Italian resellers target private label

OPI met with several of the leading resellers in the Italian market at last month’s Big Buyer show in Bologna.

Given all the international concerns about Italy’s sovereign debt crisis, the recent change of Prime Minister and potential austerity measures, the mood in the reseller community was relatively upbeat. A general feeling was that it’s been a tough few years and it will be the same again in 2012, although there are growing concerns about worsening credit conditions and the risk of non-paying customers.

There’s no doubt that the crisis has had an impact in both the B2B and consumer channels. Companies have been making staff reductions; unemployment in Italy is officially at 8.5% of the workforce, but some put the real figure several percentage points above that. Businesses are also making do with less, challenging the average office supplies spend of €300 ($400) a year per white collar worker, the benchmark market figure.

One strategy that resellers have been using in order to offset declining sales and pricing pressures has been to develop their private brand offerings.

Gifts and stationery retailer C’ART, for example, has doubled the ratio of its own brands to 30% of total sales in the last two years in its network of just over 100 stores.

CEO Stefano di Veroli says that the market for luxury goods is relatively recession-proof and a new store format – STILE by C’ART – has been running successfully in the Italian capital Rome for the last couple of years. Currently, 50% of STILE’s turnover comes from the luxury writing instruments category, but the plan is to introduce more ranges of C’ART’s own high-end private ranges. Tests are taking place and a decision will be taken next summer whether to then roll out the new concept in other city and town centres.

Expanding its private brand luxury lines is also a strategy of Italy’s number one office retailer Buffetti, which has 750 stores. The group has its own business bags Business Unit, Full Time, and so far about 100 stores have been fitted out with Full Time areas, stocking high-end leather goods aimed mainly at the female buyer.

Furniture is another area where Buffetti sees opportunities. An exclusive private label agreement with renowned German office chair manufacturer Wagner is already generating annual sales of over €1 million and special ‘furniture corners’ are being introduced in stores.

90% private label target

While C’ART’s Stefano di Veroli says private brand sales of 30% is about the right figure for his chain, Villa’s target at Buffetti is a mind-blowing 90%.

Today, 25% of Buffetti’s revenue comes from private label, but sales are up 28% so far in 2011. Villa says Buffetti achieved scores of over 90% in spontaneous brand recognition tests and that the name is associated with good quality.

A pilot store in Turin to test this private label strategy was opened about 18 months ago. Villa says that performance has been benchmarked against five other stores opened at approximately the same time and the key metrics of sales, customer traffic, staff productivity and margins are all substantially better.

In the non-retail dealer channel, private label has also been something of a buzzword.

BPGI member In Ufficio – which has 21 members and end-user sales of over €110 million – has recently revamped the packaging of its In Linea brand and increased the range to over 400 products. This includes products in new categories such as jan/san, breakroom and safety and security as In Ufficio looks to lessen its dependence on traditional office categories.

 Like In Ufficio, contract stationer Karnak has been expanding its product offering, not only in adjacent categories such as safety and security and FM, but also in areas such as online training for SMBs. Karnak has teamed up with a local online provider to offer training in subjects as diverse as English language skills and health and safety.

Karnak’s Purchasing Manager Lorenzo Rudella told OPI that membership of the Interaction alliance has had a favourable impact on purchasing terms with suppliers. It has also meant access to Interaction’s Q-Connect private brand and sales have grown to around €10 million in the first year.

“Our own private brands have traditionally been high-end and we needed a solution where we could be more price aggressive,” said Rudella.

Keywords: Italian, resellers, private label,