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Private Labels in India

Essay by   •  May 18, 2012  •  Essay  •  409 Words (2 Pages)  •  1,492 Views

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India has emerged as the fourth attractive destination for the retailers with immense growth potential and market attractiveness (Global retail development index by A.T. Kearney, 2011). Organized retailing in India is projected to grow at a rate of 20-25% per annum and with net sales of 396 Billion USD on 2011(Business monitors, 2011). Currently Indian retailers are following the strategies of some of the global retailers like Wal-Mart, Tesco, Aldi etc by developing private labels or store brands for higher margins, to add diversity and store loyalty. Private labels are developed by retailers which are sold exclusively through their retail outlets. Private labels were termed as "brands owned, controlled and sold exclusively by retailer" by Baltas (1997). The contemporary description about private labels or store brands given by Nirmalya kumar and Steen kamp (2007) is that private labels are any brand to be produced and owned by the retailer which is sold exclusively in retailer's outlet only. Private label manufacturers association (PLMA) has termed private labels as the products that encompass all merchandize sold under a retailer's brand. That brand can be the retailer's own name or a name created exclusively by that retailer. The American marketing association (AMA) has defined private label in a product development and retailing context. In product development context private label is termed as brand that is owned by the product's reseller rather than by its manufacturer. In some instances, the reseller may be the manufacturer as well. In retailing context, private label is termed as any brand name or label name attached to or used in the marketing of a product other than by the product manufacturers usually by a retailer.

Retailers are developing private labels or store brands in all categories to create unique store image, product variety, store loyalty, differentiation and for higher margins. The development of quality private labels or store brands can increase the negotiating leverage of retailers with the manufacturer brands. Indian retail sector has private label penetration of 10-12% (India retail Report, 2009). Private label market in India is estimated to be 23 million- 29 million USD (India retail report, 2009). Trent (90%), Reliance (80%), Pantaloons (75%) have the maximum depth in private labeling (KPMG, 2009). Private labels have emerged as the key players in FMCG segment in food and personal care products with a share of 19-25%. Store brands account for 12-15% of sales and contribute to 20-25% of profit for the retailers (Economic times, 2011).

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