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Calcutta, May 30: Organised retailers are expanding their private label portfolios to push margins.

Private labels are brands owned by the retailers themselves, priced at least 5-20 per cent less than manufactured brands.

According to industry estimates, profit margins in private labels range from 15-20 per cent in FMCG products, 20 per cent in electronic goods and 30-70 per cent in apparels.

Retail chains in India are looking at a 20-40 per cent growth in their private label sales to boost bottomlines and bridge the gap in their product mix.

Devendra Chawla, head (private brand) of Future Group, says margins are higher in private labels as the products are directly sourced from the manufacturer and do not involve intermediaries such as clearing and forwarding agents, stockists and distributors.

According to Mohit Kampani, vice-president of Spencer’s Retail, by saving 20-25 per cent in supply, distribution and marketing, private brands offer more value for the same quality.

The consumer also gets better deals in terms of pricing, Kampani added.

For Bharti Wal-Mart, which is looking to create a house of brands, private labels will be an area of thrust, a spokesperson said. Private labels are a major revenue earner for the global retailer.

In India, Bharti Wal-Mart has two brands — Great Value in food and grocery and Equate in household drugs and pharmaceuticals.

Bharti is eyeing a 30-40 per cent growth in its private label segment in the next five years. At present, private labels contribute 8-9 per cent to its revenue.

Future Group plans to have around nine brands in FMCG and food by the end of the year. It is also expanding its men’s grooming range with John Miller and working on more ready-to-eat snacks under Tasty Treat.

The group, which has nearly 300 products and 25 categories under its private brands, draws 15-40 per cent of its revenues from the segment.

Spencer’s is also planning to enhance its portfolio over the next 18 months. At present, it has 20 brands.

“We will also add about 2.75 lakh sq ft retail space by that time,” Kampani said.

“At present, about 15 per cent of our business come from private labels. The target is to garner 30 per cent over the next 18 months.”

Reliance Retail has restructured its growth and brand strategy for the value format business. The company sells its private label products through kirana stores.