From fashion to cosmetics to professional quality hair care products, it’s no secret why retailers like private label products: Better profit margins. Ever since the 1990s when MIT economists started writing papers on margins of greater than 30%, retailers of every stripe have included their own “store brands” in their offerings—and with good reason. The Innovative Sales Group noted this spring that private label sales growth has climbed steadily. For example, private label drugs grew 17% while store brand groceries grew a whopping 22%. In some places, like the Stop & Shop grocery chain, sales are up nearly 40%. Astounding!
But, the smartest retailers use private labels to focus on something different: Their brand strategy. When you sell a product with your own name on it, you extend the experience of your salon into the homes and daily lives of your clients. On an unconscious level, every time your client picks up a bottle of your shampoo in the shower their product experience becomes fused with their in-salon experience until one day the two become inseparable. What retailers—and service businesses like yours—are selling in those private label bottles isn’t a product. They are selling positive memories and the promise of more to come.
What is more important to your business, the profit margin on the bottle, or the client who books out six months or a year at a time? The answer is, both. Repeat loyal clients are as good as gold. A private label bottle, with your name on it, brings them back.