What are the pros and cons of a private label?In a discussion with major shareholders you suggest making a few changes and introducing a private label. While it's true your clients specialize in...

What are the pros and cons of a private label?

In a discussion with major shareholders you suggest making a few changes and introducing a private label. While it's true your clients specialize in offering the brand names at discount prices, you suggest exploring the possibility of offering their own label. They are known, like their competition, as being a store where one has to dig through the racks regularly. If your client had a private line of the most basic items this would provide products a customer would want constantly, not just when you happen to have them. If they are not interested in clothing, they could introduce a private jewelry line. There are limitless possibilities. In addition, if your client’s store consistently has something the competition only carries on occasion, strip mall or no strip mall, customers will be coming here instead.

What are the pros and cons of a private label?

 

Asked on by yacel0762

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thanatassa | College Teacher | (Level 3) Educator Emeritus

Posted on

Pros:

– Private label items are available consistently and don't depend on the idiosyncrasies of manufacturers of other brands.

– Private labels usually offer higher profit margins.

– All aspects of the private label are under your control.

– If the private label becomes popular, you have a loyal customer base dependent on your retail outlets for that label.

Cons:

– You will need to build a brand following for your own label, as opposed to existing labels that already have followings.

– Private labels can be perceived as down market unless very carefully positioned.

– You would be moving into a new a different business model, acquiring new suppliers or new relationships with suppliers, and doing a different sort of marketing. This is almost like moving into a new business and carries a fair amount of risk.

– "If it ain't broke, don't fix it."

Sources:

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