Retail biggies testing local flavours

AHMEDABAD: Who’s on the wish-list of Mukesh Ambani’s Reliance Retail? Induben Khakrawala, Gujju Masala and Nilon’s. Apart from banking on national brands or private labels, now large retail chains, including Reliance, RPG and the Piramals, are turning to lesser known but strong local brands to rake in more moolah. In a bid to penetrate faster and better in local markets with higher margins, the retailers are now increasing the share of local brands at their retail outlets.

Take RelianceMart, country’s biggest hypermart. Reliance Retail plans to focus largely on local brands, including Induben Khakrawala’s namkeens, Lijjat Papad, Wagh Bakri, and Madhur (spices brand).

This is in addition to the nearly 100 private labels that Reliance plans to display. The company plans to open 500 such outlets all across the country and with this strategy, the number of local brands, particularly in the food segment, to get place on the hypermart’s shelves would be big. The company sources say, share of regional brands in the hypermarts would be over 10%.

Usually, for retailers, it is more profitable to stock regional brands than national brands. Also, the supply chain is more efficient. However, in some cases, a few local brands that have a strong regional presence offer margins lower than that offered by the national brands. “We have not quantified the share of local brands so far, but we intend to provide brands and products sought by customers.

The customers should feel that it is their kind of stores. The local brands will be stocked largely in food category with non-foods,” said Reliance Hypermarkets chief executive K Radhakrishnan said.

Also, local players are now fast expanding their footprint and the market acceptability of regional brands too is growing. “The expansion by national retailers is throwing good opportunities. Also, we get display on shelves of the sueprmarkets and hypermarkets which further increases the acceptability. So far, we have supplied around 12 packets of 250 grams.

Future supply will be decided based on the response, said Ashishbhai Rasiklal Khakrawala of Induben Khakrawala. It is also talking to Spencer for a possible supply agreement. Apart from stocking the products by regional brands, the retailers are also talking to several renowned local brands for making private labels for them.

“According to our research in different regions, we have found preference for local brands. We offer local brands across food and non-food categories and intend to attain over 20% localisation,” said Piramyd Retail Limited’s GM-operations Gopa Kumar.

The company sells local brands such as MMK Farsan, Subham and more at its Tru Mart stores in Pune. In Ahmedabad, it is finding a good market for brands such as Nilon sauces, Gulab Oil, Nirmal and Madhur. The company is also focusing on private labels in food category and it plans to take the share of private labels to 25%. It has already launched a few food products under ‘Uttam’ brand in Maharashtra which will later be taken to other markets.

RPG groups’ Spencer’s, which operates hypermarkets, supermarkets and convenience stores, is also focusing on regional brands. “As a conscious management decision, we are increasing focus on regional brands. The move is mainly to offer preferred regional products to the customers. So, apart from increasing focus on in-house brands, we are also focusing on regional brands across categories,” said Spencer’s marketing vice-president Samar Shekhawat.

Future group’s Big Bazaar too offers several local brands. However, the group intends to focus on private labels. “At present, regional brands account for around 3-4% at Big Bazaar. However, we do not intend to increase focus on regional brands,” said a Big Bazaar spokesperson.