Private Label Brands Flourish
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Another key change in jan/san distribution has been the reduced exclusivity of product brands, which has, in turn, led to a rise in private label products.
Not too long ago, brand exclusivity gave several jan/san distributors a leg up on the competition.
“We really grew our business by having exclusive brands,” says Stark. “We made a choice early on in our history to be a branded company.
That all began to change when manufacturers chose to increase distribution, thus tempting them to drop exclusivity in favor of providing more product to more jan/san distributors. On top of this, more companies chose to enter the marketplace as jan/san distributors leading to more business for manufacturers and more competition for the companies that boasted the exclusive brands.
“What has happened has reduced significantly the margins that were different in our industry,” says Friedman.
Distributors differ somewhat on how the loss of exclusivity has impacted the industry. Stark thinks the loss of exclusivity has been good for the customer, but doesn’t know if it’s been good for manufacturers and distributors. However, Friedman believes the increased competition is good because it makes companies work harder and stay sharp.
What some do agree on is that the loss of exclusivity has helped lead distributors into exploring private labeling and all the benefits it provides.
Private labeling hasn’t always been looked on favorably. However, those perceptions changed around eight to 10 years ago when wholesale clubs began to create their own brand of product that wasn’t a misfit, cheap or of lesser quality, but simply good, says Silverman. Costco, she says, started to create its own brand of food and beverage that people enjoyed: Kirkland Signature.
People’s perception of private brands has changed,” says Silverman. “It used to be ‘the private brand is crappy.’ Not anymore.”
Today private brand labels on products in the jan/san industry are of better quality, which also helps perception. In some cases, these private brands are just as good as a national brand.
“Now there are manufacturers out there that make very, very good chemicals for all sorts of distributors,” says Stark.
In exploring the previous 75 years, distributors commonly praised the jan/san industry for its ability to take on anything it was given. Sure, newer technologies have consistently been hard for many in the industry to accept, but most eventually jump on board before it’s too late to pounce.
“We lag behind high tech industries, so it gives us a chance to preview it,” says Silverman of the industry and technology. “Now it gives you time to understand where business is going.”
The jan/san industry has been able to either battle through or take advantage of the many themes of the past 75 years, so perhaps it’s fair to assume the same will happen in a modern era, where distributors find themselves fighting off, among other things, wealthy, well resourced e-tailers like Amazon Business. If they adapt, distributors should continue to not only survive, but thrive