What are the criteria for Private Label goods to really work?
1. Fascinating article on big retailers trying to mimic Trader Joe’s (TJ), Aldi and (not mentioned) Costco’s Kirkland uber brand.
2. And, Keychain sounds like an interesting matchmaking platform.
3. But, what’s missing from the success formula of TJ and Aldi?
a. They don’t have duplicate, name brands next to their private label. This creates redundant inventory investment.
b. They don’t offer an array of SKUs – just two for peanut butter – smooth and chunky.
c. And, the formulas for the SKUs are to be good or better in quality than the #1 brand.
d. Because of fewer SKU’s and 20% lower prices than full-service grocery stores, the volume throughput (turns) is much greater. This creates an entirely better- buying, logistics – system.
e. When stores get replenished far more often then fill-rates can be tuned to very high and excess stock very low.
f. Private label SKUs are only the visible tip of a great business model.
4. SO; what are (other) reasons that distributors have even more challenges with true, financial success with private label goods?
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