Rocktomic Labs Explores How Private-Label Products are Changing the Retail Industry
Private-label products have become a transforming force in the retail industry. Private labels are able to deliver high quality to consumers at a competitive, affordable price when compared to major brands.
The development of private brands in retail has made strides over the past decades. More retailers in apparel, health products, and food and beverage, among other sectors, are seeing the benefits of adding private labels to their store shelves.
Rocktomic Labs, a private-label contractor and manufacturer based out of Atlanta, Georgia, shares the ways in which the retail landscape is being changed by private-label products.
Adding Profitability
The cost of producing a private-label product is lower than that of producing a brand-name product, by as much as 50 percent. The markup ratio can then be lower, causing the price paid by the consumer to be at a lower level as well. Positioning a product as a value-priced alternative to a major consumer brand can bring in profits and expand a private label’s reputation for quality.
Consumer products like over-the-counter drugs and supplements follow this rule. Rocktomic Labs produces a wide variety of private-label products for its clients across the country.
Equivalent Quality
Private-label manufacturers are always careful to make sure that their products have the same active ingredients as their competitors. They are regulated in the same way as major brands. Private-label manufacturers make sure that the products are tested to be equally safe and effective. In the case of health products like supplements, these are certified to be as good as their major brand counterparts.
If a private-label brand slips in quality, it will quickly gain a reputation of being untrustworthy. Stores that sell private labels need to keep a close eye on their manufacturers and make sure that they adhere to strict quality standards.
Attracting Customers
Having a robust private-brand program can help to attract customers to a store. Clothing retailers like JC Penney, Kohl’s, and Nordstrom all sell private brands alongside their major-label clothing. These brands are perceived to have the equivalent quality to their branded alternatives, and it is easier for the retailer to put them on sale in order to meet shifting supply and demand over the course of the year. Prices for major brand products tend to be less flexible, meaning that the profit margin is harder to maintain if the clothing goes on sale.
Special Promotions for Private Brands
Selected grocery chains in the United States have implemented special promotions for their private-brand products. In conjunction with their customer loyalty programs, the stores offer a percentage of private-label purchases back to the customer in the form of quarterly rewards. These programs make it more likely that customers will focus their grocery dollars on private brands rather than on major brands. These programs induce people to try private brands for themselves and see that they have equivalent taste and quality to the major brands.
Providing a Better Alternative
In some cases, the quality of private-label brands is even higher than that of their major brand competitors. This means that companies can price these products closer to the level charged for the major brand version.
Working with Private-Label Manufacturers
In order to produce the best private-label items, it is necessary to find a manufacturer with high quality standards. If a product receives the reputation of a “knock-off” or imitation of a major brand, this will hurt sales. Finding a private-brand manufacturer means striking a balance between the wholesale price retailers want to pay and the price they can charge for the item in a retail setting.
Coming to the correct balance of price means that you will be able to set your profit margins at a healthy level without overcharging the customer. As a private-label manufacturer, pricing below the level of competitors is generally the best strategy to follow.
Promoting Private Labels
Sellers of private-label products sometimes fail to advertise them to the public. They may rely on customers’ browsing habits to draw them to lower-priced alternatives to major brands. It is a better idea to promote these products in sales circulars and advertisements, including the company’s retail website.
Taking Advantage of Private Brands
These advantages of private brands make it easy to see why the sector has grown so much over the past few decades. As time has gone by, the quality of private-label brands has increased together with their profit margins.
Rocktomic Labs believes that manufacturing private-label products can present a significant advantage, especially for companies in the healthcare products sector. Private-label manufacturers are capable of producing the best quality products that compete favorably with their brand-name alternatives.
Retailers should consider the advantages of selling private-label products. They can produce higher profit margins than brand-name products while maintaining the quality that shoppers have come to expect.
