Private labelsthe meaning can be obtained from the word itself. It is a label that is private and not available with all and sundry. One of the major reasons for retailers to go in for private labels is to boost sales, which indirectly add to the bottom line (profit). But there are various reasons for choosing private labels, and this will largely depend on the retailers' goals. There are retailers who sell mostly private labels (like Westside) and there are retailers who also sell private labels (like STOP from Shoppers' Stop, GEORGE from Wal-Mart, Arizona from J C Penny, etc.) The reason could be to differentiate himself or herself from the general retailer who would sell merchandise available at many outlets. While selling general merchandise, one would have to spend a lot more on attracting customers, as the product would be available at many outlets. This will definitely push up the operating costs of the retails. But if the retailer were able to create a name (like Westside has done), then they would not have to spend as much on marketing as the general retailer. However, if they were not successful, then it would mean a lot of investment going waste.
The key to successful marketing of private labels is the long-term business strategy. One could have introduced private labels to compete with existing national players, as the market is good and could take some more brands, so that the customer has a choice. One could also introduce them, as the profit margins would be high on them. Based on the strategy, private labels could be either an umbrella brand or an individual brand. While the former relates to brands across multiple categories, the latter relates to specific brand names for specific segments or categories. The other type is the store brand. The retailer sells products/services under the store name itself, like Nilgiris, Foodworld, etc.
Pantaloons, for example, had plans to introduce more than 30 private label product lines. Products like dals and pulses and staple food items such as atta and rice are sold under the umbrella brand `Premium Harvest', whereas, ready to eat and ready to cook products like sauces and jams are sold under the brand name `Tasty Treat'. Food Bazaar aiming to earn Rs. 100 cr in the current financial year 2005-2006 exclusively from its entire private label range and is investing to the tune of Rs. 5 cr to achieve this. |
