Maintaining the Discussion on Private Labeling

The latest issue of TED magazine had a couple of articles about private labeling. Tammy accurately portrayed many of the issues that distributors should consider if they think about private labeling and five independent distributor stalwarts of the industry expressed their opinions.

Opinions are nice, and expressing concern for others is admirable, but private labeling, and the increased purchasing from price-oriented lines is a business decision that requires an understanding of the issues and extensive research.

Private labeling is a reality in the electrical industry with two national chains, Rexel and City Electric, openly admitting to private labeling, and another industry player, HD Supply, pursuing private labeling. Others are researching and contemplating.

Last year we conducted extensive research on the private labeling issue, surveying distributors, manufacturers, reps and end-users/contractors. Our interest was driven by questions that we received from manufacturers.

Overall we wrote eight articles that were published in Electrical Wholesaling on the subject

• Electrical Distributors Speak Out
• Distributors’ Thirst for Market Share
• Manufacturers’ Perspective on Private Labeling
• The Myths of Private Labeling
• Contractors Speak Out
• How Do Distributors Protect Themselves
• Reps React
• Generics vs. Private Labeling

The results were interesting and our conclusion was that private labeling is here to stay and the greater opportunity for distributors (and risk to manufacturers) is generic / unknown products (presuming they meet quality standards). An issue then becomes whose brand is more important (see our upcoming article next month in Electrical Wholesaling which reveals brand research we recently conducted).

Channel conflict may arise, especially with some name brand manufacturers doing private labeling for national chains; manufacturer suppliers producing product for distributors; and the issue of a distributor private labeling key manufacturer products as the electrical industry pie for brand name manufacturers gets sliced even thinner.

Are you being affected by private labeling in your market? Are you purchasing more from price-oriented lines? What is the future of branded manufacturer sales? Is brand important to you? Tell us your thoughts