I’ve been around long enough to see a lot of things. I guess that’s the beauty and penalty of getting old. The old biblical adage about there really not being anything new under the sun is true, albeit with a few exceptions and modern twists.
Like the use of private label products by retail chains. They are not new by any stretch, and in fact pre-date me by many decades. But by the time the 1960s and 1970s rolled around, they were prevalent, especially in food and beverages. But many larger retail chains also launched their own clothing lines, as well as electronics and home appliances.
The problem back then, as well as up until recently, was that many of those private label products looked, smelled, and actually were, cheap. As in low-quality junk.
JCPenney, which is barely alive these days, thought so much of itself in the 70s that it contracted with RCA for them to manufacture their own line of televisions and consumer electronics. These were to be different from RCA’s line of products, which is code for “not as good.” And, given the era, they were actually manufactured in the USA.
Meanwhile, WT Grant, an enormous discount chain with stores in 46 states, launched its own washers and dryers, along with other appliances. The company went out of business in 1976, no doubt burdened by the weight of its own private label products that consumers simply did not see in the same light as, say, a pair of private label blue jeans.
But wait. What about Sears, you ask? Didn’t they have private label products too? Of course they did, like Kenmore appliances, Die Hard batteries, and Craftsman tools. But Sears went to great effort, and to their great credit, to ensure that these were actually high-quality items, not flimsy come-ons for cash-strapped consumers.
Store brands, as they are also called, have continued to proliferate, and despite a 1970s and 1980s sub-class known as generics that arose in response to high inflation, are in much better shape now than ever before. Walmart in particular is coming on strong with a strategic push into ever more of its own products.
While Walmart has long had multiple private labels in foods and beverages, like most grocers, its recent efforts are focused on electronics accessory items (think memory cards), tools, and clothing.
Private labels provide many benefits to retailers. They typically have much higher profit margins, which is extremely beneficial in a business sector that often has very low margins once overhead is factored in. They seldom if ever have expensive advertising campaigns supporting them, and the retailer is less dependent on middlemen. They simply contract with a manufacturer, and merchandise just shows up as planned.
Retailers also tend to favor their own brands, giving them prime visibility on every shelf and garment rack. After all, these are their babies, and to do anything less would be anathema.
The trend today, not just at Walmart, but perhaps more importantly at Target and Bed Bath & Beyond, is that private label products are pushing nationally branded products out of stores, while at the same time leaving a bigger contribution to overall revenues. It’s a trade that many large retailers are willing to do, even if they may alienate some customers by eliminating national brands along the way. Each store truly becomes unique with its own lineup of house brands and nationals.
After all, it’s about the overall shopping experience, and national brands may not be all they are marketed to be. For example, I go through camera memory cards like potato chips. The brand name versions from SD cost a fortune, but with Walmart’s own Onn brand, I can buy a 64GB card for a mere $10.34. And guess what? They are just as good as the name brands. I know. I have plowed through enough of them the last year, and have never had a failure with them.
Walmart has also rolled out its own line of Onn LCD television sets, which, you might think, would portend a disaster like JCPenney faced 50 years ago. But times are different now, and TVs are ridiculously cheap to begin with. Back then, each house had one max, and they cost a good fortune. Today, they’re almost impulse items.
Once you fold in the current round of inflation, suddenly private labels become not just a viable option, but a financially expedient one at that. I’m good with that, and as long as they deliver comparable quality, I’ll line up to buy them.
But even Sears hasn’t been able to survive with its quality private label items. Its other problems were just too big. Had they done like JCP and WT Grant with their shoddy durables, though, they probably would have folded decades ago.
Just know that if Walmart, Target, and others ever start selling their own washers and dryers, it’s over. I’ve seen it all before.
