Myntra makes way for private labels while cutting discounts

Not so recently, Flipkart announced its plan to reduce dependence on smartphone sales by focusing on private brands. The e-commerce biggie is in the middle of developing exclusive products across various product categories, which would go live before the 2017 edition of annual Big Billion sale.

Now we hear that Flipkart-owned Myntra is going to follow the same strategy. The only difference is that Myntra wants to get rid of discounts by placing more emphasis on private labels.

Like parent, like subsidiary

Myntra’s CEO Ananth Narayanan believes that utilizing precious funds to enhance own-brands and technology makes more sense than pouring it down on discounts and promotional activities. Myntra is also on track to grow sales by about 40-50% in this financial year, chief executive Ananth Narayanan said in an interview.

Reiterating the fact, Narayanan said,

“Instead of increasing spending only on marketing and discounts, we have decided to invest more in technology and brands. These will help us build moats and improve the bottom line.”

The allure of private brands has captured many e-commerce companies’ attention. Be it e-commerce giant Amazon or niche fashion retailer Koovs, all are investing heavily in developing their own line of products. And rightly so, because it allows retailers to earn fat margins, operate on their own terms, modify product offerings and maintain control over quality, quantity & delivery.

Offline retailers like Shoppers Stop too has started concentrating on their own brands as it helps to drive the online customer base to their shopping site.

Won’t turn into private labels etailer, says Myntra

In spite of the many benefits of own-labels, fashion etailer Myntra wants to strike the right balance between private and national brands. The company understands that established brands have a higher customer pull and diverse product portfolio is essential in today’s competitive business environment.

We want to cap the contribution of private labels to a third of our overall business. We want to keep our identity as a multi-brand retailer and not turn into a private label business”, said Narayanan.

Myntra had launched its Brand Accelerator programme last December. It bought a majority stake in HRX, a clothing and shoes brand launched by actor Hrithik Roshan, from Exceed Entertainment last August.

The company will do “many such deals” this year, Narayanan said. Its private brands, which include Roadster, Dressberry and Anouk, will contribute about 30% of overall revenues by the end of the year from 23-24%, he said.

More full-price sale events on the horizon

In order to reduce dependence on discounts, Myntra experimented with full-price sale. As customers equate sale with discounts, the etailer failed to touch its revenue target of Rs. 100 crore. But this hasn’t dissuaded Myntra from hosting similar events in the future, albeit with few changes.

Narayanan disclosed,

“One of the things we learnt from the full-price sale was that you need to have a lot more high fashion and exclusive merchandise. That’s what customers are looking for when you ask them to pay full-price. Another thing is, the sale should be longer. Because a full-price purchase won’t be an impulse purchase, customers like to browse and delay the decision. They want to come back later and see if they feel like buying it.”

Now what remains to be seen is if this no discount policy will affect the sale or will the established labels keep the consumers happy?

Source : Livemint.com

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