Fashion etailers Bank On Private Labels For Growth

Flipkart-owned fashion retailer Myntra plans to invest in and forge strategic partnerships with at least 15-20 local fashion brands as part of its new accelerator programme and is simultaneously looking to bring more international brands to its marketplace this year, a top company executive said.

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Myntra, which launched its Brand Accelerator programme in December last year, has set an ambitious target of generating a valuation of about $500 million-$1 billion from these private brands over the next three years. Last year Myntra bought a majority stake in HRX, a clothing and shoes brand launched by actor Hrithik Roshan, from Exceed Entertainment.

“One of the big bets we are making is with the Brand Accelerator. We are getting into strategic partnerships with at least 15-20 (local) brands—many of

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these export houses do great quality manufacturing. What we have is the distribution, which is 18 million customers. So, what we are saying is, ‘Why don’t we come together in a partnership?’ And we are going to invest through our platform in 15 big brands in our country and together we will try to get to a point where in 3 years Myntra has helped create an ecosystem of local brands,” Ananya Tripathi, strategy head at Myntra, said in an interview.

“In about three years, we are expecting about $500 million to $1 billion of valuation to come from just these domestic brands,” she added.

There are some good reasons for which more and more etailers are opting for private labels.

Changing consumer shopping habits. The impact of sophisticated management information systems on the

technology and scale of retailing. New relationships between retailers and manufacturers. Shifting consumer merchandise tastes. Waning dedication of several chains to private labels.

Other etailers in the foray of private labels

Last year, Amazon launched the first of at least six fashion private labels it proposes to introduce this year, as it looks to boost sales and margins in the second largest product category in e-commerce. Since the start of 2016, Amazon Fashion has signed more than 150 fashion brands including Aeropostale, Emporio Armani, Armani Exchange, Versus by Versace, and its growing selection includes CONFLUENCE by Swarovski, Calvin Klein, Levi’s, Furla, Replay, Fitflop and designers like Payal Pratap, Tarun Tahiliani, Monisha Jaysingh.

Similarly, Zivame started out as an aggregator of brands, including Enamor, Amante and Jockey, among others, but launched private labels in 2013 in an

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attempt to boost margins. Online fashion stores such as Yepme and Zovi sell only private brands.

“If there are selection gaps on your platform, then there are spaces that absolutely need to be filled. But you want to do it in an area where there clearly is need and customers would shop for that,” Amazon India head Amit Agarwal.

Benefits of Private Labels

Private label brands have an edge with regards to understanding the customers better, especially those that have a loyal set of customers attached to them. By means of data mining, the retailer is in a better position to narrow down on merchandise and products that sell well than the others and also the trends that are in vogue. That is the reason almost all retailers are bringing out their private label.

Tying up with private brands boosts the productivity of sellers and essentially saves time of etailers while marketing. E-commerce firms are looking at private labels to boost business, mirroring a move that offline retailers such as Shoppers Stop and Big Bazaar made in the past.

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