Bath and Body Private Label
Bath and Body Private Label: A Dynamic Growth Market
On an ever increasing basis the Private Label bath and body products industry forms a significantly larger portion of the consumer products marketplace. The retailer distribution network is joining with manufacturers to re-brand products as generics or store brands or to sell private label skin care brands to enhance market position. The Private Label Manufacturers' Association (PLMA) has said recently, that 20% of items sold in retail settings in the United States is now a private label brand. Selling private label goods can increase improve customer loyalty, differentiation of the retailer and keep the merchandiser focused on its key competencies.
Private label products have become the center of successful selling strategies across a wide segment of the natural skin care market. At the top of the list are many Premium private label products which are gaining increasing acceptance. These products offer any retailer additional sales points for their outlets and consumers a high quality choice in private label product.
Recent research published by the Private Label Manufacturer's Association (PLMA) shows that sales of private label brands have increased by nearly $1 billion in 2005 versus the prior year. This pattern of sales for private label products was also true across the board as Private label annual market share increased from 19.4% to 19.6%. Accordingly, many manufacturers are turning to private label, while at the same time new challenges arise for both manufacturers and distributors.
Private label soap manufacturing opportunities offer strong growth prospects, for the aggressive operator who can keep costs low it offers the opportunity to increase manufacturing capacity utilization. Private label skin care products have a simplified sales and marketing requirement and small need for intricate promotional strategies. Furthermore, private label companies Research and Development costs are reduced, because they tend to be followers and not innovators. It is important to know that Private label manufacturer becomes the steward of the Private Label Product and its brand. In some cases, branded suppliers build relationships and gain shelf space at key retailers for their branded lines by agreeing to supply private label also.
Private label manufacturers will have a significantly reduced amount of control and visibility than with their in house brands. In addition as some of the realities of manufacturing are not clearly understood by the less sophisticated customers. While they will have greater control of the processes, they generally do not understand procurement procedures, run minimums, lead times, packaging and other basic production issues.
Private label bath and body products will change the mix and product variety for private label manufacturers. Because each private label product will be customized to the distributor, there will be more skus, with more product specifications and procurement difficulties than is economical. However, despite the problems, successful private label products deliver margin and value. They effectively compete well with top-selling products with widely known brands, which will obviously improve margin performance for a product slot.
Because retailers and merchandisers have a tendency to change private label suppliers relatively often due to pricing or availability, Private Label manufacturers struggle to provide information to buyers on their quality programs, market differentiators, and the overall costs of changing Private Label suppliers. While having many private label customers forces sku proliferation among private label soap manufacturers, having only a few major private label customers presents a higher degree of risk of business volatility, as a result of the fact that retailers generally do not treat Private Label relationships as strategic.