Getting The Most Out Of Private-Label Brands

April 2012 Integrated Solutions For Retailers

By Mark Burstein, president of sales, marketing, and research and development, New Generation Computing

As private-label brands gain market share, retailers must position themselves to reap the greatest benefits from the move.

Private-label apparel continues to be one of the hottest trends, as retailers devote an increasing amount of floor space to their own brands. According to an article in Crain’s New York Business, some stores now devote 40% of their floor space to private labels, up from 20% just a few years ago.

Why the sharp increase? One of the main reasons is exclusivity, since consumers can’t buy a retailer’s private brands anywhere else. Higher profits are another key driver; private-label brands can increase profit margins by up to 20%, since retailers can control costs and margins by managing the design and production process. And, with the dramatic rise in the cost of raw materials, private labels have become even more attractive, as retailers and brands seek to offset costs by focusing on more profitable lines.