In the textbook, private label merchandise are defined as “Goods that are manufactured to a retailer’s specifications and bear the retailer’s name or other brand names created by the retailer.” Private labeling takes advantages of company’s image of the retailer. It can help the company increase revenues and sales and maintain company’s image. For either a convenient store as pharmacy or a luxury department store retailer, their private label lines would help both of them sell similar industry leader’s products at a lower price. It is even better for a luxury department store retailer, because their private label would still be expansive as luxury products comparing to other fast fashion products.
For instance, I often shop at CVS pharmacy for bandages. I used to buy the brand Band-Aid until one day I saw CVS had exactly the same item but much cheaper price. A package of flexible regular-sized bandages costs $5.49 for 20 counts under Band-Aid whereas a CVS package only costs $3.99 for 30 counts! (See sources for the prices.) I would definitely go for CVS, since their quality is the same and I do not have a preference while using a bandage only for prevent external contact from cuts.
On the other hand, when consumers know well about the company, including its image, concept, and position, they are most likely willing to purchase products that are under its own label. For example, according to Barneys New York’s website, “the Barneys New York collection includes thoughtful, indispensable pieces highly regarded for their superior construction and timeless design. Featuring men’s and women’s clothing, shoes, and accessories, the line showcases enviable, seasonless wardrobe staples.” Their private label still has fashionable designs, but less expensive prices than the products they are selling in stores. Most importantly, their logo is not obviously shown on the products. Therefore, I would spend $300 for a bag that has a similar design of a $1,000 bag without obvious logos on it.
All in all, private labelling is a good way to generate company’s sales and revenues for merchandise selling and planning. It also maintains its brand image.
Barneys New York Private Labels