Private brand is a distributor or a retailer's brand. A large distribution channel member (usually a retailer) develops a private brand by buying from manufacturers in bulk and putting its own name on the product. Thus Shopper's Stop has developed private brands like Stop and Kashish, and Big Bazaar has its own private labels. Westside has developed Westside range of private brands. Private brands are so called because their availability is limited generally to the outlets owned by the retail chain
A retailer can develop Private brands when it does high volume of business. High volumes are required to achieve economies of scale and cost efficiencies.
Retailers are developing private brands for following reasons:
- Private brands reduce the manufacturer dominance and helps retailer develop more
customer loyalty. - Private brands enables a retailer to differentiate it from other retailers by providing
an exclusive product and variety. - Private brands enable a retailer to develop products as per customer requirement
and of desired quality. Since retailers have closer interaction with customer they
are in a good position to understand customer requirement and can hence get products
manufactured as per customer needs. - Private brands move due to confidence the customers develop with a retailer offering
and hence do not require heavy promotion or advertising support. Because of this
they can be priced below manufacturers' brand of similar quality. This further develops
customer loyalty. - Private brands enable retailers to have better bargaining power with manufacturers.
The manufacturers in turn benefit as they get a large captive buyer. - Private brands enable greater freedom in pricing strategy.
- Private brands enable positive control on stock keeping strategy.