Knowledge Primer- Private Labels

Private Labels are those brands which are owned by the retailers themselves.

Normally in an MBO ( Multi Brand Outlet ) you can see many brands which are external to the store.

However the store also offer their own brands. For example 'STOP' is a private label by Shopper's Stop.

Private labels work better in categories where there is a poor brand recall. For example in cereals category only two brand names come to the mind.

Private labels are recent phenomenon in India. According to an estimate private labels account for nearly 40 per cent of Wal Mart sales globally.

Buy why retailers keep private labels. The answer lies in margins. The margins are much higher in keeping private labels. They range from 15-20 per cent in FMCG, around 20 % in electronic goods and 30-70 per cent in apparels. The other reasons are differentiation and increase in consumption.

But why customer buy private labels ? The answer could be that store labels spell trust and savings.

The key concerns for retailers are inducing the first trials. It is seen that once used, customers have a very good brand loyalty.

Private labels work best in low-involvement category. For high-involvement categories, such as apparel, it is the name of the store that matters the most.

Some Definitions of Stores

You would do well, if you keep these definitions of store in mind.

Please remember, however, that Indian stores are more or less a combinations of each of these (and size is much smaller). So to categorize a store in purely one category would be a disaster.

Mass Merchandiser

a retailer or retail store that seeks to sell large quantities of goods quickly through such means as discounting, customer self-service, or unadorned display and packaging, as in a warehouse.

Source: http://dictionary.reference.com/

Destination Store

Giant retail store combining the attributes of several categories of stores: the size of a mass merchandiser, the variety and scope of a department store, and the low prices of a discount store. So called because consumers are willing to travel a good distance to shop in it.

Department Store

Large retail establishment with an extensive assortment in variety and range of goods, organized into separate departments. All departments are housed under the same roof to facilitate buying, customer service, merchandising, and control.

Discount Store

A department store which offers its items at a lower price than many other retail stores. Discount stores are often able to drop their prices due to efficient distribution methods. Many of the largest discount stores are also chain stores, and include Wal-Mart, Target, and K-Mart. Furthermore, many of these discount stores could also be categorized as big-box stores, as they grow to include more and more products, sometimes even including a large grocery section.

Source: http://www.businessdictionary.com

Case Study: Concept of "360-degree" lifestyle store

Please read the full article here. 

Questions (Any of these situations can be asked in a GD):

1. You are the brand manager of an apparel retailing company having 12 stores all over the country. Your Boss gets excited about the concept. Would you recommend ? Would you not, why ?

2. You are business manager of a cafe chain in India. Your boss gets excited about the concept. Would you  recommend ? Would you not ? why ?

3. You are a store manager of an apparel company. The company management is asking your recommendation towards giving a space for opening of a cafe. Would you recommend ? Would you not ? Why ?

4. You are a customer coming for shopping in an apparel retail store. You spot a cafe inside the store. Would you welcome such a change, be indifferent or dont like it at all .Why ?

What to Study for GD/ PI for MFM

I have been asked this question several times. It is important that there should be certain background or orientation in order to perform well. Here are my top readings that you can do for GD/PI for MFM.

1. Images Retail: It is a monthly magazine, you would do well to go through it. It is also important that you know the meanings of the terms such as footfalls (No. of people entering in a store), Ticket Size ( Average bill value of a store), Visual Merchandising ( The display of merchandise in the store) Markup ( Cost + Profit) and Margin ( Sales Price- Profit).

2. Economic Times or Financial Express or Mint: Look for the news related to apparel retail, textile or apparel exports.

3. Business of Fashion: A must read  magazine. Please  go through it atleast to have the idea of how brands are doing.

4. Vogue: To get a hang of what fashion is all about.

5. Visit to a Mall: Go to apparel stores and note down:

a. Best store in terms of visual merchandising
b. Best store in terms of variety.
c. Best store in terms of service
and so on... you will get to know so many things about stores.

6. A textile Book: Get to know the meanings of Voile, Silk, Chiffon, Georgette, dyeing, Batik and so on. Should know the difference between weaving and knitting, dyeing and printing etc.

7. Your own wardrobe: Study your cloths. How many formals, casuals etc do you have. What are your wearing and spending patterns.

This is just a small list where you can get enough material that will see you through the conversation during GDs and PI.

Current Topics for GD/PI- MFM- NIFT-2010

These, according to me, are the hot topics that can be discussed during group discussion and personal interviews:

1. You are brand manager of a casual apparel brand. How you can use social networking sites such as Facebook or Linkedin for the benefit of your brand.

2.Indian apparel retail post recession. Challenges and Opportunities. 

3.  If your brand is doing well in Metro cities, would it make sense to venture into the Tier-2 cities. How would the marketing mix ( product, price, place, promotion) be different there. 

4. Should apparel brands go on discounts at all ? Why ? Why not ?

5. Should there be any return policy for an apparel brand ? Why ? Why not 

6. Malls are not the same post recession. 

7. Rising Prices of Cotton Yarn- Boon or bane for Indian Exports. 

8. India should stick to manufacturing and selling traditional textiles and leave the manufacturing of other textiles to China and other countries.

9.Organic Textiles. Does it have a future or it is a mere eyewash .

10.India Advantage- Apparel and Textiles

11. Indian customer knows only one language- the language of discounts- every other strategy is useless.

You can read My Retail Notes to prepare for some of these topics.