Kirkland Truck Parts?
First, know that I don’t have an ‘I-told-you-so’ bone in my body. But the November 2004 issue of Truck Parts & Service carried a column of mine detailing concerns with China as the end-all solution for supposedly price sensitive heavy-duty truck parts.
Most of the problematic scenario I painted there has come true. Occasional quality concerns, shifting currency valuations, evaporating government rebate support, a few earthquakes and tsunami and environmental concerns have lined up as a perfect storm to rain on the Chinese parade toward manufacturing dominance.
It remains clear that source of supply is an important issue. However, there are two ways to increase results in this market: improving how you buy and improving how you sell.
My personal opinion has always been that innovation in sales pays a far greater dividend (and lasts longer than) a purchase advantage. Customer service can become a virtually unassailable competitive advantage, whether the competition is another independent distributor or a dealer.
With these observations as background, there are some real questions (at least to me) of the value of private brands as a major distributor weapon in the heavy-duty truck parts wars.
We are not alone in facing this question. Total private label share of US retail sales approximate about 25 percent — a 50 percent increase over the past nine years. Wal-Mart has already achieved 40 percent of its sales on store brands and store brands are present in 95 percent of consumer product categories.
The simple reason that private brands are succeeding is that too many name brands lack the development skills to avoid becoming unchanging commodities that can be reverse engineered — quickly, accurately and cheaply — then made and sold for a lot less, without any perceived loss of value by the end user.
Distributors and groups have deployed a range of private labels that roughly fall into three historic patterns: