Private Brand Development: Opportunities And Challenges

H&M has recently launched new products to the market, labeled "Versace (Versace) forH&M" and "Givenchy (Givenchy) forH&M" and so on. The purpose is to get rid of the imitation of H&M's plagiarism, but in fact, it is conducive to preventing consumers from "downgrading consumption" - buying the "self owned brand" product of the department store.

And in April 5th, Dangdang owned its own brand children's clothing and its own home brand low-key line, set off an electronic business platform gathered to encroach on its own brand.

Nandu correspondent has learned that Jingdong mall has also set up a "private brand Department". Good Lok is also discussing cooperation with its own brand consultancy company. Besides the development of joint brands such as angry birds and plant zombies, the CEO Bi Sheng also publicly stated that Le Tao network will be launched gradually.

"At present, physical department stores such as Wangfujing department stores and thousands of general merchandise stores also have a lot of trouble in their own brands, which is an ad hoc payment method for settlement of behalf of factories."

Liu Hui, general manager of Beijing Zhao Yi retail companies, told Nandu reporters that private brand is the most powerful weapon for retailers to increase profits, but the potential threshold is quite high.

If we blindly develop, we will repeat the "great decline" of more than 10 years ago.

Every tactic of a private brand.

"In addition to the DangDangBaby children's clothing that is already on the line, we will expand the product line of our own brand to toys, baby carriages, early childhood supplies and other fields in the future, and will try a variety of business models, such as special distribution channels. Soon there will be" bird 3 mall "in Dangdang.

Wang Yue, vice president of Dangdang net and general manager of baby business department, told Nandu reporters that the reason why they choose to rely on children's clothing is to pry open their own brand market. First, Dangdang's data on "0~13 year old" children's consumption habit analysis are very detailed; two, the development of Chinese high-end children's clothing products is still relatively blank.

In Wang Yue's view, the difficulty of private brand development is not in procurement, such as sourcing and manufacturing, but in planning, marketing, product planning and product design.

This requires a professional team to operate.

"Dangdang has set up its own brand operation team at present. The responsible person of this team is from Lining, Mei bang and other famous clothing companies, and is familiar with brand building and operation."

However, the establishment of such a private brand operation team is not without difficulty.

"Just pricing has a lot of art.

This involves the question of how the inventory is sold throughout the year, how the sales are, how the fabrics are priced, how much money the processing and packaging cost, and so on.

Liu Hui, general manager of Beijing Zhao Yi retail companies, told reporters in Nandu that such buyers must know both sales and fashion production, which is "rare" in China.

If we regard all customers as a model of "electricity supplier + fashion", perhaps Jingdong mall's approach is more convenient.

According to people familiar with the matter, Jingdong mall has set up its own brand department, and its trader is the vice president of Wu, who is a job hopper to Jingdong.

Besides, it's like happy Lok, Wangfujing.

Redemption of profits

Retailers' enthusiasm for their own brands is no less than the strong desire of brand manufacturers to control shelf occupancy.

AC Nielsen research found that consumers' loyalty to a retailer is very low, and the main reason is that there is not enough difference between stores.

If we develop our own brand, we can form the differentiation advantage of the retail market.

Moreover, Nelson has investigated the consumption habits of Chinese consumers. The results show that Chinese consumers have relatively low awareness of their own brands, while in the past month, only 15% of consumers have bought their own brands. This also indirectly proves that private brands still have great market opportunities and development opportunities in China.

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The greater temptation is to raise profits.

"Generally speaking, there are about 60% gross profit margin of the brand textiles, which are allowed to return. The daily gross profit is about 60% to 65% (the buyout can be as high as 80%), the snack food has 50% gross profit, and the shoes have 55% to 60% gross profit (allowing 30% return rate).

Liu Huiru is the analysis.

In contrast, according to public information, last year Dangdang net gross profit margin was 13.8%, while Jingdong mall gross profit margin was only 5%.

It is worth noting that retailers, especially B2C electric providers, are eager to "redeem profits", behind which is the will of VC.

"In the past, VC often used sales growth rate as an assessment requirement, but now it is determined by gross margin and capital flow status."

Chen Hu, vice president of Le Tao network.

Hidden risks

But like two sides of the coin, private brand goods are mainly bought by cash, gaining independent pricing power.

"Take small household appliances as an example.

The average price of Joyoung soybean milk machine is about 300 yuan.

If B2C electricity supplier turns Joyoung soya bean milk machine into its own brand, changing the packaging, the selling price will be adjusted to 150 yuan.

The question is, will the $150 product be better? Even if it is, will consumers abandon Joyoung and beauty and choose your brand? "An insider told Nandu reporters that only in some areas with low penetration of brands can they succeed in making their own products, such as home accessories.

Clothing and textiles seem to be consuming a lot, but the trend is changing too fast. Brands such as ADI, Nike, and 31st degree are not able to resolve their chronic diseases.

Little known "secret", and "allegedly, Beijing copper cattle company has undertaken the order of Dangdang private brand clothing production, and the company is actually a customer's foundry.

How to balance? Liu Hui told reporters in Nandu, "now, Wangfujing department stores, thousands of department stores and other retailers are considering following the Gome and Suning mode, working with the banking system to create a" acceptance bill "for behalf of the factory.

Liu Hui gave an indicator, "roughly estimating, to develop a brand of its own brand, with sales of at least 18 million per year."

The sales performance of single product 18 million is not difficult for Dangdang, Jingdong and other electricity supplier companies.

The new problem is that the current electricity supplier industry is "cash is king", but the more orders it means, the more cash it needs to pay.

Industry perspective

Only in some areas where brand penetration is low can self made products succeed, such as home accessories.

Clothing and textiles seem to be consuming a lot, but the trend of fashion change is too fast.

In the past, VC often used the sales growth rate as an assessment requirement, but now the gross investment rate and capital flow condition are used to determine additional investment.

Private brand goods are mainly bought by cash, gaining independent pricing power. On the one hand, they bring huge profits to retailers and raise the threshold for competition. On the other hand, they also bury bombs for their inventory backlog and cash flow.