Private Brand Matters for Local Retailers
By Jane Han
Staff Reporter
Tide vs. Unknown: What's your pick?
Choosing a no-name brand over a top maker used to come off as being ``cheap'' and quality negligent, but nowadays these frugal shoppers are badged as wise consumers.
``Many warehouse stores are whipping out excellent quality goods ranging from food, drinks and clothes to so much more,'' said Jung Sun-hee, a public relations official at Samsung Tesco, the country's No. 2 discount retail store. ``If two products are virtually the same, why not buy the cheaper one?''
That's exactly what shoppers are increasingly doing.
Homeplus, operated by Samsung Tesco, currently offers about 2,000 private brand (PB) items and 18 percent of overall sales come from the company's original merchandise.
``Sales continue to rise, so we're expecting that 20 percent of this year's total sales will result from PB,'' said Jung.
Homeplus categorizes its PB into three categories _ Good, Better and Best _ so that consumers can pick and choose their own mix of quality and price.
``Good items have good quality with low costs, Better has top quality priced 20 percent less than the market average and Best goods have excellent quality even though the price may be on the up side,'' she explained.
E-Mart, the No. 1 retailer on the local front, also categorizes its private brands _ or what they call private labels (PL) instead _ where E-Plus covers food and other grocery goods, while E-Basic represents the retailer's original fashion merchandise.
``Starting from the 1997 financial crisis period, the PL market started booming because consumers obviously wanted better goods at lower prices,'' said Park Soo-beom, an E-Mart public relations official, adding that their private labels are priced 20 to 30 percent less than other national brands.
He added that E-Mart is moving to expand its PL market so that consumers can be offered a wider range of quality goods.
``About 10 to 11 percent of our total sales come from our PL, but with ongoing product development, we're optimistic that figures will go up,'' said Park.
Another mega retailer Lotte Mart has also recently beefed up its promotion of PBs with the introduction of its original name Wiselect (Wise + Select) that covers some 2,700 goods.
Mainly targeting consumers in their 30s and 40s, Lotte Mart has actively developed its PB line up to 12 percent of its total sales in 2006 from newly introduced merchandise.
``PB products not only have a lower price tag for customers, but it also leaves a bigger profit for the company because of the simplified distribution line,'' said Nam Chang-hee, marketing head of Lotte Mart. ``So it benefits both sides.''
While many leading local retail giants have lately been strengthening their private brands, experts say global players have done so much earlier.
``European retailers reap about 50 percent of their total sales from PB, so we still have some ways to go,'' said Jung at Homeplus.