The Battle of the Private Brands

By Jim Lewis, CEO Enhanced Retail Solutions LLC

It seems every retail re-invention comes with a plethora of new exclusive private brands. Bed Bath & Beyond and JC Penney are just two of the latest to announce exclusivity. JC Penney has long been a leader in designing, sourcing and managing private brands, but look where that got them. Granted, there is not any one reason why a retailer succeeds or does not, but a good portion can be attributed to whether the product they sell is desired by enough consumers to keep them in business. I remember the introduction of Arizona Jeans at JC Penney (a long time ago in a retail galaxy far, far away). Many consumers assumed it was a National brand and it was wildly successful. Virtually every competitor of JC Penney watched it and copied it (ex. Sonoma at Kohls). Some went too far- remember Mervyn’s? They offer a cautionary tale not to become so brand agnostic and basic that the whole store looks boring. Yes, consumers want value- but that is not the only thing they want.

Another example is the GAP. I do not think the assortment has changed in 15 years- only the colors of stripes and more stretch in the jeans. Their sales show it. Don’t get me wrong- GAP gets a lot right, but they are solely dependent on the look and value of their one brand to succeed.

Target succeeds because they offer so many product categories that have recognized brands that their overall percentage of private brands remains balanced. Each time they offer up a hybrid brand, or co-design a brand, every drop of product sells out. The turning of brands keeps things fresh and exciting.

Not designing in a silo is essential, so retailers look to their suppliers for help. But retailers must be careful not to turn off their supplier base by knocking off their designs. Suppliers will catch on and decide not to show the best product- I have seen it many times in many product categories.

Admittedly, I am not an expert in branding, but my retail store and buying experience taught me that balance is the key. Unlike the value equation to determine whether to buy on a direct or indirect basis, there is not a magic formula for branding. If anyone can figure it out it will be Mark Tritton. Private branding makes a lot of sense at Bed Bath, especially in the basic categories. But to show the value of new brands the customer must be able to compare them with the brands they already know and love to see if they are better. And those brands also need to be on the sales floor.

The next year will be interesting to watch in terms of comebacks. Will JC Penney rise to the occasion under new (still undetermined) leadership? We know the new owners believe in branding. And if Bed Bath’s ubiquitous blue coupon can bring consumers to a more valued quality assortment, they can be a powerhouse again.

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