private label tag

by Eric Linxwiler

It has been a banner year for private labels. Inflation and the rising cost of living have changed how consumers shop, leading more to turn to store brand alternatives to save money. More than 87 percent of consumers are now opting to buy private labels at least some of the time, and among those shoppers, 90 percent say private labels provide better value for the money. 

Striking the Right Balance to Retain Loyal Customers

Many retailers believe this could signal a lasting shift in consumer habits that continues even after inflation calms. In order to retain the loyalty of these customers, however, store brands will have to continue to keep costs low and quality high, which is no easy task given the economic conditions and continued supply chain challenges. Inflation, material shortages, and logistics bottlenecks have complicated sourcing operations since the pandemic. Given the frailty of the global supply chain and continued geopolitical turmoil and weather-related disruptions, certainly, there are headaches that lie ahead.

To get ahead of these challenges, retailers serious about scaling their private label brands need to commit to a digital transformation of their supply-chain operations. Digitalization creates competitive advantages by cutting costs and helping to bring products to the market faster, while giving brands and retailers the agility they need to navigate global challenges.

Here are three examples of how a robust muti-enterprise platform can create strategic advantages for private label brands:

1. Smarter Material Procurement

Supply chain management software can identify missed cost-saving opportunities and show landed costs for different commodities based on countries of origin — but thanks to recent advances in artificial intelligence, it can do so much more than that. It can also help predict demand and identify alternate or future supply sources.

Digitalization creates visibility into prices, supply bases, and costs, enabling predictive sourcing and allowing buyers to negotiate more transparent agreements. When brands and retailers have visibility into sources and suppliers they are not already using, they are better able to mix and match materials during the specification and procurement process. This visibility is key to sourcing competitively, especially for businesses that may be expanding their private-label offerings or branching out into new categories.

2. Automating Quality Management

Retailers staking their reputation on store brands need intelligent systems for ensuring quality. Multi-enterprise platforms streamline the process of quality management, creating a central repository of inspection reports and providing visibility into the historical performance of every factory and vendor a retailer leans on.

Multi-enterprise connectivity can also track sample requests and provide automatic updates when samples ship. These systems also speed up the process of requesting quality inspections and tests by interfacing directly with third party labs and inspection providers — and, crucially, they reduce the risk of safety issues and defects by providing continuous alerts as red flags arise, allowing quality teams to manage by exception.

3. Vetting Suppliers and Ensuring Compliance

In addition to monitoring quality, brands and retailers must execute due diligence to ensure their suppliers are living up to the expected standards of social and environmental responsibility. Multi-enterprise platforms help here, too. Many non-profit and for-profit organizations maintain databases of vetted suppliers, but those databases still need to be cross-checked by buyers, merchandisers, and compliance managers. A cutting-edge multi-enterprise platform can integrate databases such as amfori, Higg, WRAP, and others directly into their workflows. 

This software saves time not only by speeding up the onboarding of new suppliers, potentially shaving weeks off the process, but also by managing certification statuses automatically for buyers and merchandisers, alerting them whenever certifications have expired or there are other potential compliance issues. These systems allow businesses to quickly vet factories, which is crucial when they are determining who they trust to produce their branded products.

Given the continued pressure on retailers to bring products to market more cost effectively, the profitability of private label lines increasingly hinges on the efficiencies a multi-enterprise platform creates.

Eric Linxwiler is Senior Vice President of TradeBeyond. He has over 30 years of experience in enterprise software and cloud-based service companies with a specialty in supply chain optimization and workflow management.

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