Private Labels

“There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.”

RETAILING : PRIVATE LABELS & THE NEW RETAIL ENVIRONMENT

PRESENTED BY:

Nishant Agarwal (2013174)Nishant Renjith (2013175)Nishidh Lad (2013176)Nitesh Beriwal (2013177)Nitesh Singh Patel (2013178)SECTION-D

What is Retailing?

Sales of goods and services to the ultimate consumer for the personal, family or household use.

Any organization selling to final consumers- whether it is manufacturer, wholesaler or retailer.

In the channel of distribution, retailing is where customer meets the product.

Exchange

Types of Retailers

1. Store Retailers

2. Non store Retailers

3. Corporate retail organization

Store Retailers

1. Speciality Store : Narrow Product line.

Store Retailers

2. Department Stores: Several product lines

Store Retailers

3. Supermarkets:

Large

Low cost,

Low margin,

High Volume,

Self Service store,

Meets all household and food products

Store Retailers

4. Convenience store/ Drug stores: Small store in the residential area open 24/7

Store Retailers

5. Discount store:

Low price

Low margin

High volume store

Standard

Specialized Merchandize

E.g. Walmart

Store Retailers

6. Extreme value or hard discount store:

Store Retailers

7. Off Price Retailers : Leftover goods, overruns, irregular merchandise sold at less than retail.

Store Retailers

8.Superstore: Huge selling space, routinely purchased food and household items, plus services

Consumer Preference

1. Self service

2. Self selection

3. Limited service

4. Full service

NONSTORE RETAILING

1. Direct Selling:

Multilevel selling

Network selling

NONSTORE RETAILING

2. Direct Marketing:

Telemarketing

Television direct response marketing

Electronic shopping

NONSTORE RETAILING

3. Automatic Vending:

CORPORATE RETAILING AND FRANCHISING

1. Consumer Cooperative:

Owned by customers

Members contribute money to open their own store

Vote on its policies

Elect a group

Manage it

Receive dividends

CORPORATE RETAILING AND FRANCHISING

2. Franchise Organization :

NEW RETAIL ENVIRONMENT

What Has Triggered the CHANGE….

•Fast changing Macro and Micro Environment

•Growing consumer expectations.

•Exhaustive Competitive pressure.

•Growth of Urbanization.

•High disposable income.

NEW RETAIL FORMS & COMBINATIONS

•Bookstores featuring Coffee Shops.

•Gas stations including food stores.

•Shopping malls and stations having peddlers’ carts in their aisles.

Store Based & Non Store Based Retailing.•Increased offerings through mails, cell phones and internet.

•Non store based retailers enjoy convenience leverage.

•Store based retailers coming online to compete.

•More and more experiential touch being given to the physical stores.

GROWTH OF GIANT RETAILERS..

•Inherit superior information systems, logistical systems and buying power.

•Crowding out small manufacturers.

•Suggest even companies for improvement and innovations.

•Includes huge market share.

Growing Investment In Technology..

•Improved ways of forecasting, inventory control and order processing.

•In store programming on LED’s, electronic shelf labeling and smart shopping carts getting common.

•Digital advertising and different payment methods creating further space.

•Global Retailers snatching grounds.

•Growth of Shopper Marketing.Influencing customers at the point of purchase.

Marketing Decisions

Target Market ChannelsProduct AssortmentPricesServicesStore AtmosphereStore Activities and ExperiencesCommunicationsLocation

Target Market

Channels

The collection of goods or services that a business provides to consumers. The main characteristics of a company's product assortment are:

(1) its length or number of products,

(2) its breadth or number of product lines,

(3) its depth or number of product varieties

within a product line and

(4) how products relate to each other in a

retail environment.

Product Assortment

Price

Fine Specialty Stores: High-Markup, Lower-volume group

Mass Merchandisers and Discount Stores: Low-markup, Higher-volume group

ServicesPrepurchase

Services• Advertising• Fitting rooms• Fashion shows

Postpurchase Services

• Shipping & Delivery

• Alterations• InstallationsAncillary

Services

• Parking• Repairs• Rest rooms

Store Atmosphere

Store Activities &Experience

Communication

Location Central Business Districts

Regional Shopping Centers

Community Shopping centers

Shopping strips

A Location with a larger Store

Stand-alone stores

PRIVATE LABELS

I DON’T WANT TO TALK IN TERMS OF MARKET SHARE.

I DON’T WANT TO SHARE MY MARKET WITH ANYONE.

-LARRY LIGHT, CEO

WAL-MART

Definition Private labels are retailer brands.

Brands owned & sold by retailer & distributed by retailer.

The Beginning

A&P’s 8 O'clock Coffee in 1900s

Background of PLB Earlier referred as Cheaper & Low quality alternatives for national

brands.

Just a profit making concept which needed no marketing effort

Tescos Value Range in 1995 was the first value pay brand

Other retailers like Sainsbury etc. quickly followed the suit

In India in 2000s this concept came up & Future Brand came up with “SACH” toothbrush & toothpaste range.

Why Did It All Begin?

Shift of power from National brand marketers

to National Retailers

High Quality & Low Price

Historical perspective of key retailers of a

strong house brand.

How does PLB work?

Winning strategy for improving store image and profitability.

Offers value for money

Increases the price competitiveness

16-23% less price for the consumers as compared to national brands

Differentiating factor as exclusively available at the particular store only

Consumers get an assurance that they can directly interact with the owner of the brand

Would You Prefer A PLB Over A National Brand?

Yes44%

May Be44%

No13%

Yes May Be No

If Yes, Then Why?

Quality42%

Trust on that retail store24%

Cheaper Price25%

No, I wouldn't prefer9%

Quality Trust on that retail store Cheaper Price No, I wouldn't prefer

If No, Then Why?

Don’t want to change brand preference

30%

No trust on quality18%

I can give it a try52%

Don’t want to change brand preference No trust on qualityI can give it a try

How Was Your PLB Buying Experience?

Average22%

Awesome6%

Good63%

Not Tried9%

Average Awesome Good Not Tried

Would You Like To Repeat Your PLB Experience

Yes89%

No11%

Yes No

Food Dominates India’s Private Label Market

According to Nielsen’s Survey “Food” captures 76% of the India’s Private label Market

PRIVATE LABEL GROWTH vs

MODERN TREND GROWTH

ADVANTAGES

1. DIFFERENTIATION

HIGHER MARGINS

FREEDOM TO CREATE OWN MARKETING PLAN

Independence to retailer to use its own innovative marketing strategies

For National Brands, Poor marketing strategy by the manufacturer not only results in the failure of the product, but also erodes the profit margin of the retailer

FREEDOM WITH PRICING STRATEGY

Similar to the Marketing Strategy, Private Labels also give the retailers to a chance to adopt their own pricing strategy

Shields retailers from the losses due to longer shelf life of poorly priced products

Retailers can directly pass on the price benefits to the customer

Strong Customer Positioning

Develops Customer Loyalty

Uniqueness of Private Labels, helps to build brand loyalty

Customer Loyalty has significant advantage over its competitors

Private Labels (Examples)

JOHN MILLER – AN ILLUSTRATION OF SUCCESS

Facts about John Miller

Came into existence in 1995 as an extension of Pantaloons

Ranges between Rs. 800-1500

Targeted at Premium segment customer

Over the years it has grown from a private label to a private brand.

KEY TO SUCCESS OF JOHN MILLER

One of the very first private labels in the apparel industry in India

High quality at low price

Reasonable Price Range

Attractive option for value buyers

Contd.

DISADVANTAGES

Highly Competitive Market

High risk with reputation of the brand.

Risk of getting into a price war

Dependent on the supplier

Excess focus on private labels inside the stores

CONCLUSION

Win – Win situation for both, customer and retailer

Lower prices and Higher margins

Quality is comparable to that of National Brands

Value for money products

Extra care and detail

Contd.

Huge growth potential

Deeper Market penetration required

Innovative Marketing and promotions are the need of the hour