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Future Group-owned KB’s Fairprice is expected to drive the group’s private label strategy to get better margins and improve profitability for the convenience and neighbourhood store format.
Kishore Biyani, Chairman, Future Group, said, “KB's Fairprice will be the key channel and catalyst for the growth of company-owned FMCG (fast moving consumer goods) brands and help make Future Consumer Enterprises among the leading FMCG companies in the country.
KB’s Fairprice is housed under Future Consumer Enterprises, which is a subsidiary of Future Ventures, a Future Group company.
In 2008, Biyani had announced ambitious plans for the group’s entry into private brands in categories such as FMCG, household consumer durables, electronics and apparel, with a target to reach a sales turnover of Rs 10,000 crore.
At present, private labels contribute 40 per cent of KB’s Fairprice’s sales turnover, but going forward, this is expected to soar. Private labels brands such as Golden Harvest (staples), Ektaa (community based products) and Sach (toothpaste, juice, ghee) will get adequate shelf space at the ‘neighbourhood’ formats of KB’s Fairprice. However, the company is to stay away from the premium segment in categories such as lifestyle and baby care, where it will continue to stock established brands.
K. Radhakrishnan, President, KB’s Fairprice, said, “We will challenge the market leaders with our private brands and prove that they are equally good products. However, it would be the commodity driven categories such as staples where we would like to establish a presence, more than the premium categories such as soaps and baby care where the known brands would continue to rule.”
Future group’s foray into the cash-and-carry format, in partnership with the Hong Kong-based Li&Fung, will also help in servicing formats such as KB’s Fairprice in the future. As part of its cash-and-carry business, the group has recently created a market called ‘World Market’ in Bengaluru, with average shops size ranging from 400 sq ft to 550 sq ft. These shops will offer traders and wholesalers an opportunity to buy, own, invest and run their own shop.
Considering the group is already getting ready to serve other retailers, it would also be in a position to service its own retail formats.
“As part of the cash-and-carry business, it is the most logical step to take, as we expect cash-and-carry to help in consolidating sourcing operations within the group-owned formats,” added Radhakrishnan. KB’s Fairprice expects to break even in the next two years.
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