Why private labels succeed???????????????

I believe private labels are growing faster than manufacturer brands. They are ubiquitous across categories and they now compete on quality, in fact, they are now brands! Private label share is expected to increase manifolds.

Private labels have evolved from ‘cheap and nasty substitutes’ to the real thing. Indeed, ‘copycat’ private labels still remain a strong strategy for retailers. However, the copycat no longer depends on the price advantage to fight the branded product; now it has improved on quality and offers a value proposition to the consumer. Similarly, the earlier theory that that recessions fuelled private labels while an economic boom resulted in growth of brands no longer holds good..............

Private labels are an important factor in the success of a retail chain as it reduces average buying and sourcing cost and builds customer loyalty. In the long run, these labels are likely to become independent brands. 

Private Label/Store Brands  products are a cheaper alternative to branded products.The customer those are not brand concious can easily switch to Private labels. Positioning of the brand is important for the success of private label .

For example "Food Bazaar" positioned its private salt brand as premium health salt which is available in the price of the ordinary salt. It enjoys 40 - 45% market share in its category among all the "Food Bazaar" outlets. Thus it has used the differentiation strategy and got success.

Well .. I reckon that its a WIN-WIN situation for the brand & the consumer..

The consumer in this case is the one who actually could not buy the 'required - aspired product' for a relatively higher cost.... he  always aspired to buy that-for eg: a middle class youth who aspired to buy a lee, pepe -like denim,,couldnt actually buy 1 'coz of the cost factor- which injected fear in him to enter the outlet..now he is ready to buy something similar in quality, relatively lower in price.. offered by a BRAND, say reliance retail / pantaloon in this case..

This is ultimately resulting in reliance retail capturing this segment of customer , by offering him the aspired alike product in affordable budget....& the aspiring consumer being offered what he actually requires....

Infact many a times becoz of the positioning of the brand in the market (outlets), even the prospective buyer would have given thoughts on entering such outlets...thus these brands  by the offering their in house labels are reaching to the untapped segment ..

The only reason behind the success of provate labels is the focus and the efficient man power.Private labels set their annual targets which has to be achieved whereas the govt sector though has the target but they do not have the focus.

Inspite of less monetary power incpmparison to Govt.labels,Private players have set mindsets and they hire employees accordingly.The whole channel works in properly and they all run for the equal goal.On the other hand the lack of hyrarchy makes the Govt. labels out of the race

According to me, there are two aspects which  influence the success of Pvt. Labels:

1. As Ms. Shailena explained in her views, COST.  Obviously, any buyer would prefer to buy a product at a lesser price, if he can get similar quality.
2. Secondly, any retailer would apparently like to sell his own products rather than someone else’s. And more over, by selling his own product as he gets a better margin he would definitely push his brands.

It means that buyer and seller are inclined towards Pvt. Label. I think it goes on the lines of, “Miya Biwi Razi tho kya karega Khazi”.

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