By Camille Nigon, August 2019
Today, we see more retail chains than ever before. However, despite the variety of options, if you explore any of them a little deeper, you will find a similar pattern – an expansive brand of products unique to that retailer, otherwise known as a Private Label Brands or Store Brands. In recent years, retailers have shifted their focus to increasing their brand recognition. In order to accomplish that, they need to deliver quality goods at competitive prices. Thus resulting in a “private label war” which drives down the prices of store brand assortments, creating more competition for well-known national brands.
The groundwork for these “private label wars” can best be seen by comparing consumer attitudes over time. Rewind and imagine walking through the aisles of any retail store 20 years ago, trying to make a decision between a private label product and a well-known national brand that ran commercials during the big game. If you had your kids with you, or if you were the child in this scenario, good luck in choosing to buy the private label/store brand product without some resistance. Back then, private label products were synonymous with bargain shopping, and the typical consumer opinion was that buying a store brand product meant you were sacrificing quality in order to save money during your shopping trip.
Fast forward to present day, and you will find that consumer opinion has shifted significantly, with, 61% of consumers saying that quality has increased significantly for private label brands. However, between the retailer, supplier, factory and product, there still remains many quality and compliance challenges for retail private label brands in today’s competitive landscape.
#1: Supplier Integrity & Compliance
The measurement of a supplier’s compliance within the company’s international rules and regulations
are crucial in order to ensure a functioning supplier management program. Non-compliance can be costly, through unauthorized bills, missed pricing and discounts, unawareness of the changes in the global market, and much more. A common issue is human error. In order to avoid this, stronger collaboration between the retail and supplier is needed.
Additionally, private label retailers have hundreds of suppliers worldwide. This can lead to multiple currencies, different regulations and duplicates in your database which leads to problems keeping up with the number of active suppliers vs. outdated and non-compliant suppliers, in order to avoid doing business with non-compliant suppliers a single automated, real-time process can help to alleviate the above mentioned challenges for supplier compliance.
#2 Factory Integrity & Compliance
Factory compliance is also a big topic in the retail industry. As Factories have to be audited and comply with the General Manufacturing Process (GMP), Corporate & Social Responsibility (CSR) and Global Security Verification. Non-compliance with the international standards and being unaware of the state of the factory can lead to an international PR disaster for any retailer doing business by producing private label products in these non-compliant factories.
#3 Product Integrity & Compliance
Ensuring product safety and quality, respecting substance regulations, handing all the document requirements – i.e. the declaration of conformity in the EU, ensuring the labelling and testing requirements on a global level in regulatory landscape can be cumbersome and pose some big challenges. The consequences of not implementing a proactive 21st century digital compliance process can be grave. Not only are there real legal repercussions associated with non-compliance, but there is also the risk of human harm and catastrophic public relations damage. Organizations must also manage the many challenges throughout their upstream supply chain, including having transparency into their supply chain and as already mentioned ensuring that suppliers are compliant. It is recommended to integrate compliance as a function of the product development lifecycle as it is becoming increasingly important for product innovation.
How do we solve today’s Challenges?
What if retailers had one system of record that connects to their leading auditing and testing firm? What would that mean for the retail market? How will this system help ensure the quality, compliance and integrity of today’s retail store brands?
Speed, Scale, Simplicity and Compliance are critical to keeping the supply chain running as efficiently as possible. However, from the retailer’s perspective, sourcing-to-shelf, is fraught with safety, quality and compliance hazards – one mistake could not only incur hefty fines but could irrevocably damage the reputation of any retailer or brand. Staying on top of the latest corporate and regulatory requirements demands efficient collaboration between retailers, suppliers, 3rd party auditing, compliance and testing organizations. It requires a strong quality & compliance, trade management platform, linked to a global trade network.
To learn more about interlinking quality and compliance throughout the entire end-to-end private label development process – inspirations, line planning, development, sourcing, quality and overall speed-to-market please contact us directly or find more information @ www.cbxsoftware.com