Retailers in all trade channels, the possible exceptions being Trader Joe's and Aldi, have to be concerned with finding the right mix of store brand/exclusive label products and those falling under the national brand and designer label categories.
Many, if not most, stores are placing an increased emphasis on their own items with the picture of higher margin dollar signs dancing in front of their eyes. Whether this will ultimately prove successful, however, remains to be seen.
The newly national Macy's chain is a prime example of a retailer focused on driving the top and bottom lines through the sales of its own brands.
According to a report in the Chicago Tribune, the retailer has jettisoned designer labels such as Prada, Miu Miu and Jimmy Choo, while others such as the Yves St. Laurent handbag collection have been seriously cutback.
Instead, the company has brought in its own brands in apparel, accessories, home goods and furniture.
Macy's, not counting stores just converted, gets about 18 percent of its total sales from its own brands with many outperforming designer labels. In women's clothing, for example, the department store's Charter Club line outsells Ralph Lauren.
"It's very clear that Macy's private label will be given a lot more prominence," said Donald Soares, principal of Capgemini's Midwest consumer products and retail practice. "The very high-end brands that don't fit with the Macy's profile are probably going to be replaced."
The retailer is also counting on exclusive label items to attract shoppers while keeping more of its profits in-house.
Martha Stewart will begin selling her home collection in Macy's next year. The chain is also selling T Tahari, "a hip women's clothing line" from the designer Elie Tahari. It will also rollout O Oscarm, an affordable line of clothes from Oscar de la Renta, early next year.
Macy's retailer brand strategy is intended to help it overcome the perception that all department stores are alike. The company is putting its own product front and center with key displays near entryways and power aisles.
Amira Krvarac, a Chicago area resident who shopped at the one of the converted Marshall Field's locations at the Old Orchard shopping center in Skokie, Ill., told the Trib, "I think it's better. There's more to choose from and the prices are better. If I had more time, I'd shop more."
Frank Guzetta, chairman of Macy's North, believes consumers in the areas where Macy's has replaced regional department store banners will find the same things to appreciate as Ms. Krvarac.
"I'd like to see how they feel two months from now," he said.
Discussion Questions: What added pressures are placed on merchants looking to their own brands to generate consumer traffic along with top and bottom line results? Are retailers at risk because of the emphasis and/or execution of their own brand business?