Every natural products retailer knows that having a successful private label supplement line is a cornerstone for good business. At their best, in-house brands will increase sales, drive repeat purchases and create customer loyalty. But at their worst, these products can disappoint buyers, clog shelf space and create headaches for department managers.
To market private label supplements successfully, a retailer should be prepared to make a strong commitment to the program. "Unless you can do your due diligence—unless you have the time and the ability to go and check up on a manufacturer and have verified results of the various products—stay away from private label; stay with national brands," advises Sunil Kohli, vice president and chief operating officer of Health Plus Inc., a private label supplements manufacturer located in Chino, Calif.
Committing to a private label program starts by understanding what it takes to make the program a success. "You have to have a buy in from the staff before the program can be successful," says Jim Cary, owner of Clearspring Pharmacy, based in Denver. "What truly measures success is, do customers buy it and are they getting the desired results?" he says.
To help retailers who may be beginning a private label program or revamping their existing program, here is a simplified step-by-step guide.
Step 1: Determine Your Product Mix
Before contacting a private label supplements maker, a retailer should be prepared to answer questions, explains Jane Drinkwalter, vice president of nutritional supplements for Lake Forest, Calif.-based Vitamer Labs. Her first question to retailers is, "Are you looking for a commodity product, or are you looking for a premium private label product?"
She recommends that stores know exactly how they want their private label line to work with existing products on their shelves, and that they carry at least as many private label SKUs as their leading national brand.
Drinkwalter urges retailers to carry premium-quality private label products and says determining the proper product mix is "a two-way street."
"Consider what the national brands are not able to supply, and what the brands are good at [supplying], and [ask] 'Can we replace those in [your] own name,'" she says. Many ingredients offered by private label manufacturers are trademarked ingredients, such as Ester C, Ostovone, Selenamax, Cran Max and OptiZinc. They are often backed by clinical trials or studies that validate their efficacy.
Artista Marchioni, owner of Artista's, a natural medicine store in San Pedro, Calif., started her private label line more than 20 years ago with a $400 investment and a few key items. Today, the store carries hundreds of private label items including a liquid line and custom-blended liquids. "I took nine months to develop a custom product, called Smog Check, that I designed for the Los Angeles area," she says. "I worked with an herbalist and [at first] gave product away."
Not every retailer needs a custom blend, says Paul Licata, president of Licata Enterprises in Huntington Beach, Calif. "Very few stores, unless you're a 10-chain store, need to have a proprietary blend," he says. Minimum purchases required by many supplements makers are very large.
Step 2: Find A Qualified Manufacturer
Federal regulators do their best to ensure that businesses and consumers get exactly what they pay for. But, as Licata points out, manufacturing supplements is not a perfect science: "Making a tablet is an art. While the procedures may be good, the ingredients may be full of crap, essentially," he says.
To find a quality private label manufacturer, retailers must ask some tough but basic questions, such as:
- How long has the manufacturer been in business? Does it have references?
- For which companies does it already do private labels?
- Is it a member of NNFA and the TruLabel program?
- Does it use glass bottles?
- Does it use date coding?
- Does it do batch analyses at independent laboratories?
- Does it allow independent inspections of its facilities?
- Does it have a drug-manufacturing license?
- Is it registered with the FDA?
- Does it have any complaints filed against it?
- How does it ensure that its blends are being dispersed evenly?
- What kind of quarantine process does it have?
- Is its packaging recyclable and printed with environmentally friendly practices?
- Does it offer child-specific options?
Cary says that Clear Spring Pharmacy sends its potential suppliers a seven-page questionnaire to find out what goes into their manufacturing processes and what kind of standards they follow. "We use four different private label vendors to get the right mix of things that we need," he says.
"Go to companies that do private label on a full-time basis," suggests Licata. "In our industry, there are a handful of companies that actually do that."
Step 3: Create Labels And Packaging
Retailers who choose to put premium-quality products into their branded bottles should use professional-looking labels. "I think most people want their name to be associated with the highest-quality line, and what better way to draw attention to that than with a high-quality, eye-catching, clear, easy-to-read label," says Drinkwalter.
Every store should have a logo and color palette created by a graphics design expert. Keeping the store's image consistent with the private label brand is important.
"Imagine a bottle of vitamin E, 180 count, with your brand on it," says Drinkwalter. "That's 180 images of your store name. That's the point of private label—seeing that product in front of you, on the kitchen table, in the pantry, on your desk at work. It's more and more images of your name," she says.
In addition to looking good and having a consistent image, every label must include the FDA's required nutrition and ingredient information. Full ingredient disclosure is mandatory today, and every manufacturer should be able to provide all the required information and an option for printing labels.
Step 4: Determine Prices And Marketing Strategies
Most successful retailers have the same advice when it comes to pricing and marketing private label supplements: "Private lines should be competitive [in price] or slightly below your highest-quality products in your store," suggests Cary. "That way, you can move people to your products more easily."
Licata shares a similar opinion: "Generally, the prices should be 10 [percent] to 20 percent lower than a national brand," he says. He also notes that many retailers have more than one private label line. "They'll position one at a high price and one at a low price," he says.
Another manufacturer, Vitamer Labs, agrees in principle with that idea. "I think it's fine and probably even a good idea to have a value line in your store, but in my opinion, it should not be the line with your name on it," says company spokeswoman Drinkwalter.
Here are some other pricing and marketing suggestions:
- Shrink-wrap two bottles together as "buy-one-get-one-free" offers.
- Put private label products on sale when national brands go on sale.
- Cross-market within the private line. For example, offer a buy-one-bottle-get-15 percent-off-the-second-bottle promotion.
- Stock your line deeply, to show customers a commitment to the program.
Why do these types of promotions work? Cary summarizes it this way: "We can price our private label line competitively and get a larger margin because it's our marketing behind the products instead of someone else's, so we're not paying the marketing dollars," he says.
Step 5: Build Product Selection And Repeat Sales
If a few initial products are successful, retailers will consider adding more house-branded bottles to the mix. To build a proper selection, Cary suggests what has worked for Clear Spring: "We'll monitor the other lines on the shelves; if it looks like we have something with some velocity, then we say we should offer that in a private label," he says.
Kohli, of Health Plus, says that building a private label line should be done in a "synergistic" manner. "From five go to seven, from seven go to 10, from 10 go to 15. Have them progress in a logical manner so that one leads to the other. Have the best sellers very attractively priced so that you get people in the habit of coming into your store for those one or two items, again and again. Then you can present the other ones to them," he says.
Most importantly, to create repeat sales, retailers should spend the time educating and training their staff about their in-house products. "When customers come in, your employees should be instructed to show them a private label supplement first, as long as it meets their needs," Licata says.
Retailers agree that without brand loyalty to your line, it's difficult to have loyal customers. "You're building trust with that customer and your brand, and you're raising them, so to speak, on your product, which they can only buy from you," notes Cary.
Steve Taormina is a writer and Web site designer.
Natural Foods Merchandiser volume XXIII/number 4/p. 18, 22, 28