Thursday, January 09, 2014

Anders Dahlvig's Vision Of Private Label And Its Example: Oxylane

Couple of months ago I finished the book of former CEO of Ikea Anders Dahlvig. My readings inspired couple of blog posts I wrote. But so far I don't think I have discussed about Anders vision about private label. Anders Dahlvig, and Ikea foremost, believe that private lable is vital for one retailer. It allows one retailer to set apart the competition. Indeed, if retailers of one sector have the very same products to distribute, then there are little room to differentiate, and hence to set apart from the competition. Then most of the time it leads to price competition,which has as the main outcome to shrink mergins.

Hence, Ikea has always worked on innovative private labeled products, that would be difficult to reproduce for the competition, and hence, can give them an edge.

I wanted to link this vision to one of the greatest success of French retailing: Decathlon. Decathlon is a sport goods retailer. The sport market is ruled by large brands, mostly Nike and Adidas, which have massive advertizing budgets of all kinds (sponsorhip, TV commercials, event organization...) to promote their brand. Therefore it is difficult in these conditions to see a private label grow. But Decathlon, which was already a large retailer in France, decided to focus on its private label, and to turn it into the core of the company. Now, Decathlon sells mostly private label goods, and has been able to innovate big time in the industry. Its tent which is set in 2 seconds is one of the best example.

Private Label is actually a very important marketing tool for one retailer, as it is the easiest way to be different from the competition.

Whereas its competitors are struggling, Decathlon is able to maintain its sells thanks to its private label, in a market known for the power of its brands. The best example I believe of all.