Retailers pull out own brands from shelves


Big retailers' own brands, which had started eating into the market share of mainstream consumer brands, have taken a hit in their overall market share in recent years with retailers turning less aggressive, and some private labels being pulled from shop shelves.

According to a global report by market researcher Nielsen, share of Indian private labels now stands at 4.5% of overall supermarket sales, 220 basis points less than their share in 2010.

Indian retailers started pushing their own brands around eight years ago, at lower prices vis-a-vis national brands, in a bid to boost their profit margins when national brands were consistently negotiating lower retailer cut. The initial success of such labels prompted retailers to aggressively launch their own brand across product segment.

But their appeal waned when major consumer product companies resorted to promotional offers and matched private label pricing by operating in tighter margins even as an overall slowdown made consumers look for bargains.


According to experts, one mistake several Indian and Asian retailers made was to bring out a flurry of products without waiting for their private labels to gain acceptance.

"Retailers launched private-label programmes expecting Asian consumers to instantly trust them without investing the 20 years it has taken in developed markets to build acceptance," said Peter Gale, managing director of retailer services at Nielsen. "Many Asian retailers virtually copy-and-pasted the European model without dedicating the groundwork necessary," he said.

This forced several retailers to exit categories and consolidate their portfolio. Aditya Birla More, Bharti Retail and Reliance Retail were among those who started launching fewer products and subsequently withdrew from some non-performing segments due to high involvement and investment nature.

Also, the slowdown pushed most retailers who were expanding at a fast clip into a financial crisis, leading to closure of hundreds of modern trade stores and shelving of expansion plans.

Most big retailers have come out of the crisis and some like Future group and Spencer's Retail are still upbeat about their private label business.

RPG Group's Spencer's has over half a dozen own brands including Smart Choice, Tasty Wonders and Clean Home.

India's top retailer Kishore Biyani's Future Group, for example, has nearly two dozen brands, including Tasty Treat, Fresh & Pure, Clean Mate, Premium Harvest and Sach, which account for anywhere between 15% to 45% share in sales of their segments from Big Bazaar outlets.

Related Tags:, , ,

Hottest ProductsMore