Geant plans major push with own label brands

Pricing, promotions and ambience will also help set it out from competitors, says Retail Arabia, holder of the Geant franchise in the Eastern Gulf.

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By  David Ingham Published  March 11, 2005

Geant intends to promote its own label brands in a big way when it opens its first UAE store within the next few months. Own label brands have so far failed to take off in the region, but Geant is confident that regional consumers will start to embrace them as they have elsewhere if the products are properly presented and promoted. “Critical mass is the key reason why own labels haven’t taken off,” says Mazher Papar, director of Retail Arabia, which holds the Geant franchise rights for the Eastern Gulf. “Also, the market wasn’t developed to the extent where people needed to introduce them — they were making money on international products. Own labels come into play when the market gets competitive and people are trying to find a differentiation point.” Own labels have made a massive impact in Europe and North America, eating into the market share and, in particular, the profitability of major brand name suppliers. In the UK, for example, own labels now account for a 39% value share of grocery sales. In the categories where Geant has its own brands, the hypermarket offers two of its own products. One would be a ‘premium’ offering roughly equal in quality to the most expensive brand in that category, but significantly cheaper, whereas the other would be an entry level product, with a rock bottom price. Despite its keenness to push own label brands sourced from outside the region and the prospect that it will use its bulk buying power to drive down prices, Geant says suppliers need not fear the arrival of another international hypermarket chain in the UAE. “I think suppliers have realised that to do business with a hypermarket, you’ve got to work on volumes rather than absolute profitability on a particular product,” says Papar. “Yes, you do have tough negotiations, you bring down prices because you want to offer value to your customers, but when suppliers see that you have a professional setup and see that you will move the volumes you promise, they want to go along with you.” Peter Janho, general manager of Fine Hygienic Paper, which makes a range of paper products, views the emergence of hypers with mixed feelings. “When there is only one hypermarket chain, they can treat you badly,” he says. “When they know there’s more than one — now Geant is coming and there’s talk of Metro coming in — it will make a difference. People will behave differently.” On own label brands, however, he admits that, “If they are successful, it will be tough for us. Consumers are very brand oriented, but they would also like to go for cheaper products.” As well as promising a wide choice of own label brands, Geant aims to set itself apart from competitors through aggressive use of promotions and superior store ambience. Pricing will, it says, be competitive with what its competition can offer. Retail Arabia carries 65,000 products at its Geant store in Bahrain, which opened in 2001, and has around 200 products on promotion at any single time. “When a customers comes into Geant, he not only has the benefits of hypermarket mass merchandising, promotions and pricing, but he gets it all in a much better environment than what he might be used to,” says Papar.

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