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Future of private label brands
Private label brands are retailer-owned brands that are produced by one company but sold under another's brand name. Private labels have grown significantly in India in recent years due to cash-strapped consumers perceiving them as cheaper options and a new generation being less brand-loyal. While private labels have low innovation and minimal product differentiation, they can be successful by catering to different consumer segments through quality and price. Major Indian retailers are increasing their private label penetration through better in-store visibility, highlighting value, and building consumer trust in the quality of private label products.
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Future of private label brands
- 1. FUTURE OF PRIVATE LABELBRANDS
- 2. Private label brandsare produced by one company for offer under another company’s brand
- 3. Brands vs Privatelabels Brands High Innovation rate High product differentiation Longer purchase cycle Heavy promotional activity Private labels Low innovation rate Minimal product differentiation High price sensitivity High purchase frequency
- 4. India is oneof the most successful private-label markets in the south- east Asian region. Private label grew 27% between 2012 and September 2014.
- 5. DRIVERS FOR PRIVATELABEL BRANDS GROWTH • New generation of shoppers is less brand-loyal and more open to trying new products. • Higher margins, cheaper price and better bargaining power for the retailers. • “Cash-strapped consumers' perception of the products as a 'cheaper option' changes," • Diverse spread of spending power and generic competition at the lower end of the market.
- 6. Goods like fruits,vegetables can draw premium price from consumers at top of pyramid – Thus a option of private branding At bottom of pyramid, consumer would be willing to accept the low cost product at minimal quality – Potential of developing private label suited to this segment
- 7. Degree of Privatelabel penetration in major Indian players Trent Reliance retail Pantaloon Nilgiris Piramid Food World
- 8. PRIVATE LABEL GROWTHDRIVERS IN DEVELOPED MARKETS • CONSOLIDATION • EXPANSION OF THE “HARD DISCOUNT” FORMAT • CONTINUED ECONOMIC SOFTNESS • INNOVATION • NEW CHANNELS
- 9. WINNING STRATEGIES FORPRIVATEL LABEL PLAYERS IN INDIA • USE PRIVATE LABEL AS A POINT OF DIFFERENTIATION. • INCREASE IN - STORE VISIBILITY OF PRIVATELABEL PRODUCTS. • HIGHLIGHT THE VALUE FOR-MONEY PROVIDED • UNDERSTAND LOCAL NEEDS AND PREFERENCES. • INVEST THE TIME AND RESOURCES TO EDUCATE CONSUMERS AND BUILD TRUST IN PRIVATE LABEL
- 10. Conclusion • Private retailerswill 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. • In countries such as Switzerland and the UK, private labels have reached this limit and these markets have saturated.
- 11. References • T.Subha, R.Kirthika, P. S. Narayanasamy. Private Label Brands in Indian Retail Industry • Nielsen, The State of Private Label around the world •
- 13. Created by: Mohd Wasil IITDelhi During Internship by Sameer Mathur, IIM Lucknow