Keeping customers in the store is the primary goal of a house brand.

The founders of Ironology Health Solutions approached Carl Marshbanks, the director of sales at Earth’s Creation, with a problem they were hoping he could help solve.

For years they had offered information and advice about iron supplements for those suffering with iron disorders. But now they wanted to offer their own products as part of the solution instead of instructing people to go elsewhere, Marshbanks said. “They came to us about coming up with a product for them to launch,” he added.

Marshbanks said Earth’s Creation, a South Carolina-based developer and manufacturer of vitamins and supplements, helped create two iron-related products, now offered as part of a private label.

That example, he said, serves as only one of many that illustrates the benefits of private labels.

Private labels, products manufactured by one company and sold under another company’s label, are becoming increasingly popular with natural product retailers, said Kenny Flores, the vice president of sales for Reliance Private Label Supplements, a New Jersey-based manufacturer of private label supplements.

“I think every retailer should have [a] private brand, private label,” Flores said, adding he has seen an evolution of private labels for natural food products over the past decade. “You’re seeing it more and more, not just with dietary supplements, but it crosses all categories. I think all retailers are struggling … trying to keep customers in their stores, and there is no better way to do that than private brand.”

Justin Zehrung, vice president of sales and marketing for Essential Source, an Arizona-based manufacturer of probiotic, weight-loss, beauty, nutrition and specialty supplements, said one way to keep customers in stores is for retailers to develop a product association with their clients.

“When the consumer knows this retailer is looking out for their best interest, and has their own brand in a category, it makes the retailer even more of an expert in that category,” said Zehrung.

As Marshbanks explained, with many companies, including Earth’s Creation, which supplies hundreds of retailers, developing a private label can work two ways: Retailers can choose to create private labels from manufacturers’ existing product lines or can work with the manufacturers to develop custom private labels.

The good news, Flores said, is that developing a private label is not a daunting task.

“It’s not as overwhelming as one would think,” he said. “… I think retailers probably shy away from doing private label, private brand, because they think it is going to be an overwhelming process.”

Mitch Coven, founder and CEO of Vitality Works, a New Mexico-based manufacturer of herbal and nutraceutical supplements, said the process of developing a private line is not only often simplistic, but also, it’s usually inexpensive.

“People don’t know how easy it can be,” said Coven, who founded Vitality Works more than 30 years ago. “It’s not expensive to get into private labels.”

Coven added keeping a few things in mind—making sure the manufacturer has third-party oversight and long-term expertise, analyzing some samples, comparing price points and finding full educational support to name a few—as well as asking intelligent questions when selecting a manufacturer for private labels, helps ensure a lasting brand.

Starting Off Right

Asking the right questions at the beginning of the process can lead to a great relationship between the retailer and the manufacturer as well, said Regina Flight, private label and bulk manager for NOW Foods, an Illinois-based manufacturer of natural products.

“Many retailers who have been in the industry for a long time already know which manufacturers will provide high quality at the best price,” Flight said, adding NOW Foods has been in business for more than 50 years. “Don’t make the mistake of buying by price alone—ask them if they are GMP (good manufacturing practice) certified, how they source ingredients and the details for testing the raw materials used to make the products. Ask them for a tour of their manufacturing facility. A reputable company should be proud to give you a tour of their facility and testing labs.”

According to Flight, one key benefit of a personalized label is trust.

“With a private label line, retailers can brand their stores’ image[s], a time-tested method to attract customers, and retain their business,” said Flight. “Once customers become accustomed to a particular store brand, they learn to trust their products.

Once customers have found a trusted product, and if that product is part of a private label, a committed retailer-customer relationship naturally follows, Flores said.

“If you have them buying your product with your label, it’s a product they cannot go get anywhere else,” he said. “They can’t get it on the web. They can’t get it at your competitors up and down the street. They’ve only got one place to come back, and that’s your location.”

Retailer Theo Kitschker, store manager at Green Acres, a health food store in New Jersey, has experienced just that. Kitschker, who has been the manager since 2001, said customers, many of whom he’s known for nearly 17 years, often come into the store and head directly to the prominently displayed Green Acres private line, made up largely of vitamins, minerals, a few herbs, protein powders and current trending products, such as amino acids and seasonal allergy products.

Although Green Acres developed a private label in the early 1990s before Kitschker’s arrival, he said the success of the private line works as a guarantee that the store does not solely rely on the success of national brands.

“If I’m carrying a private label company, I don’t have to worry about the other companies, which are already established, either going down with their quality, selling out, or just simply going out of business,” he said.

But one of the best parts about having a private label with the retailer’s name on it is ensuring the consumers are getting the best products in terms of quality.

The idea that, through private label, customers can’t get the same product elsewhere helps develop a trusted customer base—but only if the products are of the highest quality, said Christy White.

White, who with her husband runs WhirlyBird Granola, an Ohio-based natural food company specializing in granola products, said when it comes to private labels and natural foods, two things matter most: quality and taste.

“I don’t think any consumer will come back for more if the quality isn’t there,” said White, who added WhirlyBird makes individualized products for each retailer. “… Consumers are just getting smarter and smarter, and they are reading labels, and they are looking at ingredients, and they really know what they want. The first thing is to make sure that you (as the retailer) are looking at the ingredient deck to make sure there aren’t any added fillers, artificial ingredients—general things that will indicate that you’re not getting the most high-quality ingredients.”

Because the customers know what they are looking for, developing a private brand that is of premium quality, yet remains at an affordable price, becomes even more important, Flores said, which is why he advises asking potential manufacturers a series of questions before creating any private labels.

“‘How am I going to differentiate my brand? If I am building my own private brand, what is going to make it unique … what is going to make it special? Am I going to be able to be competitive with the national brands that are out there? Is this line going to be of quality?’… questions I would ask would definitely revolve around quality and key points of differentiation,” Flores said.

Due to the increased competition among all retailers, and the subsequent increase of private labels, the whole idea of quality means much more than just the best price in the store.

“The time when private label may have meant ‘low-price, low-quality’ has passed, and the retailers demand ‘the good stuff’ to protect their own retail operation master brands in the consumers’ minds,” said Leslie Gallo, vice president of operations at Artemis International, an Indiana-based natural product company specializing in a variety of dark berry extracts.

The initial development process can take several weeks—depending, of course, on the number of products and the amount of custom work needed, manufacturers said.

However, Zehrung said, retailers can choose more popular items to begin selling as private label at first to increase the chances of success and then add other products as the private label continues to expand.

“One important thing with a private label is to establish the product as a category standout first,” Zehrung said. “So, if [retailers] can sell a branded product first and then convert that item to their own private label brand, they can better judge the outcome, having already sold that item in their store.”

Zehrung said regulations at Essential Source, which was founded in 2008 and which has more than 35 items on its product line, take into account that many retailers now developing private labels are brick-and-mortar stores. Because of that, he said, adjustments have been made to help smaller retailers protect repeat business and make developing a private brand worthwhile. “We’ve found ways to bring down the MOQ (minimum-order quantity) on many of our items, so that the initial investment getting into the private label can be afforded by more,” he said. “We also supply all the graphic work through our own third party that speeds up the process and makes less work for the retailer.”

Marhsbanks said the minimum-order quantity is one of the most important aspects a retailer should understand when creating the first order for a newly developed private label.

“Do not overbuy, just to do a private label,” he said. “Private labels require minimums (300 to 5,000 or more). Excessive inventory can lead to product expiration and then [the products] have to be discarded or reduced.”

Challenges for Retailers

Flight said retailers often worry not only about the difficulty of selecting ingredients for products for private labels but also about the challenges of creating packaging designs that are both professional and adhere to regulation standards.

However, she added, if the right manufacturer is selected for helping create a new private label, the design aspects, as with the ingredient choosing, can be smooth.

“We know a lot of retailers are concerned about label design and compliancy, but we provide options that make it simple: Stores can choose from one of our appealing stock designs or they can provide their own artwork,” she said. “We can even add your store’s image to the label design. All of those options lead to labels that look professional and meet label requirements.”

Although establishing a private line can take weeks if the retailer selects from the manufacturer’s already existing branded product—and slightly longer if the retailer is creating a custom private line—once the line has been established and the first order has successfully gone through, subsequent orders likely have a fast turnaround, said Coven, who added that clear communication between the retailer and the manufacturer should continue after the initial developments and products have been made.

Coven said Vitality Works delivers on a two-day turnaround, and Flores said Reliance Private Label Supplements, which completes the entire process—bottling, packaging, shipping, etc.—at one facility, can have a retailer’s order on the way three days after it’s been ordered.

“Once your account is set up, your label design is complete, and you have received that first order, the turnaround time is very quick. It’s a much more labor-intensive process,” Flores said, referring to the manufacturing end of the ordering process. “But with that said, it is not a lengthy, lengthy process.”

Adding to the ease and speed of private label development and ordering is increased technology, manufacturers said, and Flores added the internet has also increased visibility of private label manufacturers, allowing retailers to more easily compare what different manufacturers have to offer in terms of price, minimum orders, turnaround time and shipping processes.

Marshbanks added that technology also allows retailers to more easily access studies or trials of products to help with determining ingredient lists.

“Private labels can offer products that are backed by studies, and products that can make claims based on clinical studies,” he said. “The manufacturers have already done the research, and the work. If you like a product, you can use the established data on that product.”

With the increased ease, though, comes some challenges, said White. As the number of products and their visibility surges, so too does the opportunities for customers to choose other products—only increasing the need for high-quality ingredients.

“It is important, now more than ever will all the technology, to really differentiate yourself,” White said.

If that can be done successfully, Zehrung said, private label is an excellent answer to intense online competition.

“Brick-and-mortar stores have tough competition with online stores, now more than ever,” he said. “Private label is the one way they can combat this and never lose a sale to ‘that customer’ [who] searches the product on Amazon and potentially walks out.” Even with retailers being able to do much research on their own, manufacturers said their companies provide the help needed so retailers are confident with the private label products they display on their shelves.

“Over the years I’ve spoken with hundreds of retailers about running private label, and I’ve found that most who’ve never participated want to but feel like they don’t have the time,” Zehrung said. “So, working with a company like ours, that offers help with every step, is very important. The end result is always the same—retailers are glad they got into starting their own brand and typically expand on the brand very quickly.”

After all, as Flores said, an end goal for retailers remains the same: customer retention.

“The end goal is to hold on to your consumer, to hold on to customers … to keep customers coming back to your locations, and private brand is the answer,” Flores said. VR

For More Information:

• Artemis International, www.artemis-international.com
• Earth’s Creation, www.earthscreationusa.com
• Essential Source, www.essentialsource.net
• NOW Foods, www.nowprivatelabel.com
• Reliance Private Label Supplements, www.archonvitamin.com
• Vitality Works, https://vitalityworks.com
• WhirlyBird Granola, www.whirlybirdgranola.com

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