Why Retailers Need Their Own Private Labels

The rise of the private label is rippling across the retail world. Once seen as cheap knock-offs of better-known brands, owned brands are popping up (and holding their own) all over the place, from Amazon to Target to Macy’s.

From a consumer perspective, this trend makes sense. Millennial and Gen Z shoppers – the primary drivers of sales today – have different perceptions of quality than their parents. They care less about big name brands and more about fair pricing, transparency, and a seamless shopping experience that speaks to their values.

But what about retailer-side? In fact, there are tons of financial, operational, and marketing benefits to selling owned brands. Below, check out some of the reasons retailers need their own private label.

With a private label, retailers can:

Boost Profit Margins

With owned brands, retailers cut out the middle man. There’s no more need to hike up prices to offset the costs of selling another brand’s merchandise.

What does this mean for retailers? They can sell private label products at lower prices. This doesn’t just attract more customers and boost brand loyalty. It boosts profits overall, leaving both consumers and retailers with fuller pockets and sparing resources to be better spent on design, quality, and marketing.

Build on Customer Trust

Retailers have already done the hard work of building a trusting customer base. With owned brands, there’s no need for extra marketing to inform and attract the public. Customers who already know and love your brand are already bought into your private label, which cuts out tons of marketing effort (and costs).

Remain Competitive

As big names like Amazon further embrace direct-to-consumer models, or “retailization,” it’s more important than ever to stay ahead of the competition. In other words, it’s hard to keep up in today’s retail world without starting a private label… because everyone else is doing it.

In 2017, private label manufacturing grew at least 26% from the previous year. It’s clear that in today’s retail landscape, growing an owned brand is a crucial way to protect market share and remain competitive.

Improve Control over Marketing and Branding

Cutting out the middle man doesn’t just protect and boost profits. It also gives retailers greater control over their products’ marketing and branding.

First, retailers can build on the foundation their brand has already established. Then, through owned brands, retailers can extend that messaging, creating the conscientious, seamless shopping experience today’s consumers crave. No more worries about off-message products or PR disasters brand-side.

React to Trends Quickly and Flexibly

With a private label, you not only have more control over your branding – you also have more control over supply chains. Owned brands give retailers the opportunity to either bring design, sourcing, manufacturing, and distribution in-house, or at least have the final say on who fulfills those roles.

With full control over your supply chain, you’re then free to seek out the best tools for market research and production. You can focus as much energy as you need on data analytics and agile manufacturing, which lets you respond more quickly and flexibly to changes in market demand.

To learn more, check out our blog How to React to Fashion Trends Quickly.

Learn More with THE/STUDIO

One way to make the most of your private label is through access to factories with small batch capabilities and quick turnaround times, allowing for fast, flexible, transparent service end-to-end. To learn more about agile manufacturing with THE/STUDIO, visit our website today.