Implication for the Retail Industry Essay

574 Words 3 Pages
Thomas, Ryan, “The Right Mix: Brands versus Private Labels,” Apparel, Feb’04, p. 30-33

Overview of Article
     Department stores that may want to develop or expand private labels to replace lagging national brands should be aware of the downfalls as well as the benefits.
     Private labels increase margins from 6-10% higher than national brands. They also allow for fashion garments to be reproduced the following season if they are still in demand. However, department stores risk opposition from national brands if such private labels create too much competition.
     If private labels are to be expanded, they should be of higher quality than the norm. They
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     However, there are definitely some downfalls with creating private labels. If a private label directly competes with a particular brand, the department store risks losing that brand permanently. This is why some chains only provide private labels in fashion-sensitive merchandise categories like home furnishings, pants and sweaters. Also, customers like having brand names, giving them an option to choose between the lower-cost private labels or the fashion-conscious brand names. Nevertheless, retailers are placing more attention on the profitability of each brand. Those national brands that bring in customers, yet continue to lose money are at risk of being replaced by private labels.
     Private labels can be very helpful to a department store’s sales if quality and quantity are considered. The quality of private labels is important because if it seems too cheaply made, it will have to be marked down, which greatly lowers profits. Also, to get large profit benefit from a private label, it should be available in large volume, particularly across similar categories. For example, offering a particular private label in men, young men, and boy’s allows for minimal advertising to cover all three categories, increasing the label’s overall sales.
     Private label clothing lines are typically

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