Private-label Goods, India and the Nature of Shopping

Private-label is a growing in India.  The slow but steady turn from small, family-owned retail and the growth of organized retail has helped shape the process, as has the growing wealth and infrastructure of the country. But the growth of private-label food brands has not been limited to large, organized retailers. Private label goods are finding their way into traditional markets. Increasingly, “loose” foods (food stuffs sold in bulk from bins, are finding themselves well-packaged under the store name, stacked neatly on the shelves next to branded products.

Traditionally, the appeal of loose foods over branded products stems from their perceived quality, authenticity and lower price. However, incidences of tainted food have created negative perceptions in the minds of shoppers for the loose foods, especially among those who are less price-conscious and more driven by quality attributes. Branded foods were once seen as having an advantage due to convenient packaging and guarantees of consistency and proportion. They have also come to be seen as safe.  And increasingly, quality of taste and ingredients have become major selling points.

To give more context, the “loose” format, traditionally sold in most Indian mom and pop stores, includes foods like rice, flour, sugar, salt, spices, lentils, etc. Lacking abundant shelf or aisle space and a smaller client base that typically has less storage space in the home, they are bagged by the retailer for each order. Small scale processes for CPG goods has become is seen as a great opportunity for the people supplying the goods.  In addition to representing new sources of revenue for the manufacturers, this solution gives the store owner better margins than that of branded products. It also helps build a brand equity for the retailer, helping shoppers overcome negative quality perceptions associated with loose foods.

Perhaps most importantly, it also offers up the appearance of greater choice to consumers, providing an increased sense of status, democratizing food consumption across socioeconomic class.  The result for the retailer is to differentiate themselves from other small grocers by providing greater access to less expensive branded products that are not traditionally sold at other such stores.

So what does it tell us?  It tells us that marketing and selling products in India is much more complex than it is in the West, where the mom and pop store has largely become a destination for the relatively affluent and mechanization defines our palette.  It may seem trivial, but it signals that when thinking about branding and selling in India, we have to completely rethink the paradigm of grocery shopping (or any kind of shopping, for that matter) and understand the system in which goods are marketed and sold.  You don’t get that from spending a week observing shoppers in India, you get that from learning how things like work habits, labor divisions within the home, neighborhood structure, views about food preparation, etc. all play into the shopping experience and building your brand with a different worldview in mind.

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One thought on “Private-label Goods, India and the Nature of Shopping

  1. You are bang on when you say “You don’t get that from spending a week observing shoppers in India”. Being a native and having done some consumer research I have seen the complicated nature of choices made by an Indian consumer. As you rightly pointed, the ‘loose’ market is extremely big in India and is mostly relevant in food & beverages category (acc to me). One of the big reasons for that would be perceived quality and the fit!! Consumers feel by buying smaller grammages they would be stocking fresher products!! Also, these loose products often tap the right potency.. For eg in Tea; the loose brands perfectly match the taste bud of the consumers in that locality thereby consumers preferring these versus the well known brands (whose strategies are at most region specific but not locality specific!)

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