December 19, 2008 | Business Standard
Tata's Croma finally launches private labelAfter two years of research and development, Croma — the consumer electronics retail chain of the Tata group — has finally launched its private label ‘Croma’.
The company has identified niche lifestyle products such as wine cellars, foot spa among others to break into the Rs 32,000 crore consumer durables space, besides having mainstream durables and appliances such as air-conditioners, irons and vacuum cleaners. Croma is targeting a 20 per cent sales contribution from the private label.
“After a stringent selection process of sourcing and quality testing and having identified certain unique lifestyle products, we have finally launched our private label brand Croma,” said Ajit Joshi, CEO and managing director of Infinity Retail, a 100 per cent subsidiary of Tata Sons, which runs Croma, adding that, “In the long term will compete with national brands and hence it may account for 20-25 per cent share of the product mix.”
Croma will continue to add products to fill the gaps in price points and categories and may also look at exporting the brand.
The Tata group has a small presence in the durables sector since it manufactures air-conditioners under the Voltas brand. A private label, on the other hand, involves outsourcing or importing the manufacturing while owning the brand, distribution, pricing and after sales services for the brand. In Croma’s case, the products are being imported from places like Hong Kong and Shanghai under a partnership with Australia-based Woolworths.
A private label allows higher profit margins to the retailer as supplies can be managed at lower costs. Given the slowdown in the economy, Joshi feels that the time is right to launch the private label as consumers have taken to more value-for-money products. The products have been aggressively priced - a rung lower than the market leader - but at par with other brands on offer.