Big brands take a hit as big retailers quietly push own-brand sales

With some of the major retailers in the country such as Aditya Birla More, Bharti Retail and Reliance Retail starting to vend their own-brand products, sales of some popular consumer brands have been adversely impacted, resulting in reduced overall market share of some of these brands.

This has resulted in some of the private labels being pulled from shop shelves, says reports.

According to a global report by market researcher Nielsen, the share of Indian private labels now stands at 4.5 per cent of overall supermarket sales, 220 basis points less compared to an earlier survey.

With margins from major brands failing to match costs, retailers started pushing their own brands around eight years ago, at lower prices vis-a-vis major consumer brands, mostly in the grocery, edible oil, milk and personal care segments, in a bid to boost their profit margins.

Private labels have tried to overcome their market loss through promotional offers, but this again has been matched by retailers even as an overall slowdown made consumers look for bargains.

However, high investment costs have forced some retailers like Aditya Birla More, Bharti Retail and Reliance Retail  to subsequently withdrew from some non-performing segments, according to experts.

"Retailers launched private-label programmes expecting Asian consumers to instantly trust them without investing the 20 years it has taken in developed markets to build acceptance," said Peter Gale, managing director of retailer services at Nielsen. "Many Asian retailers virtually copy-and-pasted the European model without dedicating the groundwork necessary," he said.

Also, the slowdown pushed most retailers - who were expanding at a fast clip - into a financial crisis, leading to closure of hundreds of modern trade stores and shelving of expansion plans.

Most big retailers have come out of the crisis and some like Future group and Spencer's Retail are still upbeat about their private label business.

RPG Group's Spencer's has over half a dozen own brands, including Smart Choice, Tasty Wonders and Clean Home.

India's top retailer Kishore Biyani's Future Group, for example, has nearly two dozen brands, including Tasty Treat, Fresh & Pure, Clean Mate, Premium Harvest and Sach, which account for anywhere between 15 per cent to 45 per cent share in sales of their segments from Big Bazaar outlets.