At Home Depot, four triggers to a private-label program
As the world's largest home improvement retailer intends to leverage its private-label offerings across its businesses in the United States, Mexico and Canada, its top merchandising executive described the process for choosing a private-label brand.
There are four triggers that drive a private-label program, said Craig Menear, executive VP merchandising, during the company's recent Analyst and Investor Conference. They are:
• Lack of brand relevance. ("If a brand doesn't carry its weight with a customer, the category could very likely become private label," he said.);
• Lack of innovation;
• A financial issue that needs to be solved in the business; and
• A quality issue or opportunity.
" If there is a quality problem, or a significant opportunity to improve the quality and also drive a stronger value proposition for the customer, we'll look to private label or exclusive product," he said.
Proprietary and private-label brands combined represent about 14% of the company's business, Menear said. Any growth in these categories will ultimately be determined by customer wants and needs, he added.