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A new report from Deloitte Consulting LLP sayd that retailers have focused too much on brands and positioning of private label products while not addressing their sourcing and execution needs enough.
And addressing their sourcing, Deloitte says, could be critical to unlocking the value of private brand profits.
The process should not be entered into lightly, though, the company says. “Before going head-to-head with major brands, retailers should weigh the opportunities against the higher risks they assume when merchandising and manufacturing products under their own label,” the report says.
The report suggests that reshoring suppliers to local markets is “an increasingly attractive option for retailers seeking a reduction in transportation costs.”
It suggests establishing regional hubs in the supply chain to mitigate the risks of a fragmented chain. And because it says the private brand industry worldwide is worth $1 trillion annually, private label retailers should use “core sourcing capabilities that can allow them to discern the appropriate sourcing objective – the required mix of cost, quality and speed to market – for each of their product categories.”
To download or review the entire report, visit http://www.deloitte.com/assets/Dcom-UnitedStates/Local%20Assets/Documents/us_consulting_PrivateLabelSourcingPOV_05302012.pdf