As retailers continue to look for ways to differentiate themselves, they’re paying more attention to private brands—and providing the supply chain enhancements necessary to unlock the collections’ full potential.
During the first quarter earnings calls, retail executives explained the importance of house brands in their product assortments.
Walmart, for one, has recently “stepped up” its focus on private label. Until recently national brands had been more important to the company since “it’s easy to communicate your everyday low prices relative to the competition when you have national brands,” according to director of investor relations Kary Brunner.
Now the retailer is committed to using its house brands to increase its share of wallet. One example, she said, was the slate of new labels Walmart announced in February, including Time and Tru and Terra & Sky for plus sizes. The collections are roughly evenly split between core product and fashion basics with the addition of a sprinkling of trend right looks.
Private label is one of three key areas for J.C. Penney, along with improving its omnichannel capabilities and increasing revenue per customer.
Though the department store chain struggled with unseasonable weather at one point during the quarter, CEO Marvin Ellison insists apparel is showing signs of improvement.
Executive vice president and chief customer officer Joe McFarland said the double-digit boost in women’s active that occurred in the quarter was due to national activewear brands like Nike and Adidas as well as Xersion, the company’s private brand. He also credits house labels a.n.a. and Worthington for connecting with consumers. The retailer’s exclusive Liz Claiborne line resulted in “great success” during the period, the company said, particularly in plus sizes.
Ellison said apparel has benefited from JCP’s supply chain changes.
“We’ve implemented a speed calendar,” he said. “We have reduced the time from developed designs to sales floor by 40 percent.”
He added in some cases JCP is now able to deliver new goods on a monthly basis, which is a new achievement for the company. Tops are a particular focus for this “fast lane” approach.
Speed and flexibility were a factor for Macy’s as well as it strives to boost private and exclusive product from 29 percent to 40 percent of its overall assortment.
“Our margins are better. Our supply chain is shorter, and we are getting more value in the products. The AUR is higher than the average,” CEO and chairman Jeff Gennette said about the retailer’s house collections. “We’re having some really great success with a number of our private brands, and it’s our objective to get all of our private brands performing that way.”
Gennette said across the organization, the company is benefitting from a “massively simplified” merchant structure, which folded merchandising, planning and private brands into one function.
“I think if you asked our partners or our vendors, they would say at Macy’s that we are operating now with courage and more speed and more agility,” he said. “That we are making calls and the divisionals are making calls without oversight. There’s less meetings and there’s more countable people. So I think the new structure is really helping us in execution.”