Concept of Private Label

Private Label
• When the retailer decides to sell products or a line of
merchandise which is owned controlled merchandised and
sold by the retailer on his own store he is said to be selling
own label or private label merchandise.
• PANTALOONS - John Miller, Bare, Ajile and Rig
• VISHAL MEGA MART- v-needs(rice, whole wheat flour
(atta) and besan) and v-fresh(Jam, Ketchup, Noodles,
Cornflakes, Juices, Biscuits, Pickles, Pure Ghee, Mustard
Oil, Wafers, Chips, Namkeen and Squashes.)
 What they say?
• Speaking to Business Line, Ms Bina
Mirchandani, Head (Category Management),
Pantaloon Retail, said: "Today our private
labels generate between 75 per cent and 80
per cent of our revenues. Some of these
brands have taken a natural level of growth in
certain areas and we are thinking of exclusive
stores for them."
 What they say?
• Ambeek Khemka, group president, Vishal Retail
Limited (VRL) says, “Private label development in
food categories began in Vishal almost two years
ago, though we aggressively forayed into the
business only about six months back. Growth has
been multi-fold in the last six months; in the food
categories, private labels currently contribute close
to 30% of sales.”
 Some statistics
• On an average 45% products sold in Europe
are sold via private labels.
• 25% in USA
• In Europe the prices of private labels can be
10-18% cheaper
• In USA the %age rises to 25%.
 Advantages of a Private Label
• Substantially higher margins than a brand name products
• Greater freedom with pricing strategy
• Freedom to create your own marketing plans
• Increase your sales
• Control over the stock inventory
• Create a positive image of yourself for your customer which will lead
to stronger customer loyalty
• Reduce dependance on brand names for sales
• Positions you better in a tight economy
• After building customer loyalty for months, your customers won't
turn around and order the same products from an online megastore
because they are only available from you!
 Process of Private Label Creation
• Defining the Objective
• Defining the gaps in the market
• Decision on make or buy and sourcing
• Determining the marketing and sales strategy
• Determining the measure of performance
 Defining the Objective
• Need to create competitive differentiation
• To Offer a wide unique product range
• To enhance the margin the retailer may be
earning.
• To build customer loyality
 Defining the gaps in the market
• The retailer needs to understand the customer
segment to be tapped(ie he needs to identify
the segment which is underserved by the
available national brands/other stores)
• He also needs to guage the price sensitivity of
the audience.
 Decision on make or buy
• The method in which sourcing of the product
is to be done needs to be identified.
• Make or Buy?
• If Buy then who would be the vendor?
• Determining the marketing and sales strategy
• Determining the measure of performance
Thank You