Private Label Sourcing
Strategies to differentiate and defend
Retail has entered a period of rapid change – omnichannel forces are reshaping consumer behaviour and the competitive landscape, the pace of international expansion continues to grow, and supply markets face more volatility and regulation. In this new environment, retailers are looking to private label sourcing to drive more differentiation on the shelf and to defend market share, margin and brand reputation.
As a $1 trillion global market, the private label industry accounts for nearly $1 of every $6 of consumer spend. In the United States, private label made up 18% of consumer goods dollar sales in 2011. Key ‘mega-trends’ are driving the importance of private label for retailers. Rapid population growth – disproportionately located in developing regions – is opening up low-cost country sources of supply, creating new markets for retail expansion, driving commodity volatility, and fuelling supply chain complexity. The rise of the omnichannel retail environment is driving demand for innovative and exclusive private label products since national branded merchandise is easily sold by online competitors. Finally, consumer interconnectedness, enabled by social media, has led to greater transparency to private label supply chains.
Whether looking to create or grow innovative private label offerings, retailers face the imperative to enhance their sourcing capabilities. Deloitte’s 2012-13 Private Label Sourcing Survey highlights shifts in market trends and uncovers leading private label sourcing practices. With 266 respondents from apparel, general merchandise and grocery retailers, the survey is one of the largest and most comprehensive studies of the market to date.
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