You may be a brand aficionado, but if a product is about 50 per cent cheaper in a department store, you'll be tempted to check it out. If it is a big-ticket expense like a convection microwave and the private label is Koryo, which is backed by the reputation of the Future Group's Big Bazaar, you may even want to buy it. But will it be a better deal than a Samsung or an LG?
Yes, say the discount stores that are aggressively marketing their in-house brands of electronics. "It's very profitable as margins in private labels are about 30 per cent compared with just 10 per cent earned by selling other brands," says Anil Rajpal, VP and head of retail practices, Technopak. Little wonder then that even expensive products like air conditioners are available at discounted prices along with the frills of freebies, scratch cards, etc. The consumer's worry: does the low price mean poor quality?
Kishore Biyani, managing director of Pantaloon Retail and group CEO of the Future Group, rubbishes this perception. "Customers don't buy our in-house brands only because they are cheap. They are assured of quality too," he says. He backs the claim with numbers: Koryo, Big Bazaar's electronics brand, comprises a tidy 18 per cent of the total sales in this category.
"It is not in the stores' interest to sell sub-standard products. This is disastrous for the labels' long-term prospects and also affects footfalls as in-house brands are the only exclusive offering by these stores," says Rajpal. Much of the price difference can be attributed to a combination of manufacturing, retailing and low distribution costs.For quality assurance, Vishal Retail's group president, Ambeek Khemka, points to the ISI mark, the bill and warranty period on their home brand, Zline. Croma claims that its products are sourced through its partner, Woolworths, which has stringent quality standards. Biyani says that the Koryo range is manufactured in the same factories that produce items for leading brands. "All electronic items pass through external agencies of quality control. So there is no question of compromising on quality," he adds. However, Koryo is yet to get an ISI mark like Zline.
What about the after-sales service? Leading brands such as LG have their own infrastructure. So do Croma and Zline. Koryo has outsourced it, but Biyani claims that customer service is "strictly controlled". As these in-house brands are only a few years old, not much data is available on the quality of their after-sales service. "We can't say whether private labels rate higher or lower on repair and maintenance services. People usually rely on word of mouth for such issues," says Rajpal.
So, is it too early to rely on private labels as far as electronic products are concerned? After all, not only are you spending big bucks, but the products have a long life and require engineering care once in a while. As far as the quality of components is concerned, you cannot conduct a check even for an LG or a Whirlpool. You need to exercise due diligence for both private labels and leading brands. For instance, if it is an air conditioner, check the star rating, ISI mark, features that conserve energy, etc. Ensure that you get a proper bill and that the warranty period of the product is at par with other brands.
Leading brands let you register your product on their Websites and provide online help, which home brands are yet to do. So, for aftersales service, you must find the contact details of the service personnel and the approximate time it will take to address your complaint
Even if you are assured on all these aspects, private labels fall short on the aspiration scale; a Bosch scores way more on snob value than a Zline. "This is true only for people who have used a particular brand. Entry-level buyers are brand neutral and are open to trying lesser known ones," says Rajpal. He adds that though the market is nascent, one should not bypass inhouse brands completely. For, in terms of cost, they are sure winners.
The bottom line: if you are looking for functionality rather than flaunt value, home in on in-house brands.