Private Label By Dr.Hitesh Gaur

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Information about Private Label By Dr.Hitesh Gaur
Education

Published on December 3, 2008

Author: hatterdude

Source: slideshare.net

Description

this is presentation depicting the current scenerio of private label industry. are they encroaching the market share of manufacturers brands.

Its been prepared by a student of Nirma University.

Private Label Brands: Encroaching the big brands share November 24, 2008 By: Dr.Hitesh Gaur

I. The Apparel Private Label Paradigm II. National Apparel Brands Counter Strategy III. The Future of Apparel Private Labels IV. Indian Scenerio

I. The Apparel Private Label Paradigm

II. National Apparel Brands Counter Strategy

III. The Future of Apparel Private Labels

IV. Indian Scenerio

Source: adapted from Cotton Inc.

Worldwide Private Label retail sales have passed US$1 trillion 2006 US apparel & shoes retail sales: $358.6 Billion 2006: 45% apparel sales were private label 2005: 39% apparel sales were private label 2002: 35% apparel sales were private label By 2010, private label merchandise expects to increase by 22% to 55% of total apparel sales Source: US Dept of Commerce, expand on May 2007 Apparel and Textile News

Worldwide Private Label retail sales have passed US$1 trillion

2006 US apparel & shoes retail sales: $358.6 Billion

2006: 45% apparel sales were private label

2005: 39% apparel sales were private label

2002: 35% apparel sales were private label

By 2010, private label merchandise expects to increase by 22% to 55% of total apparel sales

Consolidation of retailers Brands sell to same retailers and become a commodity Retailers need differentiation and better margin Declining retail prices (women’s apparel prices dropped 2.4% 2007 vs. ‘06) Globalization of Production

Consolidation of retailers

Brands sell to same retailers and become a commodity

Retailers need differentiation and better margin

Declining retail prices (women’s apparel prices dropped 2.4% 2007 vs. ‘06)

Globalization of Production

From 1996 to 2006, the average retail price declined a minimum of 9% Source: adapted and expanded from Cotton Inc. winter 2003 Product % Change Retail Channel % Change Total -8.9 Total -8.9 Jeans -5.5 Department -13.7 Slacks -11.7 National Chain -9.0 Shorts -4.9 Specialty -5.8 Sweat Apparel -12.6 Mass merchant -7.5 Shirts -8.1 Off-price -4.2 Sweaters -16.3 Other -11.2 Shirts/Dresses -6.1

Imitate designer brands to reduce R&D costs Source direct with factories to eliminate middlemen cost Buy in larger volume to receive lower cost Source from low cost, duty and/or quota free countries: China, India, Bangladesh, Vietnam, Pakistan, South & Central America, Africa How do retailers achieve low PL prices?

Imitate designer brands to reduce R&D costs

Source direct with factories to eliminate middlemen cost

Buy in larger volume to receive lower cost

Source from low cost, duty and/or quota free countries: China, India, Bangladesh, Vietnam, Pakistan, South & Central America, Africa

Generic –very promotional, very low margin, Conway, Walgreen Fast Value Fashion – knock-off brands, Zara and H &M Premium Store Brands – Retailer’s own brand offers same or better quality at better price. The most profitable strategy in private label.

Generic –very promotional, very low margin, Conway, Walgreen

Fast Value Fashion – knock-off brands, Zara and H &M

Premium Store Brands – Retailer’s own brand offers same or better quality at better price. The most profitable strategy in private label.

Highly competitive - same or better quality at better prices, average 37% less than national brands Higher Gross Margins (est. 58 – 68%) Higher selling price per square foot than other Private label strategies Biggest threat to national brands Brand Loyalty What is the preferred PL strategy? See Appendix 2

Highly competitive - same or better quality at

better prices, average 37% less than national brands

Higher Gross Margins (est. 58 – 68%)

Higher selling price per square foot than other

Private label strategies

Biggest threat to national brands

Brand Loyalty

*Sales in billions include all private label & exclusive products Macy’s percentage includes 18% private label and 15% exclusive merchandise Retailer 2006 Total Sales Private Label % to total sales Private Label Sales in USD * JC Penney $19.9 50% $9.95 Kohl’s $15.5 35% $5.42 Wal-Mart $312.4 40% $124.96 Macy’s $27 33% $ 8.9 Target $59.5 32% $19.4

JC Penney’s – a.n.a., Arizona, Ambrielle Macy’s - INC, Alfani, Style & Co Wal-Mart - Faded Glory, George Target - Mossimo, Circo Kohl’s - Urban Pipeline, Sonoma, Apt 9

JC Penney’s – a.n.a., Arizona, Ambrielle

Macy’s - INC, Alfani, Style & Co

Wal-Mart - Faded Glory, George

Target - Mossimo, Circo

Kohl’s - Urban Pipeline, Sonoma, Apt 9

Combined effort, a win-win strategy: American Living, Simply Vera, Isaac Mizrahi One time exclusive deal – H & M, Target Blending in with Premium brands - INC, Arizona Marriage with a celebrity name – Sarah Jessica Parker, Hilary Duff

Combined effort, a win-win strategy:

American Living, Simply Vera, Isaac Mizrahi

One time exclusive deal – H & M, Target

Blending in with Premium brands - INC, Arizona

Marriage with a celebrity name – Sarah Jessica Parker, Hilary Duff

Develop unique products and stay ahead as a trend leader Create own stores Develop a compelling marketing strategy Increase brand loyalty Combine effort by offering exclusive lines. I.e, Simply Vera, American Living, Liz & Co Create one shot exclusive deliveries and SKUS Evaluate sourcing strategy and production cost Maintain net price (minimal promotions & discounts) Improve forecasting and turn around time

Develop unique products and stay ahead as a trend leader

Create own stores

Develop a compelling marketing strategy

Increase brand loyalty

Combine effort by offering exclusive lines. I.e, Simply Vera, American Living, Liz & Co

Create one shot exclusive deliveries and SKUS

Evaluate sourcing strategy and production cost

Maintain net price (minimal promotions & discounts)

Improve forecasting and turn around time

Becoming national premium lifestyle brands: INC, Alfani, Arizona Branching out to create specialty chain business: George apparel stores, Wal-Mart, UK Increasing depth of multi dimensional merchandising product mix (Tony Hawk mens, boys, footwear and etc) Spin off PL brands (Aeropostale) Cannibalize weaker PL brands

Becoming national premium lifestyle brands: INC, Alfani, Arizona

Branching out to create specialty chain business: George apparel stores, Wal-Mart, UK

Increasing depth of multi dimensional merchandising product mix (Tony Hawk mens, boys, footwear and etc)

Spin off PL brands (Aeropostale)

Cannibalize weaker PL brands

PROS Exclusivity & differentiation Bring customer loyalty Better margin Better control in deliveries Brand equity Freedom in pricing strategy Increase bargaining power with both national brands and PL factories CONS Inventory risk Higher R&D expense Higher marketing expense No markdown or return allowance from branded suppliers If product fails, will create negative image Quality control, complex production & import issues

PROS

Exclusivity & differentiation

Bring customer loyalty

Better margin

Better control in deliveries

Brand equity

Freedom in pricing strategy

Increase bargaining power with both national brands and PL factories

CONS

Inventory risk

Higher R&D expense

Higher marketing expense

No markdown or return allowance from branded suppliers

If product fails, will create negative image

Quality control, complex production & import issues

KOHL’S New Launches– Simply Vera by Vera Wang, Elle Apparel, Food Network Kitchen estimated growth rate 6-7% for 2 nd half of 2007 Tony Hawk, board-sports inspired, a hot category JC PENNEY American Living by Ralph Lauren 2008 C7P – Chip & Pepper Denim 2007 Liz & Co Arizona - $1 billion lifestyle premium brand MACY’S INC, Alfani, Style & Co, Martha Stewart, Field Gear, Epic Threads WAL-MART * George - $3 billion men’s urban fashion Faded Glory - $3 billion lifestyle premium brand *Wal-Mart figures represent worldwide sales

KOHL’S

New Launches– Simply Vera by Vera Wang, Elle Apparel, Food Network Kitchen estimated growth rate 6-7% for 2 nd half of 2007

Tony Hawk, board-sports inspired, a hot category

JC PENNEY

American Living by Ralph Lauren 2008

C7P – Chip & Pepper Denim 2007

Liz & Co

Arizona - $1 billion lifestyle premium brand

MACY’S

INC, Alfani, Style & Co, Martha Stewart, Field Gear, Epic Threads

WAL-MART *

George - $3 billion men’s urban fashion

Faded Glory - $3 billion lifestyle premium brand

To differentiate To gain and maintain consumer loyalty To achieve higher gross margin To compete with national brands I. Retailers believe private brands are their strategy:

To differentiate

To gain and maintain consumer loyalty

To achieve higher gross margin

To compete with national brands

II. National brands should: What This Means Change mind set and realize that Private Labels are competing brands Innovate and stay as market leaders to beat PL Stay focused on target audience Increase and market brand imagery to gain and maintain customer loyalty Partner with retailers to produce exclusive brands, SKUS, one-time offers or lines Price competitively and streamline expenses

Change mind set and realize that Private Labels are

competing brands

Innovate and stay as market leaders to beat PL

Stay focused on target audience

Increase and market brand imagery to gain and maintain

customer loyalty

Partner with retailers to produce exclusive brands,

SKUS, one-time offers or lines

Price competitively and streamline expenses

III. Future of private labels: Private brands will continue to play an important part of the assortment to their growth strategy Become national lifestyle premium brands Deploy a multi-layer strategy in brand, price and quality Cannibalize weaker private and national brands What This Means

Private brands will continue to play an important part of the assortment to their growth strategy

Become national lifestyle premium brands

Deploy a multi-layer strategy in brand, price and quality

Cannibalize weaker private and national brands

Average price gap 37% based on quality equivalent categories Average price gap 21% based on national brand’s quality is perceived to be less than private label brands. Private Label Brands Retail $ Gross Margin National Brands Retail $ Gross Margin Price Difference betw. Brands INC (Macy’s) Dresses $79-129.00 GM 60-69% BCBG Dresses $158-178 GM 48-56% 37% Alfani (Macy’s) Men’s Polo $34.50-42.0 GM 58-68% Nautica Men’s Polo $45-55 GM 50-54% 30-39% Faded Glory (Wal-Mart) Denim $10.77-14.42 GM 38-54% Levi’s Denim For Wal-Mart $19.68 GM 45-48% 37% Sonoma (Kohl's) Menswear $ 16-28.00 GM 60-62% Dickie’s, Shady’s & etc $16 – 40.00 GM 40 – 48% 20 –25%

06/06/09 Jade Blue Mochi Ka Juta Food Bazaar Pantaloon Westside Naturals Reliance fresh Patidar Shree ji Induben-Khakhrawala

Jade Blue

Mochi Ka Juta

Food Bazaar

Pantaloon

Westside

Naturals

Reliance fresh

Patidar

Shree ji

Induben-Khakhrawala

Contract PL manufacturing company Balsara enterprises: Contract PL manufacturing company Colgate Palmolive Beecham Group Henkel Cosmetics Reckitt & Colman Vasa Cosmetics :

Balsara enterprises:

Contract PL manufacturing company

Colgate Palmolive

Beecham Group

Henkel Cosmetics

Reckitt & Colman

Vasa Cosmetics :

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