private label rahul unal jony1111

8/14/2019 Private Label Rahul Unal Jony1111

1/13

INTRODUCTION

WELCOME to the world of private labels. Store brands, own labels, private labels, call

them what you will, but retailer-owned brands have arrived in India. Private labels are

brands owned, merchandised and sold by retailers themselves. They are also called in-

store brands. From apparel, healthcare products and furnishings to consumer items,

private labels are making their presence felt in a variety of retail items in the country. In

the dogfight world of Indian retail, the private label is emerging as a new business

model. Most retail chains in the country are increasingly relying on private labels to

bridge the gap in their product mix and are targeting specific needs of consumers.Though, private labels at present constitute about 5% of the organized retail business,

experts feel they can grow up to 30% once retail brands develop in the country.

Retailers like Pantaloons, Shoppers Stop, More; Reliance and Vishal Mega mart are

expanding their range of private label products from cosmetics and food to clothing to

improve the profit margins of their stores. Retailers have realized that by having top

quality private labels they can differentiate themselves from other stores and become

destination stores. Private labels also give retailers a chance to bring in uniqueproducts in their supply chains that have not been branded before and its a win-win

situation even for the producers who get a chance to display their produce.

PRIVATE LABEL SHARE 09-12

5

10

20

30

0 20 40

A

B

C

D

2 0 0

9 ,

2 0 1 0

, 2 0 1 1

, 2 0

% SHARE

Series1


2/13

Private label strategy

The differentiating factors in merchandise for retailers these daysare the private labels. The transformation of store brands/ private

labels has built a WHOLE NEW SCENARIO. The UK and Belgiumlead the list of private labels with over 43 percent in terms of volume. Private labels range from aluminum foil, tissue paper, toapparel and food and groceries. This is found most suitable forsupermarkets, hard discount stores and specialty stores. Thegrowth is found to be almost more than 60 percents worldwide,more than manufacturers brand. These private labels lack inquality 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 inIndia like kc das rasogulla of Kolkata and panchi petha of Agra,chirag din of Mumbai in apparel. Spencers RPG group has readyto eat food with 25 % private labels.

Big bazaar hypermarket. Generates a turnover of 200 crores fromprivate labels.Nilgiri in Bangalore offers private labels in dosa andidlI,aditya Birla group--more offers non liquor beverages.

These days most of the space is occupied by private labelsmainly known as type 1 labels type 2 private labels have morevalue added to them. In terms of packaging branding andcontents.ex- dadima pickles, smart choice jams both bySpencers.

With its private labels giving it higher margins and revenues, Pantaloon Retail is

planning to spin them off into individual store brands in the near future. The retail major


3/13

has identified four of its leading private labels to add to its retail format considering the

healthy growth rates registered by each of them.

Labels such as John Miller , Bare , Agile and Rig have been shortlisted to make a foray

into the retailing industry as standalone format stores.

Private labels generate between 75 per cent and 80 per cent of their revenues. Some

of these brands have taken a natural level of growth in certain areas and plans for

exclusive stores for them are being formulated.

% of REVENUE GENERATED

(PANTALOONS)

20%

80%

Other

Brands

Private

Labels

WHY PRIVATE LABELS

Differentiating factor - as the competition is pacing upretailers is left with similar kid of merchandise. privatelabels are usually manufactured by a company and soldunder the brand of another companys I have seen thispractice in retail ex- MORE most chains are promoting them

aggressively becks private label/store brands portfolioprovide them a powerful margin. Provides a strong tacticaland strategic benefit to retailer.

Private labels make available the benefits to the retailerwherein he has his very own product and without the effortof making it by himself.


4/13

Having ownership rights to products, he is allowed to do allthe revisions and editing that he wants. Likewise, he canincorporate any value that he desire, any illustrations orimages and add in any additional content and include hisbyline after revising the product.

Private label materials include information products, whichare the easiest to work on.

You can brand your own name. Almost anybody purchasingsomething prefers to buy from someone they trust andknow. With your Private labels, you are able to display yourname in the product as the manufacturer then you aresupplying consumers with important information. Thenwhen consumers are pointed to your site, seeing your nameonce more, they instinctively have that certain feeling of knowing and trusting you.

Substantially higher margins than a brand name products.

Greater freedom with pricing strategy.

Freedom to create your own marketing plans.

You will increase your sales.

You have control over the stock inventory.


5/13

Create a positive image of yourself for your customer which will lead to stronger customer loyalty.

Reduce dependence on brand names for sales.

Positions the product better in a tight economy.

You will not walk into Wal-Mart and see the same dechlorinator that you sell ona shelf with a retail price lower than what you pay your distributor.

After building customer loyalty for months, your customers won't turn around andorder the same products from an online megastore because they are onlyavailable from you.

You can start up a private label with us for less than $1,000.

In almost all cases we can make product as it is needed or we can warehouse itfor you. We can also drop ship product directly to your customer and they willnever know you did not ship it.

We do private labels for even the traditional mom and pop pet store all the wayup to the guys who supply the mass market stores

We can have merchandise into your hands in as little as three weeks.


6/13

We make products for public aquariums. They don't trust $5 million worth of sharks to just anybody. We use very high grade raw materials. Our formulationsare thoroughly tested for safety and efficacy. That's why we are one of the fewU.S. companies that meet the exacting standards of the Japanese aquaticsmarket

No manufacturing cost and no fixed cost.

No research and development cost to be recovered.

No extra sales force is required.

Advertizing, marketing, transportation is not required since

they have existing infrastructure and promotion is in house.

Increase sales for retailer in addition to margins the costadvantage helps retailer to be flexible with the pricing of store brands.

Slowly slowly customer shows brand loyalty and startspurchasing the other offerings of same brand.

With your exclusive brand you can, if you wish, enter the entire Out-of-Homemarket supply for coffee, selling to restaurants, the hospital and health carefield, hotels, catering trucks, stadiums, indeed every other nook and cranny of


7/13

the market. The potential volume in the Out-of-Home market is many times morethan in coffee service itself.

You can sell the mystique as well as the real quality of your coffee, enabling youto achieve a higher average selling price (though many operators make themistake of selling their private label for a lower price than the national brands)

The packaging and labels can be custom tailored to meet specifications,including product name, description, company's logo and contactinformation.

Private labeling allows for greater control over many factors - includingsales, marketing, and distribution. Retailers can have complete control over

product distribution with private label products

The products are only available from the retailer - customers will not gointo a popular megastore and find the private brand product at a lower price.Customers will not find the private brand product somewhere else on theinternet either.

With private labeling, retailers can acquire products that are alreadydeveloped, or that can be changed and re-branded in an individual fashion.Basically, retailers can control many business aspects, and create their ownunique product

Many find the current recession benefits store brands, as consumers look topinch pennies where they can without giving up quality. "The recession isdefinitely having an impact on private label," says Jim Roth, senior customer development manager for Raskas Foods, Inc. in St. Louis. With more than 80percent of the business, Raskas is by far the nation's largest supplier of privatelabel cream cheese. "Over the past year private label is starting to significantly


8/13

outpace the Kraft Philadelphia Brand," says Roth, adding that historically Kraftcontrolled about 62 percent of the cream cheese business, but it's now down toaround 52 percent. "This year Kraft is off about 2 percent, while private label isup 2 percent," he says. "Cream cheese pricing is based on the commoditymarkets, but the difference between Kraft and private label is that when the

commodities drop so does the private label priceKraft doesn't. There is moreaggressive pricing out there, and due to the economy people might be switchingover to private label products."

'Masterstroke'

Burt Flickinger III, president of Strategic Resource Group, a New York City-based retail consultancy, calls the hiring of Lee "a strategic master stroke for Albertsons." At Safeway, he says, Lee was a key architect "of what's arguablythe finest food and drug private label program in the U.S."

Flickinger notes that Lee rationalized a number of underperforming privatebrands out of Safeway's product mix, in many cases reducing categories to thetwo leading national brands and private label. He says Albertsons has alwayshad a good private brand program and that Lee is moving it up to very good.Over time, Flickinger predicts, Lee will raise Albertsons' program to the level of great.

A hold USA, another mega-chain placing a heavier emphasis on private label, isrolling out a new line of store-branded competitors to leading-brand carbonatedsoft drinks. The lineup features two varieties of cola: Rally, which the chaindescribes as having a classic all-American flavor, and Spin, with a"contemporary" taste. Other new offerings are Quist, which has a lemon-limeflavor; Ramp, with citrus flavor; and Dr. Bob, billed as an exciting flavor with aunique, vibrant aroma.

They can personalize the products; add their own information, additional

materials, logos, titles, etc. This can all be done in a lot less time than itwould take to develop the product from scratch.


9/13

Private brands come from several different sources. Numerous companiesnow offer contract manufacturing for private goods. Large national brandmanufacturers often supply private label brands. Occasionally, competing

brands are even made by the same large manufacturer. Ingredients, quality,and designs often differ quite a bit among these products,

Private brand goods are also acquired from small, quality manufacturersthat specialize in particular product lines. Often, these companiesconcentrate on producing private label brands almost exclusively. There arealso regional brand manufacturers that produce private label products for specific markets.

Private label brands are available in a wide range of industries from food tocosmetics. These brands help create a unique product and personalize a brandfor retailers. Retailers with strong private label brands create exceptional salesopportunities for themselves. They can build value and recognition from thecustomers. Private brand products allow retailers to differentiate their productsfrom competitors' products, and provide consumers with an alternative to other brands.

BRAND BUILDING STRATEGY

The store brand products are benchmarked to the market leaderin terms of features and benefits and easily captures customersmind due to low price.

A. leverages the branding of chain and customers response -

since the store brand and the market leader are of similarfeatures but since the store brand is low priced and promoted byretailer the chances of buying the store brand increasesdrastically. Ex - tea priced at 26 and brook bond at 40


10/13

B. now if the product meets customer's expectation then itreplaces the national brand

(Store brand / market leader brand ---------- similar

features and benefits----- replaces the market leader -----becomes a brand.)

Private brands have unique

A. packaging,

B. design

C. pricing

The better best approach - 3 segmented portfolio

good segment -- similar features low price Better segment --- additional features to market leader low /

similar pricing. Best segment --- enhanced offerings and comprehensive

with low cost.

STEPS FOR BRANDING

Use a unrelated brand name

Associate it with the store name for leverage. Differentiation Segment classification Packaging guidelines.

After this positioning has to be decided good better or best.


11/13

Ex- CFL introduced by leading private retailer.

INDIAN CONTEXT

In India it is largely based on pricing play Marks and Spencer has only storebrands. West side. Its a chicken and egg story . Lifestyle retailer Shoppers'Stop says its four store brands together account for approximately Rs 50 crore or20 per cent of its turnover. Shoppers' Stop has four private labels - Stop, Life,Kashish and Karrot - that extend to several categories. Shoppers' Stop is clear thatprivate labels are a significant part of the company's long-term game plan.Shoppers' Stop expects its own brands to contribute to at least 40 per cent of turnover in time, and is dedicating resources to the development of its privatelabels with this objective in mind.

% of TURNOVER(SHOPPERS' STOP)

20%

80%

Private

Labels

Other

Brands


12/13

For the Delhi-based Ebony , 25 per cent of apparel sales come from its private labelEbonyETC . Ebony's ETC brand accounts for 50 per cent of the sales in men'sapparel and 25 per cent of sales in women's and children's apparel respectively.

The growth of EbonyETC has been from 3 per cent of apparel sales to 25 per centof apparel sales in the span of 10 months

CONSUMER PERCEPTION

I would rather go for a private label than paying almost thedouble for the same quality, said a customer picking up apparel

of a private label at one of the leading retail outlets in thecountry. Globally, various studies show that educated andaffluent people buy more private labels as they do not need thebrands to make them feel that they are important. Asdisposable income of the middle class increases, private brandscan expect a larger market share in the country. It is also veryevident from the sales figures of the various retailers that privatelabels have started to consolidate their places in the minds of the

customers and are ready to take their toll on the othermanufacturers brands. All this shows that the people havestarted to accept these private labels as a very reasonablesubstitute for other branded products of the same category.Private retailers will occupy 50 per cent of the market the worldover. At 50 per cent, they begin to saturate. If they try to occupy


13/13

private label rahul unal jony1111

Documents