This article examines how retailers could use Information Process Theory in practice to enhance their private label branding strategy. It first discusses the market forces, trends and outlook for private labels among various markets and types of retailers. Second, it examines India's retailing industry. Third, it looks at branding, including private label branding. Fourth, it discusses the Information Process Theory and, especially, how it can impact private label branding. Finally, it concludes with "Lessons from Information Processing Theory"lessons that are theoretically-based and developed for the retail practitioners who want to use private labels as part of their merchandising strategy.
One of the most visible retailing phenomena of the past two decades has been the increase in sales of private labels, or `store brands'. Although the strategies are different, private labels have made important inroads worldwide among grocery, discounters, department, and specialty stores. Driven by retail consolidation, attractive margins, consumer sophistication and pricing, private labels offer a wider assortment of price and merchandise options for both, the retailer and the consumer. Although, they have been a formidable part of the overall merchandising mix in the US and Europe for decades, private labels have only recently begun to make inroads in other parts of the world.
Specialty clothing stores dominate private brands and private brands dominate specialty stores. US brands, owned and sold exclusively by a single retailer, accounted for 42% of all women's and men's sportswear sold in the US in 2003.5 Specialty stores such as Old Navy, Gap and Talbot's sell their own private labels exclusively. These labels have become strong national brands and have provided the retailers margins that would have otherwise gone to a wholesale vendor.
India's total retail market, estimated at over $200 bn for 2003, is unique in that the organized retail market accounts for only about 2% of the total market, whereas, in the highly industrialized countries it accounts for over 70%. The largest industry in India, retailing, is second only to agriculture in employment. It generates over 10% of India's GDP, employs about 6% of the workforce and has been growing at an average rate of 11.5% during the past decade. |
