The ABC's of Private Label
07.28.2010Whole Foods Magazine Online Gives the ABC's of Private Label and Interviews Co-Founder Steve Shriver!
"For the last few years, consumers have been reevaluating their buying habits, doing their research and looking for more value for their dollars. As a result, private label brands have seen an upswing in sales because of the value they offer. Karl Halpert, president and CEO of Private Label Select, Ranchos de Taos, NM, says, “Stores offering brand name quality at 20% to 30% below brandname pricing presents a powerful value to the consumer. We see this as a stable trend in good times as well as bad. A strong private label program also encourages store loyalty with the customer.”
"A: Appropriate Products
One of the biggest mistakes a retailer can make is to not take enough time to select the most appropriate products for their line. According to Sunil Kohli, COO of Health Plus, Inc., Chino, CA, “Retailers need to truly understand their specific loyal consumer niche. Is it baby boomers in the south? Is it more athletic and younger people? Is the store located in suburban towns with many young families? Each core group of customers has needs in common.”
"With all of the unique and important products the natural products industry has to offer, you may be wondering where to start in terms of with which type of product to start your line. Typically, vitamins and supplements seem to be the safest routes, as opposed to grocery or health and beauty care (HBC) products."
"Muhammed Khalid, president of Pro-X Nutraceuticals, Irvine, CA, notes,now “It depends on each retailer and its demographics as to which products to launch, whether health and beauty or food items.” Functional foods, he adds, are another growth category in the private label sector.
According to Lynn Betz, president and co-founder of Sensibility Soaps, Inc., Beaver Falls, PA, “Health and beauty are more risky because of the typically lower volume of sales in those categories and some consumer loyalty to national brands.”
Another issue are the minimums required. Russell adds, “When buying HBC and food, most often case quantities are required for purchasing and independents are not comfortable will all their cash being tied up in one reliancebrand’s inventory.” Lip balm or hand cream may be a more reasonable and affordable introduction into offering HBC products, as opposed to full hair care or anti-aging regimens.
Supplements, on the other hand, are very expansive and high-visibility items. In addition, says Steve Shriver, founder of Eco Lips, based in Cedar Rapids, IA, “Supplements are a much larger category, so it makes sense to start there. The demand for supplements has created such a competitive environment that minimums and pricing have become extremely low. This has given retailers the opportunity to reduce inventory costs while sharing the added savings with consumers, driving more sales.”
Read the Entire Whole Foods Market Magazine Article Online!