Own product lines to boost profit margins and prevent out-of-stocks
Last week I wrote about strategies to keep customers loyal. While doing research for that post I fell down the rabbit hole of private brands.
Lower costs and wider margins
Own labels/private brands or whatever you like to call them is booming right now. After losing ground to big-name brands during the pandemic, private brands have gained momentum as consumers look for cheaper substitutes to save money. There has been a demand for well-known, big brands the last few years. I’ve read theories about people turning to safety and comfort wherever they could find it during the pandemic, and I get it. Surrounding yourself with familiar items in uncertain times. Makes sense. Now, the tables have turned. People all over, thanks to the inflation, are now highly motivated to stretch every dollar and by that also not that picky with buying the original. Another reason that chains are expanding their own product lines are to secure availability and prevent out-of-stocks. Supply chains have a tough time at the moment and it makes sense that you’d like to have more control over the situation. By cutting out the middlemen you also get lower costs and higher margins.
Regular brands got some real competition
Historically own labels saw the light of day in the 19th century. Until the early 20th century their focus was on delivering quality at a price range below the regular brands. To be able to compete, low prices were considered more important than quality. Later on, quality and visual appearance improved and in the 1970s and 80s almost all big chains had their own brands and started to be real competition to the big regular brands.
My personal favourite is Sainsbury's own brand from the 70’s. Books have been written about the package design, museums have had exhibitions about it. If they brought this back, I’d gladly buy all of it, even the dog food and I don’t have a dog. And yes, I wrote this story mainly to share these beautiful packaging with you.
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