Festive Push: Retailers Bet Big On Private Labels To Boost Sales

India’s retail giants are prioritising private labels ahead of the festive season, hoping to turn around sluggish sales after months of slowdown.

Retailers including DMart, V-Mart and Shoppers Stop are ramping up focus on their own brands, or private labels, which are increasingly getting more popular as inflation weary shoppers hunt for bargains. These labels — stealing the spotlight on store shelves from big names — aren't just cheaper but offer higher margins, making them key to shore up profits.

High-quality private brands now line up on shelves offering consumers a distinct sense of exclusivity, said Shoppers Stop Chief Executive Kavindra Mishra, adding that its private label business accounts for 18% of its apparel sales and grew despite rationalisation over the past 18 months.

"We're now focusing on a sharper private brand strategy... It's very important that not only these brands are able to fill the spaces available through the gap of the national brands, but also, they help us to deliver higher margins. So that is something which we have been working on."

The trend extends beyond apparel and fashion into fast-moving consumer goods as well, where retailers have fairly expansive portfolios.

The data underscores this shift: DMart's private label sales through Align Retail Pvt. more than doubled over two years to Rs 3,322 crore in FY25.

The supermarket chain follows a 20-20-20 thumb rule for its private label expansion. It has to win 20% market share from the main brand, has to be 20% cheaper than the main brand and should yield 20% additional profit.

The management now views private labels as an opportunity to improve margins even as they downplayed their focus on these labels in the past.

DMart’s rival Tata Trent Star Bazaar has built a successful private label category which has more than doubled its revenue to Rs 2,699 crore in FY25 from Rs 1,798 crore in FY23. In categories where private labels are offered, they now contribute 70% of sales, up from 60% two years ago.

V-Mart's own brands now comprise 64% of its apparel sales in FY25, up from 33% in FY23.

Early festive sales signals private labels are outperforming expectations, said industry executives. Retailers are not only dedicating more space but also enhancing promotions on private labels as they seek to boost sales.

Analysts say that many consumers are buying private labels without even realising it.

"In several cases, the packaging appears to be very close to the leader brands in a bid to induce customers, especially the price conscious ones, given the discounts," Vivek Maheshwari of Jefferies said in a March 6 note.

Maheshwari expects these typically retailer-exclusive products to gain popularity, though consumer acceptance may differ across categories.

"Our recent market visits highlight private labels have been increasing their presence led by the rise of modern trade in urban India," he said. "With distribution likely to consolidate further, we expect this trend to pick up as leader brands are challenged by smaller brands and own labels. We see a fight breaking out between producers and distributors at some point."

However, consumer acceptance is not easy and takes time, Maheshwari said. Typically, categories like home care and everyday staples tend to gain traction more quickly than packaged foods and personal care items.

According to the latest EY Future Consumer Index, 52% consumers are switching to private labels, with 70% agreeing that these brands are increasingly providing better quality products. Retailers also appear to be responding to this shift, with 74% of consumers noticing more private label options where they shop and 70% observing more private label items positioned at eye level on store shelves. Additionally, 69% of consumers said private labels help them save money, the EY report showed.

"Consumer behaviour has traditionally evolved in response to changing economic situations, but the current shifts appear to be more permanent," according to Angshuman Bhattacharya, partner and national leader, consumer products and retail sector, EY-Parthenon. "Retailers are confidently launching private labels and allocating prime shelf space to them. The rapid growth of private labels is further evidenced by the rising popularity of fresh, new brands among consumers."