There Will Be An Interesting
Inter-Play Between Retailers & Suppliers

The top 5 retailers by 2013 are likely to have private label scale by volume and value – for many consumer product categories – comparable with the total size of main consumer product companies. In the retail channels of such retailers there will be limited chance for companies whose brands are not the top 1 or 2 as they will be forced to “buy” shelf space at greatly increased margin for the retailer thereby eroding their own profitability. Consumer Durables, Electronics and Lifestyle brands likely to be the only ones remaining somewhat immune to the challenge from retailers’ brands.

Collaboration of branded companies with top retailers foreseen Apart from the onslaught of retailer brands, consolidation will lead to majority of the channel space being shared between a few retail giants. In such a case, when each such retailer amounts to a substantial portion of the sales of branded goods companies, each such retailer will need to be granted special status as a priority customer as well as partner by the branded goods companies. The bargaining power exerted on suppliers is best epitomized by the case of Wal-Mart in the US where suppliers are driven by the company to adopt best IT practices and lean manufacturing principles to squeeze the margins even further. In this scenario branded goods companies in India will have the following opportunities to collaborate with the top retailers.