By all means I am part of those who occasionally get carried away by a few good selling days and suddenly recognize the silver lining on the horizon. One has to be able to recharge emotionally, even in difficult times, or especially then. Yes, even consultants are allowed to do that. Regardless, the task remains to search for the deeper causes, why retail is not recuperating. Surely, there are a series of known problems which entail undeniably weak business dealings. I do not want to list them here again, but rather take up a subject-matter that has only rarely, or I might even say basically never been touched on: the flood of private labels and the consequences.

Private labels, also called trademark, used to be the “house brand”, born in the gastronomy and for all those who possessed and offered such a “brand of the house”, it was the pride of that house. A merchant of delicacies from Munich, whose business is world-renowned, told me once “the established brands of Champagne do not suit the standard of our business that is why we have to carry a private label”. He is actually making more sales with his private label than with all the Champagne prestige brands his business carries combined. Such a case is surely the exception that proves the rule.

The fashion industry is facing more adverse conditions than those for the merchant of delicacies. The market for fashion, at least that for textiles and the shoe market are being inundated with private labels for some time now. So overstocked that it seems that brands are being pushed into background jobs whose main task it is to lend an aura to the labels, to provide a setting of significance, which they themselves are not able to provide. If you research the reasons for this development, retail will let you know, that this is supposed to offer a greater variety to customers at more favourable prices for those never-ending pricing battles.

In reality there are many reasons and most of all those which won’t be discussed publicly. Subsequently, I would like to illustrate my point of view: retail is using private labels in order to generate higher margins; instead of 120% markup, 150% and at times even 200%. Retail is trying to keep the industry on a tight leash in order to distance themselves from their own competition. However, in the medium and long term, this is a miscalculation.

The individual is not going to be able to escape from the ‘wrath of rebates’ through higher margins, to the contrary, he is rather going to become a victim of such thinking, because these higher margins are in the end going to be used up for rebates. And when it comes to the industry, it is suffering from private labels, but only as long as it will survive. The dying in the industry, which we have been experiencing lately, is no use to anybody, least of all to retail. And when it comes to improving your image in comparison to the competition, then private labels do not look very impressive.

There are more reasons which make it worth contemplating taking a distanced relationship towards private labels. There aren’t many markets which are that dependent on new products, innovation and brilliant creativity. The fashion market is one of those markets and private labels hardly ever offer anything innovative or creative. It is more likely to find basics and most of all cheap copies in the offer of private labels.

Private labels do not have the strength to fascinate consumes and to fulfil wants, dreams and wishes.

Private labels are lacklustre, they do not own an aura; they render the offer of retail simple. And when it comes to the often quoted proof that private labels offer a special productive efficiency, reservation may be expressed.

Private labels are gravediggers of business, because they provoke a futile artificial competition with brands. The situation of fashion retail would be much better nowadays, if there were fewer private labels. The consumer is faced with such a mass of lifeless, almost unease creating pseudo-brands and infringement of trademarks that it would have to be difficult to raise a true feeling of buying delight. The only things that have an effect in this environment are special offers and price cuts. Basically just what retail is trying to avoid knowing that in the end all that is left is the apocalypse of the business, whereas you can no longer hope that you will escape and only your neighbouring businesses are getting hit. That this is by far no exaggeration shows shockingly the events surrounding Quelle-Karstadt AG and similar cases elsewhere.

I do not want to criticize private labels without recommending alternatives to retail in its attempt to gain profile. I can see that with this concentration of competition it is necessary to distance oneself and to show profile. It is my suggestion to shape an offer in connection with partners from the industry who are willing to give brands exclusivity at a reasonable extent. To put it differently, as a retail business, I would strengthen the business with brands which offer the ability to clearly define the profile. I also suggest returning to solid margins, which make it redundant to permanently reduce prices. The consumer once again has to be able to trust the pricing policy of retail. If six weeks after launch of a collection, for the rest of the three to four months season, price reduction of 20% to 70% are offered and all year round special offers are being publicised as the center of retail advertising, then in the end all that is left is the loss of customer confidence.

It is a mistake to believe that only a tough competition could rule the market today. The real situation is different. After decades of consuming more and more, after the change of values and change of society from a simple society of consumption to a knowledge society where the individual needs to be addressed and no longer a whole smorgasbord of target groups, we are facing a consumption revolution, where the mock battle with private labels destroys more than it restructures. We do not need gravediggers, we need new perspectives and those cannot be found in private labels.