Future of products: Technology and Private Labels


December 14, 2021 | By Shruthi Nair

The future is here, but it is just unevenly distributed. A visionary is someone who can identify these ‘future pieces’, bring them together and work with them. Of course, in a democratized world where people from different parts are coming out with their own versions of the future, it is difficult to keep track of what is a fad and what is really going to transcend the test of time.

In retail, if customer is king, then product is queen. Companies have already embarked on a journey of being product-led, by making exactly what their customers want, selling through their own stores, and also utilizing other third-party channels. Traditional labels of “retailer” and “manufacturer” will become obsolete as new business models emerge, with the success of a business depending on customer experience and loyalty, and strong products and services.

 

High-Tech

B8ta is one such unique concept, which relies on the model of retail-as-a-service and serves as a marketplace for distinct products that the world hasn’t been acquainted with before. While the concept was birthed in Silicon Valley, the first B8ta store outside the UAE opened in November 2019 in Dubai Mall as a joint venture with Chalhoub Group and has seen immense traction from visitors and customers.

“We have a commitment of bringing to the customers, products they will probably see for the first time. We are an experience-led retailer, which means the products are out-of-the-box, they are merchandised in a clean format, and alongside each product there is a tablet display that talks about the description, pricing, information, and history of the product,” said Ramit Harisinghani, General Manager MENA at B8ta.

B8ta is considered as one of the most high-tech futuristic stores in the world, not only because of the products but also because of the integration of technology within the store that facilitates convenient shopping journeys, records metrics in a unique and efficient manner and increases overall store productivity. “We don’t have cashiers and instead have integrated POS systems. The store is equipped with RetailNext cameras, so every experience you see inside is being measured. If you pass a product, it is an impression; if you spend more than 5 seconds, it is a discovery, if you do a demo, purchase the product or ask for inventor, everything gets recorded”, he said.

B8ta is currently hosting eight French High-tech products in a dedicated corner in their Dubai Mall shop. This exclusive showcase highlights disruptive French brands in the fields of mobility, entertainment, artificial intelligence, health, and education. It is an opportunity for tech enthusiasts and newbies from all over the world to discover, test and buy the most innovative and cutting-edge products in the b8ta Dubai Mall store or through their online platform.

As a concept, B8ta isn’t very curated and brings an array of products from makers all over the world for a period of 6 to 12 months. “As soon as the makers of brands sign up with us they get access to a marketplace where they are able to login, control the experience (change prices, run promotions etc), get the data to measure the experience and dig deeper by looking at the numbers and also get qualitative feedback from the store. In the past, some brands have used this data to try a new color, or a different way of merchandising. Because the system is so flexible, it allows us to experiment with different locations in the store etc,” he said.

“For a customer, the experience will always be new as you see new products and the store merchandised in a different way,” he said.

 

Private Label

While the affinity and curiosity for newer innovative products aimed at making life easier and more convenient for consumers as well as tech gadgets enticing them into an immersive virtual world is one example of a retail concept that evolved purely around innovative products, there is another trend that mass retailers have been seeing tremendous potential in. With the lines of traditional retail concepts, terminologies and demarcations of retailer-wholesaler-supplier-manufacturer blurring, many businesses are responding to the shift in buying behaviour and adopting private label products.

A private label product is one that a retailer gets produced by a third-party but sells under its own brand name. The retailer controls everything about the product including the specs of the product, how it’s packaged, priced and branded etc. 

According to a McKinsey survey of more than 2,000 US grocery shoppers, nearly one in five said they’ve bought more private-label products during the COVID-19 crisis than they did pre-crisis. The consumer shift toward private labels benefits retailers as well, since private labels are typically more profitable for them. Furthermore, high-quality private labels can gain a devoted following and become a powerful driver of customer loyalty to the retailer. Private label is currently more prevalent in grooming and personal care, food and grocery, clothing and so on.

While the shift to private labels gained momentum like never before during Covid-19, as many consumer-packaged-goods were disappearing due to panic buying and supply chain issues, the trend appears to be here to stay as both consumers and retailers are seeing the many benefits it brings with it.

The fact that private labels are frequently cheaper than national brands makes it attractive for customers. On the other hand, since private labels are typically more profitable for retailers and high-quality private labels can gain a devoted following and become a powerful driver of customer loyalty makes it a great value-add for retailers.

Lulu Group recently announced that it is close to signing a major private label manufacturing agreement with Olam International, a leading food and agri-business multinational, which manufactures coffee, dairy, rice, spices, and herbs as well as premium organic offerings.

 “We are near agreement on Olam International delivering what we want and will sign the deal shortly,” said Shamim Sainulabdeen, Director Private Label, Lulu Group International.

Vinod Kumar, Sisodia, VP of Olam International Limited said the major increase in online food deliveries highlighted opportunities where branded restaurants could team up with manufacturers and retailers to sell their own branded ready meals.

“There has been a massive behavioural shift among consumers who now want to know where products are made, what they are made from, and by whom, with detailed information on the macro ingredients of products and the carbon footprint of the process,” he said. “This is an area that private label can cater to,” he added.

 

Liwa Trading has also capitalized on the benefits of own-label products, especially since the pandemic. “The pandemic made us look very closely at all elements of our business and we made huge strategic changes early in the year. Primarily, we are a franchise business. The pandemic made us look closely at the individual models of business we’ve got, as a result of which we made the decision to do more own labels,” said Mark Tesseyman, CEO of Liwa Trading.

Given how successful and efficient private labels have proven to Liwa, the company made a drastic shift in their business model. “It gives a whole new growth strategy. In 2021, only 65% of all units we sell are actually bought by us compared to 2019-20, where 90% of our products were from a franchisor.”

“The problem with franchising is that if the franchisor gets a cold, then you get the flu, and much worse, as you are an output for their input. We struck deals with some of our franchise partners to say that we think that we can get the product quicker than you can. So we worked collaboratively with them to source the products,” he added.

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