Sleep Retailer eNews | March 21, 2019

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How Private Label Programs Are Changing The Retail Game

young woman shopping at a grocery store

Though private labeling is hardly a new concept in the retail industry, the category has been experiencing a major resurgence in recent years. Not only are more and more retail stores investing in expanding their private label options, these in-store brands generated big sales gains in 2018. In addition to helping retailers control pricing and compete with online direct-to-consumer brands, these exclusive programs are also providing new opportunities for them to connect with younger consumers and create a more unique shopping experience. We took a closer look at some of the big retail players that are betting on private labeling to get a clearer picture to how the category is evolving—and, from there, determined some best practices for retailers looking to develop a successful private label program of their own.

The retail industry has seen an uptick in private label sales over the past year. In the final three months of 2018, private label brands in food and drink, toiletries and other consumers goods logged a 4.3% increase in the U.S. — compared to just a 1.2% increase in sales of the 20 largest brands in the same categories, according to Nielsen. And while private label programs have been recently picking up steam in the US, they have been going strong in Europe for quite some time. According to Koen de Jong, managing partner of International Private Label Consult agency, European private label products “have a value share ranging from 17.7% in Italy to 47% in Ireland.” Analysts have speculated that the growth has been slower in the US due to cultural ideologies. “Part of it has to do with America being the heartland of capitalism,” said Bob Hoyler, research analyst at Euromonitor. “Going back generations, families had really strong preferences for particular brands.” But those priorities are shifting stateside, especially among younger consumers. For millennials that grew up amidst the great recession, brand loyalty is less of a given—and the waning popularity of widespread mass media has lessened the impact of traditional advertising efforts. As such, these youthful shoppers have proven to be more willing to purchase in-store brands than older generations.

The effects of that shift can be seen across the retail landscape as more and more stores are investing in the category. In addition to acquiring a number of ecommerce players in recent years, Walmart has been steadily growing its own selection of private label brands, including its Allswell mattress brand. Kroger has also been investing heavily in the category. In 2018 alone, the grocery chain added more than 1,000 of its own branded items to its stock. Sold under the Simple Truth brand name, these new offerings saw sales increase by 15% in 2018—despite making less than stellar gains in its overall sales. Target has also been similarly aggressive when it comes to private labeling. While the retailer had previously focused on brand partnerships (with companies like Casper in its mix), it overhauled much of its product selection over the past year to introduce a number of new in-house brands across a wide range of categories. In doing so, 2018 generated Target’s biggest annual increase in like-for-like sales since 2005—coming in at a 5% boost.

As retail’s reigning juggernaut, it’s no surprise that Amazon’s private label attempts have generated mixed reviews throughout the wider marketplace. According to TJI Research, the online seller increased its selection of in-house brands from 86 at the end of 2017 to a total of 137 in 2018. While some of that increase includes items sold at Whole Foods, it also accounts for new offerings in a variety of product categories like basic household items, clothing and even mattresses. This kind of aggressive approach is par for the course for Amazon, but the jury is still out on whether or not it will be a success. Back in June of 2018, SunTrust Robinson Humphrey projected that Amazon’s private label business could garner $25 billion in revenue by 2022—with SunTrust Analyst Youssef Squali remarking that “Private label is one of the highly underappreciated trends within Amazon, in our view, which over time should give the company a strong…competitive advantage.” But according to a recent report from Joe Kaciukenas, founder of Marketplace Pulse, "Amazon's private label efforts have been given too much credit, both in their ability to disrupt categories and the capability to utilize internal data.” In particular, research from Amazon seller data platform Jungle Scout found that the online seller has struggled to secure meaningful sales success in women’s and girl’s apparel.

Though private label clothing has been a challenge for Amazon, other retailers are finding more opportunity in the category. “Department stores once promised that private label would not take up more than 25 percent of their stores. But now the gloves are off,” Mary Susan Wilberding, a New York–based retail consultant, recently explained to ApparelNews.net. As the popularity of ecommerce and direct-to-consumer brands continues to mount, more and more retailers are adopting private label lines in hopes of gaining greater price security. “Branded people can’t control prices because of online shopping,” Wilberding continued. "Neither can department stores. [Private label] is the only way I can see that [stores] can control online pricing and be consistent with what they sell on the shop floor.”

Traditionally, private labeling has been seen as a low-price option for retailers—and for some retailers, that continues to be the case. Cost-savings has been a major attribute of Amazon’s private label strategy. By mining data from other brands sold on its platform, the online seller has been able to develop a mantle of “close enough” copy-cat products—then peddles them under their own brand name at a lower price point.

But with the entire retail marketplace going through a transition period, some analysts are suggesting that private label’s low-cost reputation is starting to change. According to the market research firm NPD Group, more consumers are proving to be willing to buy these kinds of products at higher price points—and, subsequently, premium private label brands are growing. “This is not just generic, low-priced products,” explained Marshal Cohen, chief industry analyst of The NPD Group. "Sometimes it has the same attributes as branded products.” With these higher-end programs, retailers benefit from offering a unique selection of products for their store floors—creating a more exclusive and exciting shopping experience.

What can retailers do to build successful private label programs of their own?

Focus on developing your own store’s brand.

When deciding which private label products to buy, consumers are often influenced by their understanding of the retail brand, says de Jong. “Price and quality are obvious,” he explained, “but we also see that the perception of the retailer's image is a determining factor: to what extent does the shopper trust the chain?” That image can be shaped by a variety of different factors as well. For the grocery category, de Jon pointed to things like a retailer’s organic, fair trade or sustainability initiatives. But no matter what product category you’re in, it’s important to pin down a set of brand attributes or causes that can be easily communicated to the consumer. When shoppers have a clear understanding of what your store is about, and can see the clear connection between those goals and the private label products, then they’re more willing to buy.

Establish a core product assortment, then cycle in new special offerings.

De Jong highlighted Europe’s discount food sellers as a prime example of a winning private label strategy. “Their core assortment consists of around 1,000 basic products of high quality at really low prices,” he explained. “They supplement this with in/out actions to create surprise and excitement. They generate margins with a festive assortment, organic products, country themes... That works well.” A variation on this approach could be both applicable and beneficial for bedding retailers. By establishing a core assortment of quality basics, you can maintain a sense of consistency that will help reinforce your branding for the consumer. You can then supplement that base with seasonal and limited-time special offerings that will help generate excitement and drive more regular foot traffic.

Invest in your own direct-to-consumer channel.

If your goal is to compete with the online competition, then it’s important to meet those customers where they are already shopping. That doesn’t mean you should switch to a fully ecommerce strategy, of course. By curating a lean private label line-up and building a simple direct-to-consumer strategy around it, retailers have a chance to recapture some of the foot traffic they’ve lost to online shopping. And by coupling that with a more robust in-store selection of products, these entry-level collections can even help redirect those customers back to brick-and-mortar.

Don’t forget the value of the brick-and-mortar experience.

Whether or not you are marketing and selling your private label collections online, it’s still important to consider your brick-and-mortar experience. As we know, most shoppers still prefer to try a mattress in-store before buying—even if they’re starting their search online. As such, consumers should be able to recognize the same core brand attributes across the entire omni-channel journey. Think of your brick-and-mortar experience as an opportunity to build upon and expand your brand perception with creative merchandising, exclusive deals and exceptional customer service.   

Read more here, here, here, here and here.


Case Study: Bloomingdale’s The Carousel

Woman hanging an open sign

The Highly Curated Shop-In-Shop & How To Replicate The Concept In Your Store

In the fall of 2018, Bloomingdale’s introduced The Carousel—a revolving "shop-in-shop" offering a highly curated selection of items. The Carousel has a new guest curator each go around, and the selection of products is typically oriented around some sort of theme. For example, the most recent iteration is called Good for the Globe and touts pro-surfer Quincy Jones as its curator.

With The Carousel’s temporary collections, Bloomingdale’s has a unique opportunity to take some risks by stocking quirky, niche and indie brands. While bringing in these brands adds a level of exclusivity that appeals to the consumer, it also allows the company to test-drive the selling power of off-beat products among the company’s clientele. In fact, Bloomingdale’s is very strategic in utilizing data collected during each theme’s run to improve the following iteration of The Carousel as well as inform the buying approach for the store’s broader product assortment.

"The Carousel is a great place for us to test out new brands and see how they resonate with our shopper,” Kevin Harter, Bloomingdale’s vice president of integrated marketing, explained in this Glossy article. “Through our learnings from The Carousel, we have been able to determine what could be beneficial to our overall assortment.  We’ve also seen success in offering a cross-shopping experience and have expanded this idea to other areas in the store.”

An intriguing proposition, The Carousel isn’t the first shop-in-shop of its kind. It was likely Bloomingdale’s response to Nordstrom’s Pop-In@Nordstrom—an in-store pop-up shop series which debuted in 2013. Similarly to The Carousel, Pop-In@Nordstrom offers a themed selection, minus the guest curators. Also updating regularly (every four to six weeks), the Nordstrom’s version has two distinct styles: the shop-in-shop either delivers a curated selection of diverse and exclusive brands around the designated theme or the spaces get taken over by one key partner to create a pop-in capitalizing on that brand’s product-line, aesthetic and vibe—this mono-brand version is often called “The World Of X Brand.”

Both shop-in-shop models, while similar, are equally compelling and there’s much to learn from this engaging approach to retail. Whether you run a chain store, a boutique sleep shop or otherwise, you could benefit from introducing a similar kind of program that is customized to your unique business and goals.

Benefits

Try Something New

Maybe you’ve been partnering with the same companies stocking similar products for years. If so, you likely maintain those partnerships for a reason—quality product, strong relationship, you name it. However, offering a mini-pop-up in your store does a couple of things: it adds interest, allows you to dip your toes into a relationship with a new or new-to-you manufacturer without being disloyal to your staple suppliers. It also gives you a chance to play around with your product offering at a low commitment.

Perhaps you’ve been wanting to introduce more health and wellness items into your store. Or maybe experiment with aromatherapy candles, essential oils and other sleep and relaxation oriented products. Now’s your chance!

“Test” Inventory

Since a pop-up or shop-in-shop requires a highly curated but smaller volume selection, you can test products among your consumers without having to worry too much about getting stuck with a large volume of items that don’t move.

Testing trends in this way is a great opportunity to not only stay relevant but to discern which product lines are just that: passing trends. Collecting data on each pop-up can help measure which products have staying power for your store’s target demographic—and some might even help you reach an entirely new demographic.

Additionally, if you bring something in your store that sells well, you’ll have the feedback you need to gauge just how much of that inventory you’ll need moving forward.

A Reason To Connect With Consumers After An Initial Purchase

Another key benefit of the continually changing shop-in-shop model? It’s a chance to reach back out to your patrons and a reason for them to come back through your doors—long before they are in the market for a new mattress.

Utilize your social media channels, email list and other advertising modes to build enthusiasm for each new theme. While not all stores can create the kind of build-outs a Bloomingdale’s or Nordstrom can, having an eye for the aesthetic of the temporary place and communicating the ‘coolness’ of it will go a long way.

Approach it like a mini museum exhibition; it’s something people really need to see and experience. Communicating that to the right audience, in the right way, at the right time is sure to draw some foot traffic.

Bonus

This model keeps retail buyers nimble and requires the retail location keep its inventory fresh.

Bringing The Concept To Your Store

Depending on the kind of store and what its bandwidth is, you’ll likely need to scale this idea to your budget, space and customer demographics. For bedding and mattress retailers, it wouldn’t make sense to launch a shop-in-shop featuring jewelry and apparel—but the shop-in-shop could be a chance to test out the success of pajama sales in your store.

Deciding On A Theme

When you start developing your theme, find an angle that will allow you to test a type of product you’ve been considering for your store. And, remember that you don’t have to be a huge department store to tell a captivating story or deliver a thought-provoking experience.

Here are just a few of our ideas:

  • Bedtime Stories : Try a kid-themed segment of your store. Be a little twee and curate a selection of dreamy night lights, bed-time reading and fairytale-esque pajamas for the actual little one—and the little one in all of us.
  • Building An Ideal Sleep Environment :Think beyond the basics. Offer aromatherapy or essential oil products in a variety of forms - diffuser, candles, pillows. Bring in humidifiers and dehumidifiers, black-out drapes, sleepy time teas, sound-machines and more. Think about creative add-on products that are proven to deliver a cleaner sleep and curate a corner of your store around that theme. Or, better yet, build an actual example of the ideal sleep environment on your floor and fill it with a variety of sleep enhancing tools only found in your store.
  • The Organic Bedroom : Take the sustainable and organic bedding approach a step further. Create a safe sleep or green wellness section of your store, complete with organic bedtime snacks, pjs made with natural fibers and more.

We could go on! There are so many options.

If you’re stumped, another approach may be to look for a product that really resonates with you and building your theme around that. Peruse lists like this one or this one for inspiration and to see what consumers and media outlets alike are talking about.

Deciding On Product

The success of a pop-up like this relies on thoughtfulness of product selection. Build out the collection with care—find exclusive, new, innovative products. By choosing items with limited distribution or items from buzzy brands that are not yet available in many places, you’ll entice consumers to visit your store because in it, they’ll be able to experience something they can’t experience elsewhere.

Marketing

Make sure people in your community know about your new “store.” Treat each theme rotation like the opening of a new location. Advertise in-print, online, on social media. Email customers about it. Have an opening day reception with on-theme refreshments. No matter the outlet, tell the story of each new pop-up with flare. Frame it as something special because it is. And, have fun with it!

Pay Attention

Finally, there’s one last simple step: keep track of what goes well and what falls flat. We are sure you’ll experience some super popular themed collections—but you’ll likely have a dud from time to time as well. In addition to carefully monitoring the quantitative data about what’s sold, what gets returned, etc, it can be helpful to also collect more qualitative information as well. Ask customers for feedback through online surveys or plan for regular debriefs with your RSAs so that you can get a sense of how each new experience is received by the public. In doing so, you’ll be able to better inform future shop-in-shop strategies and refine your broader product assortment as well.

Read more here, here, here, here, here, here, here, here and here.


Tips For Spring Cleaning Your Nursery

Signature Sleep nursery

Brought To You By Signature Sleep

First things first, cleaning and organizing doesn’t seem like as much of a chore when you do it with someone else. So before getting started, call a friend - one with a baby of their own for a playdate or one without one to serve as baby entertainment while you clean. Then, it’s time to put on some music and follow these easy tips to spring clean your nursery:

Tip #1: Clothes, Clothes, Clothes

From hand-me-downs to new purchases, chances are your nursery closet and dressers are overflowing with baby clothes. Take it all out, wash all dirty clothes and separate into four piles.

  • In the first pile, put all the items that your child either doesn’t like to wear or doesn’t fit anymore. In the case where you are expecting or want another child, store these clothes until you will need them again. If not, you can either sell them, or donate them to friends or charities that collect clothing for mothers in need.
  • In the second pile, put all the items that are too big and don’t fit yet. We know your baby will grow into them faster than you would like, so don’t store them too far away.
  • In the third pile, put all clothing that is currently out of season: winter jackets or summer hats and shoes. Depending on where you live, you won’t need those items for months, so why let them fill up your closet space?
  • In the fourth pile, put all the items that don’t fit in any of the three previous categories. What you will be left with are items that you need right now.

Tip #2: Declutter

There is an unexplainable phenomenon that happens where things we buy for our children tend to multiply on their own. Category by category, go through your drawers and shelves and toss or donate items that you don’t actually need. Start with the toys, because that’s typically where we accumulate more items than our children knows what to do with. Chances are, you are still holding onto toys that your child has either outgrown or doesn’t reach for anymore. As with the clothing, remove the unused ones from your nursery, or living room, and decide whether you want to store it or donate it. Toss out the toys that are broken or that your little one has worn out.

Next up is the shampoo/soap/lotion/cream drawers. We are ready to bet that your drawers are full of half-empty bottles and products you just do not use anymore. It’s normal to try a few brands before you find the one you like the most, but why keep the others when you will never use them again? If they aren’t expired, donate them – someone else will surely appreciate it more than you. As for the products you have doubles of, combine half-empty bottles into one and save some drawer space.

Tip #3: Do Some Spring Cleaning

Now that everything is in its place, it is time to take out the gloves and scrub the shelves, wipe down the furniture, clean the windows, dust the light fixtures and vacuum the floors. It does not happen very often that the nursery is free of clutter so take the opportunity to give it a thorough clean. Make sure to use soapy water or products that do not have harsh chemicals. If needed, use this occasion to change the layout of the room to make it more functional.

Tip #4: Back to Basics

Naturally, you want the best for your child—and a good night’s sleep starts with a good mattress. We created the Signature Sleep Honest Blossom Crib and Toddler mattress so that everything their skin touches is as natural as can be. The Signature Sleep Honest Blossom is handcrafted in California and made from three ethically sourced materials: organic cotton, natural wool and natural coconut coir…that's it.

  • All three materials provide moisture wicking properties that will help keep your child warm in the winter and cool in the summer.
  • The natural coconut coir construction gives the mattress the firmness it needs to give your little ones the proper support as they grow up to be amazing little humans.
  • Babies are messy – that’s just a fact. That’s why this mattress comes with a bonus mattress cover, made with organic cotton, that is waterproof and machine washable.
  • The Blossom has a convenient two-sided construction to give your bundle of joy a mattress that will follow them from their first smiles to their first steps.
  • This mattress, hand crafted in California, contains no fire retardants and is a natural fire barrier thanks to the wool.
  • Thanks to our partnership with One Tree Planted, when you buy one mattress, you are giving back to the environment by planting one tree.

The Signature Sleep Honest Blossom Mattress gives your child the sleep they deserve, the natural way. Is there better sleep than some Good Natural Sleep?

There you go, you now have a clean and decluttered nursery just in time for summer.


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