Private Label Brandshf

8/13/2019 Private Label Brandshf

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Flow of Presentation

Retail Industry Private label brands

Primary Research Findings Conclusion


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Retail Industry - Organized Retail

Any retail outlet chain (and not a one shopoutlet) which is professionally managed, (evenif it is family run) has accounting transparency

(with proper usage of MIS and accountingstandards) and organized supply chainmanagement with centralized quality controland sourcing can be termed as an organizedretailer in India.

Source- (Dept. of Company Affairs)


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Retail Industry - Overview


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Retail Growth in India Organized retail growth in India


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Private Label Brands Private brands also known as store brands, own brands

and merchandise brands. Private brands are products developed by a retailer and

available for sale only from that retailer. Private brands products that carry the name of the

seller, not the manufacturer They are often positioned as lower cost alternatives to

regional, national or international brands, althoughrecently some private label brands have been positionedas "premium" brands to compete with existing "name"

brands.

Source Crisil Research


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Market Overview of Private labelBrands

Less than an estimated 7-8 per cent (US$ 1.4-1.6billion) of organized retail sales

10 to 12% growth rate

75% share of food items in total private labelbrands Key Segments, their sizes in FY13

Apparels & Accessories: USD 755 Mn

Food & Grocery: 510 MnHome Improvement: 280 MnFootwear: 155 Mn

Source Tata


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Market share of Private labelBrands in food sector

Source Nielsen company


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Percentage share in Private Label



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Why private label brands

Grow of Middle-class

Changing Lifestyle

Consumer Choices

Critical factors for high-end users

Market Expansion



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Types of Private Brand

Generics Copy cats

Value Innovators Premium Store Brands



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Cont

Generic private brands Generic very low promotional , very low

margin. Same or better quality at better price , average

20-40% less than national brands. Example- Big bazaar

LOOKS = LUX (6) = (10)Both Lux & Looks are kept in same shelf for sale.



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Cont

Copy Cats Private brand In this category only the brand name will be

copied (which almost sounds like original). The copycats are mostly manufactured within

the company by the retailer him self



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Cont


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Cont

Premium Store Brand Premium store Private Labels are more expensive

than national brand & will have superior quality,

good features & design. Example- In Globus F21 is very superior quality

wise & offers better features & design especiallyfor women segment.

In west side 80% of the merchandise are ownbrand & they are far superior in quality ascompared to national brand.



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Cont..

Promotion In house advertising

SMS channels Loyalty programs

Place Increase availability in terms of stores Keep with national brands



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Growth factors of Private LabelBrands

Consumer Value

Retailer Profitability

Consumer Confidence



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Where Do Store Brands ComeFrom

Only buy their favorite store brand at their favoritestore

Manufacturers of store brand products fall into fourgeneral classifications:

They are large national brand manufacturers thatutilize their expertise They are small, quality manufacturers that specializein particular product lines and also produce nationalbrands. They are major retailers and wholesalers that owntheir own manufacturing facilities. And they are also regional brand manufacturers forspecific markets.



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Store Brands Meet All Standardsand Requirements

Meet the same exacting standards and requirements asall the major national brands

Label the product to meet the store's specifications

Store brand products are tested and analyzed forquality and safety by independent companies beforethey reach the shelves

Good and attractive packaging design

Store's name or symbol is on the package assure tothe customer the product is manufactured to thehighest quality standards and specifications



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Store Brands: The Smarter Choice

American shoppers estimated $32 billion inannual savings

Difference is the so-called marketing tax,which consists of advertising and promotional



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Counter Strategy of National Brand

Develop unique products and stay ahead as a trend leader

Create own stores

Never compromise on quality

Increase brand loyalty

Develop a compelling marketing strategy

Evaluate production cost Maintain net price (minimalpromotions & discounts)


C i f N i l B d V/


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Costing of National Brand V/sPrivate Brand

ITEM OF COST National Brand Private Label

Fabric Cost (2.2 m/100 ) 220 220

Fabrication Cost 100 100

Direct Cost 320 320

27% Manufacturer Markup 86 0

Direct cost to Retailer 406 320Indirect Costs 41 13

Cost price to retailer 447 333

EXERCISE 61 47

Sales Tax 27 21Cost price to retailer 536 400

Trade Margins (%) 33 39

Trade Margins 293 268

MRP 825 675



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Advantages More margin for retailers

Example.- Shoppers stop have only five private brandsand it accounts to 20% of their annual turnover.

Private labels can offer huge discounts which thenational brands cannot offer.Example.-Big Bazzar offers noodles, pasta, soups undertheir label TASTY TREAT. They introduced cornflakesfor Rs 99 with free bowl worth Rs 60.

Rise of customized products.Example- Spencers dailys private label EKTAA hasfood items based on cultural and geographicalconsiderations.



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Pros & Cons of Private LabelBrands

PROS Exclusivity & differentiation

Bring customer loyalty

Better margin Better control in deliveries

Brand equity

Freedom in pricing strategy

Increase bargaining power with

both national brands and PL

factories

CONS Inventory risk

Higher R&D expense

Higher marketing expense No markdown or return allowance

from branded suppliers

If product fails, will create negative

image Quality control, complex

production & import issues



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Future of Private Label Brands

Private label sale to kirana stores Nielsen estimates the spend on private labels

in the country to grow five times to reach$500 million, or about Rs 3,000 crore, by 2015Apparels & Accessories: 31% p.aFood & Grocery: 36% p.aHome Improvement: 22% p.aFootwear: 27% p.a


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Cont IN COSMETICS

Pantaloons: Star and Sitaara

IN GROCERIES True Mart Uttam (Cereals, Masala Powder, Dry Fruits )

Big Bazaar Tasty Treat, R-select aloo bhujia, Haldi healthy life,Dubar rice, Supergrade rice, Sharbati atta, Amara , Externahandwash, Mupz, Scrubz, Shinze. Freshomz , Exlelz


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Primary Research

Did Qualitative Research in which we haveinterviewed:

1. Mr. Kisan Satta (H.R. Head, Reliance fresh)

2. Mr. Akash P. Modale (Marketing manager,Pantaloon Fashion & Retail Ltd.)

3. Prof. Devang Patel ( Faculty head, Xcellon

Institute)4. Mr. Pratik Parikh ( Regional Marketing head,

Nestle)


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Quantitative Research

Sample Size: 20 respondent.Research Objective: To measure the awareness

and perception of people toward private labelbrands

Research tools: QuestionnaireSampling method: Random SamplingType of Research: Descriptive


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Findings - Consumer Researchanalysis

70%YES

30%NO

Awareness of PLB



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Findings - Why purchase Privatelabel brand

9

11

0

2

4

6

8

10

12

Quality Affordable



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Findings - Point of Parity & Point ofDifferentiation

Points of parity Quality of Product Packaging

Points of differentiation Price Layouts(Pictorial

presentation) Sales Promotion Push strategy



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Findings - IMC tools used byRetailer for store brands

Cross Promotion



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Cont

Price comparison promos



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Cont

Pictorial presentation layout



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Findings - Sales Ratio

Reliance 40% - 60%

Pantaloon 80%- 20%



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Findings - Private Label Brand v/sNational Brand

Expelz

60 Rs for 500ml

Harpic

26 Rs for 200ml



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Cont

Buy 1 get 1 free No offer



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Findings - Counter Strategy ofNational Brand

Never compromise on quality

Increase brand loyalty

Combine effort by offering customer service

Visibility Off store and In store

Not big threat from private label brands



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Findings - Consumer Perceptiontoward retail brands

Women are especially likely to check out storebrands

Retail Brand name is more important Prefer to buy due to price difference and same

quality FMCG and apparel categories are more

preferabale



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Conclusion

Store image affect private label brand perception Not use Retail brand name in product brand The brand awareness perceived quality, service

level, store layout, price discounts, shelf displayetc; affect the consumer perception of privatelabels.

Growth in specific private label segments likefood and apparel segments are growing at afaster rate.



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Thank you

Private Label Brandshf

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