The combination of tariffs from the Biden administration and Trump's suggested increases, along with changing trade relations with China, is reshaping sourcing strategies for private label and DTC brands.
Private label and DTC products are the highest-margin items for merchants, often yielding more than double the profits by eliminating several middlemen versus traditional brands.
Even while utilizing similar recipes and manufactured at the same facility, private label products can yield significant profit differentials, as seen in a pet food example.
During discussions among private-label brand managers, tariffs were a pivotal concern for their 2025 strategic plans, especially regarding potential shifts away from sourcing in China.
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