Store brands or private labels, as they are also called, have been slowly but steadily becoming a major part of the retail strategy. Their higher margin contributions and the ability to render a differentiating factor have made them an indispensable tool to boost the bottom line and get an edge over the competition. But, the store brand strategy is not devoid of problems. Customers are still brand loyal and those opting for planned purchases do have a lower inclination for store brands. Also, only some commodities, are showing the promise of sustenance of the strategy. The store brand's life cycle shows that there ought to be a distinct stratagy at each stage of the store brand's life. This article discusses the store brand concept as existing in India vis-à-vis the American and European markets and explores the issues in adopting a store brand strategy and maintaining it.

Store brands or private labels have been in existence since the 1960s, but only now have they become a real strategic option and a competitive tool. Store brands give manufacturers the much-needed margins that have been elusive since the retail boom and the changing lifestyles of consumers worldwide. These brands are highly profitable to the retailers as the margins on them are far more than the manufacturer brands (also called national brands) even though they are cheaper by 20-25% than the offerings by organized FMCG majors in the market place.

Starting from the mid-1980s, retailer brands began moving up-market with innovative, high-quality, competitively priced products. They became brands by themselves. Retailers, who started off with the ‘plain-vanilla’ stuff, called private label, which was devoid of any fancy packaging and innovation; found a means of differentiating themselves from competition and profiting by means of resorting to innovative products and packaging.

The growth in private labels has traditionally been attributed to two major causes. First, retailers advertise the national brands (which attract people to the store) and sell private labels (which typically have lower variable cost and, therefore, potentially higher margins) to the price-sensitive segment. In other words, retailers use private labels to compete profitably in the price-sensitive segment.

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