Do you think that the rift is only between organized retailer and unorganized retailer? What about the threat to national brands with the introduction of private labels by organized retailers? Replacement of private labels has been widely practised by foreign counterparts – Wal-Mart, Tesco, Carrefour, Metro and biggies in this field.
Given below are some facts and figures which would force you to think how and why did it happen:-
· International retailers like Wal-Mart of USA and Tesco of UK have 40% and 55% own label brands representation in their stores, respectively.
· According to KPMG study, globally private lables contribute 17% of retail sales with a growth of 5% p.a.
· In India private labels constitute 10-12 per cent of the organised retail product mix.
· Among the major Indian players, the degree of private label penetration was the highest in Trent with 90 per cent, followed by Reliance Retail (80 per cent), Pantaloon (75 per cent), Nilgiri's (38 per cent), Indiabulls/Piramyd (30 per cent) and Foodworld (22 per cent).
But do you think that the future looks bright for retailers with the introduction of private labels? How about customization, identifying and filling the customer’s value expectation, supplying minimum threshold quality, maintenance of store’s quality standards, and assortment of products? Apart from these criteria, nummber of other sensitive issues needs to be taken care of in order to push up brand and store loyalty. Or is it the willingness of cosumers to down-trade? But they have to make sure that they do not exercise over private labelling. Line extensions provide another lesson for retailers.
But what do you think are the steps that a national brand manufacturer shoud deploy to mitigate this risk? Do you think that fighting selectively, coming up with offereings frequently and moving out of those categories where the products do not make a symbolic or emotional difference would turn out as a saviour for them?
What do you think should be the next step of the retailers when they have never been able to brush aside the affront of being called cheaper brands?
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