Private Label Set to Dominate Indian Organized Retail Shelf Space in Coming Years, says TechSci Research

 Better margins and positive consumer acceptance to drive private label roll out by retailers in future.

A recent research study “Private Label & Indian Consumer Insight 2010” by TechSci Research has revealed the transformation of organized retail industry shelf space in India due to the introduction of private labels by organized retailers in recent years. These in-house developed brands have helped retailers garner high margins as compared to branded products across multiple product offerings. As per the study, the margins from private labels range between 10%-15% in case of FMCG products and as high as 40%-60% in case of apparel sales.

According to Senior Consultant (Retail Practice) at TechSci Research, “the inclusion of private label across multiple product offering enables the retailers to improve its margins without any huge investment on marketing and advertising activities. Besides this, the private label also enables retailers to generate consumer loyalty towards the in-house brand by ensuring long-term consumer retention for their retail chain”.

Consumer acceptance towards private labels has been positive. As per the research study “Private Label and Indian Consumer Insight 2010” findings, almost 85% of surveyed consumers have shown their willingness to repurchase the private label promoted by the respective retailer. The consumption of private label has helped Indian consumers bring down their monthly consumption bill by 8%-10% depending upon the product category.

The majority of retailers in India have introduced their own private labels driven by increasing consumer acceptance and associated economic benefits. Retailers like Spencer’s, Future Group, Reliance Retail and Bharti Wal-Mart have been working continuously to create a spectrum of private brands in order to restructure their product portfolio in coming years. This new development may be seen as a new strategic move to have an operational edge over competition, as well as to retain their customer base.

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