For some consumers it's all about the tags

Brand loyalty keeps consumers coming back, but what about private labels - joke, or no joke, the joker tag is real.

You see it on every garment. It lists the size, the style, the content and the company's label. If a customer trusts your store, he or she might buy a product because your name is on the joker tag. But there are as many opinions about the benefits of private labeling as there are designers and retailers.

Elgin Edwards, a specialty men's boutique, carries a lot of private label items. Owner Dale Edwards said that was how he was brought up in the business 40 years ago.

"We control the price," he said. "We don't have to pay someone to have his name on it."

All the shop's shirts and many other items are labeled "Elgin Edwards, Colorado Springs."

"I want my customer to think about my label," Edwards said. "If he is happy with what he got, he will come back to me."

But private labeling is becoming a thing of the past, he said. Newer retailers tend to be swayed by designer labels - which come and go, as does a retailer's business and customers.

"Designers get their cut, their percentage," Edwards said. "They ride the crest of every new wave and disappear as quickly as they came."

Designer names are popular among younger buyers, who are not as loyal to a store, Edwards said. Knowledgeable buyers are loyal to a store and are not as swayed by a designer label.

However, retail is changing, and it's becoming harder to put your label on an item, he said. It is a competition; everyone wants their name out there.

Bill Kurtz at William Kurtz Ltd., has a different philosophy. He prefers to carry designer labels.

"I like people to know exactly what they are getting," said Kurtz, who has owned his store for 13 years.

With the private label, typically you don't know who made it or what the quality is, he said. Anybody can put their label on a garment, but is it truly theirs?

"I put it on all my ties for the most part," Kurtz said, "but all that means is they bought it here."

What it really comes down to is profit margin, he said.

"I would say a private label is very easy to mark up or down because nobody knows what it is," Kurtz said. "It is a generic brand."

How to get a private label

One way to develop a unique product line is to form a partnership.

Linda Bridger, owner of Saboz on Tejon Street in downtown, was looking for a new line of shoes and came across Kathryn Kerrigan, a former college basketball player who started her own women's footwear, design and distribution company, Kathryn Kerrigan, Inc.

Kerrigan flew to the Springs from Chicago and brought her line of shoes for Bridger to see. They hit it off and Bridger decided to develop her own line of shoes using Kerrigan's manufacturers in Italy.

The only additional cost to starting your own line, Bridger said, is paying the manufacturer to stamp your shoe. And that cost varies with manufacturers.

Choosing a vendor is the first step in starting a private label product line.

Ruby and Frank Maestas, owners of Sole Mates, ordered their private label shoes about three months ago and they've been in the store about two weeks.

"When people see my shoe, it is not only a conversational piece, but a way to market my merchandise because it puts the name Sole Mates out there," Frank Maestas said.

He said he paid $100 for the stamping.

More local control

Matjaz Bren, a professor of marketing in the Regis University MBA program, said that by using a private label, retailers can determine the price, the profit margin, the product placement and its promotion.

He said nearly a quarter of all products in the United States are private label.

According to a 2003 Boston Consulting study, private labels account for one of every seven retail sales, Bren said.

In addition, the study found that two-thirds of American consumers thought private labels were as good as designer brands.

The growth of private labels, mostly beverages, foods and household items like plastic bags and wraps, is growing and is double the rate of branded goods, he said.

"Most producers or manufacturers hate private labels because they are likely to lose a good deal of their market over time as their branded product becomes private label," Bren said. "Those that can make it work are usually the bigger retailers or grocery stores, such as Wal-Mart and Costco."

Giant retailers have the option to pick and choose manufacturers, and unless there is a loyal following, it can be challenging for smaller retailers.

And as trends and tastes change, Bren said, people get tired of private labels and switch to branded goods.

"The benefit of a private label depends on many factors including who is selling it, whether it is used to signify lower price or a higher quality, and whether it is truly cheaper to produce or sell," said Martin Sipos, an associate professor in the Regis MBA program.

Brand equity is one reason people will choose a national restaurant over a local restaurant, because it is a known quantity that will meet consumer expectations, he said. But for smaller businesses the cost to stock a store brand might not be any cheaper, he said.