This article explains how the late 1980’s private label boom in fashion can help current and future brands better understand how to capitalize on private labels today. Even with fast fashion dominating the industry, targeted private labels have an advantage if they can improve on the past.

During the late 1980’s  the emergence of apparel private labels helped to build the retail titans of today. Companies like Ralph Lauren, Coach and Burberry began opening merchandise stores and catering to a more narrow segment thanks to advances in manufacturing. Additional advances in technology as well as consumer-centric retail strategies gave way to the private label boom of its time.  Today's retailers and brands can benefit from understanding how the 1980's private label boom can affect their current business.

We are in interesting times in the apparel industry. Consumers have a huge amount of power, fashion houses are cheapening their products to satisfy consumers need for fast-cheap clothing, innovation has increased communication and efficiency in the supply chain (creating shorter lead times) and traditionally functional brands are expanding into new categories. These very certain set of circumstances may seem difficult to navigate, but a similar set of circumstances happened over 27 years ago and forever shaped the apparel industry.

The key to the private label boom of the 1980’s was the newly formed connections between retailers, manufacturers and consumers thanks to technology.  Advances in manufacturing eased the communication between brands and factories, creating new manufacturing options, while brands' gain the ability to interact directly with consumer data via innovative POS systems.

Expanding categories,  supply chain innovation,  consumer demand and data innovation.  

 

Brands used the advancements of the time to produce TARGETED private label merchandise.

Results Were Evident:  

In the late 1980’s Macy’s capitalized on private label monetization. In 1980, private labels accounted for only 6% of Macy’s sales volume. By 1986, private label brands accounted for 20% of Macy's sales volume. Today private label accounts for over 50% of Macy’s sales, proving to have been a valuable strategy for the retailer.    

At the same time other retailers such as the The Limited, made private labeling a cornerstone of their strategy with 70% of their sales volume belonging to private labels. The Limited‘s in house labels, Forenza and Outback Red, combined to be the third largest in sales of women’s apparel in the country.  

The complex explanation for these developments during the late 1980’s are similar to the shift occurring in retail today:

• Changing consumer shopping habits
• Innovation in retail technology
• More visibility and communication between retailers and manufacturers
• Shifting tastes

These changes led brands to create labels based on their customer's taste and preferences.

 

 So how can you capitalize off happened in 1980’s? We laid out the most important steps for you:

Follow the Data: Know Thy Customer Better

In the 1980’s customers preferred the convenience of shopping malls with specialty stores that concentrated on fulfilling the interests of narrow market segments. Specialty stores were able to focus their segmented categories by thoroughly researching their customers’ needs in these regions. But ‘needs’ in the 1980’s were much less complex compared to the needs of consumers currently.

In the 1980’s, consumers were geographically restricted, their needs could be determine based on area and limitations. Due to lack of availability, consumers would go into a store and make a selection based on what was available at that particular time, in that particular region. Consumers did not carry catalogues to malls with them to compare product selections and locating items in other stores was not a seamless convenient process as it is now. Today, the internet connects shoppers to a global marketplace. Consumers are no longer pressed to make purchase decisions based on limitations in a store, city or region. Contrary to the 1980's, consumers can can access items instantly via mobile phone devices to help influence their purchase decisions. Consumers also have access to knock offs and cheaper alternatives to clothing. Now days, a purchase decision is based solely on individual preferences and motivations of the consumer.

 

Avoid Data Overload: Find What Matters

In the 1980’s innovation in POS systems and an interest in 'lifestyle' research helped retailers to better understand their customers.

Private labels created lines based on targeted customer research from available data at the time.

Currently, advances in information technology,  online data analysis, sophisticated chat-bots and covert surveys are providing means to track and analyze customer preferences.

Data points such as fit, size, body types, style, returns, current wardrobe and frequent purchase must now be considered in the lifestyle data needed to create successful targeted private label brand. Unfortunately, these key data points are often neglected, the result is too many options, not enough quality and an overwhelming selection of every possible trend currently seen on Instagram but not exactly what the customer is needing to become a faithful return customer.  Avoid this by using data intelligently to find better details about your specific customer.

Today’s important data points have to focus more on preferences, taste and style.Options are endless to shopper can be very picky about what they want. Using specific data to find motivations and behavior is much more effective for today thanks to data availability.

 

Capitalize on Current Supply Chain Innovation

On the main advantages of private label manufacturing today is the ability to integrate efficiency technology into production.  Advanced technology such as supply chain platforms provide visibility and ease communication across the board.

New RFID technology makes tracking and managing inventory easier.  Private label merchandise can be coded, using blockchain technology and inventory management systems for better POS, online and in-store capabilities.  This give retailers and brands the ability to gather more specific information about a brand’s particular customer base and create fluid omni-channel experiences.

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The past is often a great indicator of what to expect in the future. Taking a look back and paying attention to what worked can help brands during this very similar shift in retail. Style isn’t the only trend that gets recycled, consumer behavior is pretty predictable over time as well. For more information feel free to contact me directly!

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