–Contributed by Vivin Wason

Private labels seem to have coming of age in India with the retail industry leveraging the growth in manufacturing sector. With a price band mostly lower than branded products and similar in terms of quality private labels are fast picking up the pace and are ready to take on well known brands across categories ranging from food to apparels. Private labels not only help the retailers to reduce costs by providing higher margins and better supply chain efficiency, but also give the retailer with a certain level of exclusivity. The decision with respect to the positioning, pricing and packaging is made by the retailers.  

Once the retailers reach the a certain size and scale the private label route enable them to grow faster in a particular category as the lower cost of producing private label products could be passed on to the consumers in the form of discounts. In an interview earlier this year Nirmalya Kumar, Professor of Marketing and Director of the Aditya Birla India Centre, London Business School, and co-author of Private Label Strategy, told Business Standard that Private labels are likely to occupy 5o percent of the retail space as the market opens up and matures.  

Over a few years the private labels have evolved into premium private labels. They are no longer saying "buy us because we are cheap", instead today, they are saying "buy us because we are the best". Private labels created a place for themselves. A few examples of private labels doing well in the market are Westside which has very successfully followed a Marks & Spencer model (of 100 per cent private label, very good value for money merchandise for the entire family), food bazaar, Spencer's, Subhiksha, Shopper's stop, Lifestyle, Globus, Planet M and Crossword. 

In US 15% of sales is from private labels whereas in Canada and Europe it accounts for 25% and 50% respectively (2002). These figures clearly show that a retailer can gain more by having private label brands.