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Russian Barriers To Private Label

February 15, 2013
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A new whitepaper from Schawk shows that the expansion of the private label industry in Russian is far from certain.

The paper, titled “Private Label in Russia: Tradition Trumps Innovation – For Now,” relies on observations from Hans Muysson, a vice president in brand development practice at Schawk Inc. It says that Russian private label products account for only 3 percent of store revenues, and says the country’s retail tradition doesn’t lend itself to the industry.

“There are few, if any, companies that manufacture only private-label goods, unlike in the West,” it reads. “Thus retail chains buy private label products from manufacturers that also produce national brands, and these producers only accept orders from chains that buy their national goods.”

It adds that many manufacturers won’t even sell to smaller chains because of the higher costs, and that Russian shoppers have been encouraged over the years to align with national brands and their heritage.

Some larger Russian chains have seen private label shares rise to as much as 15 percent the report said, citing a Moscow Times story, and a PMR report that it cited said some retailers are beginning to move into multi-tier platforms.

But clearly, Russian companies that want to deal in private label have much more to come up against than traditional Western retailers. It’s not merely getting customers to trust the quality of product, or leave their traditional brands. It’s about a change of culture.

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