What Ted Hebert initially thought was a bad idea now appears on nearly every product he sells.
While in his early 20s, he decided to open a business that he planned to call Custom Pools by Ted, but his mother urged him to reconsider the name. She had something cuddlier in mind: Teddy Bear Pools.
“I said ‘What a stupid name,’” Hebert recalls.
But he came around to it, and today Teddy Bear Pools in Chicopee, Mass. is a regionally recognized brand. The store’s iconic white and blue bear is ubiquitous in the Pioneer Valley. The business sponsors around 140 youth sports teams, operates 37 trucks bearing the adorable logo, and is actively involved in many local civic and nonprofit organizations.
Extending that brand equity to his inventory was a no-brainer — and, over time, it’s proven to be a boon. However, private labeling comes with certain caveats. Here, we discuss the benefits and drawbacks.
A case study in success
For Hebert, a foray into private labeling began as an experiment. As a loyal dealer of a major chemical line, he was informed that generic products simply do not sell. But he decided to challenge that notion and found a supplier that put his logo on containers of quick-dissolve tablets.
They sold like hotcakes.
He then began phasing out well-known pool treatment items as his own store brand took up more and more shelf space. When a national brand would debut a hot new product, he’d offer his generic alternative — when it was legally permissible, of course.
Hebert even developed a product of his own. In the Northeast, where pools hibernate in the winter, closing kits are a must. So, Hebert figured, why not offer an opening kit of his own? At the beginning of each season, he sells a 3-in-1 Teddy Bear Pools value pack that includes a clarifier, algaecide and chlorine shock.
“We now sell as many opening kits as we do closing kits,” Hebert says.
He’s found that there are very few things he can’t brand. Today, store-labeled merchandise comprises approximately 95 percent of his inventory.
“Our private label has been extremely, extremely, extremely successful,” says Hebert — so much so that customers request Teddy Bear Pools products over their name-brand counterparts, he says.
There are several reasons for this, the main one being that, after more than 40 years in business, Teddy Bear Pools has gained consumer trust. It also doesn’t hurt that Hebert sells generic merchandise for approximately 10 percent less than major-label products.
Plus, he believes his merchandise is superior to that of his chain-store competitors. Hebert, who has a background in organic chemistry, knows the makeup of his products and works closely with his manufacturer to ensure quality. According to him, not only are his customers saving money upfront, they’re getting more potent pool treatments, unlike some of the diluted big-box varieties.
Customers, he says, have come to know the difference.
“They’ll say, ‘Gee, what is with your product? We use so much less,’” he says.
While there is a certain allure to stocking items stamped with your very own logo, not all retailers should expect to attain the same level of marketplace dominance.
Certainly, launching your own line of chemicals isn’t without risk, cautions Ted Lawrence, corporate retail category manager at PoolCorp.
First consider the cost. Private-labeling your own chemicals isn’t necessarily cheaper than stocking a nationally recognized brand. And, in many cases, you’ll need to commit to large volumes to make it worth a manufacturer’s while.
“As long as you’re buying at least 1,000 (units) per year, then it makes sense for us production-wise,” says Mark Ridpath, who handles sales and marketing for Capo Industries, a pool and spa chemical maker in Burlington, Ontario.
It’s generally multistore operations that can meet this demand, Ridpath says, though some single stores do the necessary volume, as well.
When considering whether or not to private label, executives also should factor in certain long-term implications, such as ongoing marketing expenses. Don’t overlook the promotional support provided by some major-label manufacturers.
The benefits of being a name-brand dealer go beyond receiving free in-store collateral such as displays, banners and brochures — things that may or may not be provided by a private-label supplier. Nationally recognized brands develop sophisticated marketing programs that drive traffic to a store, such as rebates, coupons and “dealer days” events, as well as digital marketing efforts (search engine optimization, social media, etc.). They may even provide training and guidance on such issues as merchandising. “You have somebody out there who is working strategically to build the brand and create consumer awareness,” Lawrence says.
Plus, loyal dealers tend to earn rewards. Some of the biggies treat their dealerships to tropical retreats after stores close for the season. They also offer networking events, educational opportunities, in-store training and ongoing technical support.
It’s for these reasons that Ridpath has seen the number of private-label requests flatline over the years.
“People used to value having their own brand more than they do now,” he says. “Now they value a national brand with a bit more marketing behind it.”
And there’s a stigma against generic products that’s hard to shake.
“Unless you’re prepared to be a Whole Foods, who generally markets their 365 brand as a premium product,” says Lawrence of the high-end grocery chain, “the consumer, for the most part, looks at a private label as an inferior product.”
A competitive edge
So why sacrifice all that marketing might for the sake of your own label?
Mainly because it’s the only way to ensure that the products you carry are exclusive to your store — and your store alone. The old model of assigning dealers their own territories has largely fallen by the wayside. Competition from the internet has also challenged pool stores to stock merchandise customers won’t be able to find anywhere else.
“There’s no guarantee anymore that that brand won’t be found on the Internet or right down the street from them,” says Ed Wexler, vice president of private labeler N. Jonas.
Though the Bensalem, Penn. firm produces five national brands, Wexler says the vast majority of the pool professionals it serves are more interested in carrying their own chemical lines. Before they sign on the dotted line, however, they often express concerns about liability and navigating the U.S. Environmental Protection Agency, which requires chemical products to be registered in the states where they’re sold.
Like most manufacturers that offer private-label services, N. Jonas helps retailers meet EPA guidelines. As for being held liable for a product malfunction or related injury, Wexler maintains that it really doesn’t matter whose name is on the container. You’re at risk either way. The store may have to take the blame if it provided the wrong instructions or mishandled the chemicals. Otherwise, “if it’s technically our product, we’ll back the dealer,” he says.
Private-label suppliers also say they’re becoming more advanced in their marketing, capable of designing store-specific promotions and collateral.
“We do provide advertising allowances and things like that,” Wexler says. “So there are a lot of ways we can help them.”
The key to creating your own successful brand, he says, is to get customers on a program that positions your products as the primary pool-care solution.
In the end, retailers shouldn’t have to decide between launching their own line or stocking a well-established brand when there is a very reasonable third option to consider: Do both.
Says Lawrence: “When you let the consumer make that decision for themselves, I don’t think you’re missing out on too much.