Private labels can be a boon to business — just look at the success of private-label goods in grocery stores across the nation. Many jan/san distributors say that the industry’s private labels have not yet reached the stature of those in the grocery industry, but there are opportunities for growth.

Distributors who are looking to enhance their private-label presence, need to evaluate what it does for you and your customers, and address those areas that are not providing a clear benefit.

Evaluating The Label
There is one primary way to tell if your private label is paying off: sales success. If people aren’t buying, you need to re-evaluate why you carry these products in the first place.

Larry Mulcahy, president of APP Inc., Elmwood Park, N.J., says his company initially began selling a private label approximately 20 years ago to provide a product that would be more competitive than the national brands for bids. Mulcahy says the private label continues to be a success because of its lower cost.

As sales indicate a continuing market for APP’s private-label products, Mulcahy also considers other aspects of these products. Of all the products offered by APP, 80 percent are national brands and the remaining 20 percent are labeled by APP. Mulcahy evaluates the success of private-label products in the same way he does national brands — by looking at performance, the acceptance by end users and packaging.

“We look at everything, including the amount of time we are devoting to selling the product versus the growth we’re getting from the product,” says Mulcahy. “The products that we’re looking to spend time on are the ones we can grow around 20 percent per year, while the ones that are static, we tend not to spend time promoting, whether it be national brand or private label.”

To ensure his company’s private labels are paying off, Marty La Barbera, president of All-Brite Sales Co., Jacksonville, Fla., keeps a close eye on his relationships with manufacturers that supply the company with private-label components.

His company’s private labels come from a variety of sources — approximately 40 percent are made in-house. Another 30 percent are made using a superbase, which requires All-Brite to blend the chemicals with water and package it. The final 30 percent of the company’s private-label products are packaged and labeled by manufacturers on behalf of All-Brite.

Obtaining the best prices from manufacturers is critical to All-Brite’s operations. To do this, it negotiates heavily with its manufacturers and compares private-label costs to those of the national brands.

“When I mix my cleaner I look at what a case of four gallons costs,” says La Barbera. “Then, I compare that to the cost of my national brands to see if the private-label costs are in line.”

No Pay-off
John Treat is one distributor who has found that doing business with his national manufacturer — with whom he has developed a good partnership — far outweighs the name-recognition benefits a private label provides.

Treat, president of Treat’s Solutions Inc., Ada, Okla., says the company used to carry several private-label items, but now carries only one — its paper line. The reason for this comes down to his goal of creating more inventory turns.

Treat says companies in the industry generally turn their inventory six times per year. His company is at just over nine turns, with the goal of increasing that to 10 or 11. One of the ways to increase inventory turns, Treat says, is to sell national brands.

“When you use a national branded company, you have the latitude of having a truck deliver every two weeks or every month,” says Treat. “You don’t have to have 25 to 30 cases to make minimums needed for the private label.”

However, the private labeled paper line that the company does carry is a big seller.

“The good news about the paper line is we buy a lot of volume,” says Treat. “We buy straight from the truck three or four times a month.”

Treat says there are other aspects of a private-label line that distributors need to keep in mind when evaluating a private-label’s success — mainly, the time and effort involved in maintaining it.

“I really don’t miss the strain of trying to stay current with 20 products to make sure that we don’t run out and don’t overstock — which are issues with the private label thing,” says Treat. “You have logo fees, label fees, [U.S. Environmental Protection Agency] registration fees and sub-registration fees. All that is gone when you are dealing with a direct ship from a manufacturer.”

Changing Perceptions
After evaluating the pay-off a private label provides a company, it is a good idea to promote the line as “quality” products, says Linda Silverman, vice president of sales and marketing for Maintex, City of Industry, Calif. Displaying the line’s effectiveness can change people’s long-standing perception that private labels are simply a cheap alternative.

Maintex is a distributor and manufacturer — it manufactures its own private label chemicals and develops chemicals for other companies outside its geographical region — while it distributes national paper and equipment brands.

As a manufacturer and distributor, Silverman knows what it takes to make a product stand out. First of all, she says a private label should never be promoted as generic. “I think it’s really important to position our line as good as, or better than, the national brand,” Silverman explains.

However, this requires a quality product — and some innovation. “We look for problem areas that our customers have and then we try to create programs that will provide solutions to those problems,” says Silverman. “We want to provide a complete program with literature, training material and everything that will support those programs.”

Label Image
Addressing customer preferences, offering a quality product and providing all-around cleaning solutions is important to how a customer views a private label, but so too, is what’s on the outside.

When working with a manufacturer, know what type of design you are looking for, La Barbera advises. Also, pick the name of your label very carefully — for example, the “All-Brite” name suggests what will be the end result of using this product.

La Barbera says his company’s label has been largely the same since the private brand’s inception in the 1960s. “I never really liked our logo a whole lot and I knew we needed to change it and update it,” says La Barbera. “My philosophy was, I wanted something that didn’t look retail, but didn’t look institutional. I wanted to find a middle ground.”

It was a long process to update the label because several manufacturers that wanted to supply All-Brite with its private label proposed designs La Barbera did not care for. “These people would keep coming by and I would tell them this is what I want to do, and they would send me suggestions, but nothing was any good,” he says.

The disappointing designs continued for about a year when La Barbera finally found a manufacturer proposing a design that he was looking for. After some tweaks, La Barbera has a four-color mylar label that he is satisfied with.

He says the “All-Brite” typography stands out, as does the type treatment on the names of the products. For example, a product called Tempest has type treatment that makes the letters appear as if they are being blown around in a storm.

“We tried to make the type fonts match the product names, so it gave them even more distinction on the shelf,” says La Barbera.

“The labels made it look attractive, and when something looks attractive, you automatically think what’s inside must be good, especially when you open the lid and it smells good,” La Barbera says. “Now, I’ve engaged the eyes and the sense of smell. If it looks good and smells good, it must be good.”




POSTED ON: 4/1/2007