The Hindu Business Line : Private labels make it big on retail shelves

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Bangalore Jan. 25 Private labels have finally found their place in the Indian retail space. Once viewed as `inferior products with suspect quality', private labels are now boldly making it into monthly shopping carts of Indian consumers.

In fact, Indian retail chains too are getting serious about private labels, which occupy a good 20-40 per cent of their shelf space.

And it's not just traditional grocery items such as rice, dal, wheat and sugar that are being offered. Retailers now have their own brands of sauces, jams, detergents, soaps, apparel and homeware. Garments and accessories are offered as non-food private label merchandise, especially in hypermarkets.

Retail Chain

"In supermarkets, merchandise SKUs (stock keeping units) without a strong brand orientation will be ideal for private label development," feels Mr Gibson Vedamani, CEO, Retailers Association of India.

At Subhiksha stores, a South-based retail chain, private label is restricted to grocery and comprises about 20 per cent of its total sales.

At Trinethra Super Retail's recently opened hypermarket in Mysore, about 70 per cent of goods ranging from apparel to homeware and home linen are private labels.

Mr Pranab Barua, CEO, Trinethra Super Retail, says: "Retailers have now learned that consumers are not giving up on purchasing `stuff', they are instead trying to reduce the cost of it."

Branded Products

Trinethra Super Retail has launched a staples private label `Quality First' after investing in a mechanised processing unit that cleans, grades and sorts pulses and grains.

Subhiksha sources its private label products from manufacturing facilities that supply to well-known national brands and "we prefer to keep costs down by leveraging the strengths of such suppliers," says its President- Marketing, Mr Mohit Khattar.

Consumer attention

With increased interest in private labels, retailers have to fight it out with well-known branded products for consumer attention.

Apart from pricing which is crucial, retailers also have to apply the other Ps and Qs of marketing: positioning, promotion and quality.

"Therefore, in-store brands can only be successful if backed by high standards of quality, design and performance as well as advertising," says Mr Barua.