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The value of private label ranges

The value of private label ranges

As buyers increasingly favour private label ranges, do they really know how to realise the full value in this approach? Private label goods have gathered pace in a variety of sectors, most notably the fast moving consumer goods arena where the likes of Tesco, Sainsburys and Waitrose have had to develop products to compete with the big brands – as well as to fight off stiff competition from the rise of the budget chains; Aldi and Lidl.

Likewise, the industrial space has also seen the rapid emergence of private label, and this is now a fully established trend. There are a variety of benefits of choosing private label, and value is no longer measured on price alone. So what should buyers be prioritising when looking to switch to private label products?

Private label products are most successful when they are within product ranges where innovation is limited or not required for the project; the need for a product is that it just does the job. The point is to provide a product at a cheaper price point, to offer an alternative to big brand prices – but compromising on quality isn’t an option. This is where the importance of value comes in, making it possible to have your cake and eat it.

Finding a supplier that can offer a wide range of standardised, quality products at a lower price point is the key to savings. Brands survive because of their reputation for providing quality – they can charge more for the efficacy of their products and the peace of mind of dealing with a reputable brand. Big brands have to recoup their investment in innovation from their entire range of products, so this can also often drive prices up. Private label ranges can offer a viable alternative, but need to demonstrate the same level of quality to compete with the big brands, at a price that’s attractive enough to encourage a switch. It’s akin to Waitrose offering its Essential range – it still carries a hallmark of quality from a retailer that can be trusted, but at a lower price.

With products now so easily sourced on the internet, buyers have never before had access to so much choice, but it can be difficult to understand the quality versus price formula to truly recognise the value that they would receive. Equally, buyers should be wary of the pitfalls of the unbranded grey market, where the evidence of a product having been tested, audited and inspected is often unavailable. Worse, buying from an unknown supplier could result in counterfeit products being bought, thus providing a false economy when the product fails.

Buyers should be looking to work with a supplier that can show proof of adequate testing of products, a commitment to quality and performance, and compliance with industry standards. A tangible stamp of quality and a guarantee should be high on the agenda. These elements, married with a price point which is even just marginally lower than the big brands, should be enough.

For buyers in Maintenance, Repair and Operations (MRO), further savings can be generated through ease of ordering. Working with a supplier that has clear ordering and product referencing (including model numbers and names on the product itself) processes makes buying repeat products straightforward. Buying from one supplier also reduces downtime incurred by dealing with varying invoicing and payment terms of multiple suppliers. Standardising products and processes drives efficiencies which in turn drive savings. RS Components conducted some independently verified research which highlighted the cost of MRO procurement is twice that of product cost – so it is an element worth considering.

The opportunities to save money are clearly evident, and as long as buyers don’t lose sight of the pillars of value (where quality and performance meet), they can realise these cost savings without having to compromise.

 

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