Published on Sep 03, 2023
Private labels have come a long way over the last three decades. They started with retailers wanting to offer cheaper substitutes. This was for two reasons. One, having a private label meant that retailers could negotiate a better margin from the manufacturer. And the other, when they had private labels, they had a differentiator. The biggest change in the last decade or so has been the entry of 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". By offering high quality products, many private labels have started charging more than regular manufacturers.
Retailers are looking at private labels or store labels as one of the option to drive the customers to their stores. The emergence of organized retailing in India has made Private Labels a reality. It is now well within the reckoning of the consumer, retailers and brand owners. A Private Label is not merely a product with the store/ retailer's name on it. It takes more to qualify as a Private Label. The consumer must see the Private Label product as distinct from being just a 'product in a pack'. There must be a clear perception that 'it is produced by this store'
The consumer must see the Private Label product as distinct from being just a 'product in a pack'. There must be a clear perception that 'it is produced by this store'. The current Indian economy is witnessing the emergence of organized retail. It is growing at a faster pace and is expected to reach 10 % from the current 4 % of the total retail business. Retailers are expanding through variety of formats like supermarkets, convenience stores, hypermarkets, discount stores, specialty stores, and department stores. Many domestic business houses have entered this sector with ambitious plans.
With the new FDI regime, foreign players are incisive of Indian partners to grab the potential of retail market in India. As competition is becoming stiff, retailers are working on new strategies to sustain in the market. One such strategy being private branding adopted by most of the retailers. Private brands are the most successful corporate brands in the world. Private branding is one of the strategic decisions of most retail organizations in recent years. They are either manufactured by the retailer or bought directly from the manufacturer, avoiding the intermediaries. Hence retailers have control over the marketing mix elements.
Objectives of the Project
• To understand the perception of consumers for the new private labels introduced by retailers.
• To identify the consumer perception of store image on private labels.
• To study the association between private labels 'quality and store loyalty.
• To find out the various factors that builds the store loyalty.
• Private labels in modern retailing are a set of values and promises made by the retail organization to their customers.
• The sample size was relatively small.
• The respondents compromised more of home makers.
• The study was undertaken in Bangalore which is prosperous than other areas.
• Familiarity with store brands :
Out of 400 respondents, 320 respondents were aware of the private brands offered by stores. It means 80% of the respondents were aware of the private labels, another 20% respondents considered the brands to be a new entrant by the existing national brand manufacturers.
• Perception of quality:
Hypothesis 1: Store brands are perceived to offer quality on par with the national brands. More than 50% of the respondents perceive private brands to offer better quality.
• Perception of value for Money:
Hypothesis 2: Private brands offer great value for money . More than 50% of the respondents are of the opinion that private brands offer value for money, especially in case of grocery items.
Hypothesis 3: Private brands have appealing packaging. National brands are more attractive in packaging in comparison to private brands.
Hypothesis 4: Private brands have good taste/scent. From the analysis, there is close association between taste and brand choice.
Hypothesis 5: Private labels are affordable by consumers . From the analysis it can be affirmed that private brands are priced low as compared to national brands in most of the product categories.
• Store perception:
Hypothesis 6: Consumers perception of store image is same for all the retailers. From the analysis, the perception of consumers varies across stores. They build the perception based on the promotional and positioning strategies adopted by the store.
• Store image:
Hypothesis 7: Store image has a direct impact on private label perception. Positive image of the store in the market implies acceptance by consumers. Consumers perceive private brands offered by the store to be good. Findings and Suggestions
• Store loyalty and quality of a private label are dependent of each other.
• Price differential between national brand and private and store loyalty are dependent of each other.
• Private label's promotion and store loyalty are related.
• Private innovativeness and store loyalty are related.
Store brands approximately sell for 30% less than national brands. Hence private brands are getting accepted in food and grocery segment. Improvements in quality, offering more variety, with better service will enable the retailers to go a long way. Private labels are able to position themselves significantly in the minds of the customer. The future of private labels is dependent on the retailers' ability to overcome key challenges such as adaptive supply chain practices, quality infrastructure, co-option, hybrid marketing channels, talented professional, blurring dividing lines between private label and national brand and more manufacturing know-how.