Pros and Cons of Private Label Brands

Private labels are making their presence deep and wide in all industry stretches. It is inclusively dominating and capturing every aspect of the consumer market. With the growing organized industry programs, connected agency networks and the supporting retail framework, the product makers and manufacturers are getting more exposure and value to be able to venture as a brand.

But, with these private brands coming in at a huge number and influencing market trends and consumer behavior, it has a huge impact on how the forces of demand and supply function and the way values are exchanged.

Private labels have their own innate virtues and traits as an entity of perceived identity and recognizable value. These private labels and brands come with their own set of pros and cons that affect consumer affairs and market perspectives.

Let’s find out what all these are, enumerating the major Pros and Cons of private label brands:

The major pros of Private Labels

Private brands are cheaper than branded products

Private brands don’t invest heavily in marketing and promotions as branded products do. Also, their overheads are restricted to a limit as they source their products from third-party manufacturers and engage in budget practices. These local products coming from local businesses help them achieve lower costs as they don’t have to bear any establishment or production cost. And therefore these are a cheaper option to go with over the branded products.

Private labels collaborate with each other to offer a product mix

In a private label setup, players generally keep their products restricted to a certain line or grade of the offering. This requires them to tie-up with other providers and come up with a broader product range so they can cater to the varying needs of their customers. This way they are able to offer a choice of products to the users in terms of variety, quality, and volume.

The emergence of new channels

About a decade ago, there were limited distribution channels available for private label brands. The things changed gradually and it is a different market scenario now. Today you have mass merchandisers facilitating distribution and selling for these brands. This has helped private labels grow and expand across different categories. This has also led new trends and practices to evolve in the sphere. Which has brought immense opportunities for customers to benefits from.

Private labels are now reaching a national brand status

Many Private Label Brands are increasingly gaining countrywide recognition and reach. A good example of this is “President’s Choice” which is being considered and treated by the customers across the US at par with branded products. They have a range of over 1,500 products of which many are listed among the top sellers in their categories. This is inspiring more businesses to look out for opportunities in private label selling.

The major cons of Private Labels

Private Labels fail to evolve fast

Retailers could experience a gap between the expectations and value offered to work with private labels. This is because most of the times private brands are not able to keep pace with customer requirements and trends as they show a low rate of adaptation. So, this makes it difficult for businesses dealing in a fast-evolving consumer market to go with Private Label supplies. As this restricts retailers to serve their users with the latest product and service options and makes them eventually lose customers to competitors.

Private label brands rarely innovate

Private Labels rarely innovate and this is a persistent problem across all functional areas and product niches. They mostly try to feed on the marketing campaigns and promotional drives established by branded products. Private Labels also don’t stress upon value addition or product realignment owing to their regressive marketing policy. And because of this reason, they are rarely able to excel through product improvement and innovation.

The consistency in quality is not assured

Another big turn-off of Private label brands is that even the most reliable of the product lines are not able to maintain the same quality across production batches. This is mostly because they have the least control over the manufacturing supplies and have to depend on the quality assurance practices followed by the third-party providers. This results in supplies with inconsistent product quality across different manufacturing lots.

Economic conditions have a great bearing on how they perform

The ability of a private brand to perform and deliver is highly dependent on the conditions of the economy. When the economy of a country goes weak and the dispensable income depletes, the market for private labels grows and sustains. On the contrary, when the economy is on a boom and the government policies and market trends are in favor of businesses, branded players get the edge and take over the Private Label consumer share.

Conclusion

More products bring in more competition in the shelf space. And Private Labels quite critically add to the competitive commotion in the format of branded selling with their characteristic economical and commodity-driven approach of marketing and selling. They have their own set of pros and cons, and this gets them a distinct position and space to function at a parallel capacity with the generic and branded product lines. And this is the reason Private Labels allow the market to attain an equilibrium of trade and consumption practices serving users with a greater scope, range, and value of offerings.