My fear about private brands

Blogs Bill Wade July 18, 2013

I am concerned about a continuing trend toward so called ‘private’ brands — both by independents and dealer ‘all-makes’ programs.

Users of this marketing tool are trying to make one of the following points as publicly as possible:

•   We are offering our own alternate brands because national brands are application coverage or technologically insufficient; or,

•   This new brand represents a way to beat the ‘marketing tax,’ those charges for advertising, cataloging, merchandising and training that neither the customer nor distributor needs or wants; or,

•   We distributors (as the last mile link in the supply chain), deserve a greater cut of the margin pie; or,

•   This label is the only way we can be sure you bought this from us in the first place when you want to return it; or,

Over 40 percent of Wal-Mart’s sales are store (private) label; part of the $65 Billion spent on private label products (PLP) in the U.S. last year.

Shouldn’t we be on the band wagon?

With the solid supply base we have in the heavy-duty aftermarket, with at least three national branders competing in each product segment, I frankly don’t get the need for an increasing number of alternate brands.

Several recent studies conclude that 50 percent of private brands are net losers from a distributor profitability perspective even though the store brands have higher margins built into their lower price.

Bill Wade is a partner at Wade & Partners and a heavy-duty aftermarket veteran. He is the author of Aftermarket Innovations. He can be reached at bwade@wade-partners.com.

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