The Evolution of National Brands to Private Labels
Wednesday, April 6th, 2011
In an unprecedented move, online bicycle retailer Competitive Cyclist recently purchased Merlin bicycles, (see article), a leading national brand once ridden by Lance Armstrong and Greg LeMond. This acquisition effectively converts Merlin to a private-label brand sold not only by Competitive Cyclist, but numerous dealers worldwide, each paying Competitive Cyclist for the privilege of selling their bicycles.
If we move this scenario into the world of CPG, it could lead to some very interesting discussions. Imagine if some of the larger retailers began to use their immense financial resources to purchase national brands. They would immediately see higher margins on well-known products they already sell and they would control the brand’s distribution and the price their competitors must pay for the brand.
Business publications have been predicting the death of national brands at the hands of private labels for some time. Perhaps, the Darwinism of national brands to private labels may actually ensure the survival of the species.
-Contributed by Duane Nagel, Integer Denver