Lately, private label products have made a tremendous effect on the U.S. market, affecting almost everyone, from producers to retailers to consumers. Private label items are products whose name or brand solely belongs to a certain retailer (e.g. Wal-Mart and Marks & Spencer). Let’s say that you’re in a grocery store. Initially you see all those gourmet sandwiches with brands that have been familiar to you. Then you head to Marks & Spencer and lo and behold, now they’re selling exactly the same form of sandwiches too!
Private label products have cultivated significantly in Europe, especially in the Western half, and now it’s making its mark in the United States. Private labels may be divided into sub groups: private label store brands are products where the retailer’s name is a strong factor in its packaging and marketing aspects; store sub-brands are products whose link with the retailer is minimal; umbrella branding is a strategy where a retailer uses only one private label for different product categories and finally you can find individual brands in what type private label is accorded to at least one product type.
The advantages are of course numerous, to all or any key persons involved. For the retailer, one of the most obvious pros will be the increase in sales. And since it’s their particular private label, the retailer then has got the freedom to produce a unique marketing strategy, have more control over its stock inventory and possibly use it also to get a far more positive image to the public. And with an optimistic image, this might of course cause stronger customer loyalty. Naturally, having an exclusive label for one’s products would mean investing a bundle therefore the retailer must make certain that it has got the capital required for this type of venture. Secondly, many people still view private label products as something synonymous to lower quality products so this is another issue that the retailer must attempt to combat as they launch their new line.
For producers and suppliers, the features of producing private label products for a retail company is less visible but nonetheless present, nonetheless. For starters, they eliminate all the entry barriers a producer usually faces as they fight entering a market because they’re supplying straight to the retailer itself. Secondly, for cash-strapped suppliers, manufacturing private label products will let them enter greater and higher end markets. The downside of most these of course is when the item doesn’t perform as expected. Low profit could then affect the partnership involving the supplier and retailer.
For the customer, the advantages and disadvantages are almost equal. Most private label items are cheaper than branded products. This will, of course, translate to lower expenses for consumers, something that everyone would without doubt welcome. However, if the quality of the item is sub-standard, as some private label items are, maybe you’re not getting the most effective of the deal as you’ve originally thought.
At the end, everything comes down to quality. Since price-wise, private label products have the upper hand, the sole ace branded products have in their sleeves will be a more superior quality. But when an exclusive label product is backed with a reliable retailing company, the quality is usually corresponding to those that are branded. All you’ve got to accomplish is to CHOOSE WISELY.