Business Analysis : Private Labels

1276 Words Jun 15th, 2015 6 Pages
Industry Overview
Private labels are products marketed by retailers and other members of the distribution chain. Private labels are often referred to as store brands when they actually adopt the names of the store itself in some way and should not be confused with generics. These type of brands typically cost less to make and sell in comparison to national or manufacturer brands. “Thus, the appeal to consumers of buying private labels and store brands often is the cost savings involved; the appeal to retailers of selling private labels and store brands is that their gross margin is often 25 percent to 30 percent – nearly twice that if national brands”. (Keller, 2013, pg.182) This provides a distinct competitive advantage for private labels. Traditionally, private labels greatest appeal has been its ability to provide items at lower costs. There seems to be a strong correlation between the sales of private labels and personal disposable income. Private labels have experienced a large amount of success when Americans often less disposable income. This is clearly evident in certain times such as recessions. The recession of the 1970s provided “the successful introduction of low-cost, basic-quality, and minimally packaged generic products appealed to bargain-seeking consumers”. (Keller, 2013, pg.182) Furthermore, private labels experienced stronger interest due to the recession in 2008. Throughout the world and the U.S. experienced significant growth. In the United States,…
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