With Indian economy becoming the fastest growing economy in the world (2017) and a demographic dividend in its stride; consumption is the key theme of India's growth story. And if you are in retailing - online and offline; you know what i am talking about.
Private Labels, or Retailer Brands/ Store Brands as a strategy, is fast becoming a MUST HAVE in this industry. Given every business (online/offline) has a dire need for better profitability in a scenario of increasing costs (costs of rentals, manpower, logistics, demand generation), increasing competition (more brands, more channels) ; the role of Private labels has suddenly shot up to be supreme.
But Private Labels have been there for such a long time? Be it '#Stop' from Shoppers Stop or '#Bare' from Pantaloons, these are there since inception of organized retailing in India. Why so much hue & cry now? The reason is the 'new role' private labels are supposed to play. Earlier, the key role was to boost margins as cost of a private label was way lower than mainstream brands; mostly becoming a cheap & economic solution for masses.
However, now the new role is to find a gap in the assortment of brands in the category or a gap in the customer needs (not fulfilled yet) & then create a private label. This is phenomenal on part of retailers applying consumer behaviour; buy why sudden role change? Its because of the power of BIG DATA. Whether it is an online player like #Flipkart or #Amazon, the kind of shopper data that is available on ecommerce platforms is mind boggling; and the kind of data that offline retailers dont have in black and white. What a customer shopped is available in shopping history in both offline/online; but what did he search first, how he discovered (filters applied), which recommendations he clicked and so on, is something which is available in online space in wholesome manner. And add to it the power of SEO and SEM; the etailer has the power to follow you with the product you searched through the internet - whether you read news, or do Facebook or do anything else.
This power of BIG DATA is what is enabling etailers to launch private labels more successfully coupled withavailability of quality OEMs today ensuring better delivery on innovation as well. Marketers or Data Crunchers are finding gaps like - Need of a bigger Jars for mixers for Indian Families to need of a lighter, faster & economical power bank to need of economical Smart TVs to economical/quality fashionable denim brand to need of quality accessories and so on. Result is brands like #MARQ, #AmazonBasics, #Billion, #PureHomez, #HRX and so on. The rise of mid and small cap companies is a phenomenon in last 3 years.
As far as offline players are concerned, they arent left behind either. Be it FMCG products brands like #TastyTreat, #CleanMate from BB or #royal from BigBasket and several of private labels in grocery space; the unbranded or commodity nature of category like dals, spices, or even high aspiration at budget price categories like smart TV, Mobiles etc has given rise to such labels in this space as well.
Unknown or mostly unorganized categories like furniture is another area where private labels give faster scale. Thats what players like #Pepperfry or #UrbanLadder have been able to do. Even in budget hotel space, Oyo play was nothing but standardising the available sub par inventory to a label called #OyO. And so is #Uber or #Ola.
Retailer bundle such labels with sweetners like deals, points, loyalty programs like Amazon prime or Flipkart First or Profitclub and consumers sway to thier side.
But is this rise of private labels, an alarm for established brands? Yes, but that is because of this big data availability followed by quality execution on identified gaps. Marketers of established brands also need to match up to this need discovery and innovation done at retailer's end.
To further add to the growing might of private labels, here are the key facts -
1. Europe has staggering levels of private label share in retail - from 20% to 50% in switzerland.
2. US has overall share at around 15-20% while companies like Walmart (25%), Amazon are continuously boosting the same in pursuit of better margins.
3. In india, the share stands at 1-2% of retail, thus giving an exponential path for private labels to tread in the world's fastest growing economy.
With cutting edge work happening in technology across online /offline players and advent of private label products like #echo or #kindle; the path seems shorter from here! Check your basket next time across categories of what you buy, how many are private ones?
