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

Retailers like Pantaloons, Shopper’s Stop, More, Reliance and Vishal Megamart
are expanding their range of private label products from cosmetics and food to
clothing to improve the profit margins of their stores. Retailers have realised 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 unique products in their supply chains that have not been branded
before and it’s a win-win situation even for the producers who get a chance to
display their produce.

PRIVATE LABEL SHARE 09-12

2009, 2010, 2011, 2012

D 30

C 20
Series1
B 10

A 5

0 20 40
% SHARE
 INDIAN RETAILERS

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 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, Ajile 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% Other
Brands
Private
80% Labels

Unisex brands such as Bare (denim and leisurewear), Ajile (sportswear) and Rig
(utility weekendwear) have also been registering significant volumes to serve as
individual store brands.

At present, Pantaloon sports nearly 20 private label brands and it is the ladies'
ethnicwear segment which is pegged to grow in excess of 50 per cent. Its private
label in ethnic ladies wear — Akkrruti — has already tied up with designers such
as Rocky S..
Pantaloon is eyeing the ladies' Westernwear segment and the men's partywear
segment in which it might rope in more designers to give impetus to its private
label exercise.

At the same time, Pantaloon has been refurbishing its acquired denim brand -
Jealous - belonging to Indus League Clothing, in which it has a stake.

Lifestyle retailer Shoppers' Stop says its four store brands together account for
approximately Rs 50 crore or 20 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 that private 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 private labels with this objective in mind.

% of TURNOVER
(SHOPPERS' STOP)

20% Private
Labels
Other
80% Brands
For the Delhi-based Ebony, 25 per cent of apparel sales comes from its private
label EbonyETC. Ebony's ETC brand accounts for 50 per cent of the sales in
men's apparel 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 cent of apparel sales in the span of 10 months.

% of TURNOVER
(SHOPPERS' STOP)

25% Private
Labels
Other
75% Brands

ADVANTAGES of PRIVATE LABELS

• Store brands most often mean products of reasonable quality at lower

prices
• For the retailer, private labels translate into better margins, greater clout
with the manufacturers and the ability to fill value gaps in the consumers
requirements
• Private labels offer the consumer greater value
• Private labels offer greater bargaining power to the retailer
• Private labels offer the added advantage of exclusivity as no other store
has them
DISADVANTAGES of PRIVATE LABELS

• Despite the apparently rosy picture, a major flashpoint vis-a-vis private

labels is the possibility of a conflict with other brands in the category.
• Nascent retail market and prevalent unorganized retail sector in India.
• Developing a private label does take a lot of investment- design
resources, hiring of buying and merchandising personnel, travel to
industry fairs, sampling activities and brand development activities such
as the cost of promotions.

CONSUMER PERCEPTIONS

“I would rather go for a private label than paying almost the double for the same
quality”, said a customer picking up apparel of a private label at one of the
leading retail outlets in the country. Globally, various studies show that educated
and affluent people buy more private labels as they do not need the ‘brands’ to
make them feel that they are important. As disposable income of the middle
class increases, private brands can expect a larger market share in the country.
It is also very evident from the sales figures of the various retailers that private
labels have started to consolidate their places in the minds of the customers and
are ready to take their toll on the other manufacturer’s brands. All this shows that
the people have started to accept these private labels as a very reasonable
substitute for other branded products of the same category. Private retailers will
occupy 50 per cent of the market the world over. At 50 per cent, they begin to
saturate. If they try to occupy more than this, then consumers feel that there
aren’t enough choices. They will continue growth in the other countries till they
reach the saturation level. And this will happen very soon in India, too.
RETAIL MANAGEMENT

ASSIGNMENT

On

PRIvate labels in the Indian

retail sector

SUBMITTED TO-:

Ms. Esha Mittal

SUBMITTED BY-:

Avishek Rai
F-10
BBA 6th Semester

AMITY SCHOOL OF BUSINESS

AMITY UNIVERSITY, UTTAR PRADESH