Home and housewares retailing has had a steady but sometimes bumpy romance with private labels.
Retailers through the years have been drawn to private labels as price-protecting and margin-boosting salvation from a consolidating mass market — once just physical and now digital, too — that has made it harder to lay exclusive claim to national brands seeking more doors to sell as the retail customer base shrinks.
The ebbs and flows of private labels — house brands, store brands, controlled brands, owned brands, whatever you want to call them — have left some stalwarts while others have drifted to oblivion.
As much as private labels offer retailers a level of competitive protection, they also come with more accountability by retailers to build consumer markets for the brands and own the consequences when such brands don’t stick. At various times, retailers have gone all-in on private-label development only to back off when the risks associated with such store-branded products become too much to bear, often without an outside vendor to pick up the pieces.
Still, the allure of private-label differentiation remains strong with retailers. And home and housewares remain ripe for such development as heightened, pandemic-fueled demand across the board recedes a bit to put retailers in a renewed battle for market share.
The incentive has grown for retailers to optimize owned-brand portfolios to combat the wide-open e-commerce space and a blurring of traditional channel lines. While vendors rightly are concerned to see more retailers leaning into house brands, it is also reasonable that retailers will look to offset the understandable move by brands to widen retail distribution and sell directly to consumers.
Home and housewares vendors, meanwhile, could make any number of moves to enhance their branded value to retailers in this new private-label era. They could continue to streamline logistics, ramp up product and marketing innovation and invest in more trade and consumer marketing. They also might have to consider how to become lasting resources for private-label programs.
Few broad-line retail business models can get by on private labels alone, with the new wave of deep-discount grocery stores being one notable exception.
Many mainstream retailers need to walk a fine line when it comes to balancing owned and national brands. (Read about Target’s private-label strategy.) Such balance doesn’t just provide comparison points to accentuate private-label value. National brands validate a retailer’s credibility and promotional drawing power. And there are certain categories in housewares, such as small appliances, for which store brands generally won’t cut it with consumers.
Private labels are no longer mainly a way to pump up the volume on low-price, high-margin goods. The value opportunity encompasses a full scope of price segments and a longer-term commitment by retailers from which there may be no backing down.
When the low price isn’t the prime differentiator for a private label, exclusivity might not be enough. The most successful, enduring owned brands are those cultivated and nourished by retailers with the same dedicated focus as branded vendors.
It may continue to be bumpy at times, but the rekindled private-label romance among retailers could endure as they seek the most protective and productive balance in their brand presentations.
