When retailers try to develop products with their own brands

It is a growing tendency that supermarkets are trying to market the product lines with their own brands which always have low prices. Retailers believe that in the next three years, there will be one product with their own brand out of four products available at supermarkets.

Retailers try to develop their own brands

Metro Cash & Carry Vietnam, the foreign distributor who came to Vietnam in 2002, is considered the pioneer of the tendency for retailers to develop the products with their own brands.

It now has six brands: including Aro (low cost essential food and non-food products), Fine Food (food products), Fine Dreaming (non-food products and houseware like tissue or cosmetics), Horeca (the products for kitchen), H-Line (products reserved for restaurants, hotels like cream, coffee, bathing gel and towels, and Sigma (office equipments).

Vietnamese Co-op Mart Chain of Saigon Co-op has also marketed products with its own brand. According to Nguyen Thanh Nhan, Deputy General Director of Co-op Mart chain, which now has 50 supermarkets, Co-op Mart began marketing the products with its own brand in late 2003 and early 2004. The retailer has set up a division specializing in researching and developing its own brand.

Meanwhile, Big C has announced that it will launch into the market the products with Big C brand in May. Pascal Billaud, General Director of Big C, said Big C brand products will have the quality equal to the products of the same kinds with other brands, but will have the sale prices lower by 15-30 percent. Prior to that, Big C also has other 250 products with its own brand, produced by Big C Fresh Food Production Center. Also, the retailer has also imported the products with brand “Casino” of the parent group to sell on the domestic market.

Vinatex Mart, the distributor of garment products made by subsidiaries of the Vietnam Textile and Garment Group (Vinatex), has also been trying to develop Vinatex Fashion, the brand of its own. Vinatex designs the products, provides materials and outsource to producers.

Quynh Ny, representative of Vinatex Mart, said that in 2011, the retailer plans to launch four more product lines into the market which will have sale prices 10-20 percent lower than the products of the same kinds in the market.

Even Lotte Mart, the foreign distributor who has joined the market recently, has also been trying to develop products with its own brands. Lotte tries to introduce products which bear special characteristics of the South Korean culture and trying to exploit the advantages of the parent group.

Tran Anh Tuan, an expert in marketing and branding, Director of The Pathfinder, said that developing brands of their own proves to be the essential need of retailers. Launching products with retailer’s brands is the way the retailers can follow to attract consumers and compete with producers thanks to reasonable pricing mechanism.

Tuan said that in the current context of high inflation, developing their own brands should be pushed up by retailers who try to satisfy the demand of consumers. It is clear that low cost products will sell better now, when consumers are trying to seek to purchase cheap products to cut down expenses.

The big challenge for producers

Analysts have commented that the appearance of retailer brands on the market has become a threat to producers. In the competition with producers, retailers have many advantages: they have information about the sale and the tastes of consumers; therefore, they can design the products which can satisfy consumer demands.

Luong Van Vinh, Director of My Hao Cosmetics Company, admitted the big advantages retailers have. “They will display their products at “good positions” on the shelves which help catch the attention from customers,” Vinh said. Meanwhile, retailers do not have to spend money on marketing and advertising their products.

Pham Thi Xuan Huong, Deputy General Director of Ladopharm, a pharmacy producer company in Lam Dong province, admitted that the sales of the products made by Ladopharm have decreased since a distributor – the partner of Ladopharm – launched its own brand.- TBKTSG

Tags: vietnam retail industry, Vietnam retail market