Private brands gain ground in superstores

A little past the halfway point in their fiscal years, the three major office superstores chains are all reporting private brand sales have reached the 25% penetration rate and suggest there is ample opportunity for upside growth.

“We believe there continues to be substantial opportunity for further private brand penetration as we continue to expand our assortment in each of our proprietary brands,” Office Depot chairman and ceo Steve Odland said during the company’s second-quarter conference call.

At OfficeMax, where private brands account for 26% of sales, chairman and ceo Sam Duncan shared a similar perspective and noted the company added 500 private brand SKUs during the past year. “We believe private label growth is critical to our bottom line improvement,” Duncan said.

That is not good news for suppliers of branded office products who are also dealing with the reality of reduced availability of shelf space as the average office superstore prototype has shrunk in recent years and increased space has been given to technology categories and print and document service areas.

The increased penetration rate of private brand also hasn’t been enough to offset other factors such as increased competition, economic concerns and housing woes that have hurt sales.