India's organised retail story has just begun

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The end came after months of a tense stand off. Hectic talks and parleys between the two parties, sometimes muted and sometimes threatening led
to a nought. Finally, the Kellogg’s brand was pulled off the shelves from 148 Big Bazaar stores.
“We pleaded with them to listen to us and understand the issues. At the end, it was a futile exercise and some what humiliating to go to them again and again,” a senior official from the Future group says, commenting on the imbroglio. When Big Bazaar banned Kellogg’s, it replaced the counters with its private label Tasty Treat corn flakes on the shelf.

The claim by Big Bazaar officials so far on the off take of the private labels performance vis-a-vis Kellogg’s is encouraging. If Big Bazaar with its strikingly similar colours and packaging to Kellogg’s packs is able to entrench itself in the breakfast cereals category, it will open a new chapter and another front between the fledgling own labels programme of retailers and national brands in India.

The Kellogg’s-Big Bazaar fracas indicates that the working relationship between retailers and brands will remain a stormy affair. Both parties will test each other to assess the strain one can take in this battle for shelf space. Even as officials at Future group claim that Kellogg’s refused to acknowledge the reason behind the increase in margins which the retailer was asking for, Kellogg’s response is it didn’t make business sense.

“We can’t accede if they ask for the moon,” the Kellogg’s executive states. He adds that even Carrefour, Wal-Mart in developed markets never remove market leaders from the shelves and terms it as an “unnecessary show of strength”. Industry observers call this tussle as a natural progression as both parties are trying to settle into a marriage. “Even today modern trade constitutes around 4-5% of the total trade serviced by national brands. So brands were not looking at it seriously, where as retailers after tasting blood with private labels feel emboldened,” says Asitava Sen, director, business consulting, The Nielsen Company.

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