Private label products are set to increase their share of dollar spend from 15% to 25%.The higher margins afforded by private label products are like a desert oasis to those trudging across the unforgiving retail market. Budget retailers circle overhead Amazon, an ever-present danger on the brow of the horizon.
But private label is no place to rest.
Those content to simply ‘be in the game’ won’t be for long. Private label margins are hard earnt through a relentless focus on:
- Knowing your customer better than anyone else
- Creating the products for those customers better than anyone else
- Getting those products from concept to shelf quicker than anyone else
And at the heart of these three critical competencies are companies you select to be your private label suppliers.
Although many US retailers far exceed Consumer Packaged Goods (CPG) manufacturers in merchandising capabilities - having spent years positioning product on their behalf – they are playing catch-up when it comes to consistently finding the right suppliers for all those products, spanning multiple categories, that you're so keen to have launched yesterday.
Strategically sourcing from the right supplier holds the potential to augment your organization and exponentially increase performance in each of the three critical competencies shared above.
Let’s take knowing your customers, for example.
It's no secret that retailer companies are sitting on billions of dollars' worth of data. The cruel fact is that most are unable to refine more than a fraction of this data into actionable insights with even fewer insights being actioned due to ever-dwindling capacity.
Sharing data like customer feedback, online ratings/reviews and social media ‘chatter’ with the right suppliers can be a game-changer.
Think of it this way: Imagine having the world-leading industry expert for a specific product on hand to review, respond and recommend product improvements and innovations based on that data.
Strategic sourcing lays the foundation for exactly that, by finding - and winning - the partnership with the leading supplier for your private label line. It’s simply the only way you can win against the CPG industry.
It’s so important that you don’t just invest in private label.
Invest in making your private label a success by laying the solid foundation of strategic sourcing.