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PRIVATE LABEL BRAND INNOVATIONS
Building private labels also allows retailers to make uniquely featured products for premium pricing or to produce commodity products to profitably price below brands. Retailers are also leveraging private-label strategies to accelerate their product rotation.
The Benefits of Private Label
Higher gross margin is the main reason private label lures many fashion and apparel brands, however, there are many advantages which include:
- High profits
- Cost management
- Price management
- Brand loyalty
- Agility to respond to trends
Retailers and Private labels
Private label continues to be a winning growth strategy for retailers.
Per Nielsen, private-label brands in the U.S. grew three times faster than national brands towards the end of 2017. Treehouse Foods, a leading private-label manufacturer, has doubled its revenues from $3 billion to over $6 billion in just four years.
Amazon and Private labels
These are also the reasons why Amazon has created hundreds of private label brands the past few years.
That is why Cadent Consulting Group predicts that private labels will “steal” as much as $64 billion from the nationally advertised brands in the next ten years, rising from 17.7% of the CPG/food market in 2017 to 25.7% in 2027.
For an Indonesian retailer with a listed retail chain we created over 10 private label brands and over hundreds of new products including packaging and manuals, retail visual merchandising styles and marketing set-up e.g. social media, copywriting, guide books, etc.
Insights: Benefits of Private label brands
- High profits – Higher gross margins lead to higher profits.
- Cost management – Accurate directions on what components and raw materials are given by retailers to the contract or third-party manufacturers. Sticking to these directions is mandatory in most cases. This approach allow retailers ensure total control over cost and quality.
- Price management – When retailers cost control with price control, they can successfully manage profitability.
- Brand loyalty – This is both a challenge and an opportunity. It represents a fundamental change from private label’s initial business goal but also presents the opportunity to grow brand loyalty in a way that branded products do not. The reason lies in the fact that private label products are exclusively available in the store that produces them.
- Agility to respond to trends – Agility relates to fast response and flexibility. Since retailers have greater control over their brands, they can innovate and change faster. With trends in fashion changing so rapidly, it is a challenge for retailers to keep up with the fast pace. Having full control over the design of a garment, combined with the right supply chain technology, gives retailers the greater agility to stay on top of customer demands for the latest trends.
OUR LATEST WORK
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