Aditya Birla Retail, the retail unit of Aditya Birla Group, plans to launch private labels in a number of personal care products such as hair oil, hair styling gel, shaving creams and gels, toothpaste under its brand ‘Enriche’ by March this year, to take the advantage of downtrading in the economy, said a top company official today.
The company is also planning to launch private labels in consumer durables and electronics once it takes the number of its hypermarkets to 14 by FY11, the official said. The company runs 670 supermarkets and two hypermarkets, under the name ‘more’ and plans to open 200 new supermarkets by FY11.
Currently, the company sells consumer durables in its hypermarkets and has tied up with Essar Telecom’s The MobileStore for retailing mobile handsets in its supermarkets.
“We are focussing on private labels in a big way. We want to take the share of private labels to 30 to 40 per cent of our total business in the next 4-5 years,’’ said Thomas Varghese, the chief executive of Aditya Birla Retail.
The company currently has more than 320 private labels in categories such as processed foods, personal care products, detergents etc. These products sell 10 to 15 per cent lesser than that of national brands in respective category. It sells food products such as ketchups, jams, honey, carbonated drinks, chips, cookies under the brand ‘Feasters’; detergents, dishwash bars under the brand ‘110%’, shampoos, soaps under ‘Enriche’ among others.
All the major retailers such as Kishore Biyani’s Future group, Mukesh Ambani’s Reliance Retail, RPG’s Spencer’s have launched private labels in staples and cereals, processed foods, personal care and detergents, apparels and so on as private labels carry higher margins, ensure higher volumes due to lower prices and help in brand building.
Private labels in food and groceries carry margins of 25-35 per cent while that of national and regional brands give retails a margins of 10 to 12 per cent.
“The whole idea of private labels is based on pricing and retailers get enough volumes on their shelf at marginal costing. It depends on their strategy on pricing and marketing right products,’’ said Naimish Dave, a director with OC & C Strategy Consultants.
Kishore Biyani’s Future group recently announced plans to become a Rs 10,000-crore consumer products major in the next four years by launching new brands in the fast moving consumer goods (FMCG), consumer durables, electronics and apparel space in anticipation of down-trading slows and also to take advantage of a slump in commodity prices.
As part of the plan, Future Brands, the group’s wholly-owned subsidiary, plans to launch sportswear, lingerie and beauty products in the next 3-4 months along with FMCG products such as toothpaste, soaps and detergents among others.
The Future Group has brands such as John Miller, Bare, DJ&C, Indigo Nation in apparels and Tasty Treat, Fresh n Pure in the FMCG category and Dreamline in general merchandise, Sensei and Koryo in consumer durables and electronics category among others. The group expects to earn at least 30 per cent of its revenues from its private labels in the next four years, Biyani said while announcing its plans.
Mukesh Ambani’s Reliance Retail sells staples and food items under Reliance Select and Reliance Value brands, dairy products under ‘Dairy Pure’ brand among others and plans to launch soaps, detergents, cosmetics and non-FMCG products under its private labels segment with a new brand name. Reliance Retail has plans to set up a separate company called
Reliance Foods.
Both Future Group and Reliance Retail are exploring ways to supply their private labels in food and groceries to kirana stores and small retailers in the country to supplement their revenues. Future Group has already conducted pilot studies in this regard.
