Enabling Retail

Janice Goveas explores the steady growth of private labels and factors that have significantly contributed to it.

- Janice Goveas

Popular fashion retail stores these days, as is customary, stock well- known brands but have now also started stocking their lesser-known cousins—the private labels. Since Indians are price conscious, it comes as no surprise that there seems to be a distinct preference for clothes that look and feel like ‘brands’ but are priced far lower than them. Naturally, private labels pose a growing threat to many international brands since they are vying for the same rack space in a multi-brand retail outlet.

In the current retail structure, however, private labels are a win-win solution for retailers and customers in India. Retailers use the might of their private labels to retain a strong bargaining power with their vendors. They demand better margins and exert more control over their merchandise mix. Customers, on the other hand, have access to a wider range, better quality to choose from and attractive price points.

The growth of private labels is directly linked to the growth of modern retailing. Retailers need to gain customer confidence, so as to successfully introduce private labels. The share of private labels in the modern retail in India is about 7 per cent, but it is as high as 40 per cent in European countries, and as less as 1 per cent in China.

WHAT ARE PRIVATE LABELS?

Private labels are essentially brands owned by a retailer, commonly known as in-house brands or business was launched by Shoppers Stop with its private label called STOP in 1994 and ever since has added more than 10 exclusive brands, forming more than 20 per cent of the company’s total range.