Indian retail giant turns to own label

25 June 2009

MUMBAI: Future Group, which owns some of India's biggest organised retail chains, is aiming to increase the number of own label goods it sells in its stores, which operate in categories as varied as FMCG and apparel.

Multinational companies like Hindustan Unilever and PepsiCo – and their major domestic rivals such as ITC – are all heightening their activity in India in anticipation of the expected rapid growth in the country's consumer packaged goods market in the next few years.

According to the Business Standard, the profit margins for store brands in this sector start at around 15%, growing to 20% in the electronics category, and rising to as much as 70% in the clothing segment.

The newspaper also reports that store brands are, on average, between 15% and 20% cheaper than their more established counterparts in most of these areas.

In the grocery sector, Future Group operates Big Bazaar, a "uniquely Indian hypermarket chain", and Food Bazaar, a group of supermarkets. 

As it also runs Future Brands, which is charged with "creating, developing, managing, acquiring and dealing in consumer-related brands", the company is well placed to develop its private label offering.

Atulit Saxena, coo of Future Brands, said the organisation is "mulling new private brands for FMCG products like oral care, detergents and tea."

The purpose of this initiative is to ensure customers can buy "quality products", as well "bringing more affordability to the end users" of its services.

Alongside increasing the scope of its store brand offering in the CPG sector, Future is looking to introduce own label ranges in its apparel chain Pantaloon.

This includes launching a new “private brand in the women's wear category in July this year," according to Saxena.

Future Group currently has around 50 private label brands in the FMCG, apparel and electronic categories, generating sales of 567 crore rupees ($117m; €84m; £71m) in the last financial year.

Saxena argued that "economic meltdown has mainly impacted the sales of luxury brands and value retail formats like Big Bazaar were hardly impacted."

He added that consumer spending in the country has witnessed "a sort of revival in the past two months."

Data sourced from Business Standard; additional content by WARC staff