This past Friday Forbes magazine published an interesting article, “Retailers Fight Back Against Amazon With Private Brands” which presents a very high level look at the effort of retailers to leverage Private Brands as a way to differentiate and fight back against Amazon and show rooming.
Retailers Fight Back Against Amazon With Private Brands
It’s no secret that the rise of show rooming – when shoppers browse brick-and-mortar stores to check out potential purchases, only to buy them later from online merchants like Amazon at lower prices – has retailers shaking in their boots.
As a counterattack, chains ranging from Target and Macy’s to Family Dollar are ratcheting up exclusive, private-label brands – which defy price comparisons – and in the case of Lowe’s, are even reinventing themselves as wholesale brands overseas.
The race for product differentiation and fatter profit margins has even birthed some strange bedfellows this holiday season: Exclusive brands that are the result of partnerships between two retailers.
Cheap chic discounter Target and upscale department store Neiman Marcus are teaming up on a fashion, home and accessories collection that will be sold at both chains.
Meanwhile, Macy’s is setting up Toys “R” Us pop-up shops in 24 of its most highly trafficked stores this holiday season.
Indeed, there are a lot of “interesting frenemy relationships brewing,” Lisa Bradner, chief strategy officer of Geomentum/Shopper Sciences, noted on a RetailWire web forum.
It comes as little surprise.
“Retailers are increasingly threatened with pricing pressure as a result of show rooming as consumers instantly check prices in real time either while they are shopping online or in store,” said Deborah Weinswig, broadlines retail analyst for Citi, in a research note. In turn, “Private label is gaining traction, but in an entirely new way … The need to aggressively innovate and develop recognizable brands has resulted in an increased focus on quickly, efficiently and effectively creating products.”
I encourage you to read the entire article as its always great to see a major print publication acknowledge that there is more to Private Brand then “compare & save.”