Department stores like private labels because they command 20% higher profit margins than their designer counterparts.
But in many categories, like beer and baby food, private labels are irrelevant, with less than 2%market share.
In addition, the exclusivity that private labels provide generates customer loyalty, especially among more upscale middle class consumers.
It has been struggling to compete with lower-priced private labels, leading to intense downward pressure on gross margins.
Many analysts believe that the flight to private labels will outlast the downturn.
The department stores that are left have developed character and images of their own through exclusive designers and private labels.
FORBES: J.C.Penney Tramples on Liz Claiborne and Misses a Great Opportunity
He pans Martin's plans to expand the private labels from their present 6% of inventory to include handbags, shoes and accessories.
Bernstein, a research firm, estimates that about half the people who have recently switched to private labels will never go back.
Bernstein, thinks the higher prices will push consumers to the private labels.
"The quality of private labels is far better than it was even just five years ago, " says Joseph Altobello, an analyst at Oppenheimer.
The big retailers like their private labels because they typically provide 5-10% more profit than branded products, says Euromonitor International, a market-research company.
ECONOMIST: Competition in your local supermarket is getting vicious
He also indicated that while the current assortment reflects 50% in private and exclusive labels, he anticipated that private labels will drop to about 25%.
Jones Apparel competes with brands like Liz Claiborne and Phillips-Van Heusen, as well as department store mainstays such as Polo Ralph Lauren and store-owned private labels.
FORBES: Jones Contemplates Losing Its Jeans, Stock Going To $15
Without the benefit of a large brand name behind them, small private labels like ILF and Ellen Christine Millinery must work twice as hard to be seen and worn.
Private labels also offer more control over product development and distribution, enabling department stores to release new products as much as 60 to 90 days ahead of their name-brand competitors.
It also carries many popular brands and private labels.
FORBES: El Corte Ingles - Spain's Only Department Store Chain is Struggling
One way to revive growth will be to place a greater emphasis on emerging markets in Asia and Latin America, where private labels are unlikely to take hold in the near term, since retailers are smaller and do not have the knowledge or resources to produce their own brands.
Mr Christensen thinks that RoboBraille could be funded by a combination of public and private grants as well as charging pharmaceutical companies for producing Braille labels for medication which is soon to become a legal requirement.
Even when picking up the tab ourselves, we share the belief that money spent shopping for shoes and scouring consignment stores for designer labels far outweighs the value of an ocean view or a private room.
应用推荐