Private labels come of age
Meanwhile, another trend is also becoming apparent – the rise of private labels. These are the retailers’ own brands and typically compete with many of the better known products from other companies that these organised players sell.
The Future Group was probably the first to popularise the concept of private labels in India but it is the entry of Reliance Retail into this space that has set the cat among the pigeons.
Reliance sells a range of products like Sac Tac two-minute noodles that is about a fifth cheaper than market leader Maggi. It also has an in-house cola called Yeah!, which it targets at less affluent buyers and those buying such products for the first time. All of these products are 10-20 per cent cheaper than those of its rivals. And all these products share shelf-space in Reliance stores as well as the shops of Reliance Retail’s kirana partners.
These products are always manufactured by small and medium businesses that Reliance outsources this work to. This way, not only is it staving off competition from other deep pocketed rivals but also forging deeper bonds with neighbourhood shopkeepers who, effectively, become its last mile delivery arm.
Meanwhile, Amazon is plugging away relentlessly at India’s market even while the Tatas plan a big bang entry.
Thus, the various players are still in the process of putting their pieces in place in India’s retail market. The real battle will begin only after this phase is over.