The Name Game

Private label may just be the best-kept non-secret in the personal care industry. Everyone's getting in on the act, from clothing retail giants like The Gap to the smallest gift retailer. A visit to last spring's ExTracts show in New York revealed about 70 vendors who offer private label programs, while the Health and Beauty Aid Global Expo, also in New York, showcased more than 400 exhibitors with private label services.

The driving factor behind the category's success is the concept of branding. Vito Giordana of Michael Giordano International in Miami said: "In having your own brand name, you create an identity for yourself. A customer sees that yours is the only place they can get the product they love so much. You've created a loyal customer." Giordano has been selling product bearing the company's own trademark since 1985 and private label product for about five years. That segment is now about 40 percent of the company's business and growing.

Six-year-old Honeybee Gardens in Leesport, Pennsylvania, started producing private label brands three years ago. The response has been so great that president Melissa Hertzler created a separate division called Distinctive Identities just to handle private label sales. She dates the boom in private labeling for personal care products and fragrances to the introduction of CK1 by Calvin Klein. The fashion and home accents designer had created an immensely popular product for both men and women. "People responded to that, and once other companies saw its success, they thought, 'hey we can hop on this bandwagon,' " she said.

Because private-label clients run the gamut in size, different vendors offer different sorts of services. At the one end, a vendor may design, manufacture, package, warehouse, and market a custom product. At the other end, a vendor may simply stick the individual store name on its existing product.

Other vendors offer a range of services between the two extremes. "Everybody has a different agenda," said Hertzler. "Some clients want a turnkey approach. They want us to create the product, create the packaging, everything. Other clients have a totally different approach. They have their own labels and their own art department. We just make the bulk product and fill it."

Kathryn Hardy, a veteran of the fashion industry, wanted to create an "oceanic" fragrance that could be sold at water parks, aquariums, and resort gift shops. The idea was inspired by her husband, who owns a water park business in Panama City Beach, Florida. Hardy was familiar with the process of buying fabrics, "but I could not go out and buy oil," she said. "I needed to work with someone." She shopped around and settled on Michael Giordano International because it would give her alternatives. "Some companies won't do that," she said. "They just tell you, 'This is what you get, and this is how much it will cost.' "

The fragrance Hardy selected was from a group of 20 that Giordano presented. Launch costs for Tursiops (the Latin name for bottlenose dolphins) were high because molds had to be fabricated for both the bottle and its dolphin-sculpted lid that Hardy designed. She ordered 100,000 units to keep the cost per unit as low as possible; the Giordano company handled some of the warehousing.

But Tursiops took off, and start-up costs were recouped within two years. Hardy has since added a body lotion, shower gel, giftwrap, and notecards, and is planning to introduce a sculpted candle and frame.

Some retailers begin private label programs with a vendor whose products they're already carrying in their stores. Jeannine Kaplan of Parkleigh in Rochester, New York, sells Primal Elements products in her store, and her son, Kris, of Kris & Co., reps Primal Elements in New York State. The two wanted to come up with something to help celebrate Rochester's annual Lilac Festival. Aware of Primal Elements' private-label program, they thought that loaves of lilac soap that could be sold by the slice would be a good choice.

Jeannine came up with images of lilacs and submitted them to Primal Elements. "We went back and forth with drawings and indications of colorations, and they came up with a purple and white design," she revealed. They also got the scent perfect, "not overpowering or perfume-y, but the exact smell of a fresh lilac."

The minimum order was 250 loaves of soap. "It seemed like a lot of sliced soap," said Jeannine, who packages the slices in bags with Parkleigh stickers on them. "It was a pretty big investment for us, but it sold well. We sold as much in the store as we did at the festival site. People kept asking for it, so we kept it in our repertory. We're actually on our third or fourth run of it now."

Here are some points to help make sure that your experience with private labeling is successful.

• Find a vendor that will work with your needs. "It's really important that your design and ideas don't get lost in their suggestions," advised Hardy. "You need a company that doesn't tell you what you'll be doing."
• Many smaller companies are more flexible with minimum orders. "We try to cater to the smaller retailer; we don't necessarily say you have to do 10,000 pieces," said Hertzler. "It depends on the project, it depends on the product, and it depends on what they're bringing to the table."
• While there can be substantial start-up costs, you can save money in the long run. "After the one-time start-up costs are out of the way, the business pays for itself," Vito Giordana stated. "You're getting the product at a better price than what you'd be paying for it regularly, and you're getting that store recognition that could eventually become advertising in itself."
• Plan on the process to take time. "This is something that can't happen overnight. The more detail you put into it, the better product you'll have in the end," concluded Jeannine Kaplan, "If it's a good idea, it's going to sell."