Private Labels: Despite being least-developed, India among most successful PL markets in SE Asia

Across the globe, private-label sales and shares are strongest in commodity-driven, high-purchase categories and those where consumers perceive little differentiation, such as paper products and some medications and remedies like aspirin, notes market research major Nielsen. “But the definition of a commodity varies greatly across the world. In developed markets like the U.S., Europe and Australia, this includes products such as milk, bread and eggs. In India, however, commodities include products that are distinctly local, such as ghee, rice, and atta flour used to make bread,” it says in the report ‘The State of Private Label Around the World’, published in 2014.
As the food & grocery retail business in India moves towards greater maturity, retailers are investing in an increasing number of food and non-food FMCG categories to shore
up bottomlines in low-margin SKUs and enhance brand loyalty with customers.
India may represent the least-developed retail market in Southeast Asia—modern trade penetration is 5%, compared to more than 50% for most Southeast Asian markets—but it is one of the most successful private-label markets in the region, according to Nielsen’s report. Private label grew 27% between 2012 and September 2014.

What’s driving this growth?
Above all, a new generation of shoppers is less brand-loyal and more open to trying new products. “With shoppers looking to trim their shopping bills and find greater value for money, private label caters to a segment that wants to participate in the modern trade experience but is not as brand savvy,” said Sarbani Sen, associate director, Nielsen India. “This is a key reason why private label can be successful in India. Moreover, shopper loyalty is increasingly episodic and event-based, and private label is likely to continue positioning itself as a natural alternative to namebrand products.”
Also evident is a certain sophistication in approach – retailers have launched ‘tradeup’ ranges that command higher prices and margins. Unlike in the past, emphasis is shifting from aggressive promotion and discounting of private labels to providing better quality and a unique offer.
As achievements of the finalists in the Private Label Development category at the Coca Cola Golden Spoon Awards 2015 demonstrate, retailers’ private brands are now more than simply about price savings. Modern private labels from India’s leading grocery retailers- unlike the generic off erings of the past – appear to be carefully managed and marketed in order to improve their competitive edge. Indeed, some of the finalists’ labels are now seen as brands in their own right. Here’s an inside look at the three finalists in the ‘Most Admired Food & Grocery Retailer of the Year: Private Label Development’ category.
BHARTI RETAIL LTD
One of India’s leading retail store chains, Easyday is a wholly-owned subsidiary of the Bharti Enterprises, one of India’s leading business groups, which owns and operates Easyday supermarkets and Easyday Market, a compact hypermarket format.
Easyday stores are one-stop shops that cater to every family’s day-to-day needs and monthly needs. They off er an extensive range of relevant goods, high quality products, together with a modern shopping experience. The stores off er an assortment of branded products on personal care, stationery, household cleaning, food & grocery, storage, select apparel all at the great prices. Product categories also include daily need groceries, fruits and vegetables, staples, processed foods, personal care, bakery and dairy products, meat and poultry, household articles, hosiery items and fresh produce.
Driven by the mission statement ‘easy to shop, easy to save’, the first Easyday store was opened in 2008 in Ludhiana. With over 10,000 employees, Easyday’s presence in India now spans more than 100 cities via 212 stores across 10 states of the country.
Easyday Market range up to 55,000 sq. Ft. and off er thousands of products displayed in a consumer-friendly manner that brings both entertainment and ease to the shopping trip. Bharti Retail’s private brand programme is aimed towards simplifying the customer’s path to purchase, while it thinks and acts as an independent FMCG business when it comes to own labels. While private brands have been part of the merchandise mix at the company’s Easyday chain for seven years, during 2014, the retailer’s PL portfolio – comprising EasyMaxx and Easy Choice – aimed to reinforce the same with the customer being at the centre of all decisions, including product and packaging development, supplier compliance programmes and marketing communication.
As a retailer, the company is using the PL business to off er diff erentiated products to shoppers, and not just to drive margins up. Learning from its past association with Walmart, the retailer deploys a predominantly European approach to its PL portfolio.

According to the company, every 6th rupee spent at Easyday stores is to buy either an EasyMaxx or an Easy Choice product. In a major move, the chain re-launched its entire PL portfolio of 700+ SKUs in 2014 a period of six months flat with no financial write offs or adverse impacts.
In a business typified by constant churn, over 95 per cent of Bharti Retail’s PL suppliers have not been replaced since they began. Also, all suppliers are ISO/ FSSC/ BRC/ FDA approved facilities. The company deliberately selects small-scale manufacturers, in order for both businesses to grow in tandem.
Suppliers, along with the internal PL team are constantly diven to think and act like an independent FMCG company. The target is to strive to be better than the best in each category – to surpass the best price-value-quality equation. In 2014, EasyMaxx Fruit Drinks expanded the category consumption signifi cantly and was also acknowledged by leading manufacturer brands of this segment. According to the company, it also configured many of its secondary packs to rate of sales and store holding capacity to drive higher efficiencies in the supply chain.
The merchandise range:

FCEL is constantly expanding its already existing vast portfolio of established Food & FMCG brands. Currently it caters to various categories such as Basic Foods, Ready to Eat Meals, Snacks,Beverages, Personal Hygiene Care and Home Care.
The variety of brands in this division manages the entire process of creation of formulations, branding strategy, product design and development, packaging, quality control and marketing. In 2014, the retailer’s private brands team made a foray to upgrade consumers from value to more premium off ering at aff ordable prices with products like Fresh and Pure Premium Tea 500g and CleanMate Active+ Toilet Cleaner. While the former was a genuine uplift from the popular variant, CleanMate Active+ featured an eyecatching innovation – the product changes colour as it cleans from green to blue.
BIG BAZAAR
Through more than over 17 million square feet of retail space, Future Retail Ltd’s hypermarket format Big Bazaar serves customers in 102 cities across the country. Th e retailer’s private brands are managed by group company Future Consumer Enterprises Ltd (FCEL), currently pegged as India’s largest sourcing-to-supermarkets FMCG company.
FCEL is constantly expanding its already existing vast portfolio of established Food & FMCG brands. Currently it caters to various categories such as Basic Foods, Ready to Eat Meals, Snacks,Beverages, Personal Hygiene Care and Home Care.
The variety of brands in this division manages the entire process of creation of formulations, branding strategy, product design and development, packaging, quality control and marketing. In 2014, the retailer’s private brands team made a foray to upgrade consumers from value to more premium off ering at aff ordable prices with products like Fresh and Pure Premium Tea 500g and CleanMate Active+ Toilet Cleaner. While the former was a genuine uplift from the popular variant, CleanMate Active+ featured an eyecatching innovation – the product changes colour as it cleans from green to blue.

Also in 2014, Big Bazaar significantly recalibrated its positioning and promotions for PL products; the entire direction moved from price off s to freebies. With products like Sunkist Nectar, no price off s were given; instead, the chain off ered Saff ola Flavored Oats with the bigger intention to build the breakfast category and build juice as a breakfast habit. Fresh & Pure Premium tea was launched with a set of free bowls and Fresh and Pure Instant Coff ee was launched by giving free biscuits.
HYPERCITY
Hypermarket chain HyperCITY, which launched its first store in Malad, Mumbai, now has 12 large format hypermarkets and three compact hypermarkets across Mumbai, Hyderabad, Bengaluru, Bhopal, Amritsar, Pune, Ahmedabad, Vadodara and Jaipur. The chain is further looking to add four to fi ve new stores this year and also expand its retail base in the NCR region.
The chain’s stores offer some 44,000 distinct products sourced from both local and global markets in an international shopping ambience that rivals the best in the world. More than 17 lakh customers visit HyperCITY stores every month. In the nine-month period from April to December in 2014, the retailer averaged sales per sq ft of Rs 5,770, with total sales in calendar year 2014 touching Rs 70,272 lakh through a total of 58 lakh transactions.
During calendar year 2014, HyperCITY’s PL portfolio – comprising Hypercity Everyday, Fresh Basket and Terzo – delivered sales revenues of over Rs 85 crore. The own label business gathered momentum, especially with the company’s staples Private Brand Repacking Centre being HACCP-certified. In order to cater to consumer’s increasing expectations, the retailer launched a range of premium cookies in tins, speciality sauces and spreads in variants such as soya & chilli, vinegar, mayonnaise, breakfast items like cornflakes, orange marmalade, coff ee and tea and Olive Oil for the increasingly health conscious consumers. It also launched noodles, salt, premium wheat flour and ghee to cater to monthly basket of consumption.
To extend its PL reach beyond the kitchen and conventional household cleaners, HyperCITY also added new SKUs to Terzo range, with the introduction of detergent bars and dishwash bars.