Federated Banks on Private-Label Brands

Cincinnati, Macy’s parent company Federated Department Stores is finding success with private-label branding, especially through its Macy’s stores. According to Tim Adams, chairman of Macy’s Florida, “Private-label brands give us a focus and distinctiveness in our assortment, at a price that is of great value to our customers.”

For Federated, experts say the private-label strategy makes sense in that the middle man is eliminated, resulting in profit-margin increases of at least 20% over name-brand designer goods and a level of exclusivity not found with name-brand products. According to Kurt Barnard, president of Retail Forecasting, a New Jersey-based consulting firm, “There’s not much profit to be had if you’re showing Calvin Klein and the next store is showing the same thing.”

Percentages of private-label merchandise are expected to continue rising. Marshal Cohen, chief industry analyst of the NPD Group, has predicted that, by 2010, private labels will represent about half of all apparel sales.