They were produced to decrease the operational and distribution costs. Production in bulk costs lesser than sourcing expensive brands from various countries and stocking them in the store. While expensive and famous labels are meant to be traffic and image creators, they are meant to be revenue creators. Private Labels are turning out to be real game changers for retailers across the nation. And this development has seen them stock more of these goods now than ever before.
If we consider electronic players, private brands like Croma, Koryo, Sensei, Next etc. are competing with the Videocon’s and Samsung’s of today. There are a lot of questions which people would have concerning buying such private labels. Don’t they sound really cheap? Would they have the warranty and credibility offered by a Philips? Will they have the quality of their big brothers?
The proponents of the private labels concept claim that private labels are produced with the same care as the big names and many a time at the same place be it China, Philippines or Malaysia. For a person whose looking for electronic utilities say an AC or microwave for the first time, a private label maybe the right thing to go for.
With its low price, eg: a Croma 1.5 ton AC may come for around Rs 26,000 which includes the servicing charges too while a Samsung AC may cost around Rs 31,000 and easy replacement and servicing charges, private labels could be a good option for the buyer. But then this doesn’t consider the fact that the buyer may want to buy an expensive brand first up if he has the opportunity.
For the ones who are desperate to lay their hands on styles of the big brands but not able to afford them have the private labels to thank them as many a time they mimic the latest in fashion from their big brothers. The users say that quality isn’t a problem but for a lot of people around quality becomes an issue especially because of its low price. Many wouldn’t like to show such a product to their friends and relatives around.
This pattern would be common even in apparel retail where brands like Bare, DJ &C, Indus League, Srishti are fighting for space with Levis, Wrangler, Lee etc. In the case of food and beverage retailer however things could be different. Since it is a fast moving consumer good, it’s easier for people to change to a private label like Reliance Dairy Pure milk, Future Group’s Tasty Treat etc. as it offers cheaper prices.
All in all the private labels are increasing the top line margins of a store by upto 15% and resulting in higher profitability. Along with low prices and constant discounts, they offer good deals to the buyer. If you are looking for a private label, compare the features, prices and the after sales service of these brands before finalizing the buy.