The growing mall culture in India brings with it a number of opportunities and threats to national brand manufacturers. Wider distribution and increased revenues are the explicit opportunities, while implicitly it allows competition to emerge from a relatively unknown quarter-private brands. This article, drawing insights from the West and Europe-where private brands occupy the center stage-briefly discusses how private brands benefit the retailer and how they pose a threat to national brands. It also suggests a few strategies that retailers and national brand manufacturers can adopt to compete and coexist in the mixed regime.
According to a recent AT Kearney Global Retail Development Index report, India is ranked second-next only to Russia-as an attractive destination for retail investment. The report labels India as the `new China', as today's business environment in the country resembles that of China 15 years ago. With increase in per capita retail sales, the industry shows a good 30% growth rate and is currently pegged at $180 bn in size, 98% contribution coming from the unorganized sector. According to KSA Technopak projections, by 2005, the industry is projected to grow up to $225 bn due to the increased participation of organized sector (2 to 5%). Major business houses like the Tatas, Ambanis, ITC, HLL, Hero Group, Bharti, Wadias, Singhanias, Godrej, RPG Group and Piramals are trying to foray into the retail sector to grab their own share. Undoubtedly, it is going to be the most happening sunrise sector after software. As the business adage goes, `growth begets competition', and the new face of competition that will emerge in the years to come is from `private labels' or `store brands'.
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