Monday, April 18, 2011

Structure of Indian retail is intrinsically not amenable to private labels

Private labels constitute less than 5 per cent of the total Indian retail market and Soumitra Sharma, Business Analyst @ Evalueserve beleives that private labels will not pose a significant threat in India. At AaramShop we do however observe that private labels are an area of serious concern for any national brand.
A key factor for growth of the private label market in any country is sufficient penetration and muscle of organised retailers. The highly fragmented nature of the Indian retail market makes it intrinsically unsuitable for private labels. Further, most organised retailers today have a far better regional presence, as compared to a national footprint. Although most players plan to ramp up their national presence as part of their future strategy, there are several hurdles in the way. These include factors such as real estate and distribution costs, regulatory issues, and lack of skilled manpower.

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