Thursday, December 14, 2006

Retailers cashing in on private labels

The Economic Times reports that domestic retailers are gearing up to offer cheaper options for consumers with private labels. For consumers who are not too brand conscious, private labels offer a significant amount of saving for a wide range of items such as food, cosmetics, beverages, durables and apparel.

Reliance Retail will be offering a wide range of products under its Reliance Select brand. According to Gunender Kapur, president of the food division, “The company will extend its private labels across product categories like tea, water, natural food, dairy products, biscuits and cosmetics.”

Private labels contribute a larger share of the profit margin for the retailers, with savings on transportation, marketing and advertising. RPG Retail which operates the Spencer’s stores in three different formats, is considering private labels in electronic items, after having successfully launched them in apparel and foods. RPG Retail president, Jitu Mehta, estimates that private labels contribute 10% to total sales and are expected to increase to 20-30% in the next year.

At Piramyd Retail, the private label business contributes for 12% of sales and is expected to increase to 20% next year. The company has private labels in home linen, apparel and footwear and will be adding luggage and fashion jewelry to its range of private label products.

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