- RESEARCH & AWARDS
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Retailers said the most important reasons for developing a strong private label program were to build customer loyalty (40 percent), to differentiate from their competitors (31 percent) and to earn higher margins (22 percent).
"We’ve all read about a ‘leveling off’ of private label proliferation [post-recession],” said Sarah Corp, executive director of Clear Seas Research's food and packaging division, in an interview with PL Buyer, “but these results suggest otherwise.” She added, “I think it's safe to say that private label isn't going anywhere.”
According to the report, retailers expected to find the best opportunities for short-term growth in center store (29 percent), followed by the refrigerated/frozen (13 percent), natural/organic (12 percent) and upscale/gourmet (10 percent) departments. In addition, almost two-thirds said sustainability initiatives such as greener packaging and local sourcing were either “important” or “very important” in the development of current private label programs.
Over the long haul, respondents seemed to favor a balanced approach to growth. While some thought the best opportunities for private label expansion post-recession were in the national brand equivalent (21 percent), value/economy (10 percent) or upscale/premium (7 percent) tiers, the majority (62 percent) said a combination of all three types of programs would give them the best chance to succeed, according to the report.
Retailers were split with regard to who should bear primary financial responsibility for the development of innovative private label products and packaging, with 48 percent claiming the onus is on the supplier and 45 percent asserting that the burden should be shared, the report noted. Only 7 percent said the retailer alone should absorb those costs.
Not surprisingly, the report continued, most retailers (44 percent) named pricing the biggest challenge in the private label retailer-supplier relationship. Other less-frequently cited issues included timely/complete order fulfillment (17 percent), lack of innovation (16 percent) and lack of packaging options (13 percent).
“Most retailers (53 percent) go it alone in terms of the planning, procurement and/or promotion of private label products, not using or planning to use an outside broker for such purposes,” the report stated. However, it continued, 11 percent are considering such a move.
The report also noted that most retailers (60 percent) currently use 25 or fewer manufacturers to supply their private label program, while 34 percent manufacture some or all of their own private label products.
-- Denise Leathers