Private labels: Lack of customer acceptance
The fact that establishing a private label is not a self-runner was shown in a study that we carried out together with the Rheinische Fachhochschule Cologne: Here, 29 percent of the participating companies confirmed that they had to withdraw a private label product again.
The most important reasons for this: lack of customer acceptance or lack of profitability. Consumers buy private labels when the price-quality ratio is convincing.
This means that consumers do not want to compromise on quality, but at the same time they expect a clear price advantage compared to private label products. To ensure that profitability does not suffer despite this, procurement needs the right strategies and levers.
With our many years of expertise in advising retail companies, we are happy to support you in setting up and restructuring private labels.
Private Labels: four keys to successful procurement
Standardisation of specifications is a proven way to reduce costs. Standards reduce the number of variants, while the volume of remaining variants increases – the former reduces management effort, while the latter offers the possibility of bundling and thus negotiating favourable procurement prices. Standardisation is therefore an effective lever, especially for private label products.
Auctions – and especially online auctions – offer the opportunity to approach and qualify new suppliers in a resource-saving way. At the same time, an auction challenges competition among the participants. Therefore, auctions are a good solution to realise the favourable procurement prices that are essential for private labels. Learn more about the design of online auctions here.
The acceptance of private labels is crucially dependent on the quality of the products. Through professional supplier management, retail companies can benefit from the innovative power in their supply chain. In cooperation, retailers and suppliers can jointly improve established products as well as develop new offerings.
Professionally set up processes increase efficiency and significantly facilitate cooperation both within the company and with external parties. Optimising the profitability of private labels should therefore include process analysis and, if necessary, process optimisation.
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