Future Brands Ltd, a company owned by the Future Group, one of India’s leading organised retailers, is planning to go for private labelling of products in the FMCG category like oral care, detergents and tea.
“We are mulling new private brands for FMCG products like oral care, detergents and tea. The objective for developing private labels for consumer products is to ensure qualitative products for our customers. These private labelling of FMCG products would also help in bringing more affordability for the end users,” said Atulit Saxena, chief operating officer, Future Brands Ltd. Apart from FMCG, we would also focus on private labelling of products in categories like apparel as well as consumer durables and we are going to introduce a private brand in the women’s wear category in July this year, he added.
At present, Future Group has more than 50 private brands and 20 trademarks in categories like apparel, FMCG, electronics and home solutions. All these trademarks generated cumulative sales of Rs 567 crore in 2007-08. The retail major was going for more private labels as private brands owned by the retailers gave better profit margins compared to the established brands.
The organised retailers across the country were increasingly banking on private labels to shore up their profit margins in the wake of the economic downturn which had impacted their operations.
Private labels or in-store brands are brands which are owned, merchandised and sold by the retailers. According to industry estimates, the profit margins for private labels range from 15-20 per cent in the FMCG sector, around 20 per cent in electronic goods and 30-70 per cent in apparels.
For the consumers, the price difference between private brands and the established brands is 15-20 per cent. Saxena said the private brands developed by the Future Group enjoyed high confidence of the consumers apart from fetching better margins.
Asked on the impact of the economic downturn on the operations of the Future Group, he said, “The economic meltdown has mainly impacted the sales of luxury brands and value retail formats like Big Bazaar were hardly impacted. The consumer spending in the country has witnessed a sort of revival in the past two months.”
He declined to comment on the Future Group’s budget for brand advertising for this fiscal.
Source: Business Standard