Thomas, Ryan, “The Right Mix: Brands versus Private Labels,” Apparel, Feb’04, p. 30-33
Overview of Article
Department stores that may want to develop or expand private labels to replace lagging national brands should be aware of the downfalls as well as the benefits.
Private labels increase margins from 6-10% higher than national brands. They also allow for fashion garments to be reproduced the following season if they are still in demand. However, department stores risk opposition from national brands if such private labels create too much competition.
If private labels are to be expanded, they should be of higher quality than the norm. They should also be offered in a wide range of categories, to decrease advertising costs.
Article Summary
Department stores have traditionally used private labels on the selling floor as a way to provide a low-cost alternative to consumers. However, they may be expanding and developing more private labels to replace those national brands that have been falling behind.
Private labels are helpful to department stores because they increase margins. On average, private label margins are 6-10% higher than national brands.
Another benefit of private labels is one not offered by brand manufacturers. If a fashionable garment sells out fast in any particular season, ...
As the private brands may not achieve or maintain market acceptance these brands may provide the adverse results expected. Financial condition and results of operation can be negatively affected if pricing, quality and other factors are not up to customer’s satisfaction levels. With all brands sold by Dollar General there is the unfortunate shrinkage that may occur. Profitability may be negatively affected by inventory shrinkage and the inability to properly manage the inventory balances. Effective inventory management is a key component of Dollar General’s business success and profitability. If the company’s buying decisions do not accurately predict consumer trends, excess inventory will negatively affect financial results. Inventory turnover has improved and the company is aware and focusing on addressing all of these risks in the most productive way possible. The biggest risk that the company is facing from a consumer’s perspective is that their sector is highly competitive. Operating in a basic consumer goods market there is already a strain on margins, and low prices are necessary to stay competitive. This restriction on increasing prices may result in a loss when costs increase. The objective is to keep overhead, salaries, marketing and all costs to a bare minimal. Other competitors have saturated the geographic market where Dollar General once was
-Store brand name enables product to be accepted and adopted more easily by consumers because of brand recognition
In Herman Melville’s world-renowned tale, Moby Dick, the crew aboard the Pequod sail the seas in order to hunt, capture, and kill a mysteriously terrifying sperm whale named “Moby Dick”. For centuries, humans have used technological advances to protect their elite status in the animal kingdom, at the unfortunate expense of species ignorantly perceived as being too weak or unintelligent to fight back. Moby Dick illuminates one of the most historically cruel instances of selfishly-oriented, industrial engineering: whaling and hunting animals for sport. Humans and animals are the only living creatures with a similar state of consciousness and this cognitive interconnectedness binds the two species together in ways that can only be speculated and
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According to consumer research conducted by GFM, both consumers and retailers regarded socks as a product category, which was hard for companies to achieve product differentiation. In fact, most companies in this market like Chipman-Union manufactured unbranded socks for private label merchandise, because it was extremely hard to get consumers' brand awareness, and to make them recognize the product features. As a result, there were only two companies which manufactured branded socks : Burlington and Interwoven.
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... might need exposure cost. Holland and Barrett is currently using corporate branding because it presents every product with same brand name and to have same level of quality products.
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