Shop floor to join showroom as Retail Inc.

MUMBAI: Manufacturers and retailers, usually found sitting on opposite sides of the fence are increasingly looking at ways to partner and create brands of tomorrow. So along with working together on promotions, packaging and margins, manufacturers and retailers are exploring the possibility of creating co-branded labels. Retailers such as Future Group���s Food Bazaar and Magnet have initiated talks with fast moving consumer goods (FMCG) companies and other retail players. They believe it is just a matter of time before co-branded labels becomes a reality.

���Collaboration is the way forward. Retailing is an opportunity which both manufacturers and retailers have to explore together,��� says Future Group MD Kishore Biyani. The exploration at the Future Group is taking the shape of co-branded labels with manufacturers.

Food Bazaar president & CEO Damodar Mall says it has tied up with Ruchi Soya and Dynamix dairy. ���These tie-ups are for our Fresh N Pure private label in edible oils, food and dairy products. We are talking to three more manufacturers for possible tie-ups,��� adds Mr Mall. He elaborates that so far the association with manufacturers such as Ruchi Soya is for third-party manufacturing, but talks are on to extend this partnership further into creating labels.

Ruchi Soya and Future Group entered into an agreement, under which Ruchi Soya will use its facilities to produce for the Fresh N Pure label in edible oil. ���The arrangement gives us a national network for our brands like Nutrela, Soyam and Sunrich through Big Bazaar and Food Bazaar outlets,��� says Ruchi Soya Industries head (business development) Amrita Shahra. ���We are looking at aspects like geographies and scale. It���s still very preliminary,��� adds Ms Shahra on the possibility of creating co-branded private labels.

Magnet stores MD Ashok Maheshwari says private labels in foods will be a big focus for the firm in the future. ���Quite a few companies have come to us and we too have approached them. Co-branded labels could hit our shelves within the next six months if talks are successful,��� says Mr Maheshwari. Both manufacturers and retailers are realising that modern trade is enabling segmentation of target audience. Thus the dedicated catchment provides the opportunity to introduce new labels, in which both manufacturers and retailers stand to benefit.

���Through collaboration, manufacturers can utilise their resources better, while for retailer it���s one more product on the shelf which could bring additional margins,��� says Spinach CEO Dippankar Halder. ���Brands can be created, where the ownership rests with the vendors. While the brand gets distributed across regular trade, we also distribute it in our retail outlets. Similarly, co-branded labels owned by us but distributed across the trade is also possible,��� adds Mr Mall.

However, talks about possible alliance so far is taking place between smaller FMCG companies and retailers. Bigger FMCG companies, retailers say, so far haven���t evinced any interest. Marico VP (marketing and sales) Saugata Gupta says for FMCG companies with well-established brands, co-branded labels doesn���t make sound business sense.

���It���s an option when one doesn���t have any differentiation in the brands. But if one has a low-focus brand then co-branding is an option,��� says Mr Gupta. Maheshwari of Magnet stores says co-branded labels will work more with regional FMCG players who are looking for a national presence. ���If they get into co-branded labels, then it will squeeze their main brands on the shelves,��� he adds.