Role of private labels in the Apparel Sector

 16 January 2023, Mumbai

The fashion space has witnessed the phenomenal rise of private labels in both the online and offline retail domains through the years.

Anecdotally the apparel segment has witnessed the introduction of private key labels like Netplay (formal office wear), Performax (specialized activewear), Fusion (fusion-wear for women), Avaasa (ethnic wear for women), and Rio (fashion wear for working women).

The fundamental premise driving synergies here is that private-label products are getting sustainable favour & appeal from consumers across sub-sets within the fashion & retail space.

Prologue

“Islands of Certainty”.

The innate advantage it enjoys is that of high availability besides providing great control over pricing one over the other/established brands

Private labels provide a remarkable play helping retailers design promotions, advertising, or even the packaging of the label to the business requisites. One would reckon dozens of Indian private brands famously known as private label and store brands, are typically designed to be made and sold for a specific celebrated retailer to stay relevant & competitive.

Case study

"Reliance Retail", India’s largest & biggest retail company mirrors 'the shape of things to come'. It is an entity with Rs 1,49,925 crore of revenues in FY21, having launched ver four dozen private-label brands across all consumer wearables, consumables, grocery segments, etc.

Its annual report in FY21 reports that the company has earned over 75% of its revenue from its fashion and apparel, footwear chain "Reliance Trends" entailing in-house brands, where the contribution of private labels to its revenue is a whopping 60% or thereabouts.

Myntra, the case is no different, having an army of private labels most specifically across a lower price spectrum accounting for say 35% of its revenue. Here the spotlight shifts to the plethora of private labels involving/developed/backed by celebrities such as Hrithik Roshan and Deepika Padukone brands like 'HRX' and 'All About You' respectively.

The advantages overweigh prompting Amazon & Flipkarts of the world not to shy away from investing reasonably in their private-label portfolios than ever before.

Growth triggers

Growth levers; It is nothing new as prominent retailers like the Future Group, Reliance Retail, K Raheja Corp-owned Shoppers Stop, and the Aditya Birla Group have already seen private labels' demand tailwinds clocking impressive performance on the back of ease of getting credible ‘contract-manufacturing’.

All major e-commerce sites, including Amazon India, Flipkart, Snap deal, and Shopclues, are always opportunistically looking at giving a fillip to their online sales, featuring a wide range of offers and steep discounts to lure consumers.

Secular trend

It is nothing new as prominent retailers like the Future Group, Reliance Retail, K Raheja Corp-owned Shoppers Stop, and the Aditya Birla Group have already seen private labels' demand tailwinds clocking impressive performance on the back of ease of getting credible ‘contract-manufacturing’.

Umashan Naidoo, head, of customer and beauty, Trent operates Westside, alludes that," Their brands in apparel, footwear, and other accessories contribute over 99% of sales".

Science of translating private labels into powerhouse brands

Therefore, the advantages overweigh prompting Amazon & Flipkarts of the world not to shy away from investing reasonably in their private-label portfolios than ever before.

What is remarkable is that the platforms’ popular private brands Teamspirit, Mix N Match, and Avaasa are hands-down ahead of the top-selling brands in many cases.

Private labels have helped online retailers attract new consumers and many first-time customers giving them greater customer buying insights and, also filling in gap lines identifying & underpinning these gaps strategically in order to fill them with distinguished and top-quality product/s Or product lines creating differentiability to tap into underserved/underpenetrated niche opening scope for headroom growth and making business proposition big.

There are interesting instances where Private Labels have even been launched in the open market to compete fairly & squarely in the marketplace stimulating growth.

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