. Private labels are usually manufactured by a company and
sold under the brand of another company. I have seen these practices in
retail ex- most chains are promoting them aggressively because private
label/store brands portfolio provide them a powerful margin. Provides a
strong tactical and strategic benefit to retailer.
BRAND BUILDING STRATEGY
The store brand products are benchmarked to the market leader in terms of
features and benefits and easily captures customer’s mind due to low price.
Since the store brand and the market leader are of similar features but since the
store brand is low priced and promoted by retailer the chances of buying the store
brand increases drastically.
Now if the product meets customer's expectation then it replaces the national brand
Flowchart ---
(Store brand / market leader brand --- similar features and benefits----- replaces the
market leader ----- becomes a brand.)
A. packaging,
B. design
C. pricing
3 segmented portfolio----
Better segment --- additional features to market leader low / similar pricing.
Best segment --- enhanced offerings and comprehensive with low cost.
Steps for branding
C. Differentiation.
D . Segment Classification.
F. packaging Guidelines.
5. Increase sales for retailer in addition to margins the cost advantage helps retailer
to be flexible with the pricing of store brands.
6. Slowly Slowly customer shows brand loyalty and starts purchasing the other
offerings of same brand.
In India it is largely based on pricing play marks and Spencer has only store brands.
Westside.