The fear economy has galvanised private brands, creating a demand pull like never before. As Arvind Mediratta, managing director and chief executive officer, Metro Cash & Carry India, says, “It can be difficult for private labels to be sampled in normal circumstances when the shop shelf has established brands screaming for one's attention.” But now they are the ones customers are reaching out for and he adds, “As the shortage grew, consumers were ready to try out new products, in part assured by the quality and reliability of the wholesaler and retailer.”
Metro Cash & Carry supplies to kiranas and neighbourhood stores and during the lockdown, has maintained uninterrupted supply lines and its private brands, says Mediratta, across food and home care have been sought out heavily in the past few weeks. The case was no different with Reliance Retail
that has announced that its daily orders through JioMart grew four times in the first phase of the lockdown
as kirana partners focused on serving neighbourhoods during the crisis. Its private brands across food and FMCG are also hugely in demand. Executives at Spencer’s Retail say that private labels in snacks, noodles, biscuits, cereals and floor cleaners all grew over 50 per cent between mid-March and April-end.
Retailers say that the first and second phases of the lockdown
have boosted sales, when not only pantry loading, but also value packs drove consumption. Future group
plans to capitalise on the private-brand surge by launching a few more products within detergents and home care in the next month.
While sampling has become easier now than ever before, can private brands leverage the moment for a long term competitive edge?
Some retailers believe that they well might, while some are circumspect, saying national brands could claw their way back into consumer minds. Pinakiranjan Mishra, partner and national leader, consumer products and retail, EY India, says consumer behaviour will shift across three horizons, the ‘now’, ‘next’ and ‘beyond’ phase. “In the ‘now’ phase, consumers are stockpiling essential goods. In the 'next' phase, daily life will resume, but health and economic concerns will reduce consumer confidence. Brand loyalty will diminish as people trade down. Consumption of private labels will increase,” he says.
This point is endorsed by market research agency Nielsen that has come out with reports that say that value-seekers will grow in the next few quarters as consumers look to conserve cash. The emphasis therefore, say experts, will be on brands that provide the right price-value equation.
Private brands can leverage this within the categories they operate in to create a permanent niche and deeper loyalty. “With limited disposable incomes and the need to save for future needs, consumers will focus on the most important requirements, cutting back wherever they can,” says Prasun Basu, president, South Asia, Nielsen. Mishra of EY says that personal care, food, beverages and home care will see a faster recovery compared to furniture, electronics and appliances once the lock down is lifted, giving retailers the leeway to draw up new strategies around their private labels. Navigate the new landscape strategically enough and private labels could soon become power brands of the post-Covid-19 world.