Have you ever thought of selling things under your own private label? If so, keep reading. In preparation for this piece, we sat up with Sarah Ferrence, the creator of Mod. Merchant a company that assists wholesalers and retailers in adjusting their operations to the new era of retail and growing their companies as a result.
Through services such as strategy planning, merchandising, and buying, as well as private label consultancy, Sarah assists her customers in driving sales and increasing profitability.
Sarah and I had a conversation not too long ago in which we discussed the shifts that are taking place in the retail industry at this time and how businesses may differentiate themselves and survive via the usage of private labelling.
Let's plunge in!
Myth 2: Private label products are cheaper than their national brand counterparts. Private label brands usually spend less on manufacturing and marketing, which is why they can keep their retail prices to a minimum. However, some private label products aren't exactly affordable.
We began our conversation by talking about the current state of the retail market and the steps that business owners should take to be successful.
According to Sarah, “the brick and mortar setting is really difficult.” This is primarily owing to the fact that the retail industry is currently operating in uncharted waters, and there are a great deal of questions over the future of physical stores. In order for retailers to make the most of the opportunities that are given by modern retail, they need to adopt a more combative mentality.
The traditional use of brick and mortar provides a rich and diverse set of chances for both exploration and development. Unhappily, the people who are experiencing the most problems are the ones who have not adopted this new style of market or way of thinking. Nevertheless, there are innumerable opportunities available for the growth of your business, provided that you are willing to seek them.
According to Sarah, the only way for retailers to stay in business is to focus on their customers and brands.
“It is evaluating and comprehending what your brand represents to your consumer, in addition to the relationship that they have with one another.” What is it about your brand that makes your client adore it? Why do they consider it to be one of a kind? How can you continue providing the highest possible service level to your customers? After you have the answers to those questions, you should concentrate on defining your market niche in a way that is congruent with your brand and honours your customers.
She goes on to say, “The next step in developing this concept is creating your own label.” By using a private label, you are able to provide your customers with a product that is not only tailored to their specific preferences and requirements but is also unique to your traditional retail establishment.
Sarah identifies three primary advantages associated with operating one’s own record company. They are as follows:
Gross margins: The gross margins of private brands are typically higher than those of national brands in many cases (meaning more profitability for you.)
You have full control over the manufacturing processes, product combinations, and supply chains of the brand, in addition to its pricing and marketing methods. You will now have full control over every aspect of the company as a result of this, which puts you in the driver’s seat.
You are able to exhibit who you are and what you stand for – Private brands can be used as a vehicle to demonstrate your company’s guiding values in a manner that will echo with your audience and fulfil their needs. This gives you the ability to explain who you are and what you stand for.
The advantages of owning a private label have been covered up to this point. The issue then becomes, how does one begin?
You may get started, as Sarah explains, by performing any one of the following three things:
View the data for your store
She offers the following piece of advice: “First and foremost, you want to look at what is performing in your own physical and mortar business.” “Therefore, you should do an analysis of your sales in order to have an understanding of how your customers are responding and what they are purchasing. And on the other side of the coin, be conscious of what it is that they are not buying.
This is a wonderful place to start in order to determine who your consumer is and what they are reacting to.
Determine your position in the market
Sarah continues by advising, “You want to make sure that you’re looking at market trends and knowing how things are developing in the industry.” The next step is to figure out where you fall on the fashion pyramid.
Consider your rivals
“And in my opinion, looking at who your rivals are is something that should be done at the appropriate time and in the appropriate place. You certainly don’t want to be in the dark about this topic by any length of the imagination, but at the same time, you can’t afford to shut your eyes to the idea that the customers of your competitor aren’t always the same customers that buy from you.
Sarah continues by saying that once you have completed your research, trend, and competition analysis, you should begin to discover voids in the market and where you may fit back into those gaps.
This involves determining the product categories that, in your opinion, would be a suitable fit for both your company and its customers, and then constructing your business around those categories. This requires you to determine the product categories that, in your opinion, would be an excellent fit for both your company and its clientele.
You should avoid launching with only one or two items because you want to make sure that you are giving the buyer the opportunity to become familiar with your brand. In order to do this, you should avoid debuting with only one or two pieces. You should instead keep your selection reasonably small so that clients can simply find the products from your brand that they are seeking for in the shop. This will ensure repeat business.
“So from that point on, when you have a concept of what you want your assortment to look like, that is when you can begin the process of sourcing the products, the process of price the products, and the process of creating the packaging for your own brand,”
Sarah’s advice for the most effective method of marketing your firm is to “totally shout out what puts your items apart from the competitors.” What makes each of them unique in comparison to the others?
She goes on to explain, “Really look at it from a value angle as opposed to a pricing position,” which means you should consider the value rather than the price.
“Price is one of those things that may be incredibly difficult to compete with, especially in the world of Amazon. Therefore, it is essential that you do a U-turn in the other direction and locate a different technique to separate yourself from the competition and demonstrate the value that you are providing to your consumer with your own brand. That may be due to the fashion, it may be due to the quality, or it may be due to the whole experience that they are experiencing while they are shopping with you.
The takeaway here is that rather than focusing on providing your customers with the absolute lowest possible price, you should shift your attention to ways in which you can maintain your competitive edge by providing value to those customers.
Are you trying to think of ways to get your record label started but coming up empty? Some of Sarah’s all-time favourites are included in the following…
“When I thought about it, the first retailer that sprang to mind for me was Kohl’s, namely the Lauren Conrad brand that they carry. When the business was first started, both partners had a very distinct picture in their heads of the kind of customers they wanted to work with, which contributed to the company’s ability to keep its competitive edge over the course of its existence.
“Kohl’s had a gaping hole in their collection of private brands that needed to be filled, and they were well aware that they needed to appeal to a younger customer base. And Lauren had a profound comprehension of not just the requirements of her clients, but also of the nature of her brand.
Trader Joe’s is an additional example. They are really customer-oriented. They are attentive to the preferences of their clients and work to fulfil their needs.
They built their business on the fact that their customers aren’t hesitant to try new and unique culinary alternatives and flavours. They will take a product that is quite simple and transform it into something unique by adding a taste that is currently popular in the food industry.
“For instance, there is Greek yoghurt flavoured with matcha green tea. So, therefore, they are kind of combining those two different ideals. And as a result, they have truly generated quite a few products that have become cult classics. Because of this, they are a destination for the clients they serve.
When it comes to the final pieces of advice, Sarah emphasises how important it is to start with a strategy that has been clearly outlined.
“I believe that a lot of the time, people get very eager to get into the fun part of designing and producing, but it is crucial for you to go back and make sure that you have a very good understanding of who your consumer is. In addition to this, having a solid understanding of the constraints that your budget places on you financially. Be careful to do some research before settling on a price. Be sure to do some investigating about the quality of the product. In addition to this, you need to make certain that the strategy you are formulating is one that can be executed successfully for you in the years to come.
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