Private Labels -how far will they go ?

Private labels or store brands is nothing but term given to the retailer brands that compete with other well know brands in its category , retailers use the higher margin possibility to sell more of these brands in their mix .The private label brands have over years grown from strength to strength and also eating into shares of more prominent brands giving them nightmares in some categories already !

Walmart is estimated to have around 40 % of its sales from private labels and Tesco a whopping 50 % from private labels .A number of Indian retailers have private labels mix between 25 % to 30 % already .

But selling private labels has its own plus and minuses as if not done properly then the power of the reputed brands would be missed and the consumers might just shun your store if they don't find what they were looking for ie the famous brands . Plus quality is always a suspect with these brands ,but that normally gets offsetted by the lower prices of these brands .

Private labels also have like their famous cousins need to have a distinct USP ,it could be design , price or some offer to get themselves picked from the shelf , they do sit on a huge advantage unlike other reputed brands , in that they don't have sales , distribution and marketing cost sitting on them .At a certain stage a retailer would have to have an optimum mix of private labels and other brands ,as margins is the only driver for in store brands then

to drive higher margins from the other brands there is always a back door tussle between the retailers and the brands that keeps happening on higher margins or else the exit door !

Our maximum estimate is that almost 50 % of a retailer sales share can go upto from store brands ,and the remaining from other brands ,however this is our estimate how far can Private labels or store brands go is anybody's guess ...or difficult to estimate .