the range image . Private labels put downward price pressure on national brands . It upsets the pricing structure and ultimately creates pressure on the retail margins . It also affects promotional support provided to retailers by national brands .
Aligning and integrating a private label strategy with national brands might help to create a win-win situation for retailers and national brands . Invading each other ’ s territorial rights might generate skirmish and inflict damages on both .
Alternatively , retailers can get into the business of branding . But that will violate the valuable principle of ‘ stick to knitting ’ suggested in the book , ‘ In search of Excellence ’. Aligning and partnering with brands and taking them to customers in the right form , at the right price , in the right quantity and at right time is the role of retailers in the business . Small deviations to balance the profitability and threaten the national brands so that they respond well is a good tactic but getting into manufacturing and branding is not a good idea . This backward integration might push retailers back in the long run . Private labels are low hanging fruits but one must reap the quantity barely enough for the lunch .
National brands must understand the role of retailers and pay for their fair share . Unfortunately , there is the tendency of the major national brands to pull the rope harder commanding a larger chunk . Private label is considered as an ‘ all are common ’ kind of socialistic approach . It is certainly a retaliation of retailers against the monopolistic approach of mega brands and national players . Private label is the struggle for the existence of retailers who are under the mounting pressure of escalating costs and reducing margins .
National brands and organized retailers both are like nuclear powers . If national brands deny bread and butter ( fair retail margins ) then retailers respond by denying dwelling ( shelf space in stores ). Such a fight between national brands and private labels might appear beneficial to the customers in the short term . But this cold war has the potential to become the World War of marketing . As long as it remains a sibling rivalry it is good
BRANDS
for everyone but if escalated into a full-flagged war then it will destroy both , retailers and brands leaving customers high and dry .
However , Discount retailing is the format that looks to reduce the cost of living of their customers . It will remain unharmed but only as an important market segment rather than spilling over and spoiling other segments .
Yes , brands are under threat . But they won ’ t die as long as they don ’ t deny retailers their right to survive and progress . ■
Prof . Dr . Ajit Patil was awarded ‹ Top Voice on LinkedIn - 2017 ’. He is a Management Writer ; Marketing , Business Development & Retailing Consultant . He conducts Management Development Programmes ; trains & coaches Sales & Marketing teams . Reach him at : Ajitpatilmumbai @ yahoo . co . in .