National Retailer in US with over 1,200 Private Label SKUs covering 12 Store Brands, who wants to expand PL Presence.
What We Did
Full Implementation of Expense Offset program for their $3.5M budget, including Outsourcing of all detailed Creative Design work to a firm with international capacity.
Complete Success. All packaging expenses were offset by fees collected from their PL suppliers. Fees grew to over $8M per year while costs decreased 25% per SKU. Brands grew to 22 with ~5,000 SKUs … all with zero investment.
The private label team at a national retailer was at a crossroads as they began to expand their PL presence. They had stores in every state with over 1200 Private label SKUs across ~12 brands. Their internal creative team was struggling to keep up with new products and refreshes of current PL Brands, and their budget was not likely to increase substantially to grow the business. Furthermore, their artwork and brand identities were inconsistent without clear messaging, which needed to be improved at the same time. They wanted some “out of the box” thinking.
Where We Stepped In…
The client understood that some competitors had implemented a simple vendor chargeback program for Private Label, but also knew these were often problematic for several reasons. We proposed implementation of the Expense Offset program which was soon initiated with the blessing of their PL Executives and their finance team.
The program began with data analysis of their current cost structure for packaging, and an analysis of their current internal delivery for Brand design. Detailed examination of the available SKU data, sales data, and procurement data for all Private label SKUs was also undertaken, eventually yielding the details of their program.
The program implemented was strong and was accepted by their finance team, HR team, and even the Product Suppliers. So strong in fact, that the program and new creative supplier(s) still remain in their initial form 10 years later. The scope of services for the chosen creative supplier has been greatly expanded over the years with worldwide international support when needed.
Initially however, the Achilles heel of the program was hiding in the data, which was not strong and created havoc during the first 6 months after launch. Turns out their internal data was not as it appeared and new procedures were developed to ensure proper data is input each quarter, ready for audit. The problems were overcome.
Results by the Numbers
- Over $8M saved each year, entirely funding all PL packaging expenses
- Charges applied to over 650 PL Suppliers around the world.
- Growth to over 5000 SKUs, 22 Brands, with up to 2000 new or refreshed packages per year.
- Growth from $3.5M to $8M Packaging expense while reducing budget to zero.
- World Class Branding
- Fast time to market without waiting on Budget Cycles (Projects are self funding).
- All this with zero packaging investments and zero budget increases.
Outcome: 10 Years of Success and Counting.
After 10 years, the program has become an essential tool which allows their Private Label packaging to “pay for itself” while enabling better quality, branding, audit, compliance and flexibility. Each month our team manages the budgets, calculations, and communicates project changes to ensure that “money coming in” always equals “money going out” … often including a small surplus at year end. To quote a senior director… “We can’t live without it”.
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