PRIVATE LABELS. Overview 1.The history 2.Why private labels 3.Theory and research 4.Our experience...
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Transcript of PRIVATE LABELS. Overview 1.The history 2.Why private labels 3.Theory and research 4.Our experience...
![Page 1: PRIVATE LABELS. Overview 1.The history 2.Why private labels 3.Theory and research 4.Our experience 5.Creation 6.Our approach to product cycle management.](https://reader033.fdocuments.in/reader033/viewer/2022051216/5697bf931a28abf838c8f99b/html5/thumbnails/1.jpg)
PRIVATE LABELS
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Overview
1. The history2. Why private labels3. Theory and research4. Our experience5. Creation6. Our approach to product cycle management7. Our approach to portfolio development8. Sourcing9. Conclusion
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The History
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Historical outlook: from price to category management
• Traditionally:– generic product offerings
– focus on price-value proposition
– lower priced alternative
– higher margins with little to no marketing efforts
– Focus on price resulted in commoditized categories
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Historical outlook: from price to category management
Nowadays private label brands became more of an instrumental priority. Retailers advanced from the generic mindset to a new approach.
“Own” brands are developed in a way that they fit with the brand promise of the retail store, and they also give consumer drivers a key point of departure to enhance and celebrate the overall retail brand proposition to keep consumers coming back for more.
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Fundamentals of the new approach
1. Collaborative category management2. Salient consumer need should be the springboard
for an “own” brand proposition3. Leverage the consumer connection via own brands4. Optimize and promote synergies of the points of
touch you own and influence5. Right balance of similarities and differences with
brand messaging and portfolio offerings.6. Calibrate the “own” brand promise and the proof in
the product
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Private Label Continuum
Level 1 Level 2 Level 3 Level 4
Generic Low cost Alternatives
Own label entry & stand alone retailer brands
Tiered Product Offerings across Differing Price Points
Total Category Management and Innovation Leaders.“Destination Brands”
No frills substitutes to everyday famous brands. Evolving from unknown brands in the 70’s
Bearing the name of the retail store, comparable on quality and price
Specialist sub-brands, such as Boot’s Expert line of private label personal care
Offering new of unique credentials that create reasons to come to a store; e.g. Kroger’s Private Selections brand that includes some original formulations for which there are no branded alternatives
Low price strategy Differentiation strategy
Accounts for lesser share of sales and a lesser amount of time and investment
Accounts for higher share of sales but requires more time and investment
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Why private label?
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For KupiVip own brands provide a competitive edge
Private Labels
ExclusivityUniqueness
Profitability driver
Competition prevention
Anticipate demand
Control / promote
brand
Secure traffic
Build loyaltyDestination
Speed-up time to market
Enrich brand message
Stand out from competition
Consolidate margin pooling
Match consumer demand
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Research in US and EU (clothing & food) demonstrates that…
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Research demonstrates that there are clear benefits, as perceived by consumers
• Private label - easy way for shoppers to trade down to less expensive items while still meeting their everyday needs.
• Consumers who may have been reluctant to buy private label brands were driven to try them during the recession
• Women say their top concern when choosing which brand to buy is quality (cited by 37%), but nearly as many cite price (34%)
• Only 3% of women claim that buying a brand name they know is important to them.
• Majority of consumers who have tried private label have deemed them as good as national brands
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Research demonstrates that there are clear benefits for the retailer as well
Traffic 31% women say that a brand’s exclusive presence at a store makes it a destination for them.
Revenue 33% of women are likely to spend more at a store that carries a favorite brand exclusively.
Affinity 64% percent of women in the survey associated perception of the brand with the store where it was sold
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Younger and less wealthy consumers are more responsive to exclusive presence of a brand at a store
18-24 25-44 45-64 65 & older
41%
32%30%
21%
Women who say a brand’s pres-ence at a store makes it a destina-
tion for them, by age
Less than 30k 30-50k 50-100k
35%
26%24%
Women who say a brand’s pres-ence at a store makes it a destina-
tion for them, by income
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In some cases 40-70% of respondents indicate that brands exclusivity increases purchasing frequency, amount spent, word of mouth
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By far the most effective channel to increase awareness if own brands is in-store promotion
In store promotion Mass media Word of mouth Other
53%
30%
10% 10%
Sources from which respondents learned about own brands at a store
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Our journey…
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Our approach to own brands is based on a number of key principles
Key attributes of our approach are:– Data driven from start
– Multi-brand approach
– Constantly renewed portfolio
– Fast-Fashion model
– Mixed supply-chain approach: on demand plus pre-order
– Mixed portfolio sourcing approach
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Our Brands were created through cross-selling analysis of our clients
Multi brand approach permits to capture several segments
Middle one -> Brand AThe coquette one -> Brand BMum & Family -> Brand CThe fashion sporty -> Brand D
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Fast fashion product development cycle per brand per collection takes 4-5 weeks
Analysis Design1-3 weeks
Production2 – 3 weeks
Sales3 days - 4
weeks
Portfolio review
A process that sticks to market trends – optimizing inventory and sell-out rate
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Selection and data are a vital part of the creation process
Data analysis Collection mood board & samples
Selection / buyer committee
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Constantly renewed and updated portfolio on monthly basis permits keeping customers interested
Start Take off Growth Maturity0%
20%
40%
60%
80%
100%
New collectionBestsellersLast cycle (last month's collec-tion)
Over 6 months period
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Sales cycle consists of several steps
Analysis of historical data / portfolio sales
performance
Development of new models based on
analysis
Private Label design/development
committee
Sales on platform #1price X
Sales on platform #2price X – 30%
Sales on platform #2price X – 60%
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Sourcing strategy for Private Labels is based on a mixed approach
Production Delivery times Advantages
Items produced on demand (orders placed on KupiVip) Moscow, Russia 2 - 3 weeks Low Inventory
Repeat production of star models “star” models Moscow, Russia 2 - 3 weeks Low Inventory, Low
Commercial risk
Licensed goods from foreign brands Brand owner Various Goods ready to be
sold
Pre-produced product categories in specialized countries Abroad 2-3 months Specialization, price,
quality
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Development of the portfolio
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Three key approaches to development of own brands portfolio
Development of own brands ‐ Through data analysis (discussed previously)
Cooperation with leading Russian designers‐ Targeting premium and mid segment markets
Cooperation with foreign brands ‐ Exclusivity representation in Russia or licensed
production
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Portfolio consists of several sources of goods
Approach / source of goods Advantages
Design and production of own brands Quick reaction to market needs
Cooperation with leading Russian designers
Design and production managed by partners PR opportunities
Cooperation with foreign brands Design and production managed by partners PR opportunities
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Cooperation with Russian designers rests on three pillars
Sell designers existing brand
Great PR and Promotion
opportunities
Brand developed by designers
exclusively for KupiVip Holding
Unique proposition by KupiVip
Combination of approach one
and two combined
Best of both
Cooperation with leading Russian designers
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Cooperation with leading Russian designers: selection schemeM
edia
pre
senc
e /
pub
licity
/ st
reng
th o
f des
igne
rs’ b
rand
na
me
Design and production capability of the designer
Cooperate to sell existing brand + Develop exclusive brands for KupiVip Holding
Consider cooperation to develop exclusive brand for KupiVip Holding
Use Designer’s name to promote current Private Label brands
NO-GO zone
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Cooperation with foreign brands: basic principles
• Foreign brands sold exclusively by KupiVip Holding in Russia
Exclusive representation in
Russia
• Overseas brands sold in coherence with brands other sales channels in Russia
Additional sales channel
• Development of new brands exclusively for the Russian market with foreign brands
Co-development
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Advantages of own brands beyond margin…
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For KupiVip own brands bring loyal customer that purchase other brands and generate additional revenue
Purchased only private label Purchased other products on the same day as private label
First purchased other brands then purchased own brands
First purchased private label products then purchased
other brands
Buying behavior of customers who purchased private label in 2012
24%
35%
22%19%
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Customer loyalty is key driver of revenue
20%
25%55%
Over 3 purchases a year2 purchases a year 1 purchase a year
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Conclusion
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We think the following factors are critical for success of own brands in ecommerce in Russia
• Rules of the new approach (stated above)• Creation through data• Speed of development of new products• Flexibility & adaptability to consumer needs• Focus on in-store promotion• Mixed sourcing approach• Solid partnership with key suppliers
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Thank you.