THE PRIVATE BRAND PROBLEM 1. Old-line jobber.—Some of the reasons for the growth of direct manufacturer-retailer relations ap ply to the old-fashioned jobber who has not altered his classic functions. These are the reasons that have been discussed in the preceding chapter. Another elass of reasons arises from a change in jobbing functions, and of these the most important is the entry of the jobber into the manufacturing field.
The old-line jobber was a distributor pure and simple as far as manufactured goods were concerned. To be sure, he has always performed a semi-manufac turing function with respect to certain kinds of goods. The grocery jobber, for instance, has since the begin ning of the canning industry taken largely upon him self the responsibility of establishing local canning factories, and of collecting and packing the fruits and vegetables that are handled by the canning estab lishments. Sometimes the jobber owns and operates outright the factories that supply him with his canned goods; sometimes he merely backs a local canner with his capital and with his agreement to take the out put of the establishment. In either case the jobber usually controls the character of the product, and often provides in advance for its marketing. There are many independent canning factories, but the ma jority of them put up all or most of their product un der the labels of the jobbers with whom they deal; only a few advertise their own brands to the public.
The canning industry seems to be essentially one of small. units, because the cannery must be close to the source of supply; therefore, in spite of a few no table exceptions, it has not attracted generally the at tention of large scale manufacturers, and the suprem acy of the jobber in this field does not seem likely to be seriously disturbed. What is true with respect to canned goods is generally true also with respect to various goods imported in bulk and then sorted and packed for the trade by importing jobbers. The jobbers' brands have long dominated such goods, and they will probably continue to do so. Some import ers are beginning to limit their attentions to one or a few lines of goods, to brand them,uniformly, and to advertise the brands nationally. The function of these importers is essentially a jobbing one; it differs only in degree from the activities of the many general jobbers who import and pack under their own brands but who do not generally resort to advertising to mar ket the goods.
2. Jobbers as manufacturers' competitors.—These
old, well-established activities of the jobber do not raise what is known as the private brand problem. There is no private brand problem as long as the job ber puts his own label only on the kinds of goods that are not generally branded and advertised by the manu facturers. The problem arises when the jobber comes into direct conflict with the advertising manufacturer by putting his own brand on the same kinds of goods that are branded by the manufacturer. The private brand problem has become serious because some job bers are trying to carry water on both shoulders. The hardware jobber who handles many goods trade marked by the manufacturer is often pushing a similar line of competing goods under his own label ; the drug jobber who is supposed to be in business pri marily to distribute the goods of manufacturers is frequently putting out, in competition with the manu facturers' goods in his stock, a complete line of drug gists' package goods under his own label; the dry goods jobbers and others are in many cases trying to bolster up their position by similar practices.
The situation just described constitutes the private brand problem. It is probably both a cause and ef fect of the present changing status of the jobber. The jobber says : "The manufacturer is taking my most profitable trade away from me ; he is selling di rect to the largest retail buying units, which of right ought to buy from me. He is selling package goods and other specialties direct to all retailers, regard less of their purchasing power, and is then leaving me to supply the same retailers with the heavier bulk goods on which I make the smallest profit, or no profit at all. If I am to stay in business, I must make a living profit ; and I can't make a living profit unless I handle specialties which I can sell under my own la bel, which the manufacturer can't take from me, and • on which I can fix my own profit without dictation by the manufacturer." On the other hand, the manufacturer says; "Of course I have to sell direct to the retailer. Here is John Smith and Company, the wholesale druggists, with a brand of face cream of their own. Their sales men have orders to push it and to try to get the re tailers to order it instead of the face cream that I manufacture and advertise widely. Why should I intrust my brand to them? It is certain, if I do, that they will do their best to side-track it and to substitute their brand." There we have the private brand prob lem in a nutshell.