Though the term “private label” long has been associated with cheaper, generic knockoffs of well-known national brands, a closer look at the emergence of four highly successful direct-to-consumer private brands indicates that the stereotype might be shifting—and it sheds light on the new reality of the private-label consumer class.
Evaluating Warby Parker, Mack Wheldon, Casper and Bonobos, NPD Group discovered that consumers who shopped these private DTC brands in 2017 more often held graduate degrees versus the 17 percent of all consumers who buy apparel online and also earned a master’s degree or higher. For Warby, Mack and Casper, shoppers with a grad degree numbered in the mid to high 20s percent-wise; those numbers come in above 30 percent for Bonobos customers, according to NPD’s findings.
Overall, these brands’ shoppers have deeper pockets, too; those earning more than $100,000 numbered in the high 30s to mid 40s, percent-wise. This is notably ahead of the 31 percent of general online apparel shoppers who earn a similar salary. Data indicates these DTC private-label shoppers are high-value spenders, buying double what the general online shoppers did last year, according to NPD.
This shouldn’t come as a surprise; since their inception, each of the four brands has been associated with, to varying degrees, innovation and premium quality. A short-sleeve button-down from Bonobos will set buyers back $88; Casper’s mattresses are, well, mattress-priced; shoppers have to cough up from $24 to $28 Mack Wheldon boxer briefs, around twice what a Hanes six-pack costs; and Warby Parker has earned its reputation partly based on cutting out the middle man and bringing down prices while maintaining quality and style in eyewear. Consumers have rewarded their private labels for their ingenuity and for thinking outside the box.
While these brands are focused on direct to consumer operations, national retail chains like Target have achieved great success with their owned brands, including kids’ label Cat & Jack and A New Day in women’s apparel, which launched in late 2017. Amazon also is investing in private-label apparel brands such as Lark & Ro and Goodthreads, in addition to its Amazon Elements and Amazon Basics brands. In fact, NPD’s research shows that private-label apparel accounts for close to one third of total spend on apparel, and more than one third of share of apparel units. This translates to a dollar up one point over 2016, while unit share increased three points over the same period.
To stave off competition from private-label DTC upstarts, NPD recommends that national retailers invest in developing or acquiring their own innovative, premium-level e-commerce private brand.
“Instead of offering generic alternatives to national brands, how can your product differentiate itself outside of price?” the report said.