How premium retailers are taking the next big leap with their own brands

Trademarks such as Tasty Treat, Desi Atta, Kara and Voom have become increasingly visible in general stores around Mumbai and other metros in recent months. Slick and packaged well, these products are not from the stable of Hindustan Unilever (HUL) or Procter & Gamble. Instead, it is the Future group, among the country's leading retailers, which is pushing these brands aggressively in stores across the country. Built and nurtured from the start, Future group’s chief executive officer Kishore Biyani says these products have been created to sell “everywhere”. His confidence stems from the niche his private brands, which would earlier sell only within his stores, have carved for themselves over the years. About 25-30 per cent of the sales from Future group’s private brands, says Biyani, already comes from stores outside its network. And this number will go up, he says, as he pushes more of them into general trade.

 

Retail-led brands, say experts, are increasingly acquiring an identity of their own, goading some players such as the Future group to have a widespread distribution strategy, encompassing all trade channels. Some others, such as the Tata group’s Westside stores or Max outlets from Lifestyle International, are packing their aisles with more of their home brands, offering great designs, fabrics and collections at price points that cater to the mass as well as premium consumers.

 

Shoppers Stop, on the other hand, has been slowly but steadily bringing its focus back on premium private labels and international merchandise as part of its larger strategy to launch stores based on the affluence index of the catchment. Rajiv Suri, managing director and chief executive officer, Shoppers Stop, says the emphasis on premiumisation is in keeping with consumers' tastes and preferences and undertaken at places where aspiration levels are high and shoppers are global in their appeal.

 

“The consumer at Golf Course Road, Gurugram, is different from the one at Vasant Kunj in Delhi or Gaur City in Noida,” he says. “One size cannot fit all and our store strategy has to reflect the change in approach,” he says.

 

Shoppers Stop’s private brand push has seen it invest in an in-house studio and sampling unit as well as hire more than 140 designers, so that they can churn out fashionable products across price points. The retailer is also co-creating collections with celebrities and coming out with exclusive line-ups with help from its in-house designers as part of its overall push into the premium segment.

 

In ethnic wear, for instance, Shoppers Stop’s in-house brands already contribute over 50 per cent to its overall sales. Singh says that the retailer is working to improve its sales share from private labels in other categories as well including western and casual wear.

Analysts estimate that categories such as apparel and fashion are driven mostly by private labels, with contribution to sales varying anywhere between 50 per cent and 70 per cent for many retailers, though some such as Trent and Max Fashion could see that contribution closer to 90 per cent, given their exclusive focus on private brands. Of this, premium private labels are estimated to contribute around 25-30 per cent to an apparel retailer’s sales.

Food and fast moving consumer goods, in contrast, have a smaller proportion of private labels driving it, around 30 per cent, say experts, with premium brands making up around 10-15 per cent of the portfolio in terms of sales. “Private labels typically get pushed when there is an underrepresentation of established brands or a retailer wishes to give an affordable alternative to popular trademarks,” says Ankur Bisen, senior vice-president, retail and consumer products, Technopak.

 

“Within fashion, consumers now seek mainly retailers’ brands, so independent brands are coming under pressure at all levels, be it premium or otherwise. In food and FMCG, on the other hand, the trend of premium private labels is now beginning to show as consumers look for newer products and services and their confidence in the retailer’s ability to deliver these life experiences increases,” he says.

 

In Future’s case, for instance, the launch of Voom, which is a liquid detergent, positioned as one that cares for fabric and fashion, triggered an instant response from HUL, which rolled out its premium detergent, Love & Care in the market a few months ago.Industry sources say that Reliance Retail is steadily working on its own set of labels in grocery to increase its sales contribution from private brands, which currently stands at 14 per cent only in the segment. Sources say the plan is to take sales contribution from private brands in grocery to at least 25-30 per in the coming quarters as footfalls into its stores increase.

 

Within fashion and lifestyle, Reliance Retail already derives around 75 per cent of its sales from private brands, while in electronics, the figure is around 60 per cent, the company said during its third-quarter results recently. The push into private labels, especially at the premium end, is tied in with Reliance’s larger objective of being future-ready as it gears up for the commercial launch of its new commerce platform later this year. 



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