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Photo: Mint
Photo: Mint

Pvt labels fare well in modern retail outlets

Share of private labels in categories such as packaged atta moved from 11% to nearly 14% between the three months of December, January, February when compared to July this year

NEW DELHI : Share of private labels across modern retail stores rose from 3.5% in the three months to February prior to the imposition to the national lockdown in March, to 5% in July, according to market researcher Nielsen.

This came amid a dearth of supplies of top brands and consumer pivot to affordable products as the pandemic-led disruptions forced most people to become cost-conscious in an economy that’s forecast to contract this fiscal year.

The trend was visible across categories of fast-moving consumer goods, especially food items, such as packaged flour, frozen food, non-refined oils and honey, besides liquid toilet soap—all of which gained share in the last six to seven months.

Depending on the retail format, private labels are a key for most large retailers as they offer better margins and variety, and are offered at a discount to over-the-top brands.

Share of private labels in categories such as packaged atta grew from 11% in December-February to 14% in July. Similarly, non-refined oils rose from 6.3% to 10%, while private brands of honey inched up from 7.8% to 10.2%. Frozen food went up from 3.3% to 5%, Nielsen added.

Consumers tend to increase their purchases of private labels when the economy is struggling, Nielsen said in a global report in 2018. With covid-19 leaving millions jobless or making do with lower pay, consumers are likely to trade down, driving demand for such value offerings. “Modern trade private labels have started growing in the last two quarters. The categories which are seeing growth are packaged foods, essentials required for cooking meals, and health products," said Diptanshu Ray, retail intelligence lead, South Asia market, Nielsen.

Many retailers pushed their private labels in the early part of the lockdown as companies faced logistics issues. For some, private labels demand is still holding steady. Wholesale retailer Metro Cash and Carry saw an uptick in its private label offerings even after the lockdown was lifted. “In the unlock phase, i.e. June-September, in our own brands, we saw sweet biscuits and confectionary category grow by over 250%; condiments and salted snacks by 100%; breakfast cereals by over 80%; pasta and noodles over 70%. Flours and oils continued its upswing growing over 65%," a Metro spokesperson said.

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