Wednesday, August 24, 2016

Marketing Private Brands

Private brands--also known as private-label--are created or owned by retailers and other channel intermediaries.

Supermarkets are heavily into private brands, as are many general merchandise retailers like JC Penney (which owns Arizona, shown at right). Why? Because these are exclusive to the store and, just as important, they have higher profit margins.

Twenty years ago, an article in the Harvard Business Review said:
... private-label strength generally varies with economic conditions. That is, private-label market share generally goes up when the economy is suffering and down in stronger economic periods.
Today, however, the economy is strengthening and so are private brands. For example:
  • Kohl's is seeking a turnaround based on private brands such as Sonoma, Croft & Barrow, and others that are or have been mainstays of its revenue base. However, how will this resonate with shoppers seeking well-known national brands?
  • JC Penney is also putting more emphasis on private brands such as St. John's Bay and Arizona as it seeks a turnaround. In 2015, private brands accounted for 52% of Penney's sales--but by 2019, the marketing goal is to have private brands contribute 70% of Penney's sales.
  • Target wants shoppers to prefer its private-label food products, marketed under brands such as Market Pantry and Simply Balanced.
Private brands are here to stay. The question is, how much emphasis is too much emphasis?

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