One of the top challenges that brand owners and manufacturers perpetually cite to growing their business is the amount of shelf space shelf space major retailers are giving to their own brands. Though hard figures are difficult to come by, there’s no doubt that large profit-hungry merchants have been upping their game in recent years.

Promise of Better Margins
The promise of the better margins produced by proprietary lines and control of product development is enticing, but can be offset by the cost of marking down and disposing of unsold inventory.

But the promise of owned brands and other exclusives remains attractive, particularly to the biggest players.

“Amazon may be coming to the same conclusion as the more established retailers whose sales it has helped decimate: retail of third-party brands is among the weakest part of the market,” wrote Coresight Research CEO Deborah Weinswig in a blog post. “There are greater defensive positions to be found in being a retailer of exclusive brands as long as those brands are sufficiently in demand.”

Here are a few of examples of recent private label developments in apparel and home; we’ll look at consumables in a later article:

• Bed, Bath and Beyond is staking part of its future on the 10 owned brands it plans to introduce during the next 18 months across bed, bath and home products. CEO Mark Triton, who assumed the position a year ago, was well known for shepherding Target’s private label assortment to prominence, and that’s a key part of the strategy here. The goal is to have private label triple to about 30% of sales by 2023, Bed Bath Chief Merchandising Officer Joseph Hartsig said.
  “Our own brands are significantly under-penetrated compared to” competitors and that “presents a significant upside in margin,” says Hartsig. “The reality is our merchandising model simply was not working and we are working fast with strong plans to address all these areas. Price and value remain the number one reason customers don’t shop us and we are addressing that with a more value-oriented assortment” that will include owned brands. The private label push is a major change for Bed Bath, which only introduced its first private label brand (Bee & Willow) in 2019.
• Target continues to steadily add private labels throughout the store; there are now more than 40 of them, about half in men’s, women’s and children’s apparel and accessories, including children’s line Cat & Jack (which hit $1 billion in sales in its first year after coming to shelves in mid-2016), and this year’s additions such as All in Motion (activewear), Casaluna (bed and bath) and Open Story (luggage). It supplements them with a range of exclusive lines and DTRs.
• Kohl’s is readying a private label FLX athleisure brand starting in spring 2021. It’s part of a reshuffling of its softlines offerings that also involves culling eight women’s apparel lines, including  DTRs for licensed brands such as Candies and Mudd (Iconix Brand Group) and Juicy Couture (Authentic Brands Group). Other recent additions to the womenswear private label lineup include Adore Me and East Adeline by Dia&Co. The company drew 37% of its revenues from “proprietary brands” (including private label) in 2019.
• According to a Coresight Research Report (using data recently submitted by Amazon to a Congressional subcommittee) “Amazon’s private labels make a greater contribution to sales in apparel than in electronics. The company indicated that private labels account for 9% of its first-party sales in softlines by dollar value; in turn, first-party sales account for 28% of its softlines sales—implying that 2.5% of Amazon’s sales in apparel and other softlines are from its own brands.” By comparison, using the same extrapolation, Coresight says that private label represents 1.3% of Amazon’s consumer electronics sales.