Vishal Mega Mart’s (VMM) private label strategy in FMCG (~27% of revenue) has been important for its success story, redefining value for consumers. Our primary research outcomes: 1) High presence of large-pack SKUs and 2) reputed manufacturers for its private label brands. Both these features imply its focus on consumers seeking true value in FMCG by purchasing large packs private label brands without compromising on quality. Importantly, this allows VMM to acquire new consumers for its other more profitable categories (apparel and general merchandise). With its valuepricing strategy, led by focus on private labels (~73% salience), lean cost structures, efficient supply chain and loyal customer base, VMM is well placed for sustained profitable growth. BUY
Our on-ground checks suggest VMM has got its private label strategy in FMCG (~27% of revenue) right, providing value to its customers, a key driver for its footfalls and new customer acquisition for other segments (general merchandise and apparel). We noticed two unique features in its FMCG segment: a) SKUs were mostly large packs meant for monthly/longer consumption at competitive prices implying focus on consumers seeking value, and b) reputed manufacturers (specifically in foods) for its private label brands provide quality assurance to its customers, a key driver for private label adoption. These reasons, in our view, are key drivers for VMM’s private label success in FMCG, implying higher salience (~30%) and relatively higher gross margin vs peers in FMCG retail.