How to Make More Money in 2015 – Starting a Private Label

How to Make More Money in 2015 – Starting a Private Label

Start your own private label.  For a number of years now we have seen the rise in private label goods, in both supermarkets and department stores.  It is well known that creating your own label can result in higher profit margins, strengthen your brand offering and good will.

But will consumers be interested?  Apparently yes.

Previously, private label goods were the black and white, unexciting, cheaper cousin of the colourful and friendly national labels.  Myer boasts a stable of “Myer Exclusive Brands” including its successful Basque and Blaq labels.  Woolworths has Macro and Select whilst Coles has Coles’ Finest.  In the grocery sector, private label sales has risen 6.6% and is now outpacing other brands (click here for full story).  In the UK, private labels account for 40% of grocery sales.

The time is ripe for entering into private label arrangements – according to The Age, 76 per cent of Australian shoppers consider that private label quality had improved.

Retailers can leverage off existing supplier relationships to ‘white label’– a product that is exclusive for them that can assist in building their brand’s offering without having to go through the product development cycle.  Entering into such arrangements can allow retailers to supply merchandise with a higher margin, thus increasing their profitability.  Many suppliers are willing to rebrand and alter their products in order to create another stream of distribution – its win-win.

Things to consider when entering private label arrangements:

  • Have you protected your private label with the correct intellectual property registration?
  • Do you have a good contract with your supplier governing their use of your branding on their product?
  • What happens to rejected goods? (You don’t want them being offloaded at the Sunday market for next to nothing).
  • Is the product being made bespoke for you, or can your supplier also sell it to your competitors (with other branding)?
  • Are you importing the product and will you be the deemed manufacture?
  • Does your contract cover product quality? (Don’t forget it’s your name on the label– if something goes wrong with your name on it, customers won’t care if you didn’t make it)