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Positioning Private-Label to Boost Profits


As shoppers become more discerning with where to shop and on what to spend their dollars, retailers have a chance to win new sales with their private-label merchandise. While retailers explore how to satisfy cost-conscious shopper demand with their private-label programs, they often make small mistakes that could cost them big—most importantly, in the form of missed potential sales.

Associate Editor/Web Editor Samantha Murphy spoke with Kieran Forsey, senior VP product development of Agentrics, a Chicago-based provider for inventory and private-label management, on how retailers can use data synchronization and collaboration to better position their private-label brands.

The recession is clearly changing consumers’ shopping behaviors. How are retailers changing their private-label strategies to respond to consumers? 

Retailers that are seeing the most growth in their private-label sales are the ones focused on quality and consistency, irrespective of price. Retailers need to establish clear product specifications that set the standard and expectations for each of their private-label lines. Chains also should be direct about displaying information about each product, ranging from ingredients and nutrients to manufacturing processes.

In addition, more shoppers have been responding to consistent themes and ideas across ranges and brands, such as healthy rather than sophisticated eating, so retailers should keep this in mind, as well.

What technology solutions are retailers using to create their private-label lines? 

Collaboration, if properly managed, can be the key to a successful private-label program. For example, our product life-cycle management platform facilitates effective collaboration between retailers and suppliers, and streamlines development of private-brand products.

The key characteristics of these systems is that they help control growth without imposing unnecessary limitations; increase visibility to ensure that all members of the team have access to vital product information; allow for management by exception; and integrate with existing applications including sourcing and communications infrastructure as well as links to external systems.

Since the platform eliminates errors often encountered with paper-based processes, product life-cycle management can reduce overall costs. The consistent documented development process also allows retailers to retain control of the overall program. Given the current climate and the increasing popularity of private-label products, we see a tremendous amount of potential in the product life-cycle management market.

What are some issues hindering collaboration? 

The biggest challenge is data synchronization, the process that keeps data files identical and consistent between supplier partners. If business partners are not working from the same information, collaboration cannot work.

In addition, the effective use of brokers to manage private-label product development can also be challenging because while they certainly can add value, they can inadvertently complicate the new product development process.

The ideal approach is for retailers to engage specialist partners to assist and add value to the private-label management process without relinquishing total control.

How can retailers move past these challenges? 

Keeping consistent processes, practices and communications on both the retailer and supplier sides of the supply chain is one of the best ways to streamline the process of launching and growing a successful private-label program. It is imperative to establish a robust auditing process. This will allow them to constantly review and validate product and supplier audit information with the goal of delivering a uniform customer experience.

Reviewing detailed, constantly updated information on supplier safety information and working with third parties to review supplier audit results is also key to ensuring the integrity of private-label products while an effective communications infrastructure allows retailers to rapidly respond to food-safety concerns.

In the end, a successful private-label management system is one that retailers can integrate fully into their corporate culture and use as a branded product that they can use to work in tandem with their suppliers on any number of product life-cycle management-related activities.

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