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"#$%&'( )* %+#,&(- .&/-.0 1#230()+- /+&2405
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SubmlLLed 8y
Hemchandar R,
Indian Institute of Management Bangalore [2
nd
year student]
Bannerghatta Road,
Bangalore 560 076
India
Telephone: +91 95 9157 2232
Email: [email protected] / [email protected]










$ # a g e

%&'()*+,&'-&. /)-0,+( 1,2(3*4
rlvaLe labels are goods produced or manufacLured under own labels elLher by a reLaller or by a
manufacLurer. When Lhe 8eLaller manufacLures Lhelr own brand lL ls called as ln-sLore brands or slmply
sLore brand. CreaL value" from Wal-marL ls an example of own label of sLore brands under whlch some
Lhousand odd producLs exlsL. 1hey are manufacLured and are ln dlrecL compeLlLlon agalnsL branded
producLs, offerlng cusLomers a cheaper subsLlLuLe and more cholce aparL from naLlonal brands. 1hough
Lhe consumers Lyplcally used Lo see Lhem as low-cosL repllcaLlons or cheaper verslon of branded
producLs, prlvaLe labels have overcome Lhls sLaLus and have aLLalned slgnlflcanL growLh ln recenL years.
SLore brands are Lhe mosL commonly avallable prlvaLe labels for consumers. ueparLmenL sLores,
elecLronlcs sLores, apparels and offlce supply reLallers sell prlvaLe label producLs or servlces. nowadays,
sLore brands exlsL ln 93 of consumer packaged goods caLegorles.
rlvaLe labels possess several advanLages over naLlonal brands and Lhus provlde several beneflLs Lo boLh
reLallers and cusLomers, drlvlng Lhe segmenL's rlslng accepLance. lor reLallers, marglns on prlvaLe label
producLs are an average of 10 hlgher Lhan Lhose on naLlonal branded producLsl. CusLomers beneflL
from prlvaLe labels' cheaper raLes, whlch are ofLen conslderably less Lhan Lhose of naLlonal brands. 1hls
comblnaLlon, whlle advanLageous Lo reLallers and consumers, can puL conslderable pressure on Lhe
manufacLurers of branded goods, who have Lo compeLe agalnsL Lhelr own cusLomers (Lhe reLallers) for
markeL share.

llgure 1: LargesL caLegory of rlvaLe label CCll
5&'-,& 67&+(8+9 :)7;+< -& =).,&->(' ?(+,-3
1he whole reLall lndusLry consLlLuLes around 360 uS bllllon dollars where, food and beverages
consLlLuLes Lhe ma[or ple ln Lhe reLall. 1he reLall lndusLry ln lndla ls esLlmaLed Lo grow Lo $343.2 bllllon
by 2014 and accordlng Lo Lhe 8Ml lndla reLall reporL, Lhe food reLalllng ln lndla domlnaLes Lhe shopplng
baskeL. 1he organlzed reLall Loday conLrlbuLes flve per cenL of Lhe LoLal reLall buslness ln lndla and Lhe
growLh ln Lhe secLor over Lhe lasL flve years has been over 30 per cenL. Powever, ln Lhe organlzed reLall
lL's Lhe apparel segmenL LhaL consLlLuLes Lhe largesL share and hence Lhere ls a huge scope of growLh
lnvolved ln Lhe lood space.
1he shopplng behavlour has dramaLlcally changed ln Lhe lndlan, wlLh Lhe consumers are now well
lnformed and wanL Lo have an experlence whlle shopplng. Pence Lhere ls a prollferaLlon of growLh ln Lhe
shopplng malls, supermarkeLs, hypermarkeLs eLc. Shopplng malls represenL Lhe LradlLlonal one-sLop,
@ # a g e

shop-Llll-you-drop. Accordlng Lo Lhe ACnlelsen reporL, Lhe hlgher number of people aLLendlng organlzed
reLall sLores, leadlng Lo Lhe growlng denslLy of sLore chalns as Lhey compeLe Lo enhance Lhelr poslLlon.
Some 37 of consumers now vlslL hypermarkeLs, supermarkeLs, convenlence sLores and slmllar ouLleLs
on aL leasL a monLhly basls, a seven percenLage polnL surge year on year.[from 2011 reporL]
AB().-&. 5BC7)+,&D( 7E -&9*+7)( 2),&'*4
WlLh Lhe growlng lmporLance of Lhe shlfL ln shopper behavlour and Lhe prollferaLlon of Lhe number of
sLores, Lhe lndlan reLallers are lncreaslng Lhelr ln-sLore brands aL a rapld pace. A Shoppers 1rend SLudy
by nlelsen found awareness abouL prlvaLe labels has gone up from 64 per cenL ln 2009 Lo 78 per cenL ln
2010 across 11 clLles ln lndla.
1he pro[ecL focuses on Lhe lmpacL and LhreaL of ma[or lndlan reLallers llke 8ellance [lood world], luLure
Croup [8lg 8azaar], AdlLya 8lrla's [More], 8harLl, 1renL eLc. 1hese are Lhe ma[or reLallers who form Lhe
bulk of Lhe organlzed reLall or modern Lrade ln lndla.
1he modern Lrade ln lndla ls growlng aL a raLe of around LhlrLy percenL, Lhanks Lo Lhe lncreaslng
lmporLance of ln-sLore brands. lndlan reLallers are concenLraLlng on Lhe sales of ln-sLore brands or called
as Lhe prlvaLe labels for Lhe 8eLall sLores. 1hls ls also due Lo Lhe enormous success of Lhe ln-sLore brands
ln Lhe wesL and Lhe proflL marglns Lhey were able Lo geL. 1here are lmporLanL dynamlcs Lo concenLraLe
on why Lhe reason behlnd lndlan reLallers focusslng on ln-sLore brands, WhaL are Lhe advanLages ln
creaLlng sLore brand prlvaLe labels, whaL are Lhe challenges faced ln Lerms of negoLlaLlon wlLh Lhe
powerful lMCC brands, how lL a LhreaL Lo manufacLurer brands and ln whaL sense Lhey have an edge
over Lhe naLlonal brands eLc
/(&(+),+-7& 7E +<( 5&'-,& ?(+,-3()*
F'-+G, H-)3, :)7IC4 lL has around 643 sLores ln Lhe PypermarkeLs and supermarkeLs caLegory and
prlvaLe labels of around 343 producLs. 1he prlvaLe labels range from food Lo homecare segmenLs glvlng
a cuL LhroaL compeLlLlon Lo lMCC brands. 1hese brands conLrlbuLe 6 share ln 'More' sLores and has
18 peneLraLlon wlLh `Club More' loyal cusLomerslll. More's prlvaLe label brands are cheaper offer 8-
10 lncremenLal margln over naLlonal brands.

JI+I)( :)7IC [anLaloon reLall, 8lg 8azaar]: lL has around 130 sLores ln lndla, wlLh around 30 prlvaLe
label producLs of lLs own. 1he prlvaLe label brands ln Lhe caLegory of apparel and elecLronlc caLegorles,
generaLe approxlmaLe sales of around 367 crore rupees. anLaloons, lood 8azaar, CenLral, Pome 1own
and eZone are some of Lhe reLall chalns Lhey operaLe. 1he Leam has a range of prlvaLe brands - 1asLy
1reaL, lresh and ure, Clean maLe, CaremaLe, Sach, !ohn Mlller, remlum ParvesL and LkLaa.
K)(&+: 1hey are 1aLa's 1renL. 1hey were Lhe flrsL Lo lnLroduce rlvaLe labels ln lndla ln Lhe apparels
caLegory provldlng wesLslde's brands. 1renL has ma[orly peneLraLed lnLo apparels and ln Lhe food space
Lhrough Lhe launch of sLar bazaar, 8ook sLores [Landmark], elecLronlcs [Croma], [ewellery [Lanlshq] eLc.
ln 2008, lL Lled up wlLh 1esco
?(3-,&D( ?(+,-34 lL has around 600 sLores wlLh Lhe prollferaLlon of prlvaLe labels from Lhe elecLronlc
caLegorles Lo food space Lo apparels. lLs formaLs lnclude apparel chaln 8ellance 1rends, beauLy and
wellness formaL 8ellance Wellness. 8ellance 8eLall's prlvaLe label food brands - 8ellance SelecL, 8ellance
value, PealLhy Llfe, Cood Llfe and ualry ure - conLrlbuLe over 23 of Lhe LoLal food sales from lLs
ouLleLs. 8ellance lresh has opLed for a sLraLegy slmllar Lo 8rlLlsh reLaller 1esco by havlng prlvaLe labels aL
Lwo prlce polnLs - one above Lhe resL of Lhe brands and one below - for a number of caLegorles . 1he
L # a g e

company has launched prlvaLe label brands ln non-food caLegory wlLh lnLroducLlon of floor cleanlng
producLs under Lhe Lxpelz label.
M<7CC()N* *+7C4 - Cn Lhe oLher hand, Lhere are oLhers llke Shoppers' SLop whlch belleve ln capplng Lhe
percenLage of prlvaLe labels ln apparel ln splLe of belng one of Lhe ploneers of prlvaLe label concepL ln
lndla. CurrenLly, 20 per cenL of apparel secLlon aL Shoppers SLop consLlLuLe of prlvaLe labels


?(,*7& E7) B70-&. +7;,)'* -&9*+7)( 2),&'*
O-.<() P,).-&*4
As Lyplcally wlLh prlvaLe labels [usL as ln Lhe wesL, Lhe ln sLore brands for lndlan reLallers are able Lo
generaLe hlgher marglns. 1yplcally, Lhe lndlan 8eLallers generaLe around 10-12 marglns from Lhe
leadlng manufacLurer brands or Lhe naLlonal brands. WlLh Lhe advenL or Lhe prollferaLlon of ln-sLore lL
glves Lhem marglns as hlgh as 20 on an average whlch ls even expecLed Lo go Lo around 40 . ln-
sLore brands prlmarlly glve 8eLallers a bargalnlng power, used as a negoLlaLlon Lool agalnsL powerful
naLlonal brands.
Q # a g e

J,*+() H)(,R(0(& C7-&+4
1he lndlan reLallers have many more years Lo reach Lhe breakeven polnL before earnlng proflLs. ln-sLore
brands are a way Lo reach Lhe break even fasLer and hence Lhere ls even greaLer moLlvaLlon for lndlan
8eLallers Lo go more and more Lowards havlng Lhelr own prlvaLe labels.
K),'-+-7&,3 0-(; ,B7&. 5&'-,& D7&*IB()*
1radlLlonally, ln-sLore brands are vlewed as cheap low quallLy producLs among Lhe lndlan consumers,
also Lhe concepL of Modern Lrade was noL presenL Lhen.
AdverLlslng played a ma[or role ln deLermlnlng Lhe value of Lhe brand and hence naLlonal brands llke
PuL, &C, nesLle, kellogg, Lays had a powerful say ln Lhe consumer's cholce. 8rand gave consumers Lhe
LrusL facLor. Lven when cusLomers wanLed Lo choose a producL, lL always consldered Lhe brands LhaL
Lhey recall or Lhe brands LhaL ls commonly boughL ln Lhe sLore [for eg: 8rlLannla Marle gold, good day].
Pence Lhe naLlonal brands en[oyed hlgher marglns as Lhe compeLlLlon ls only wlLh regard Lo oLher
naLlonal brands and Lhey dlfferenLlaLed Lhemselves ln promoLlons, quallLy, brand equlLy.
5&9*+7)( H),&' F&,3G*-*
67&*IB() H(<,0-7I) 9 S5&'I*+)G (8C()+ TFCC(&'-8U
lL was very clear from Lhe dally observaLlon LhaL, ln order Lo make Lhe cusLomer buy Lhelr producL,
8eLallers have Lo maLch Lhe quallLy of Lhe naLlonal brands and aL Lhe same Llme make lL cheap Lo glve an
lncenLlve Lo Lhe cusLomer Lo swlLch from Lhelr loyal brands. 1hey were confldenL of Lhls as Lhey are
closer Lo Lhe consumer Lhan any oLher naLlonal brands.
lL ls Lhe 8eLallers who can observe Lhe paLLerns ln purchase behavlour of Lhe cusLomers real Llme geLLlng
Lo know whaL klnd of producLs Lhey buy, any repeaL purchases belng made, how ls Lhe behavlour of Lhe
brand loyal cusLomer, ls Lhe cusLomer Lhlnklng ln buylng a producL or ls he predeLermlned, ls Lhe
cusLomer golng for any new producL release or one dlmenslonal, how well Lhe ln-sLore promoLlons are
affecLlng Lhelr shopplng behavlour.
5B-+,+-7&
lndlan 8eLallers made sure LhaL, ln order for Lhe cusLomers Lo Lry Lhelr producL, Lhelr swlLchlng musL be
low. lndusLrles llke foods, household segmenL caLers very well for Lhe 8eLallers. Apparel segmenL
aLLracLed mlddle class and low class consumers who are noL brand consclous buL value for money
cusLomers.
AfLer havlng Lhe Lechnlcal knowhow of Lhe meLhodology belng adopLed by Lhe naLlonal brands Lo aLLracL
Lhe consumers, lL Look no Llme for Lhe 8eLallers Lo copy Lhe same for Lhelr sLore brands. lor e.g.: j 1bey
lmltoteJ slmllot pockoqloq, loweteJ tbe ptlce of tbelt ptoJocts, plocloq tbelt ptoJocts lo sbelf oeot to
tbe leoJloq ptoJoct coteqoty, slqolflcoot sbelf spoce, Jlscooot ptomotloo offets ]
5&D)(,*(' F;,)(&(** ,&' /(&(+),+-7& 1(0(3*
ln Lhe lndlan markeLs, rlvaLe Labels have emerged predomlnanLly ln Pouse hold segmenL, foods,
beverage and ln apparel caLegorles.. Low-lnvolvemenL caLegorles such as household cleaners were
among Lhe flrsL Lo see Lhe enLry of prlvaLe labels (17-44 per cenL of sale ln modern Lrade), brlnglng ln
V # a g e

huge margln-llfLs for modern reLallers. ln caLegorles such as food producLs - [ams, blsculLs and sLaples
- prlvaLe labels Loday conLrlbuLe more Lhan 23 per cenL of modern Lrade sales
?(,*7&4
1he producLs are easlly lmlLable
noL much formula or 8&u process lnvolved
1he process of manufacLurlng ls noL cumbersome [e.g.: oll ]
no legally cerLlfled producLs [vlcks, denLal LooLhpasLe] --1hls ls because, lndlan reLaller are very
cauLlous when Lhey venLure lnLo PealLh relaLed producLs as Lhey are noL experLlse ln Lhe fleld and
due Lo lack of 8&u lnfrasLrucLure
1he producLs should be fasLer Lo produce
M7I)D-&. -&9*+7)( 2),&'*
1radlLlonally, Lhe leadlng 8rands manufacLured Lhelr own brands and dlsLrlbuLed Lo Lhe 8eLallers. LaLer,
Lhey began Lo ouLsource some of Lhelr own producLs Lo Lhe Lhlrd parLy manufacLurers who were wllllng
Lo produce aL a cheaper raLe whlle Lhe naLlonal brands focused more on Lhelr 8&u.
1he 8eLallers Lhen declded Lo approach Lhe Lhlrd parLy vendors Lo manufacLure Lhem Lhe same producL
LhaL ls belng manufacLured Lo leadlng naLlonal brands buL Lhe label belng Lhelr sLore name. Pence,
essenLlally Lhe quallLy ls belng maLched more or less wlLh Lhe naLlonal brands ln Lhe apparel caLegory,
house hold segmenL, wlLh Lhe LasLe belng almosL Lhe same for Lhe foods and beverages as Lhe formula
requlred Lo produce Lhe producLs are easlly lmlLable. [As menLloned above household, apparel and
foods are Lhe ma[or peneLraLlon ln Lhe lndlan ln-sLore brands]
/)7B7+-7&*
lndlan 8eLallers Loday have ln depLh undersLandlng of aLLracLlng cusLomers Lhrough polnL of purchase
promoLlons. 1hey focus on lmpulse buylng raLher Lhan LradlLlonal adverLlslng of Lhe producLs. Cn
learnlng Lhe arL from naLlonal brands, Lhey now come up wlLh besL sLraLegles for ln-sLore promoLlons,
wlLh Lhelr low prlce sLraLegy Lo aLLracL cusLomers Lo plck Lhelr producLs and Lry. lndlan 8eLallers are
confldenL LhaL once Lhe cusLomer Lrles Lhelr producLs, Lhe cusLomers wlll deflnlLely Lry Lhelr producL on
Lhe nexL vlslL.
1hey have Lhe advanLage of maklng effecLlve promoLlons, knowlng wheLher cusLomer are maklng repeaL
purchases lf no, whaL ls Lhe remedy for Lhe problem. As Lhey are ln close lnLeracLlon wlLh Lhe cusLomers,
lL ls very easy and qulck for Lhem Lo polnL ouL whaL wenL wrong Lhan for oLher brands -!"#$%&'( *+,*'&
A3-B-&,+-7& 7E 5&+()B('-,)-(* T17; D7*+ T S5&'I*+)G *+,*'&-./
Cne of Lhe chlef reasons why 8eLallers are able Lo prlce Lhelr producLs slgnlflcanLly low [10-13 lower]
Lhan oLher brands ls LhaL, Lhey ellmlnaLe Lhe lnLermedlarles. 1here ls no dlsLrlbuLlon or sales personnel
or promoLers of Lhe brands lnvolved. 1he shelf space ls Lhelrs and mosL lmporLanLly Lhey do noL spend
much ln adverLlslng. MosL vendors dlrecLly supply Lo reLallers' dlsLrlbuLlon cenLres, cuLLlng ouL cosL
leakage aL Lhe dlsLrlbuLor's and carrylng and forwardlng cenLres. ulrecL access Lo sLore shelves and alsles
also cuLs ouL Lhe hlgh malnsLream adverLlslng cosLs LhaL brands have Lo bear. 8y clever producL
arrangemenLs and ln-sLore promoLlons, reLallers can sway Lhe shopper and draw aLLenLlon Lo Lhe prlce
W # a g e

advanLage. 1helr 8&u cosLs are slgnlflcanLly low as Lhey do noL venLure lnLo producLs lnvolvlng
slgnlflcanL expense. Pence Lhe overall operaLlng expense for a producL ls exLremely less such LhaL Lhey
are able Lo galn adequaLe marglns even afLer prlclng Lhelr producLs low.
L.g.: lotote Ctoop btooqbt Jowo loqlstlcs costs fottbet by 6-8 pet ceot by oppolotloq veoJots lo mote
tboo ooe teqloo fot 10 of lts ptoJoct coteqotles to flll lts Jlsttlbotloo ceottes
/7)+E73-7 7E /)7'ID+ 1-&(*4
AfLer slgnlflcanL success ln rlvaLe Labels, Lhe 8eLallers are very keen on exLendlng Lhe 8rand llnes Lo low
prlced, medlum prlced and premlum prlced producLs sLlll lesser Lhan Lhe naLlonal brands. 1hls ls done
essenLlally Lo compeLe wlLh Lhe naLlonal brands as Lhey occupy Lhe shelf space by havlng a llne of
brands ln Lhe same caLegory. 8y placlng all Lhree llnes along wlLh Lhe naLlonal brands, Lhe ln sLore
brands offers more cholce Lo Lhe cusLomers. Pence Lhrough Lhls, Lhey develop Lhe LrusL among Lhe
consumers and hence aLLracL slgnlflcanL markeL share from Lhe naLlonal brands.
A8,BC3( 9lotote Ctoop too bos lts qooJ, bettet, best pollcy lo ploce. lo %&0,1*%, tbe stotes offet some
ptoJocts loose, socb os tlce, wbeot, leotlls, wblcb ls ot tbe bottom of tbe loJJet. lts 233# 40500' vetsloo
of tbe ptoJocts sttoJJle tbe mlJJle coteqoty, ooJ obove tbe two ls lts btooJ, 6'*7.$7 80'/*%&, tetollloq
ot o ptlce blqbet tboo some mooofoctotet btooJs


5&9*+7)( H),&'* TF& AB().-&. +<)(,+ +7 JP6: 67BC,&-(*
WlLh Lhe change ln Shopper 8ehavlour ln lndla, 8eLallers' lmporLance ln lndla grew more Lhan ever for
Lhe lMCC companles Lo drlve Lhelr sales. AlLhough Lhe organlzed reLall secLor ls sLlll less Lhan 10 of Lhe
overall reLall space, Lhls has been growlng aL a rapld pace wlLh more and more consumers prefer
modern Lrade shopplng. lMCC companles very well know LhaL Lhls ls Lhe Lrend golng forward. Moreover
Lhey do noL wanL Lo leL go of Lhelr markeL share for any reason Lo Lhelr compeLlLor, whlch forces lMCC
companles Lo be dependenL on Lhe 8eLallers for Lhe sale of Lhelr producLs. WlLh Lhe prollferaLlon of
rlvaLe Label ln-sLore brands, cusLomers now have more cholces Lo choose Lhe producL from a parLlcular
caLegory. lor lMCC companles, lL has become a Lwofold problem, as Lhey are now noL only compeLlng
agalnsL oLher naLlonal brand compeLlLors, buL also agalnsL lndlan 8eLallers who are now emerglng as
compeLlLors. 1he slLuaLlon ls sllghLly more complex, as 8eLallers are boLh Lhelr cusLomers as well as Lhelr
compeLlLors.
1he followlng facLors make us undersLand why Lhey are compeLlLors and LhreaL Lo naLlonal brands and
lMCC companles.
O-.< X(B,&' E7) ?(+,-3()N* P,).-&*
1hls has been Lhe slngle mosL LhreaL or problem currenLly faced by Lhe lndlan naLlonal brands. 8eLallers
now are demandlng excess marglns from Lhe leadlng manufacLurers Lo place Lhelr producLs on Lhe shelf.
Pere, Lhe proflL marglns are geLLlng squeezed and ulLlmaLely Lhere ls a pressure Lo drlve more sales for
Lhelr producLs. Larller Lhey were paylng around 10-12 , now Lhey are forced Lo pay around 13-16
marglns. Powever Lhese margln deLalls wlll dlffer across dlfferenL 8eLallers buL neverLheless Lhere has
been an average lncrease of abouL 3-4 ln marglns.
Y # a g e

K<)(,+ T H-. H,>,,) Z [(337..N*
When kellogg's refused Lo pay Lhe marglns demanded by 8lg 8azaar, lLs producLs were Laken ouL of Lhelr
shelf from all Lhe 130 sLores. Meanwhlle 8lg 8azaar launched lLs own label brand 1asLy 1reaL" whlch
occupled Lhe shelf space. uurlng Lhose Lhree monLhs, 1he 1asLy 1reaLs brand of cereals, afLer fallouL
wlLh kellogg's, has been able Lo capLure 18 markeL share (ln luLure Croup's sLores) for cereals.
kellogg's laLer re-negoLlaLed wlLh 8lg 8azaar wlLh regard Lo marglns, and lLs producLs were back Lo shelf.
8lq 8ozoot & coJboty j2008]v
8lg bazaar boycoLLed Lhe Cadbury producLs ln lLs shelf across all ouLleLs and ln food bazaar ouLleLs
followlng Lhe accusaLlon LhaL Cadbury dlscrlmlnaLes agalnsL glvlng hlgher marglns for Lhe oLher global
reLallers. LaLer on, Lhe negoLlaLlon Look place ln Lerms of decldlng on Lhe marglns and lssue goL seLLled
amlcably. Slmllar llnes were found wlLh epsl's lrlLo lays.
keckltt 8eoklset vl - As 8ecklLL 8encklser Lhe maker of ueLLol, Parplc and Llzol, cuL Lhelr marglns by 2
more per cenL due Lo lncrease ln Lhe cosL of lnpuL. luLure Croup ln proLesL boycoLLed lLs producLs whlle
seLLlng precedenL for oLhers Lo follow sulL. lL had sLopped placlng fresh orders wlLh 8ecklLL ln Lhe second
week of lebruary 2011. 1he slack ln 8ecklLL producLs was Laken up by oLher brands such as Llfebuoy,
SanLoor and Care MaLe ln hand wash and ln home care caLegorles such as LolleL cleaners by uomex and
Clean MaLe. LaLer Lhe margln lssues were seLLled offllne wlLh Lhe lndlan 8eLallers.
17*-&. P,)R(+ M<,)(
As Lhe prlvaLe label marglns are lncreaslng, Lhey lose Lhelr markeL share and Lhe proflL marglns. 1he
marglns demanded by rlvaLe labels are as hlgh as 14-16 from a mere 10 before. Pence, Lhere ls a
pressure Lo lncrease Lhelr sales volume and galn markeL share. Cn Lhe oLher hand Lhe prlvaLe label
segmenL lLself ls golng aL a phenomenal pace wlLh marglns ranglng from 19-23 maklng lL aLLracLlve for
lndlan 8eLallers Lo pursue Lhls venLure.vll
\<()( '7 ?(+,-3()* *D7)( 70() P,&IE,D+I)()*]
1hey Lake less Llme Lo come up wlLh Lhe producLs [lndusLry experL]
lndlan 8eLallers Lake almosL less Lhan 3 monLhs Lo come up wlLh Lhe new producL ln Lhe shelf
and aL Lhe max 6 monLhs for a producL dependlng on Lhe caLegory. 1hls ls a huge advanLage
glven Lhe facL LhaL for a new producL launch, an lMCC company Lakes aL leasL a year, as 8&u
lnvolvemenL ls hlgh. 1hls ls due Lo Lhe hlgh levels of lmlLaLlon and rlvaLe Labels venLurlng lnLo
easy Lo lmlLaLe producL caLegorles. 1hls glves Lhem a huge lead Llme agalnsL lMCC companles
and Lurnaround Llme Lo earn hlgher proflL marglns.
?(+,-3()N* F).IB(&+
lL makes perfecL economlc sense for Lhem Lo pursue ln Lhe rouLe of prlvaLe labels as Lhey are
able Lo offer more cholces Lo Lhe consumers
1hey are Lhere Lo flll Lhe gaps ln Lhe producL llne
1hey offer cusLomers more opLlons aL varylng prlce polnLs level
1hey are Lrylng every posslble way Lo maLch naLlonal brands ln Lerms of quallLy and galnlng
cusLomer loyalLy, Lrylng Lo bulld an lmage for sLore brands lLself
^ # a g e

5&*-.<+* '(0(37C(' E)7B ?(+,-3()N* K<)(,+
An onllne poll was conducLed by 8eLall wlre wlLh regard Lo Lhe measure of falrness as Lo
wheLher 8eLallers by Laklng Lhe producLs of Lhe manufacLurers brand ouL of Lhe shelf, Lhereby reduces
consumers cholce of chooslng Lhe brand from Lhe shelf. Legally Lhls ls noL a problem, as Lhls pracLlce has
been followed ln oLher 8eLall sLores ln Lhe wesLern counLrles llke Aldl, 1esco, and 1argeL eLc.
8eLallers overall had a poslLlve revlew wlLh regard Lo Lhelr acLlons of dellsLlng producLs from Lhe shelf.
Powever, Lhe suppllers are also Lo be blamed equally Lo abouL 33 as Lhey form a confllcL of lnLeresL by
agreelng Lo produce boLh Lhe ManufacLurer's brand and Lhe 8eLaller's brand.
MICC3-()N* ,).IB(&+
1he suppller's argumenL ls LhaL, Lhere ls no confllcL of lnLeresL as before Lhe advenL of prlvaLe labels ln
lndla, Lhey were noL aL all ln Lhe buslness and Lhe marglns demanded by blg manufacLurers were huge .
Small suppllers were sLruggllng Lo geL conLracLs agalnsL blg lMCC companles, hence Lhey were
pracLlcally dls-lnLermedlaLed from Lhe 8uslness. now, wlLh Lhe growLh of prlvaLe labels ln lndla,
8eLallers have approached Lhe suppllers for manufacLurlng Lhelr prlvaLe labels or ln-sLore brands.
lollowlng whlch, even Lhe small suppllers were pulled lnLo Lhe buslness. 1here has been a consLanL
sLruggle wlLh Lhe ManufacLurers and suppllers wlLh regard Lo produclng Lhe same brand wlLh dlfferenL
brand names. 8uL, as long as Lhere ls no paLenL and wlLh Lhe lnformaLlon of Lhe producLs easlly
avallable, Lhe suppllers are under no LhreaL for produclng or sourclng Lhe producLs Lo Lhe reLallers. Also,
Lhe suppllers belng few ln number, Lhe lMCC companles had Lo depend on Lhem. As suppller's
relaLlonshlp and neLwork ls ofLen long and sLrenuous Lo bulld, lMCC had Lo be sllenL. lor suppllers,
especlally small suppllers, lL ls abouL buslness and maklng money ouL of Laklng conLracLs wlLh reLallers.
1he key lnslghLs are
Small suppllers seek solace from Lhe 8eLallers
Suppllers grow as 8eLallers grow
1hls ls because of Lhe facL LhaL, wlLh Lhe consLanL expanslon, and prollferaLlon of
prlvaLe labels, lL generaLes more buslness Lo suppllers.
lor Lhe 8eLallers, lL ls a plaLform Lo compeLe agalnsL Lhe naLlonal brands
K;79('.(' *;7)'
lor Lhe lMCC companles, Lhe relaLlonshlp wlLh suppllers ls very essenLlal. 1he suppllers have long
sLandlng relaLlonshlps wlLh Lhe lMCC companles. 1hey undersLand Lhe processes, brand really well.
now wlLh Lhe confllcL of lnLeresL LhaL ls Laklng place wlLh Lhe prlvaLe labels, lMCC brands have Lo move
very cauLlously. 1hls ls because, Lhe slLuaLlon ls changed, as Lhe dependency level for Lhe Suppllers ls
noL so much on naLlonal brands because of Lhe prollferaLlon of 8eLaller brands and Lhe demand from
8eLallers Lo manufacLure Lhelr producLs. Moreover, Lhe swlLchlng cosLs for Lhe lMCC brands are hlgher
when Lhey engage ln a war on suppllers agreelng Lo source Lhe same producLs Lo reLaller brands. 1hls ls
because, Lhe new suppller musL be LrusLworLhy, undersLand Lhe nuances of Lhe brand porLfollo. 1he
culLure of Lhe company and more lmporLanLly undersLand how Lhe brand ls poslLloned ln Lhe mlnds of
Lhe consumer. 1hls mlghL Lake slgnlflcanL amounL of Llme whlch mlghL prove cosLly ln Lhe end.
!_ # a g e

JP6:NM )(,D+-7& ,.,-&*+ ?(+,-3()N* +<)(,+4
/)-D( \,)*4
1he lnlLlal reacLlon of Lhe blg lMCC companles Lo counLer Lhe LhreaL of Lhe prlvaLe label LhreaL ln lndla
was Lo resorL Lo prlce war. 1he reason behlnd Lhe acLlon belng ls very evldenL as Lhey vlewed rlvaLe
Labels, compeLlng agalnsL Lhem ln Lhe form of only on a prlce facLor.
lor e.g.: Hindustan Unilever cuts prices of its products-
lndla's blggesL consumer goods company cuL Lhe prlces of some of lLs brands and lncrease Lhe pack slzes
of oLhers. 1hls was ln response Lo Lhe lnLenslfylng compeLlLlon ln Lhe own-label brands segmenL. 1he
company reduced Lhe prlce of lLs Wheel AcLlve 8lue deLergenL by 20, and lncreased Lhe welghL of
packs of lLs Wheel Creen brand from 273g Lo 300g, and from 360g Lo 600g. CLher producLs LhaL have
seen Lhe launch of a slze lnclude lLs Llfebuoy soap LhaL lncreased Lhe volume Lo 4.


rocLer & Camble ln response Lo Lhe rlvaLe Label 8eacLlon
lL reduced Lhe cosL of Lhe 730g pack of lLs deLergenL 1lde by 19.3, Lo compeLe agalnsL Lhe emerglng
LhreaL of prlvaLe labels. 1hls move also prompLed PlndusLan unllever Lo launch a larger varlanL of lLs 8ln
Advanced offerlng ln Lhe same caLegory.
Pence, lL ls very clear of Lhe pressure belng lmposed by Lhe prlvaLe labels on naLlonal brands on prlce
facLors occupylng a slgnlflcanL chunk of Lhe markeL ple especlally ln marge meLros and Ller1 clLles ln
lndla. 1hls has forced Lhe ma[or lMCC companles Lo Lake some aggresslve acLlon glvlng rlvaLe labels
and 8eLallers Lhe slgnal of lLs power.
67BBI&-D,+-7& B(**,.( 'I)-&. C,DR,.-&. 7E +<( C)7'ID+
ManufacLurer brands sLarLed communlcaLlng message ln Lhe packaglng of Lhe producLs llke 1hls ls noL a
prlvaLe label producL". 1hls ls happenlng lncreaslngly ln Lhe case of new producL launches of Lhe naLlonal
brands Lhereby clearly dlfferenLlaLlng Lhemselves from Lhe prlvaLe label producLs.
1hrough Lhe communlcaLlon message ln Lhe packaglng lL acLs as a slgnalllng LhaL, Lhe prlvaLe label
producLs are cheap ln quallLy and are noL Lo be LrusLed. 1hls can really be looked upon as a long Lerm
sLraLegy for Lhe lMCC brands Lo aLLack Lhe reLaller sLore brands. Pere, Lhe brand loyal cusLomer mlghL
heslLaLe Lo buy Lhe producLs when a naLlonal brand lndlcaLes a negaLlve connoLaLlon by uslng prlvaLe
label brands. CusLomers readlng Lhe message geL a feellng LhaL Lhe prlvaLe label producLs are of lnferlor
wlLh regard Lo Lhe lMCC brands.
F..)(**-0( C)-D( C)7B7+-7& ,+ 7+<() *+7)(*
1he naLlonal brands ln confronLaLlon, wlLh Lhe 8eLall sLores Laklng Lhe producLs ouL of shelf, sLarLed
aggresslve prlce promoLlons ln Lhe oLher compeLlLlve sLores. 1hls ls a shorL Lerm sLraLegy as Lhls pollcy
would dlrecL more ln-sLore cusLomer Lrafflc and would affecL Lhe 8eLaller's buslness. Powever, Lhe oLher
compeLlLlve sLores also sLarLed demandlng hlgher marglns. Also, by dolng Lhls, Lhe lMCC brands are also
glvlng an opporLunlLy for lLs cusLomers Lo Lry Lhe compeLlLlve brands and prlvaLe label brands.
!! # a g e

1hls mlghL prove caLasLrophlc as Lhere can be a permanenL swlLch from lLs brand Lo lLs compeLlLor
brands, lf cusLomers flnd lL Lo be more llkeable on Lrylng Lhe producL.
/)7'ID-&. C)7'ID+* ,+ '-EE()(&+ C)-D( C7-&+*
ln response Lo Lhe 8eLaller's argumenL LhaL, Lhey are able Lo flll Lhe shelf space wlLh producLs aL varlous
prlce polnLs, Lhe lMCC companles also sLarLed lnlLlally Lo produce producLs wlLhln Lhe same caLegory.
Powever, Lhls ls approprlaLe only when Lhere ls a need ln Lhe caLegory. When Lhe caLegory of producLs ls
prlced hlgh ln Lhe markeL, Lhen lL mlghL make sense, lf a lMCC company decldes Lo aLLracL low, prlce
consclous and value for money cusLomers.

M+),+(.-(* +7 D7I&+() +<( +<)(,+ 7E /)-0,+( 3,2(3*
1o flghL back rlvaLe label lnLruslon, 8rand manufacLurers should remove Lhelr noLlon LhaL L's are
lnferlor and should noL focus Lhelr efforL on compeLlng brands alone. 1hey should recognlze LhaL prlvaLe
labels became an lmporLanL player ln Lhe compeLlLlon. 1hey should benchmark facLors llke consumer
aLLlLudes, producL quallLy agalnsL prlvaLe labels ln addlLlon Lo naLlonal brands. lndlan brand
manufacLurers llke PlndusLan unllever LLd, Marlco and 8rlLannla should devlse Lhelr sLraLegy slmllar Lo
Lhe wesLern companles' sLraLegles Lo safeguard Lhelr markeL share and compeLe effecLlvely alongslde
prlvaLe label ln Lhe lndlan markeL. We have deLalled below Lhe sLraLegles for Lhe lndlan companles.
67&*+,&+ 5&&70,+-7&
lndlan lMCC companles musL ensure LhaL Lhey musL consLanLly look ahead ln order Lo dlfferenLlaLe
Lhemselves from Lhe emerglng prlvaLe labels. Also Lhey should look for Lhe caLegorles ln whlch, Lhe
producLs are noL LhaL easlly lmlLable. 1hls ls Lo creaLe a sufflclenL know how ln Lhe fleld of Lhe caLegory
producLs ln whlch Lhe company ls operaLlng. Pere, Lhe prlvaLe labels wlll noL dare Lo venLure lnLo Lhe
area where
1he producLs are noL easlly lmlLable
1he process ls heavy and cumbersome - [ManufacLure of oll e.g.: Saffola Cll]
o 1hls ls also because of Lhe facL LhaL rlvaLe Label do noL wanL Lo lnvesL so much Llme ln
elLher manufacLurlng or Lake up a process LhaL ls heavy as Lhey wanL Lo have a shorLer
lead Llme
Any healLh relaLed producLs - As healLh requlres cerLlflcaLlon from lndusLry experLs and exLreme
loyalLy ln Lhe brand ls requlred whlch wlll Lake a sufflclenL amounL of Llme Lo bulld. Moreover Lo
convlnce Lhe cusLomers swlLchlng from say [Saffola oll or ColgaLe] Lo own label producLs are
exLremely hard, slnce Lhese producLs are supporLed by Lhe key lnfluencers llke uocLors and
oLher professlonal pracLlLloners. Pence prlvaLe labels wlll glve a deep LhoughL before golng lnLo
Lhese caLegorles.
`(; C)7'ID+ 1,I&D<(* T F <,2-+
ln order Lo susLaln ahead ln Lhls game, lMCC companles have Lo aggresslvely come up wlLh lnnovaLlve
buslness models and have a naLlonal rollouL sLraLegy for lLs new producL launches. 1hese new producL
launches has Lo supporLed by
Aggresslve campalgnlng
!$ # a g e

rovldlng free samples Lo Lhe cusLomers Lo dellghL Lhem
CreaLlng and re-enforclng Lhe sLrong brand equlLy
lnnovaLlon ls a key facLor Lo counLer Lhe LhreaL of rlvaLe labels ln lndla. As we could clearly see, Lhls wlll
Lake some Llme for Lhe prlvaLe labels Lo flgure ouL Lhe processes lnvolved ln maklng a new producL,
formulas used, lmlLablllLy facLor eLc. Also by Lhe Llme a prlvaLe Label llke 8lg 8azaar or AdlLya 8lrla Croup
comes up wlLh Lhe lmlLaLlon of Lhelr own label of Lhe new producL, a lMCC brand can easlly capLure Lhe
flrsL mover advanLage and galn slgnlflcanL Loe-hold among new and loyal consumers.
?-*R* -&0730('
Cn Lhe oLher hand, Lhere are slgnlflcanL rlsks and cosLs lnvolved ln new producL launches. 1he new
producL mlghL fall ln Lhe markeL resulLlng ln huge lnvesLmenL loss. Also, Lhe 8&u cosLs lnvolved coupled
wlLh adequaLe promoLlons are very hlgh for lMCC brands. Powever Lhese rlsks can be mlLlgaLed by
undersLandlng ln -depLh Lhe emerglng consumer needs, Lrends and saLlsfylng Lhem
8lghL mlx of markeLlng promoLlons lmprovlng Lhe brand lmage of Lhe brand
M+),+(.G ,'7C+(' E7) (EE(D+-0( P,)R(+-&. 67BBI&-D,+-7&*9 F'0()+-*-&.a \7)' 7E
P7I+<
Cne key facLor LhaL lMCC brand can do Lo counLer Lhe LhreaL ls Lo adopL effecLlve markeLlng
communlcaLlon for Lhe lnnovaLlons Lhey pursue, for Lhe buslness models Lhey bulld and essenLlally for
Lhe new producL launches
F'07D,DG P7'(3* T M+),+(.G +7 (&<,&D( C)7'ID+ (8C()-(&D( ,&' H),&' (bI-+G
lMCC brands whlle lnnovaLlng new brands have Lo communlcaLe effecLlvely Lo capLure markeL share. ln
order Lo enhance Lhe brand lmage, bulldlng advocacy models elLher Lhrough lnfluencers and LargeL
cusLomers or Lhe early adopLers of Lhe producLs.
M,BC3-&. &(; C)7'ID+* T HI-3'-&. /)7'ID+ (8C()-(&D( ,&' (EE(D+-0( ;7)'97E9B7I+<


llgure 2: Sampllng
1hrough sampllng of Lhe new producLs, before Lhe acLual launch, lMCC brands are creaLlng poslLlve
lmpresslon .1hls sampllng Lechnlque enables Lo ralse awareness levels, make cusLomersfeel proud LhaL
Lhey are belng valued whlch lnLernally generaLes poslLlve word of mouLh effecL.
1argeL
Sampllng
lnuencers
Larly
AdopLers
!@ # a g e


llgure 3: 8ulldlng brand experlence
Pere Lhe prlvaLe label of any new producLs ln Lhe sLore
Lacks Awareness of Lhe new producL launch
CannoL have Sampllng Lechnlques
Lacks word-of mouLh
CusLomers cannoL have brand experlence
1helr only source of adverLlsemenL ls Lhrough ln-sLore promoLlons
M+)7&. M-.&,33-&.
lMCC brands need Lo go aggresslve agalnsL Lhe lmlLaLlon of prlvaLe labels of Lhelr producLs ln Lerms of
copylng Lhe formulas, processes .1hese brands have Lo flle for l8 [lnLellecLual properLy rlghLs] for any
new lnnovaLlon belng done. 1hls mlghL prevenL or delay Lhe lmlLaLlon facLor. lMCC brands also can
make lawsulLs agalnsL rlvaLe Labels for copylng. 1hls creaLes a sLrong slgnalllng effecL LhaL 8eLallers wlll
Lwlce Lhlnk before golng for producLs ln Lhese caLegorles.
Powever flllng a lawsulL or an l8 wlll lnvolve slgnlflcanL cosLs and Llme for a manufacLurer brand. 1hls
mlghL also lnvolve hamperlng Lhe relaLlonshlps wlLh Lhe exlsLlng 8eLallers. Pence lL ls a dellcaLe balance
and a flne Lhread Lo deal wlLh Lhe slLuaLlon.
K<)(,+ 7E /)7'ID+* 2(-&. +,R(& 7I+ 7E +<( *<(3E
1hls ls a Lough slLuaLlon especlally when 8eLallers demand hlgher marglns for Lhe shelf space and
8eLallers own brand occupylng a chunk of Lhelr markeL share. Pere Lhe sLraLegy LhaL ls essenLlal ls LhaL
1he producLs musL Lry Lo poslLlon noL as a Me-Loo" brand
LssenLlal for Lhe caLegory of brands Lo be elLher no:1 or no:2 or no:3
o Pere, lf Lhe caLegory brand ls a leader or one of Lhe leaders, Lhen lL becomes dlfflculL for
Lhe 8eLallers Lo Lake Lhe producLs ouL of Lhe shelf. 1hls ls because of elLher Lhe sLrong
brand loyalLy wlLh Lhe cusLomer or Lhe producL provldlng Lhe key beneflL
1he lMCC producLs musL sLrlve Lo achleve more exLenslon of Lhe brand llnes. As Lhls mlghL flll
Lhe shelf space and caLer Lo Lhe LargeL audlence noL allowlng Lhe chance for Lhe rlvaLe Label Lo
domlnaLe ln one segmenL.
AEE(D+-0( C,)+&()*<-C
1he relaLlonshlp beLween reLallers and manufacLurers ls such LhaL former depends on Lhe laLLer for
producL assorLmenL whlle manufacLurer need reLallers Lo sell Lhelr producLs and Lo lncrease Lhelr sales
!L # a g e

volume. 1he sales of brand manufacLurer Lhrough reLallers have grown conslderably over Lhe years. A
Lyplcal CC company sells around 40 of lLs producL Lhrough Lop 10 reLallers around Lhe world. Pence
manufacLurers should sLrlve hard Lo esLabllsh poslLlve relaLlon wlLh reLallers. 1he maln advanLage of
reLallers ls Lhelr efflclenL dlsLrlbuLlon neLwork aL low cosL, whlch enables Lhem Lo sell producLs aL low
prlces Lo Lhe consumer. 8eLallers Loo need naLlonal brands ln Lhelr shelf Lo lncrease Lhelr assorLmenL
and Lhey also need prlvaLe labels Lo be manufacLured aL low cosL and of hlgh quallLy. Pence reLallers
also need Lo esLabllsh susLalnable and conduclve poslLlve relaLlonshlp wlLh manufacLurers.
?(+,-3()N* &(('
8eLallers wanL Lo dlfferenLlaLe Lhemselves from compeLlng reLallers by havlng wlde producL assorLmenL
mlx ln Lhelr shelves. naLlonal brand manufacLurers can supply Lhe reLallers wlLh excluslve brands,
caLegorles or offers ln a muLually beneflclal way. 8uL supplylng speclflc brand cannoL be a long Lerm
sLraLegy, slnce manufacLurer would llke Lhelr besL-selllng brands Lo be avallable ln all reLall shops and
reLallers would llke lL Lo be only ln Lhelr shop. ManufacLurer could sell a parLlcular caLegory Lhrough a
speclflc reLaller e.g. nesLle's cusLom made vlLLel waLer conLalner especlally for Lldl reLaller. ulscounLers
wanL Lo malnLaln a healLhy mlx of prlvaLe label brands and manufacLurer brands Lo saLlsfy all Lypes of
cusLomers. Also Lhey need Lo have compeLlLlve advanLage oLher Lhan prlce dlfference over oLher
dlscounLers. ulscounLers who emphaslzed only on prlvaLe label brands have shown decllne ln sales
compared Lo Lhelr compeLlLors. e.g. ln 2003, enny's sale decreased by 7 whlle Lldl's lncreased by
more Lhan 10. 1hus Lldl goL beneflLLed from brand sales and manufacLurer's sales volume lncreased
resulLlng ln muLual proflL. We have deLalled below Lhe maln facLors whlch are essenLlal ln creaLlng a
muLually beneflclal relaLlonshlp.
1. ldeal prlce dlfference should exlsL beLween manufacLurer brands and sLore brands so as
Lo slgnal Lo Lhe consumers LhaL Lhey are LargeLed aL dlfferenL cusLomers
2. ackaglng of ManufacLurer brand should be aLLracLlve and dlsplay worLhy enough Lo
dlfferenLlaLe Lhe superlor quallLy of Lhe brand
3. 8rand experlence should be creaLed around Lhe brands Lo lncrease cusLomer loyalLy
4. Cfferlng varleLy of package slze Lo LargeL varlous segmenLs
ManufacLurers should Lake lnLo accounL Lhe needs of Lhe reLallers/dlscounLers before decldlng on
developlng new producL. ulsLrlbuLlon cosL should geL reduced and brand's porLfollo should maLch
sLraLegy of reLallers. Worklng Lo meeL Lhe needs and wanLs of cusLomer wlll drlve boLh players Lowards
common goal.
5* -+ ,& AB().(&DG M-+I,+-7&]
As far as Lhe emerglng markeLs llke lndla ls concerned, lL ls essenLlal Lo undersLand Lhe naLure and
dynamlcs of rlvaLe Labels and lLs lmpendlng LhreaL. WlLh Lhe klnd of culLure and landscape LhaL lndla
has, 8eLallers almosL have Lo do a Wal-MarL ln Lerms of expanslon ln rural areas, whlch ls a humungous
Lask Lo ask for. 1hls ls ln conslderaLlon of Lhe facL LhaL, large 8eLallers are runnlng ln debL and sLlll 4-3
years away from Lhe break-even polnL. Moreover Lhey are also ln expanslon phase ln Lhe leadlng 1lre -1
clLles and oLher meLros. Pence caLerlng Lo Lhe seml-rural and rural area, where Lhe ma[orlLy of Lhe
populaLlon lles ls noL posslble. ln an developlng economy llke lndla, where Lhe dlverslLy and lncome level
varlaLlon ls so huge LhaL unorganlzed reLall [80 of reLall share] ls hard Lo replace.
!Q # a g e

Pence prlvaLe labels LhreaL ls noL an emergency slLuaLlon, buL Lhey are deflnlLely a facLor for Lhe lMCC
brands ln creaLlng a denL ln Lhelr markeL ple. 1hey are seen and wlll be seen as a LhreaL ln Lhe ma[or
meLros and ln organlzed form of 8eLall. 1he unorganlzed reLall wlll prevall and lL rules Lhe roosL. 1he
leadlng manufacLurer brands however have ralsed Lhe eye-brows of Lhe aggresslve behavlour of
8eLallers.
ln 8eLallers slde, Lhey have Lo be cauLlous ln Lhreadlng Lhe paLh of rlvaLe label, as Lhey Lry Lo lmlLaLe
llke WesLern counLerparLs. Pere Lhey have Lo noLe LhaL, Lhe buslness cllmaLe, populaLlon and lncome
level, governmenL pollcles play a slgnlflcanL role ln Lhelr developmenL and vary greaLly w.r.Lo lndla.


















!V # a g e


F//A`X5c
5&'I*+)G (8C()+ T SH),&' P,&,.()a ?(+,-3U
d4 WhaL do you Lhlnk abouL Lhe currenL prollferaLlon of ln-sLore brands ln lndla?
F4 Well, ln wesLern counLrles, some 8eLallers almosL domlnaLe e.g.: WalmarL and 1esco and are more
on even Lerms wlLh Lhe manufacLurers. ln lndla, Lhe rlvaLe label scenarlo has lmproved Lo a large
exLenL ln Lhe pasL 3 years. Lspeclally Lhe downLurn recesslon ln 2008, helped us a loL ln Lerms of galnlng
markeL share and Lhe LrusL among Lhe publlc, people sLarLed golng for prlvaLe labels as Lhey are cheap.
lL ls a good slgn ln Lhe sense lL offers more cholce for Lhe cusLomers Lo selecL Lhe producLs
d4 Pas lL changed Lhe relaLlonshlp beLween you and Lhe manufacLurer?
F4 LlLLle blL, as you know lL ls deflnlLely eaLlng away Lhelr markeL share and aL Lhe same Llme, our
producLs are cheap and laylng Lremendous emphasls on quallLy. ln facL, A8C 8eLall has a separaLe
dlvlslon for LesLlng Lhe quallLy of our producLs. lMCC are vlewlng us rlghL now as compeLlLors.
d4 ls Lhere always a Lenslon beLween you and Lhe lMCC companles or oLher naLlonal brands, because
you exorblLanLly ralse Lhe marglns and someLlme even dellsL Lhe producLs from Lhe shelf space?
A: noL exacLly, we demand hlgher marglns for Lhe shelf space. 1he scenarlo has changed now, as we
have our own producLs Lo flll Lhe shelf and cusLomers are buylng lL .Pavlng 10 marglns ls very old
conLracL whlch ls bound Lo be changed someLlme or Lhe oLher. We Lry Lo lncrease Lhe marglns on a
smaller scale buL noL dramaLlcally. ln Lerms of de-llsLlng, lL happens when Lhey normally are adamanL
abouL Lhelr prlclng and occupylng huge shelf space, for e.g.: kellogg's. 1he Lenslon ls Lhere as Lhey are
noL able Lo accepL Lhe facL LhaL rlvaLe Labels are acLually lmprovlng....1hey wlll have Lo reallse LhaL
golng forward rlvaLe Labels ls a way of llfe and lL wlll be Lhe Lrend ln Lhe fuLure"
d: Pow dld you galn Lhe LrusL among Lhe publlc, how were you able Lo change Lhe percepLlon of a cheap
brand Lo a LrusLed brand?
F4 lnlLlally, we Lrled Lo undersLand Lhe consumers, Lhelr shopper behavlour and how Lhey geL aLLracLed
Lo dlfferenL producLs. We reallsed ln order Lo compeLe agalnsL Lhese brands, we need Lo be slmllar Lo
Lhem ln Lerms of packaglng, deslgn aspecL or even beLLer Lhem and prlce lL low. lL also depends on Lhe
caLegory ln whlch we are operaLlng.
d4 rlclng lL low, how are you able Lo do LhaL, lL seems you prlce almosL 13 lower Lhan Lhe naLlonal
brands
F4 ?es, LhaL ls one advanLage of belng a 8eLaller. 1here ls no sales and dlsLrlbuLlon cosL, Lhere ls no
manufacLurlng cosL for us. Cf course we have some, buL we ouLsource mosL of our producLs Lo Lhe Lhlrd
parLy vendors, lnLeresLlngly, lL ls Lhese same vendors LhaL supply Lo Lhe lMCC secLors as well. We
ldenLlfled Lhese vendors, approached Lhem, and sealed a conLracL. Also, we do noL adverLlse, whaL we
do ls Lo aLLracL cusLomers as he enLers Lhe sLore and make hlm buy our producL, hence our overall
expense ls qulLe low, moreover we also do noL lncur 8&u cosLs much, buL quallLy yes... So, we are
comforLable exLracLlng marglns even whlle prlclng low.
!W # a g e

d4 Why ls lL LhaL, your 8&u cosLs are low, l mean you LargeL only speclflc caLegorles?
A: We normally would llke Lo go lnLo Lhe caLegorles where Lhe process of manufacLurlng ls less heavy.
e.g.: foods, beverages, house hold. Moreover we come ouL only wlLh Lhe exlsLlng producLs, hence more
or less Lhe same composlLlon of elemenLs or maLerlals are used and cusLomers need noL worry abouL
Lhe producL caLegory, as our sole purpose ls Lo make cusLomer swlLch from Lhe naLlonal brands Lo our
brands"
d4 Where do you Lhlnk, Lhe 8eLallers has Lhe edge over manufacLurers?
F4 1hls ls Lhe key , we normally roll ouL any producLs wlLhln 3 monLhs, we plan for a monLh and Lhen
launch lL afLer 3 monLhs, whlch lMCC companles cannoL posslbly do, on Lhe oLher hand, we are more
closer Lo Lhe consumers Lhan Lhey do. We have a daLa cruncher or daLa speclallsL appolnLed by us who
analyzes Lhe buylng paLLerns, esLlmaLlng Lhe correlaLlon on varlous facLors whlch are requlred from our
slde and we geL lL, we observe lL much fasLer Lhan Lhey do, plus we have Lhe Lechnology LhaL ls already
presenL. 8y Lhe Llme Lhey reallse LhaL Lhls ls Lhe problem, we would have recLlfled lL and moved Lowards
Lhe lmplemenLlng Lhe soluLlon. Pence, Lhe lead Llme for us ls Lhe key, as we conLlnue Lo roll ouL more
producLs wlLhln shorL Llme
d4 uo you really Lhlnk you are poslng a LhreaL Lo Lhe lMCC companles"
F4 Well, you can vlew ln Lwo dlfferenL angles. ln any lndusLry compeLlLlon ls a glven facLor. Any new
players enLerlng Lhe lndusLry llke us, can be a LhreaL ln Lhe eyes of naLlonal brands on Lhe oLher hand, as
long as Lhe compeLlLlon ls healLhy, lL offers more cholces for Lhe consumers, more cholce means more
declslon maklng and more Lhlnklng lnvolved. lL ls good for Lhe economlc perspecLlve as well. Pence , l
vlew lL as noL belng a LhreaL as we boLh can co-exlsL very well, we have wesLern
5&'I*+)G (8C()+ T SH),&' P,&,.()a JP6:U
d4 Pow do you vlew Lhe currenL prollferaLlon of prlvaLe labels ln lndla?
F4 rlvaLe labels ln lndla are a recenL phenomenon. lL sLarLed gradually some flve -slx years back ln lndla
wlLh some of Lhe players llke 8lg 8azaar and AdlLya 8lrla Croup, growlng ln promlnence. rlvaLe labels ln
general are consldered Lo be cheap quallLy brands by Lhe way.
d4 8uL Lhe percepLlon ls slowly changlng and now has become a compeLlLor Lo leadlng lMCC companles,
occupylng slgnlflcanL markeL share..Pow do you vlew Lhls?
F4 no doubL, Lhey have grown ln slze ln recenL years and have posed some lssues Lo Lhe lMCC
companles. ln Lerms of Lhe markeL share, Lhey are nowhere close Lo Lhe marglns we have overall, buL
yes, you could say LhaL Lhelr prlvaLe labels ls glvlng Lhem more marglns Lhan Lhey could have asked for
over oLher naLlonal brands and LhaL ls a moLlvaLlon for Lhem Lo pursue ln Lhls paLh.
d4 uo you vlew Lhe emergence of rlvaLe labels, a hlndrance Lo lMCC's growLh?
F4 Well, lL depends on how you look aL lL. Cn one hand yes Lhey wlll negoLlaLe and bargaln hard wlLh us
over Lhe marglns. 8uL on Lhe oLher hand, Lhey also need us. lL ls a hard facL LhaL Lhey cannoL lgnore us,
as we are more dlrecLly responslble for generaLlng Lhe ln-sLore cusLomer Lrafflc. CusLomers come ln
search for our brands ln Lhe sLore. Pence our brands are lmporLanL ln Lhe 8eLall shelf space and LhaL ls a
sLrong hold for us. Moreover, our revenue or markeL share from Lhese 8eLall sLore are mlnlmal where
!Y # a g e

Lhe ma[orlLy of Lhe revenue comes from Lhe klrana sLores and ln rural areas. lf you Lake organlzed reLall
as a whole, Lhe markeL share ls [usL around 10 . Pence Lhe growLh lles ln unorganlzed reLall .PuL per se
has a large and effecLlve sales and dlsLrlbuLlon neLwork such LhaL, lL caLers Lo dlverse reglons across Lhe
counLry. lf you could see wlLh regard Lo Lhe prlvaLe labels, Lhey are happenlng only ln meLros. Lven Lhe
expanslon ln Lhe number of sLores happen ln meLros
d4 We have had lnsLance where reLallers llke 8lg 8azaar have Lhe guLs and courage Lo Lake ouL even
producLs of blg brands llke kelloggs, 8ecklL 8enklser ouL of Lhe shelf? 1hls ls a slgnal of Lhe klnd where
lMCC companles may noL Lake lL llghLly ..
F4 Well Lo some exLenL you are rlghL, such acLlons, lnlLlally would have proved Lo be a shock for Lhose
brands. 8uL lf you could see, we do noL have any such problems wlLh 8eLallers so far. lL depends on how
you negoLlaLe lL. 8aLher Lhan vlewlng Lhem as a LhreaL, we need Lo flnd effecLlve ways of co-exlsLlng
LogeLher. ln Lerms of Laklng Lhe producL ouL of Lhe shelf, Lhey cannoL do LhaL on a susLalned basls for all
brands. lf Lhey do LhaL, Lhey mlghL lose poLenLlal cusLomers who mlghL geL dlsappolnLed on noL seelng
Lhelr favourlLe brands ln Lhe reLall shelf.
d4 1he confldence of lndlan reLallers comes may be from Lhe success of wesLern 8eLallers over naLlonal
brands..uo you vlew a slmllar slLuaLlon llke Lhls ln lndla?
F4 Well, ln order Lo analyze Lhe wesLern reLallers over lndlan reLallers, our 8eLallers are sLlll ln Lhe very
nascenL sLage. 1here Lhe culLure, landscape ls LoLally dlfferenL Lhan ln lndla. AlmosL 90 of Lhe shoppers
go Lo Lhe malls and Lhen buy Lhe producLs.. Pere as l sald organlzed reLall ls [usL around 10 and Lhls
mlghL noL be sulLable Lo caLer Lo Lhe people ln rural and seml-rural areas. 8uL ln MeLros, l agaln Lhlnk lL
mlghL be exLremely dlfflculL. 1hls ls because of Lhe facL, LhaL lndlan reLallers aL presenL are very good aL
lmlLaLlng Lhe producLs noL come up on Lhelr own. 1hls ls noL Lhe case wlLh Lurope where sLores llke Aldl
has 90 of lLs own prlvaLe labels and people have hlgh sLore loyalLy. ln lndlan landscape, Lhe consumers
are very brand loyal and Lhey need our brands.
d4 1rue, 8uL Lhey are also Lrylng Lo lmprove Lhelr quallLy by seLLlng up 8&u facllLles and prlclng low ?
F4 Well, rlghL now Lhese Lrends are seen, noL wlLh all 8eLallers Lhough. 8uL aL Lhe end of Lhe day , Lhey
do noL have adequaLe resources nor Lechnlcal know-how Lo manufacLure producLs llke vlM". 1hey
cannoL do LhaL and cusLomers need vlM. Pence we are safely poslLloned. 8uL yes, havlng sald LhaL , Lhey
can damage our share ln Lhe areas where lmlLaLlon ls hlgh by prlclng low and lmprovlng Lhe quallLy. 1hls
ls where, we need Lo be cauLlous and Lry Lo flnd adequaLe ways Lo counLer Lhe LhreaL.
d4 1hen how do you Lhlnk you can avold Lhe LhreaL of prlvaLe labels ln lndla?
F4 Pere we need Lo undersLand LhaL, rlvaLe Labels ls a way of llfe ln lndla. lL ls Lhere and wlll conLlnue
Lo be Lhere. Pence, we need Lo undersLand LhaL and flnd ways Lo lmprove ourselves.
d4 Where do you Lhlnk rlvaLe labels have caused slgnlflcanL damage ln lndla?
F4 Well, l cerLalnly Lhlnk, lL has made lLs mark ln MeLros. ln Lerms of Lhe brands, Lhe smaller players
mlghL Lake a hard hlL as Lhey cannoL compeLe wlLh Lhem ln Lhe prlce aspecL nor can Lhey do have Lhe
bargalnlng power Lo negoLlaLe Lhe marglns. Pence lnsLead of Lhose producLs ln Lhe shelf, 8eLallers place
Lhelr producLs along wlLh our producLs. 1hls ls where Lhe damage ls belng done and especlally Lo Lhe
!^ # a g e

smaller players. 1hls also Lo my mlnd re-enforces of Lhe facL LhaL, nowadays Lhe brand has Lo be sLrong
or Lhere musL be a good amounL for cusLomer demand for a parLlcular producL.
d4 llnally whaL do you Lhlnk lMCC companles should do? WhaL sLraLegy Lhey should follow?
F4 Well Lhe sLraLegy does noL dlffer much, excepL LhaL, we should have a sLrong 8rand equlLy, lf noL
bulld a sLrong lmage Lhrough adverLlslng and exLenslve promoLlons. Also, lL ls very lmporLanL Lo come up
wlLh our own producLs as Lhls ls where lL wlll dlfferenLlaLe from rlvaLe Labels ln general. We can also
Lake leverage of our sLrong 8&u faclllLles. lor smaller companles, lL mlghL prove Lo be a cosLller affalr,
buL Lhey can concenLraLe more on unorganlzed reLall and Lhen laLer come Lo reLall sLores aggresslvely.
l Lhlnk lL ls also lmporLanL Lo have smooLh relaLlonshlp wlLh 8eLallers. lL ls essenLlal aL Lhe end of Lhe day
as Lhey are our cusLomers as well!!!


?AJA?A`6AM Z H5H15=:?F/Oe


Lars 1homassen
B001IODGU8
, kelLh Llncoln , AnLhony Aconls [2006] - 8eLalllzaLlon: 8rand Survlval ln
Lhe Age of 8eLaller ower

kelLh Llncoln
B001IO9MTM
, Lars 1homassen [2009] - rlvaLe Label: 1urnlng Lhe 8eLall 8rand 1hreaL
lnLo ?our 8lggesL CpporLunlLy
nlrmalya kumar !an-benedlcL L. M. SLeenkamp [2007] - rlvaLe label sLraLegy- 1o Lackle ln-sLore brand
challenge

hLLp://www.Lhehlndubuslnessllne.ln/praxls/pr0303/03030640.pdf
hLLp://www.moneyconLrol.com/news/buslness/no-celebraLlon-for-cadbury-blg-bazaar-Lakes-lL-off-
shelves_340777.hLml
hLLp://arLlcles.economlcLlmes.lndlaLlmes.com/2010-09-06/news/27380731_1_prlvaLe-labels-wal-marL-
sLores-recklLL-bencklser-lndla
hLLp://arLlcles.economlcLlmes.lndlaLlmes.com/2009-11-17/news/28461418_1_prlvaLe-brands-
devendra-chawla-fmcg-brands

hLLp://arLlcles.economlcLlmes.lndlaLlmes.com/2009-12-02/news/28407134_1_prlvaLe-label-super-
markeLs-prlvaLe-brands
hLLp://www.Lhehlndubuslnessllne.ln/praxls/pr0303/03030640.pdf
$_ # a g e


hLLp://www.wlklnvesL.com/concepL/rlvaLe_Label_1rends
hLLp://www.wlklnvesL.com/concepL/rlvaLe_Label_1rends
hLLp://www.moneyconLrol.com/news/buslness/no-celebraLlon-for-cadbury-blg-bazaar-Lakes-lL-off-
shelves_340777.hLml
hLLp://arLlcles.economlcLlmes.lndlaLlmes.com/2010-09-06/news/27380731_1_prlvaLe-labels-wal-marL-
sLores-recklLL-bencklser-lndla
hLLp://arLlcles.economlcLlmes.lndlaLlmes.com/2009-11-17/news/28461418_1_prlvaLe-brands-
devendra-chawla-fmcg-brands
hLLp://www.warc.com/ConLenL/ConLenLvlewer.aspx?lu=4018e29d-ffa2-4b68-a4e9-
cddfba1b9262&q=LhreaL+agalsnsL+prlvaLe+labels&MasLerConLenL8ef=4018e29d-ffa2-4b68-a4e9-
cddfba1b9262