The Hindu Business Line : Of sunrise, pugs and private labels

With organised retail growing by leaps and bounds in India, how do you see the private label movement shaping up in the country? What must Indian retailers watch out for as pitfalls?

- J. Dayanidhi, Chennai

Daya, private labels are currently rather small. Organised retail is just about taking its baby steps in the country. Of the total retail business pie of $340 billion, only 3.6 per cent in terms of value is in the hands of organised retail as of now. The rest is in the hands of a nation of shopkeepers numbering 16.1 million!

The private label business is yet small, and a small value sub-set of the business enjoyed by the organised retail industry. Organised retail is just about bringing in a portfolio of brands in the private label space in the country. This has commenced essentially in the space of garments and common day-to-day usage items such as grains and pulses. The value-add is the hygiene factor brought in by these chain stores into the lives of consumers who would otherwise have bought these as loose commodities.

The image of these private label brands is all about occupying the low-price segment of the market. We are yet to get mid-price and premium price private label initiatives in India.

I do believe the market is, however, very bright for the private label. A lot of volume, for sure, will house itself in these offerings soon, in the medium term. What’s more, private labels launched by chain stores and super-markets have the immense potential of eventually becoming ‘public labels’ as they find distribution outside of the chain-store that launched it in the first place.

My advice to the Indian retailer would be to grow this segment carefully. Grow it by investing real value in the initial offerings that you enter the market with. Have distinction in the offering. Pack it with USPs that are real, and not emotional, as is the case with mass-marketed FMCG brands. The consumer is looking for real value and good quality. Offer both of these. Assess the mind of the consumer carefully and cater to her needs with tailor-made products. Look for niches in the beginning and then expand the offerings to cover a wider range.

One more piece of advice to the Indian retailer. Don’t work at the popular price end of the private label game only. Offer private labels that are mid-market and surely premium priced private labels as well. It is important to break the Western paradigm of the private label, which is all about private labels being me-too ‘clonal’ offerings that are low-priced because they are not advertised products.

I do believe the private label segment in India, particularly in the sectors of garments, food products, beverages and consumer durables, has the potential of occupying as much as 26-34 per cent of the value sales of a retailer in the mid-term future in the next three-four years. This needs to be capitalised upon.

If you look at India and its business boom, which sectors do you see as the ‘sunrise sectors’ of the economy?

- Arjun Jethmalani, Mumbai

Arjun, the sunrise sectors of India essentially comprise the services sector. For decades, India has not been much of a service-oriented economy. It has been a products-oriented economy. Today, there is demand for the services. The economy is hungry.

Here are some gems from the services sector.

Telecom is a high-growth arena. We add eight million mobile phones in India every month! Banking is big. Credit cards, even bigger. Insurance. Very big. Retail. Growth rates hover around 35 per cent per annum as of now on a low base of organised retail. Entertainment of every kind including bowling allies, cinema multiplexes and the beauty and cosmetic care business are booming as well. Technology, end-to-end-services and the outsourcing industry is booming too.

There is a lot of ‘sunrise’ around for the moment.

In recent months there have been a lot of brand identity changes that have occurred. What are the pain points to watch out for?

- Sankari Sreenivasan, Bangalore

Sankari, brand identity changes can happen for many reasons. In most recent cases, particularly Axis Bank and Vodafone, the identity change was all about a need for a new name to replace the old. In the first case, it was a statutory imperative and in the second, it was due to a change of ownership pattern. The key need is, however, to convey that the change is but a name change alone. Nothing else has changed. We are the same. Our reliability continues.

The key points one needs to focus on in such changes are the link elements in terms of visual, aural and experiential imagery that the old brand enjoys in the minds and hearts of consumers. It is important to audit these points carefully and emerge with bridge elements that will continue in the new communication exercise. In such an audit that is consumer-centric, you could emerge with as many as 1,200-1,600 points that spell the meaning of the old brand to the consumer. You need to short-list from this by giving specific weightage to those points that must remain inalienable from the new identity you are about to convey and build.

After having gone through this laborious exercise, brands need to ensure that the old imagery balances itself with the new. It is important for the new elements in the brand communication exercise to have the right weightage. For instance, the Vodafone logo and its dominance.

Brand-name morphs are sensitive exercises. One deals with them through a series of executions. At times one execution is not enough. For instance, Vodafone will need to have a very quick second-generation campaign following the pug in the new kennel. This campaign needs to be new-identity-specific. My firm view is that the pug needs to get onto a ‘just noticeable difference’ format where its presence is slowly phased to a smaller degree of significance visually.

(Harish Bijoor is a business strategy specialist and CEO, Harish Bijoor Consults Inc).

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