Coming Next, private label from Videocon

As Videocon expands its presence in consumer durable retail, the company has followed it with the launch of its private label under the Next brand. The company runs a durable retail chain under the same name. Videocon has introduced a varied product range that includes, colour televisions, cordless irons, toasters and microwave ovens among others under the Next brand.

The addition of Next makes it the eighth brand in the company's portfolio. Videocon's portfolio includes, Akai, Toshiba, Sansui, Hyundai, Kenstar and Electrolux apart from the Videocon brand. Next also sells competing brands like LG, Samsung and Philips.

Analysts say apart from its own brands, Videocon has formulated an equally aggressive strategy in the private labels sector. The private label Next is priced at least 10 per cent lesser than Videocon's own brands. Executives say the Next range of TVs is already the top selling brand in its showrooms.

With close to 300 outlets of the Next chain being operational, analysts say that the launch a private label was just a matter of time. For the last ten months, the group has been manufacturing private labels for rival retailers like the Future Group. The two companies recently entered into an agreement where Home Solutions will give preferred vendor status to Videocon under its electronics retail format E-zone and Electronics Bazaar.

The competitors are also equally bullish on their private label efforts. Home Solutions Retail part of the Future Group, launched its private labels Koryo and Sensei in 2006. Launched in April 2006, Koryo targets first time electronic appliances users. The Sensei range consists of digital products like MP3 players, LCDs, ACs and so on. Future group is targeting 25 per cent sales from the private labels. They currently contribute 18-20 per cent of store sales.

The company hopes to introduce new categories in the Sensei brand like washing machine and refrigerators and is looking for sourcing arrangements with existing or new partners. At present, Next is however restricted to the bottom end of consumer durables and appliances. Company executives were non-committal if they would gradually move up the value chain with their private labels.

Earlier, Videocon was reportedly in talks with the Mukesh Ambani-promoted Reliance Retail to become its sourcing partner. The Tata group's Croma chain of durable retail outlets also plans to get into the durable retail business by next year. Analysts fear that the price advantage that private labels offer, will hurt the sustainability of the consumer electronics segment, subject to consumer acceptance.