Recommended Reading: 5 Reasons Private Label is Expanding in Distribution

Distributors cite several reasons for considering a private label strategy.

In a recent MDM survey, about 40 percent of distributor respondents said they included private label products in their offerings. Of the 59 percent who don't offer it currently, 13 percent said they had plans in the works to do so.

Growth in private label has really picked up since the start of the recession in the U.S. JB Steenkamp, author of Private Label Strategy: How to Meet the Store Brand Challenge, says that as a share of the Consumer Packaged Goods market, for example, private label moved from about 17 percent of units to nearly 22 percent in the wake of the economic crisis; it now sits about 21 percent.

So why are more distributors getting more involved in private label? Here are five reasons cited by distributors:

  1. Margin opportunity
  2. The ability to offer additional products at a different price tier
  3. Defense against new competitors, including online players such as Amazon
  4. To combat channel convergence. More distributors are looking across sectors to expand their offerings and their bottom lines.
  5. To fill holes in product lines or to meet specific needs of existing customers.

Get more details on why private label's role in distribution is growing in the latest issue of MDM Premium:

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Access the Feb. 10, 2014, issue of MDM Premium now.

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