Consumers Wary of Product Sourcing, Report Reveals

Many multichannel merchants turn to private label merchandise to create their own unique identities, niches and brands as exclusive labels continue to increase in popularity among consumers. But has this necessarily been a good thing? According to a recent benchmark report published by research firm Retail Systems Research titled “PLM Squared: Product Lifecycle Management Powers Private Label Merchandise,” this recent phenomenon has been plagued by quality concerns from consumers.

Much of this concern stems from marketers’ increased reliance on sourcing this merchandise from low-cost sourcing countries. The recent survey polled 59 multichannel marketers. Here are some noteworthy findings of the survey.

* Last year in the U.S. alone, there was an average of 28 products recalled weekly;

* 34 percent of respondents evaluate their product suppliers on an ad hoc basis, 29 percent do so annually, 17 percent twice a year and 6 percent quarterly;

* 47 percent of respondents say it takes six to 12 months to bring a new product to market, 24 percent say three to six months, 16 percent say 12 to 18 months and 5 percent say less than three months;

* 36 percent indicate the percentage of their merchandise that is their private label brands has increased by 10 percent to 25 percent since 2006, followed by 34 percent who have increased by less than 10 percent, 22 percent who have stayed the same and 7 percent who have increased by 25 percent to 50 percent;

* 70 percent of retailers whose comparable store sales outperform the average have increased the percentage of merchandise they design together with suppliers;

* 80 percent of these retailers have experienced improvements in gross margin over the same period; and

* on-time delivery remained the most important criteria for suppliers, followed by order and merchandise quality, willingness to collaborate, fair labor practices, and the ability to provide new ideas for better products.

For more information, go to www.retailsystemsresearch.com