Private Label Trends

RECENT NEWS
Benzinga  Apr 10  Comment 
Vitacost.com, Inc. (Nasdaq: VITC), a leading online retailer of healthy living products, announced today that it has rebranded and expanded its line of private label health food products, replacing its "Best of All" label with the Vitacost brand....
newratings.com  Apr 3  Comment 
LONDON (dpa-AFX) - McBride PLC (MCB.L), a provider of private label household and personal care products, Thursday reported 4 percent decline in group revenue, on a constant currency basis, and said it is unlikely to meet full-year market...
StreetInsider.com  Apr 1  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Corporate+News/Wells+Fargo+%28WFC%29%2C+Dillard%E2%80%99s+%28DDS%29+Enter+Private+Label%2C+co-Branded+Card+Agreement/9336760.html for the full story.
DailyFinance  Mar 25  Comment 
ERIE, PA -- (Marketwired) -- 03/25/14 -- Fortitude Group, Inc. (OTC: FRTD) announced today that they have executed a private label card agreement with a fast growing bail bonds company. The name of the company is being withheld until...
DailyFinance  Mar 24  Comment 
KIAMESHA LAKE, NY -- (Marketwired) -- 03/24/14 -- Boreal Water Collection Inc. (OTCQB: BRWC), a leading provider of award-winning premium bottled water for high end private label clients, today announced that it is committed to increasing...
Forbes  Mar 20  Comment 
The company?s sales in the grocery segment declined by ~3% y-o-y, as it lost market share amid intense price-based competition from the private label brands. We expect similar market conditions to continue to weigh on its results this year as...
SeekingAlpha  Feb 14  Comment 
ByAsean Century: Executive summary: Investors should look for further gains in Clearwater Paper as margins continue to expand. Clearwater continues to grab market share in the private label tissue market. I see the company...
Cloud Computing  Feb 6  Comment 
MCLEAN, Va. , Feb. 6, 2014 /PRNewswire/ -- WidePoint Corporation (NYSE Mkt: WYY), a leading provider of secure, cloud-based, enterprise-wide solutions and services in mobile communications management and identity management solutions, announced...
DailyFinance  Feb 4  Comment 
LYNNFIELD, MA -- (Marketwired) -- 02/04/14 -- HP Hood, one of the largest branded dairy operations in the United States, today announced that it has been named as Processor of the Year by Dairy Foods magazine. Recognized for its successful...
Automotive World  Jan 23  Comment 
Acquisition will expand Federal-Mogul’s customer and product presence in core chassis business Federal-Mogul today announced that it has entered into a definitive asset purchase agreement to acquire Affinia’s chassis components business.  The...




 
TOP CONTRIBUTORS
Error creating thumbnail
Private labels as % of 2006 sales for the top four U.S. grocery retailers

Private label describes products manufactured for sale under a specific retailer‘s brand. They are often designed to compete against branded products, offering customers a cheaper alternative to national brands. Though the public generally used to see them as low-cost imitations of branded products, private labels have overcome this reputation and achieved significant growth in recent years. The most commonly known private label goods are the “store brands” sold by food retailers, though this is just one example of many. Department stores, electronics stores, and office supply retailers all offer private label products or services.

Private labels offer several benefits to both retailers and customers, driving the segment's rising popularity. For retailers, margins on private label goods are an average of 10% higher than those on similar branded products. Customers benefit from private labels' lower prices, which are often significantly less than those of national brands. This combination, while beneficial to retailers and consumers, can put substantial pressure on the manufacturers of branded goods, who have to compete against their own customers (the retailers) for market share.

Error creating thumbnail
At Wal-Mart, brand name products share shelf space with pivate label products belonging to the retailer itself.


Impact of Private Label

Brand Loyalty

  • National brands are sold all over, so there's no real sense of brand loyalty in terms of where consumers buy them. Because private labels are unique to one retail chain, there is the possibility for retailers to cultivate a sense of brand loyalty. Though they used to be seen as knock-offs of "name brands", private labels have become increasingly more accepted by the public as quality has increased and retailers have expanded their offerings of private label goods. Many consumers now seriously consider private labels as acceptable alternatives to national brands. Retailers can capitalize on this shift in public perception by offering quality private label products, which can foster a feeling of brand loyalty. This can give retailers a significant advantage over competitors.
Error creating thumbnail
Largest private label categories, by % of 2006 volume share

Lower Prices/Higher Margins

  • Private label goods are generally much cheaper to produce than branded goods, due to the lack of advertising and marketing expenses. As such, retailers are able to purchase private label goods for much less than they would have to pay for comparable branded products. The cost difference is usually large enough that retailers can offer customers lower prices while still making higher profit margins themselves. Lower prices can be enticing to customers and increase a stop on a product's way from the manufacturer to the consumer. Retailers are now becoming increasingly established as brands themselves, marketing their private label products as alternatives to national brands. This has resulted in a growing shift in the balance of power between retailers and manufacturers, with retailers not only becoming less dependent on manufacturers for product offerings but actually making manufacturers dependent on them for sales volume.

Who benefits from an increase in private label?

  • Wal-Mart (NYSE:WMT), Target (NYSE:TGT), Costco (NYSE:COST), and other retailers for whom private label goods constitute a significant percentage of total sales. Stores such as these would benefit from the higher margins that private labels provide.
  • Whole Foods (NASDAQ:WFMI), Kroger (NYSE:KR), and other supermarkets with strong private labels could benefit from the further penetration of private label into the food retail industry.
  • Cott Corporation (NYSE:COT) is the largest manufacturer of retail-branded carbonated soft drinks in the U.S., producing 68% of all private label soda sold by U.S. retailers. Cott's largest customer is Wal-Mart, who accounted for 38% of total revenue in 2006. An increase in demand for private label soda could benefit Cott greatly, as its entire business is focused on this segment.

Everyone is actually gaining form the Private Label!

Who benefits from a decrease in private label?

  • The Coca-Cola Company (NYSE:KO), PepsiCo (NYSE:PEP), Procter and Gamble (NYSE:PG), and numerous other manufacturers of branded products could be harmed by a rise in private label's popularity. Some manufacturers have hedged their bets somewhat by beginning to produce private label goods as well as branded products. Examples include: Kraft Foods (NYSE:KFT), Nestle (VTX:NESN), Kimberly-Clark (NYSE:KMB), H.J. Heinz (NYSE:HNZ), Del Monte Foods (NYSE:DLM), and Unilever (NYSE:UL). By producing private label goods, these companies would be somewhat less impacted by a decrease in demand for their branded products. Private labels, however, provide much lower margins than branded products, especially since these companies already cover R&D and marketing expenses for their existing products.
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki