Private labels explode as consumers purge their closets



In the household cleaning supplies aisle at Walmart, you’ll find a famous brand bleach spray cleaner that sells (as of this writing) for $ 3.28. Not too far away, with a keen eye, you’ll find the same-size vaporizer with Walmart’s private label Great Value for 98 cents.

A recent search on Amazon for “men’s oxford dress shirts” returned, at the top of the page, the sponsored listing of a famous brand for their shirts, priced at $ 30 to $ 40. Scrolling down, the same product under Amazon Essentials’ private label is listed for around $ 20.

Private labeling was already a staple of big box retailers before the pandemic, for retail giants like Walmart and Target, and for major niche players. In 2018, Urban Outfitters said more than half of its business was generated by private label products.

Today, driven by supply chain disruptions, financially abused consumers and rampant inflation, the future of private labeling seems to have arrived just about everywhere, and in some unlikely categories. For example, Walmart just launched a private label drug, an insulin analogue for diabetics, which is up to 75% cheaper than the competition and only available in the company’s 5,000 or so pharmacy departments. .

Customers are cheering, according to a survey of 2,000 US consumers last year by Daymon, a private labeling consultancy based in Stamford, Connecticut. Daymon reported that more than 80 percent rated private labels as good or better than equivalent branded products.

Turns out COVID-19 may have been the perfect storm to muddle the rules in retail and a powerful stimulus for a private label boom, especially in apparel. The pandemic has done what billions of marketing dollars could never do. Consumers are getting rid of their tired and old-fashioned clothes as well as those made unusable due to increased waistlines. According to a recent Associated Press report, we are in the midst of a “pandemic clothes purge”. The clothing market looks set to explode, and the clothing resale category has already.

The biggest challenge for retailers appears to be sudden disruptions on the supply side. Not only did inbound cargoes from Southeast Asia flooded our main ports awaiting unloading, but a mega-ship stranded in the Suez Canal in March and the traffic jams it caused caused recalled the risks of such long supply chains, especially for -labeling goods. From grain to disposable diapers, interest is now high in on-shoring and near-shoring – doing things here, or near here, instead of there.

Wherever supply chains begin, the relationship between retailer and private label source becomes a low-key issue for managers, says Michael Taylor, president of Daymon. In a recent column on the the Wall Street newspaper, he said his company looked at a representative sample of US retailers and determined that “those with long-term supplier relationships have outperformed their competitors by up to 30% in terms of movement of products on the shelf. Even in times of distribution difficulties, ”he said,“ these retailers still gained about 20% more dollar growth than the market average ”.

Private labeling is no longer just for mass market retailers. Machus is a specialty clothing store established 10 years ago in Portland, Oregon that intermittently experimented with private labeling. According to the information site Fashion law, Last year, owner Justin Machus “started putting more time, energy and budget into the company’s private label, and it paid off.”

Machus’ private label apparel appears on the store’s website alongside its branded products, offering customers “unique styles that complement the assortment of designer labels in the store at an affordable price.”

As the private label trend shifts from the ‘cheaper than the rest’ model to something much more sophisticated, the opportunity presents itself with another challenge for retailers who are used to leaving vendors like the fashion industry determine what’s hot and what isn’t.

This means investing in the same type of rigorous consumer research that brands do to guide their design and production decisions. It also means that retailers will be more exposed to the risks of missed opportunities and costly flops.


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