Reliance digital plans own label

Sangeetha G, Chennai
Financial Chronicle
Reliance Digital, the consumer durables arm of Reliance Retail, will launch its private label products within six months.

The store brands will be introduced in a variety of categories, including IT and telecom accessories, small kitchen appliances and consumer electronics, said Ajay Baijal, president and chief executive of Reliance Digital.

“The plan is to introduce private label products within six months, by which time we hope to attain a minimum scale of operation. In 2010, private label products will be available at the stores,” he said.

Private labels work well in categories that have a highly fragmented market and products in which customers look at prices rather than brand value, he added.

However, there are a few challenges in venturing into private labels. “When it comes to providing better prices, quantum of sales should be higher. It is riskier in products that have a higher brand presence and those which are subject to constant price erosion,” Baijal said. But, Baijal also finds opportunity in specific category products for better margins.

The company also finds the 10,000 sq ft to 40,000 sq ft-size stores as most viable among its formats and plans to have 150 such outlets over three years.

The other two formats – Express and iStore — carry more of technology products and cater to a specific group of customers, whereas large-format stores can have around 5,000 store keeping units, including consumer durables, he said.