Brand New World: Making Private Labels a Success for Retailers and Businesses

When you walk into most department stores or browse online, consumers see an array of brands for clothing, footwear and accessories. But unbeknownst to the average person most department stores and e-tailers offer numerous product offerings featuring brands that are owned by them—also known as private branding. The retailer is competing alongside and against the many national brands that it features in its stores. Private label branding is a steadfastly growing practice that gives consumers a wider choice of products in certain categories. It gives the retailers another source of revenue beyond their normal business of selling third-party products, the retailer can usually get better profit margin on these products and can control mark-downs more easily. For small to mid-sized makers of apparel and related products it provides an opportunity to design and sell products at major national retailers. Companies in the private label industry generally have on-staff designers and product developers who can source products through their vast foreign factory networks and can provide on trend products at a slightly lower price point than the national brands, as they do not have to pay a royalty to use a national brand. If you are a retailer or company who desires to break into this market, this article will help you identify issues on both sides of the arrangement.

Private Label Vendor Agreements

Typically the department store or e-tailer has significant bargaining power in seeking private label partners. As the retailer, your agreement should consider all the pitfalls that one can face when sourcing products that will include a brand owned by you, including adequate indemnification provisions and assurances that the products being made meets quality standards and does not infringe any third-party intellectual property rights. One issue that has dogged retailers of late is copyright infringement allegations brought by owners of fabric print designs. These serial plaintiffs own catalogs of fabric prints and assert copyright infringement directly against the retailer who could be subject to significant damages. Retailers must carefully choose their private label partners who understand the dangers of using fabric prints of unknown origin, and have the financial ability to defend these claims should they arise.