With an increase in organized retailing, another phenomenon that is being witnessed is the increase in the popularity of private brands, especially in the grocery segment. Why is there an increasing proliferation of private brands in this segment? Is this a passing phase or a new beginning? How successful will these private brands be in the grocery retailing? What about the future of these brands? These are some of the questions that this article attempts to answer.
The other day I purchased my monthly lot of groceries from a leading supermarket chain. After returning home and going through the grocery bags, I made an interesting observation-more than three-quarters of the grocery items bought by me were of the `local store brand.' It then stuck me that this pattern had been going on for quite some time and without realizing, I was gradually substituting the national brands for the local or private brands.
Currently, the three major growth engines of the organized retailing in India are the apparel segments, life style accessory segment (consisting of jewelry, watches, etc.) and the grocery segment. The PWC report states that in organized retailing, clothing and textiles contribute 36% of the total sale followed by watches and jewelry at 17% of the total sale and food, and grocery at 14% of the total sale. A study undertaken by KSA Tecknopak also estimates that the percentage contribution by food and groceries segment to the organized retailing in India will be nearly 14%.
Let's understand what exactly a private label is? Private labels or store labels are those product lines that are owned, controlled, merchandised and sold by a specific retailer in its own stores. Unlike the national brands, which are available with most of the retailers, these items are exclusively available with a particular retailer only. According to the findings of the Market research agency, A C Nielsen, most supermarkets have private brands. The agencies' estimates project that groceries account for 45.9% of private labels in these stores, followed by packaged foods at 25.7% and home care items at 16.4%. |
