Private Labels: Need to look beyond just being a low-cost alternative?

For long, private labels have projected themselves as lower cost alternative to the national brands to gain consumer attention and grab market share. However, after making the initial splash, it’s clear they need to think beyond ‘cost’ (to sustain their long-term growth.

If you’d visited any of these retailing outlets or malls like Big Bazaar, More, or Reliance Fresh, recently, you might have stumbled across not-so-familiar brands such as Tasty Treat (ready-to-eat foods), John Miller (clothing), Feasters (biscuits) and Sudz (detergent). But as organized retail continues its rapid growth in the country, get ready to see more of these in-store brands, more popularly known as private labels.  

However, after making initial splashes have these private brands been able to really make much of an impact on the market share of national brands or manufacturers’ brands? It seems so as a latest survey from Nielsen shows that the awareness about private labels among consumers improved to 78% in 2010 from 64% in 2009. The survey titled, Shoppers Trend Study, was conducted across 11 cities in the country. According to Nielsen Director (retail services) Siddharthan Sundaram, “Over the last three to four months, we found an increased awareness of private labels in categories such as staples, household products, personal care products such as soaps, biscuits and packaged groceries.” As a result, private labels now account for nearly 6% of their overall sales (for the one year period, October 2009-September 2010) for retailers like Big Bazaar, Spencer’s and Reliance Fresh, the Nielsen survey found. 

Open publication - Free publishing - More private label

This figure, though, pales in comparison with the success of private labels in Europe – home to private labels - where they account for more than 50% of the overall sales for retailers such as Aldi (98%), Tesco (50%), and Carrefour (36%). Even in America, Wal-Mart derives almost two-fifth of its sales from private labels. This shows that Indian retailers have a long way to go as far as their private label penetration is concerned. But for that to happen they need to look beyond the cost aspect and focus more on product innovation, quality, better or attractive packaging, and, in fact, they can also create their own niche categories besides continuing to make inroads into generics or no-brands segments like pulses, spices, dry fruits etc. 

Besides, a lot would also depend on how they promote these in-store brands. Many times you may find these private labels are not showcased properly in the stores. Often they would be stacked in a big basket in some corner and a customer would just overlook them as he or she finds them an assortment of rejected goods! Go to any Big Bazaar outlet and chances are that you might find packets of Tasty Treat snacks kept hastily in some baskets and placed in some remote corners where you are less likely to have a look at or at worst you may just overlook them. And this is the case with most of the organized retailing players which though have a slew of private labels under their belt but have not paid much attention on how to position them inside their stores to gain maximum attention and convert an unlikely visitor into a loyal customer. But it’s time they should paid attention to these aspects as well and focus on putting up electronic display boards, asking staff to guide consumers about their own private labels and encourage them to give it a try and so on; in other  words, get the in-store promotion and positioning right guys. Retailers can even introduce loyalty programs or give higher loyalty points on the purchase of private labels. They can even try to make these products available in the local kirana stores in and around the retailer’s mall or outlets to improve visibility and reach.

However, this is largely observed in case of FMCG products and is not the case in segments like clothing where retailers have been quite aggressive in marketing these private labels.  

Notwithstanding, they need to be a bit more aggressive when it comes to private labels in FMCG segment too to compete effectively with the nationals brands.

Amy, Chief Editor

You can contact the author at businessbanter@gmail.com

Obama and the bullies

Exactly how does this topic rise to the level of presidential concern?

(Click image to enlarge; White House page here.)

When I am elected president, I will assure you of this: The president will do only those things that only the president can do. The rest shall be handled by subordinates.

IMO, this is another example of this president taking care of the easy things. Over the last two years it has become abundantly clear that the "too hard" box in the Oval Office is stacked deep. But according to the AP,

Aides say this is a personal issue for both the president and his wife, Michelle Obama. The president taped a message for the "It Gets Better Campaign" last fall following the deaths of several young people who were bullied for being gay.

How, exactly, is this a "personal issue" for this president in a way that is different from any other American unrelated by blood or bond to the victims? Where is the personal connection to Obama? The deaths were bad, tragic. Of course. But I ask again: do they make bullying rise to the level of presidential concern? Of course not.

But it is of whole cloth with the progressive movement. Now that bullying (which can never be tightly defined) has become a matter accorded to full weight and authority of the United States government, regulation will follow as night follows day. Here is last October's preview:

The Education department's press release also quotes Obama thus:

"We have an obligation to ensure that our schools are safe for all of our kids. Every single young person deserves the opportunity to learn and grow and achieve their potential, without having to worry about the constant threat of harassment."

Note the imperial "we." What does he mean, "we?" Of course, he means the full weight and authority of the US government. Exactly why does school bullying transcend the authority and capability of local school districts and municipalities or of colleges and universities?

So here is my question - comments are turned on - am I missing something here? If you think that schoolhouse bullying is a legitimate matter of presidential concern, please explain why.

Comments on - and do note commenting rules, they are not flexible.

The President's Speech - coming to a multiplex near you

The smashing success of Best Picture winner, The King's Speech, has Hollywood looking for a sequel. And here it is!

Christina Aguilera arrested Along With boyfriend Matthew Rutler

Bad time for Christina Aguilera and their fans as she was arrested on suspicion of public intoxication and her boyfriend, Matthew Rutler, was arrested on suspicion of DUI early Tuesday in West Hollywood, authorities said.

An extremely intoxicated Aguilera, 30, was taken into custody at 2:45 a.m. for her own safety and released around 7:30 a.m. after she sobered up, sheriff's Deputy Bill McSweeney said. The arrest will go on her record, but criminal charges will not be filed against the singer, sheriff's spokesman Steve Whitmore told L.A. Now.

"There will be no court date, and there will be no prosecution," Whitmore said.

After his girlfriend was released through a back entrance to avoid gathered paparazzi, Rutler, 25, was still in custody. His bail is set at $30,000.

The "Burlesque" star filed for divorce from music exec husband Jordan Bratman in October; the split is expected to be finalized in April. Rutler escorted her Feb. 6 to the Super Bowl in Arlington, Texas, where she botched the words to the national anthem, a song she's performed in front of crowds since she was a child. She sang at the Grammy Awards on Feb. 13 in a tribute to Aretha Franklin.

Cameron: shut down Libya's air force

Where are the carriers? It doesn't matter.

British Prime Minister David Cameron: "I have asked the Ministry of Defence and the Chief of the Defence Staff to work with our allies on plans for a military no-fly zone."

The point of a no-fly zone would be to prevent by force the Libyan air force from continuing to attack civilians demonstrating against the country's dictator, Moammar Qaddafi (see, "Libyan jets armed to kill").

But where are the carriers?

US Navy: No carriers in the Mediterranean Sea.

Royal Navy: Britain has only a single aircraft carrier left in service, HMS Illustrious. Well technically, HMS Ark Royal will be on the active roll until 11 March, but its decommissioning work is completed. However, Illustrious is of "ski-jump" design and has no aircraft assigned to it, nor are any even available anywhere in the UK's arsenal. Harrier jets, the only type Illustrious can handle, are no longer in service there.

HMS Illustrious with US Marine Harrier jets conducting interoperability training in an undated photo. Britain's armed forces no longer fly the Harrier, the only type jet that the carrier can launch or recover.

French Navy: France has one carrier, Charles de Gaulle. Larger than Illustrious, it is smaller than American carriers but of similar design. Hence it can launch and recover conventional fighters and attack aircraft.

USS John C. Stennis, top and USS John F. Kennedy, bottom, flank the French carrier Charles de Gaulle, which is leading Britain's assault ship, HMS Ocean (a helicopter platform), in this 2002 photo.  

However, Charles de Gaulle has had its operational-readiness problems.

As President Nicolas Sarkozy prepares to use a historic London summit to announce the use of RAF jets off the Charles de Gaulle, his naval chiefs have told him she is no longer seaworthy.

Presumably the problems with the carrier's propulsion systems have been fixed, as de Gaulle just completed combined exercises with USS Abraham Lincoln.

Nonetheless, absent American carriers, it will be difficult, if not impossible, to enforce a no-fly zone over the long term if the model is the no-fly zones the US and Britain enforced over most of Iraq after the Gulf War. Those years involved constant patrolling and substantial commitment of airframes and crews.

The reason for the difficulty is that the closest Allied air base to Tripoli is Sigonella Naval Air Station in Sicily, about 350 miles away. This is not next door for flying high tempos of air interdiction. The next closest is Aviano Air Base in northern Italy, more than 900 miles from Libya.

However, Britain and the US (and France and Italy?) need not institute constant patrolling to shut down Qaddafi's air force. A fair number of these BLU-107 Durandal cratering bombs will do nicely:



Developed by the French and type-adopted by the US Air Force in time for 1991's Gulf War, the BLU-107 creates enormous craters even in concrete runways. The Brits once used an even more diabolical cratering bomb, the JP233, that not only made a huge honking hole, it also scattered 215 anti-personnel mines around the crater as a disincentive to repair the runway. However, this bomb was withdrawn from service, mainly because the Gulf War proved it was dangerous to the bombing aircraft.

However, chasing down individual Libyan fighters, while technically quite possible, is pointless. Crater their runways from one end to the other and the problem is solved. Carriers, while desirable, useful and highly symbolic for long-term commitment, are not necessary to get this job done. Sky park a few Predator UAVs above the airfields so that if Libyan engineers try to repair the craters, we will know immediately - and the Predators can launch disincentives. For that matter, we can crater the runways again and maybe bomb a few pilots' barracks as encouragement.

Putting Libya's air force into no-fly status is not all that challenging and it does not require aircraft carriers to do.

Update, March 2: Libyan air defenses would have to be dealt with, of course:

Option 1: Turn the runway-neutralization mission over to the US Air Force's 509th Bomb Wing with its B2 Stealth bombers. I doubt Libya would be able to counter them.

Option 2: Notify Libyan AF's high command that we are going to crater their runways but will not attack personnel or other facilities. Make it clear, however, that if they resist in any way all our gloves come off and Libya will not have an air force left.

USS Kearsarge, now on station offshore, can mount combat search and rescue missions in support. An aircraft carrier would be nice but is not necessary for this mission.

This is not to say I support such an action; I have serious reservations. But simply as a military action, it would not be terribly difficult.

Endnote: The toothless Illustrious is due to leave service in 2016. It's replacement, Queen Elizabeth, will not enter service until 2020 at the earliest. QE and its later sister ship, Prince of Wales, however, will be super carriers rivaling the US Navy's and will be the largest warships ever for the Royal Navy. Curiously, both predecessor ships of the same names were battleships sunk in World War II.

Related: To be clear, I do not think that doing this would be a good idea.

A new milestone: Maruti Suzuki crosses 1mn mark in Sales

Maruti Suzuki becomes the only Indian car maker to have crossed one-million mark in sales as it sold 10.37 lakh units in the first 10 months of FY 2010-11.

Maruti Suzuki, the home-grown car giant which began life as a state-owned enterprise but later became a subsidiary of Japan’s Suzuki Motor Corporation, a few years ago, has scripted a new success story as it becomes the first Indian car maker ever to have crossed 10 lakh or 1 million mark in sales. The company clocked sales of 10.37 lakh units in less than 10 months of the current fiscal year 2010-11.  

Continuing with its robust performance so far during the fiscal, India’s largest car maker, which accounts for one in every two cars sold in the country, has reported a jump of nearly 16% in its overall sales (including domestic as well as overseas sales) to 1,11,645 units in February 2011 against 96,650 units in the same month a year ago. Further, Maruti’s domestic sales grew higher at about 20% to 1,01,543 units from 84,765 units, during the same period. Though its exports declined by 15% to 10,102 units in February’11 from 11,885 units in the same month of the previous fiscal; which has resulted from the company’s recent shift in focus from overseas markets to the Indian market to meet the rising domestic demand. Also, expectedly, sales of Maruti 800, which for long had remained its bread-and-butter model, continued its downward journey, falling by 15% to 2,712 units from 3,178 units, during the said period.

Sticking to the basics: Key to success

The company’s recipe for success in overtly competitive Indian market has remained much the same: to make practical, fuel-efficient and affordable cars. This strategy has once again been vindicated by the success of its Ritz, a premier compact car, which crossed one-lakh mark in sales in October last year, in just 17 months since its launch in May 2009.

Besides, a huge network of service centers and lower maintenance costs too have helped it sustain its market leadership for so long. 

In for serious competition, ahead

However, that is not to say that there are no pain points. While one hand Maruti’s product portfolio boasts of such successful models as Swift, D’zire and SX4, it also has laggards in the form of Versa and Zen Estilo.

Also, with MNC rivals like Ford and GM and domestic war horse Tata Motors now firing on all cylinders to grab bigger pie in the small car market segment, Maruti can ill-afford to rest on past laurels. 

Ford India’s February’11 sales jumped nearly three-fold to 9,293 units from 3,223 units in the same month of the previous fiscal, led by strong sales of its small car, the ‘Phenomenal’ Figo. Tata Motors, India’s largest auto manufacturer, too reported a rise of 12% in its February sales, y-o-y, propelled by its Nano car, whose sales jumped 101% to 8,262 units, during the said period. 

And with two prestigious launches, which include Toyota’s much ambitious small car, Liba, and, Honda’s little cutie, Brio, barely a few months away, Maruti Suzuki is in for some serious competition ahead. 

Amy, Chief Editor

2012 Olympics Logo: Iran Objects On it

The new 2012 Olympics Logo has been unveiled today in London. The games will be held in London next summer. Iran feels the 2012 Olympics Logo is racist because they believe the logo spells the word “zion”. Take a look below at the new 2012 Olympics Logo and see what you can make of it.

Iran sent a letter to International Olympic Committee President Jacques Rogge. The letter claims the 2012 logo spells out “Zion,” a biblical term widely recognized to refer to the city of Jerusalem.

In comments carried by the official IRNA news agency Monday, secretary general Bahram Afsharzadeh said the letter urges other Muslim states to oppose the "racist logo."

"There is no doubt that negligence of the issue from your side may affect the presence of some countries in the games, especially Iran which abides by commitment to the values and principles," the letter said.

Iranian President Mahmoud Ahmadinejad has called for Israel's destruction and questioned historical accounts of the Holocaust. Iranian athletes have refused to compete against Israelis.

The Logo is supposed to say 2012, in an abstract sort of way. It has the Olympic rings and the word London and we cannot see the word “zion”. So why all the fuss? The new 2012 Olympics Logo is one of a kind.

The Summer Olympic Games are scheduled from July 27 to August 12, 2102. This new logo has four different base colors and another version for the 2012 Olympics Logo for the 2012 Summer Paralympics