Private Labels

Ever wondered what keeps brand managers in manufacturing companies awake at nights? Is the rival brands that are snapping at their heels? Or is the fear that recession would bring them down? Well you are way off the mark. The answer is private labels owned by the retailers themselves, which are also known as store brands or own labels.

Should manufacturers really be concerned over what the retailer is doing? Yes, private labels are large in developing markets — they account for 40 per cent of Wal-Mart sales ($126 billion), 50 per cent for Tesco ($36 billion) and are eating into a larger chunk of the organised retail sale in developed markets. Private labels constitute around 10-12 per cent of the organised retail product market in India and their share is likely to grow even in the current economic environment, says a report by global consultancy firm KPMG. Some of the key players in this category include shopper stop, big bazaar ,Pantaloons, Reliance and Hypercity.

This segment by segment invasion followed by the private labels is a trend to be watched out .Especially during times of recession when consumers tend to become more price sensitive and private labels reach out to them by offering them products similar to the high quality branded goods they are used to purchasing at a lower cost.

The Shift in the Private Label Paradigm

The definition of private label branding has evolved radically over time. In recent years, retailers have been liberating themselves from the traditional definition of private label marketing as being the poor relative of national brand consumer goods and have begin to recognise it as their biggest weapon during recession

Private label brands were traditionally defined as generic product offerings that competed with their national brand counterparts by means of a price-value proposition. They were often type-casted as the lower priced alternative to the “real” thing and carried the stigma of inferior quality which therefore...