New Deloitte Study on Private Label Sourcing: Part I

Rising and increasingly volatile costs dominate retailers’ top challenges sourcing private label goods, while changes in consumer behavior fueled by mobility and online shopping are driving the strategic importance of private label sourcing

By ·

Editor’s Note: This the first of a two-part feature.

Rising and increasingly volatile costs dominate retailers’ top challenges sourcing private label goods, while changes in consumer behavior fueled by mobility and online shopping are driving the strategic importance of private label sourcing, according to a new Deloitte study, Private Label Sourcing: Strategies to Differentiate and Defend.

“Rapid population growth, skewed to developing regions, is increasing demand on raw material sources while providing new markets for low-cost labor,” said Michael Daher, principal and Retail Sourcing Practice leader, Deloitte Consulting LLP.  “Additionally, online, mobile and social channels continue to disrupt the retail landscape.  As low-cost online competitors continue to expand across more categories, private label provides an opportunity for retailers to defend their marketshare by offering products that are exclusive to their banner.  But it’s not the ‘copy and paste’ private label we grew up with—these are innovative private label brands that require more sophisticated sourcing capabilities.”

Deloitte’s Private Label Sourcing Study – one of the largest and most comprehensive to date – analyzed responses from more than 260 executives from apparel, general merchandise and grocery retailers to uncover shifts in market trends and private label sourcing practices.

The survey asked respondents to rank their top market pressures.  Respondents indicated that raw material cost increases and volatility were considered the top market pressures, followed by rising labor wages and fuel price volatility.  Raw materials, production labor costs and transportation costs account for 80 to 84 percent of total respondents’ average product costs.

Retailers’ current response strategies do not appear to directly mitigate such pressures.  Roughly 7 in 10 respondents indicate that their organization’s response strategy is currently focused on enhancing quality assurance programs (71 percent), engaging in advanced planning/scheduling with vendors (70 percent) and enhancing ethical sourcing capabilities (69 percent).

Next Installment: retailers are adopting new strategic responses that correspond more closely to the acute cost of pressure.


About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at [email protected]

Subscribe to Logistics Management Magazine!

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.
Start your FREE subscription today!

Article Topics

All Topics
Latest Whitepaper
Face security threats head-on. Protect data beyond perimeter.
Traditional Data Loss Protection (DLP) solutions present a number of serious shortcomings and challenges for companies deploying them, creating a clear gap in the market.
Download Today!
From the January 2018 Logistics Management Magazine Issue
Industry experts agree that costs across all sectors worldwide will continue to rise in 2018, and the most successful shippers will be those that are able to mitigate their impact on profitability. And, the right technology will play an increasingly vital role in driving efficiencies across the global logistics network.
The Future of Retail Distribution
Navigating the Reverse Supply Chain for Connected Devices
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly email newsletter!
Latest Webcast
Securing IoT data across the connected supply chain
Learn why a holistic approach to IAM is the most effective way to govern access to your systems and information requested by your partners, vendors, customers, and connected devices.
Register Today!
EDITORS' PICKS
State of Global Logistics: Delivering above and beyond
Industry experts agree that costs across all sectors worldwide will continue to rise in 2018, and...
2018 Rate Outlook: Economic Expansion, Pushing Rates Skyward
Trade and transport analysts see rates rising across all modes in accordance with continued...

Building the NextGen Supply Chain: Keeping pace with the digital economy
Peerless Media’s 2017 Virtual Summit shows how creating a data-rich ecosystem can eliminate...
2017 NASSTRAC Shipper of the Year: Mallinckrodt; Mastering and managing complexity
An inside look at how a large pharmaceutical firm transformed its vendor and supplier relationships...