Focus On: Garcoa Labs sees private label helping bolster sales

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Focus On: Garcoa Labs sees private label helping bolster sales

By Seth Mendelson - 11/15/2018
Officials at Garcoa Laboratories feel they have all their bases covered — and that could be great news for the nation’s retailers.

The fast-growing Los Angeles-based company manufactures as many as 2,500 private-label and controlled-brand items, as well as many branded products. They include a wide range of health and beauty care categories, including hair care, skin care, body and bath care, as well as over-the-counter items and household products. While based in California, the company has manufacturing plants in Chicago, Toronto, Ottawa City, Ill., and Guatemala City, Guatemala.

On top of that, Garcoa is a company that is designed to give retailers what they need to better compete in a brutal retail environment, where getting an edge up on margins is crucial to both the short- and long-term success of the business. According to CEO Greg Rubin, who founded the company in 1983, Garcoa’s business model is fashioned on simply asking retailers what they need from the company and going out and doing what is necessary to develop the best product possible. Some retailers prefer turnkey programs to include concept, formulation, package development and procurement, while others just want manufacturing and production services, he said.

“We work with virtually every single major retailer in the country,” Rubin said. “We simply ask them what their needs are, and they give us a shopping list of products and we fulfill that list. Reverse engineering is a big part of what we do. They tell us what they want. We rebuild it to make sure it is efficacious, meets all the industry standards and is delivered on time. Our retail partners know they can come to us for all of their private-label needs. We are a one-stop shop.”

To that point, Rubin said that Garcoa offers its retail partners a broad array of services. They include global sourcing, market insight and intelligence, inventory management, packaging procurement, logistics, warehousing and distribution, research and development, and quality assurance and control.

He also was quick to add that three major firms audit Garcoa: NSF, UL and Intertek. “The diversity of our products and our reputation in the marketplace gives us a lot of range,” Rubin said. “On top of that, I think the retail community respects us for what we offer them besides the products themselves. We do the research needed to make sure the product is the best possible on the market, and we follow the trends. If a retailer has a problem, we have the solution.”

The overall private-label category is at an interesting crossroads. Private label’s market share has grown to between 20% and 25% of all sales at the nation’s mass retail outlets as product quality has dramatically improved and many retailers are looking for ways to generate more profits from many stagnant categories, as well as offer their own labels that are not available elsewhere.

Yet, some suppliers are complaining that retailers are pressuring them for even better margins and profits. That has the private-label community concerned that they might not be able to stay in business. “The private-label category is rapidly changing,” Rubin said. “The high cost of doing business is causing a large number of manufacturers to disappear. I think retailers are not giving manufacturers the opportunity to make money. They want better margins, and that is hurting the supplier’s ability to make money too.”

He said that retailers need to develop programs with their suppliers in private label that allow the supplier to make “a few cents” by developing products without interference from third parties that run costs up. “The industry has to work together to ensure that everyone can make a profit from this category,” Rubin said. “This is a lucrative marketplace and we can all benefit from it.”

Rubin, who runs the Women’s Enterprise-certified company, or WBENC, with his wife Melinda, who is president, also calls on retailers to treat private-label products in the same fashion they treat national brand items. “The promotional activity for private-label products must be increased in store,” he said. “Retailers need to do a better job promoting their private-label brands. They are giving endcaps to [national brand suppliers] for their products, but they are not giving their own brands the same support. That cannot help.”

However, Rubin is confident that retailers will soon get the message that private label can help them entice consumers into their doors and bring more profit to the bottom line, especially in the era of Amazon.com and other digital retailers.

“In five years, I think our company will be more than two times the size it is today,” he said. “At the end of the day, it will come down to the companies that are the most innovative and the most willing to bring new ideas and products to the marketplace. We think that Garcoa has stood at the front of innovation for years and will continue to be a leader well into the future.

“Yes, we cover the bases. We are trendsetters. We are knowledgeable about our total business and we know what is going to be hot tomorrow, today. We look ahead and our retailer partners benefit from this.”

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