In today’s hotly competitive retail marketplace, private-label products let catalogers set themselves apart from other merchants.
“You can gain a competitive advantage if you’re smart about your product development,” asserts Karen Scott, founder of One Step Ahead and Leaps and Bounds, two catalogs of children’s merchandise.
For Scott, that meant coming up with some new and original product concepts and getting them to market before the big retail chains.
“The mass merchants have entered our market,” she says. “They’ve learned to copy goods and sell them cheaply. By designing some of our own products, it gives us back our competitive edge.”
Textiles and home merchandise consultant Karin Miller of Miller Merchandising, Long Beach, CA, concurs that private label can be a competitive hook for catalogers. “The most obvious benefit is the ability to leverage customer knowledge to develop products that will sell,” says Miller.
Why Private Label is Worth Exploring
While it’s a great coup to develop your own products for competitive reasons, consultant Jack Schmid says the No. 1 benefit catalogers gain from adding private-label goods is better margins. “If you can find a way to add 10 points of margin, you’re going to have a big success in that product line,” says Schmid, chairman and founder of J. Schmid & Associates in Shawnee Mission, KS.
Take pet-supply cataloger Doctors Foster & Smith. Schmid says: “They were a $5 million business in the 1980s. One of the things that was a significant breakthrough for them was the private-label program, which helped them add 10 to 20 points of margin to their product lines. It was so successful, that the line grew and grew. They even have their own [pet] pharmacy now. Today, that company does more than $100 million in sales.”
Scott says that for her catalogs, pricing and margin advantages have been among the other key benefits of selling private-label products. “By manufacturing your own products or having them made for you, you have more control over your costs, and therefore your pricing, too,” she explains.