3. Retailer's private brands.—The private brand problem is not confined to jobber-manufacturer re lations. Retailers have private brands, as well as jobbers. Opposition to nationally advertised goods on the part of retailers frequently takes the form of the retailer's handling a line of goods bearing his own label. This is more common in large depart ment stores and chain stores than in smaller specialty shops or country general stores. The use of private brands by retailers is a very real obstacle to the mamt facturer of nationally advertised goods who wishes to obtain the widest possible distribution.
It is by no means a universal practice, however, since a comparatively small percentage of retailers follow it; and, moreover, it seems to bc decreasing ex cept in the case of chain stores and catalog houses.
On the other hand, among jobbers, the use of private brands to a greater or less extent is almost a universal custom, and there are no evidences that it is decreas ing. Our consideration of the private brand problem will deal, therefore, chiefly with the private brands of jobbers. Much that is said applies equally to jobbers and retailers, altho the illustrations are all taken from the jobbing field.
4. Different kinds of manufacturing The jobber who sells his own private brands is some times known as a manufacturing jobber. He oper ates in several different ways. Some jobbers actually establish their own factories and really manufacture the goods on which their trade-mark appears. They are relatively few in number because of the amount of capital needed to establish and operate factories. Other so-called manufacturing jobbers go to inde pendent manufacturers and have them put up goods under the jobber's own label, or they buy package (mods of various sorts without labels and then attach their own after the goods reach their warehouses. This method. is followed to some degree by ahnost every jobber in every line in the country. Still a third method is for a large jobbing house to take the exclusive agency for a manufactured line, and to act as the manufacturer's exclusive agent for the distri bution of it thruout the entire United States or within a limited territory. _ The jobber who follows any of these three prac tices does not, in the majority of cases, advertise the goods for which he assumes responsibility. When he advertises it is usually in trade papers and is not in tended to influence the consumer. Some manufac turing jobbers, however, are using local mediums— newspapers, street cars, etc.,—to influence consumer
demand; and a few of the largest jobbing houses are advertising in general mediums to reach a national consumer market. Among the well-known products advertised nationally by jobbers who either manufac ture them themselves or who have undertaken the exclusive responsibility for their distribution, are Eskay's Food, Calox Tooth Powder, Pebeco Tooth Paste, and Steero Bouillon Cubes.
5. Why the jobber likes private brands.—We are to consider the problem of private brands from three points of view: first, from the point of view of the jobber who is responsible for them; second, from the point of view of the manufacturer who makes them; and third, from the point of view of the general pub lic and of the manufacturer who opposes them.
C. Snzall profit on advertised goods.—When the jobber puts his own trade-mark on goods to sell in competition with goods trade-marked by manufac turers, he serves notice of his intention to abandon his historic function of being merely a middleman. This is the case, no matter whether he actually manu factures his own goods or whether he simply puts his own label on goods made by somebody else, be cause in the latter case he consciously accepts the re sponsibility of a manufacturer just as much as in the former. "Why does he change his methods'? Why does he abandon his former exclusive function of a distributor? His first reason is usually his belief that he can make more profit on his own brand than on a manufacturer's brand. The charge is made that (roods which are advertised by manufacturers often give the jobber such a small profit that he cannot af ford to handle them. If this charge is true, it is an argument that cannot be answered, but the advertis ing manufacturer contends that large sales of his product give large gross profits.
7. Quality.—Some jobbers say that their private brand goods are justified because such goods are bet ter than competing nationally advertised goods. One jobber has said that "fifty per cent of the advertised goods in my line could not be given away if they were not advertised. The non-advertised goods usually have more merit." Opponents of private brands re tort. "The jobber's sole purpose in putting out private brands is to make more money—to get goods for the minimum price and to sell for the maximum; and consequently quality is likely to be a secondary consideration." The truth is found in neither of these extremes.