Bigger Margins, Smaller Minimums: What Private Label Really Takes for Indie Retailers
The rules have changed…
The same branded product your customer sees in your store is also on the brand's own site, in a competitor's window, and on a marketplace at a discount. Margins are squeezed from every direction, and savvy customers are price matching right on your sales floor! It is no wonder more independent retailers are developing their OWN products. Here, we're breaking down why the juice is worth the squeeze and how the process has shifted in favor of indie retailers.
In this session, Dane Cohen sits down with Steve Trayner, President of Sales at CFL, a global apparel sourcing and manufacturing partner that has been producing merchandise for brands and retailers since 1978. Steve has worked the brand, agency, and supply chain sides of the business for nearly two decades and is known for straight talk on tariffs, landed cost, and what it actually takes to get product made.
You’ll leave knowing:
Why the shift toward owned brands is happening now, and what it does to a store's margin, exclusivity, and long-term trajectory.
The myth-versus-reality breakdown on minimum order quantities.
The execution checklist first-timers need before spending a dollar, plus the specific places new private label programs lose money.
A start-small playbook: how to build a few hero styles, read the sell-through, and scale what your customer is already voting for.
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Indie Insights Live - “Bigger Margins, Smaller Minimums: What Private Label Really Takes for Indie Retailers”
Featuring: Dane Cohen (Management One) and Steve Trayner (CFL)
Host: Management One
Aired: Oct 1, 2026
Dane Cohen: Welcome back to another episode of Indie Insights Live, back at you every Thursday. We are going to be joined by an awesome guest this week, someone that I consider a bit of an industry legend, and we're going to talk about a topic that I think is on everyone's minds right now, and that is private label. So, before we get into the conversation, and I think it's going to be a really awesome conversation, let's go over some housekeeping. So, first off, we have the chat. Please get involved in the chat. We want your questions. That's the beauty of being live. So as we go through, ask your questions. We'll try to get to all of them. And we will, of course, be sending out the recording. It is on our YouTube channel, so you could always see it there, but we will send the recording as well. So I'm going to introduce my guest. We have Steve Trayner on today. He is the President of Sales at CFL. CFL is a global apparel sourcing and manufacturing partner that works with some of the biggest retailers across the globe. Steve has been in the industry for 20 years. Steve, welcome to Indie Insights.
Steve Trayner: What is up, Dane? Thanks so much for having me. I'm excited to be here. I can't believe you said twenty years in the industry, and you you realize you're like, it's, it really goes by quick.
Dane Cohen: I'm there, too. I'm about.
Steve Trayner: Altogether.
Dane Cohen: So…
Steve Trayner: Crazy.
Dane Cohen: Yeah. So, Steve, here's where I like to start. I like to get to know, you know, where our guests started, how they got into the industry. And I know that you have a pretty storied career. So let's start from the beginning. How did you get into the biz?
Steve Trayner: Totally. You know, I was studying music of all things, living in Sydney, Australia, and My first job that kind of got me into any sort of power or fashion was this little tiny ad agency in Sydney. I was interning, and then I was kind of doing some account executive stuff at the tail end of my time doing university, and Nike was one of our customers. And so kind of my engagement for retail and how it worked, we were doing what would be qualified as content back then, which was wild. This is 2002. So think about what content was 25 years ago, which is insane. It's very different, very print centric. But I think.
Dane Cohen: social media era.
Steve Trayner: Bro, full pre-everything. It's like, so… it was, it was… it was very, very rudimentary and, and tactile, that's for sure. But it was interesting, because like, if you… it still came down to story. Like, whoever tells the best story wins. And I would say that that was kind of… if I saw things and how they began, even in that more analog, tactile engagement for content, print-centric, whatever. or TV. It was like, whoever tells the best story wins. I think that's stat that sat with me. And then, basically, we moved back to the States, and I had got my first job in fashion working for a denim brand out of Los Angeles. And so there was four of us. We were all in our twenties. I had no idea what I was doing, but I literally had to walk I had to walk cold along Melrose, sell stores, go to trade shows. I remember going to Vegas for the first time in 2006.
Dane Cohen: This was this was in the heyday of denim.
Steve Trayner: Oh, heyday. I mean, it was I worked in East LA. It was wild. I remember the just you know, the trade shows in New York and Vegas were insane. Berlin also was giant back then, and so it was… it was a wild moment where, you know, thousands upon thousands of people would come to these shows. It was just, the drama in the theater also was pretty entertaining at these shows, a lot more than it was now. And, and then… we went through the financial crisis. It changed the game for what brands were doing, why they were doing it. I think it brought some healthy correction. And then I left LA and moved to New York, and ended up starting an agency that I ran for about 12 years. And we would bring brands in, from all shapes and sources. Many of it was across, we did a lot from Europe, brought it to the States, and we kind of did everything. We weren't kind of a… should I say, we weren't a showroom, we were a distributor, so we… We had the 3PL, we had marketing, we had everything. And it was also the beginning of social media too, as well. So it was when Instagram had just launched, we kind of saw the power of influencer marketing and its kind of early semblance of relevance. And still that same thing went through. Whoever sells the best story wins. I also got a lot more engaged in the pricing, marching, margin, and other elements on what would make something profitable, and also the financial kind of mechanics on what would make sense for retailers. Because I think as more brands come and go, retailers are going, like, there's 2,000 choices for who I should buy this shirt from. why am I gonna choose it? Obviously, there's gonna be, you know, either it's, I can see it selling or doing really well, or you're gonna offer me a really, really compelling margin that's gonna make me try this over something else. And so I think that was we learned a lot about that. How do you engage? How do you start? And then you know, more years went by. I left New York in 2019, I live in Atlanta now, and I got kind of the agency stuff had stopped during COVID. I worked internally for a brand out of Italy called Kappa, which is a big soccer brand.
Dane Cohen: For sure.
Steve Trayner: If maybe you would know.
Dane Cohen: Logo, iconic logo.
Steve Trayner: A guy and a girl back to back. I remember wearing it when I was kind of in my early teens playing soccer back in the day. And their mandate so I basically worked twice for them. But their mandate was like, can you make us cool again? And it was a great fun mandate. How do you kind of bring a brand? This is very interesting. How do you bring a brand from $200,000 a year? That's where they were at in off price business, kind of lost in the throes of Marshalls or TJ Maxx to they're like, we want to be cool again, and we've gone through cycles. What do we do? And so Basically brought down their thousand skew matrix to just their old kind of nostalgic track and soccer centric stuff. And, their business went from 200 grand in retail to about $14,000,000 in.
Dane Cohen: Wow.
Steve Trayner: about 18 months. And so it was, it was a, you know, there was, there was some velocity in the marketing as well. But I mean, we were selling. Nordstrom's. Barney's. It was… it was… it was… every retailer had an opportunity to do some special SMU, and… but it was still based around the same, kind of, like, 16 SKUs. Well.
Dane Cohen: Listen, Steve, if there's anyone that can make a brand cool again, it is certainly you, so.
Steve Trayner: I'll take it. I'll take it.
Dane Cohen: And then, okay, so bring us up to CFL. So, give us a little bit of a flavor of what CFL does, and, you know, then we're gonna kind of move into the private label discussion, but you guys are a huge player in this market.
Steve Trayner: Yes. Yes. The the business has been around for fifty years. It was very interesting to go from agency world to. corporate, but I think it was a very, very cool change, because in our first conversation, I was talking with the CEO, and he goes, you know, we've been around for 47 years at that point, and they're like, our whole goal is to allow scale for brands. Because, you know, every $100,000 brand can have the opportunity to potentially become a $100 million brand. And so they're like, we don't want to just, in the traditional format of sourcing. Usually there's many, many sourcing agents. So you hand me your PO, I put my single digit line markup on it, I hand it to the factory. Can I help you do some technical elements of design, maybe manage the mill a little bit, and then that's it? You still have to do all your relational interaction with the factory. And the thing that I found very, very interesting in talking to CFL, they're like, we work as a principal. And so we actually take the paper, meaning, like, we take the risk of that PO, and we handle it with the factory. So it allows brands that, say, make 200 pieces of something. To be involved in a brand that makes 100,000 units of something, and we can take the general mass of all these similar products and take it as one business to the factory, thus allowing brands that would never get the pricing that a $100,000 a month brand would get. They can get it with 200 pieces. And so I was like, my gosh, I'm like, managing risk and growth when I was on the agency and the brand side was the most stressful thing. Because production is hard, it's difficult, it's annoying. I'm trying to manage your inventory dollars, margin, all those things, markdowns, and I was like. Gosh, if there actually is an opportunity for impact in a greater way now to engage brands and retailers to grow this side of the business, I'm like that kind of creates some magnetism on why I want to take the role. So I was like I think there's a lot here.
Dane Cohen: You're essentially, you know, supporting the full life cycle of an owned brand.
Steve Trayner: 100%. 100%.
Dane Cohen: Okay, so here's the question, and you know, we have a lot of different types of retailers on this, on with us right now. I think the perception is, right, that private label is only for the big guys. And so, I do want to hear about some of the retailers that you work with. I think two of the big examples are Huckberry and Backcountry, and these are big players, but how do we look at private label for maybe a smaller retailer? And I think the big question we get is, is there opportunity for, you know, small to mid-sized retailers to get in on owned brands and private label?
Steve Trayner: I think it's a great question. You know, one of the things that we saw you guys know the brand Tecovas. They're out of Austin, Texas. They make boots, cowboy boots. They kinda made it all cool. So they had zero apparel business, and they had probably about a hundred million dollar boot business. We talked to them, and they said, basically, hey, we don't want to… number one, we don't have the volume to create a giant business in apparel, so we want to mitigate our risk. Where do we start? And so we said, well, you could start with 300 pieces a month. 300 pieces for your first orders, I mean, per month. And they're like, that's possible? And so even Tecovas basically started out in a very small, simplistic, as if you were a one-store retail environment. And it was very shallow, but wide in the amount of SKUs that they wanted and the styles they wanted to try, because they were still trying to figure out what is possible and what will work. And that was also the same scenario with Huckberry. I mean, they have a giant DTC business, but overall. When we came to them, or should I say when we started our conversation, they were like, hey. We don't have a big business for our brick and mortar environments that we want to grow. 80% of our business is third party, which we love our third party, but we understand that a 50% kind of gross margin on third party is prohibitive in a growth trajectory, so we want to engage an own brand scenario where we can try to get 70% or 80% gross margin on those types of products. And try to, you know, if we have to mark down third party, well, then we can offset whatever elements that we see where risk is exposed by having a greater margin for our own brands. But they still started out small. It was shallow but wide because they are, number one, testing out what works. Number two, trying to mitigate the risk exposure because everyone has a finite level of dollars unless you're, I guess, Elon. But it's like, you know, it's it's it's looking at the format of, like, how do I start? Where do I start from? And so that has been kind of a a thing that I had gotten the chance to kind of engage with a lot more. incubation, we call it. Like, where are you at? You got 200 units, you got 300 units, and you want to do it across 10 styles? Let's start. Let's figure it out, because every $20 million brand that I'm talking to now started out in that place, and we know it's possible.
Dane Cohen: Right. And one of the, one of the big things that we preach here at Management One is if you're looking to get into private label, you have to have your cash flow locked in. Right. Because you're going to need a good amount upfront to start, you know, dabbling in this. you know, in this arena. So, we're gonna go through some, a look at margin and what private label could do for a retail business, but, you know, overall. you know, why private label, right? Because let's say a retailer is looking at this as, you know, I'm working with some great brand partners, I, you know, I don't want the stress of this. Why are we pushing retailers to, you know, start thinking about and start looking into how they can support private label in their stores?
Steve Trayner: I would say there's there's, like, five points that I find very interesting around private label. And I think there's two different ways you can do it. I think that, for instance, I would take Huckberry as one example, and then I'll take Saks as the other. Saks Man is the, kind of, Saks private label thing. It doesn't feel overtly special to me personally. It just feels like, hey, here's the retailer name. They don't really think about their kind of in garment label. It doesn't, even though it may be from a great mill and really cool, it doesn't feel like it has its own equity. But for instance.
Dane Cohen: Same thing with Bloomingdale's, man.
Steve Trayner: Totally, to say, it's like, it is kind of this, brandless brand that they have, because they're like, hey, we can make some more margin, let's put out these suit coats, or these trousers, or whatever the situation is. And what I would say is the other strategy that I've seen be successful that me as someone who enjoys the story, right? Whoever tells the best story wins. Huckberry. And it's the same with, you know, backcountry, and I'll use the… I can tell you guys the brands for that. Huckberry has 3 in-house brands. Flint and Tinder, Wills, and Proof. So, Proof is an activewear brand. Wills is more of like a higher end engagement for tailoring and whatever else waxed. And then Flint and Tinder is more kind of Americana. Think like double RL, Ralph, that kind of situation. It's beautiful stuff. But I love it.
Dane Cohen: By the way, I just want to call out, you know, I'm a big fan of Flint and Tinder, and I had no idea it was an owned brand by Huckberry. So, you know, exactly what you're saying, right? I love the brand, and I kept going back to them because I couldn't find it anywhere else, but I had no idea that that was exclusive to them.
Steve Trayner: I guess I remember that happened in our when we were catching up, and I was like, that's crazy. This is one of their own brands. So there's like there's five things that I find really interesting. Number one is margin, right? Why own brands? Why now? You know, something that maybe seems inaccessible. You set the price, you control the markdown, and there's no wholesale wholesale layer between you and your and the product at all. Number one, it's exclusivity. To your point, you're like, I'm looking for Flint and Tinder. I can't find it anywhere. It's only on Huckberry. So it can't be price shop because it only exists in your store. So you can control the engagement for price, markdown, whatever you want. loyalty. Like, you know, if something fits, I think it comes down to, you know, fit and engagement for, the tactile engagement for it, whatever else. The thousand factors which make products happen, but I would say loyalty gives customers a reason to come back to you specifically for this set thing, which is awesome. And then number… Number four would be long-term equity. You build your name instead of renting someone else's. That's what I find very interesting.
Dane Cohen: I love that phrasing.
Steve Trayner: Like, you build you build your own name instead of renting someone else's. Because what if the scenario changes for that brand? They got a business. I don't know. They wanna sell you anymore. There's gonna be a thousand scenarios. And I would say why now? I think with the macroeconomic thing that we're all aware of, like, if we're in retail, we're in apparel. This is want-based business. There has to be some sort of magnetic element that drives consumer base to you, and I would say that where there is accessibility to get more margin and to build a business like this, and it's a lower barrier than I think it's ever been, why not? So, sourcing… starting partners work with smaller programs than they used to, the process is shifted toward retailers, smaller brands, like, it's a lot more accessible, so maybe something will seem like a… An inaccessible option is a lot more Accessible than it ever has been.
Dane Cohen: Right, and so that brings us to our first question, which I think is right on target here. Does the MOQ need to be, you know, around that 300 level? Can it be a capsule collection of 100 units of each style? So. I think that's a question, like, that a lot of retailers have. Like, how, you know, the minimums, that is the big scary thing. I think that is what holds a lot of retailers back from engaging with this, and we could talk about, you know, on our end, some of the tips and what we see on how to kind of enter into this market that are probably a little more scaled back than actually, you know, going and working with factories and manufacturing, but is that available? I mean, if we're looking at 100 styles, 100 SKUs, you know, in an order, is that something that's possible today? I know you're talking about it being more accessible, but how accessible are we talking?
Steve Trayner: Totally. One of the things that, you know. There's like a yes and a no answer to that question. I would say yes. But the second part of that question and answer would be, many times when we engage with a factory, because we're not We're not PO-centric, where we're like, give us your PO, and then we're gonna move on. We're kind of like a dating-to-marry type of business, where we're like, hey, there is a long-term opportunity for a relationship. We all see the better space of what can be created in that type of, kind of, arrangement. Where it's like, we're not just here, give us your one PO and then move on. We understand there's testing, and you have to get figured out, like, I understand that. But usually, when we are starting with a branded incubation stage, then the process is, where do you think this will be? We're not going to keep you to your numbers, but any factory that's going to be producing lower numbers. lower MOQs, then they're gonna go to go… they are wanting to go, can this be something? And so we want to Figure out what that could be, and at least speak to a visionary statement of, hey, you may be 600 units across 10 styles right now. But… we would like you to be, and I hope you would want to be, bigger than that in the coming next 24 months. So as long as we can plan out a projectionary element that makes sense for growth, then those small numbers that start out are pretty plausible.
Dane Cohen: Right, and we're talking about building long-term brand equity. So, you know, if you're going down this road, you know, it shouldn't be looked at as, hey, I'm gonna try this for one season. This is a, you know, long-term growth opportunity, and, you know, factories, manufacturers, they're looking for partners. So, one of the questions we just got, and I think this is a great You know, a great kind of. you know, really getting down to the nitty-gritty, what about colors? Like, when we talk about a style, does that, you know, can we have four colors in that, or are we talking just one style down the middle, you know, a size run, and that's what you gotta do for a minimum?
Steve Trayner: I think it's… it depends on the type of garment. Sometimes we have more flexibility with other types of things. For instance, like, if you have a great knit that you want to do, an amazing sweater, and you're like, hey, let's do 400 units across 4 colors, that is doable. That is 100% doable. getting down to those smaller units that are like, I want 5 colors across 100 units, it's not going to be as possible. But I think that's also, like. To your point, this isn't like, let's do a small collection and try it. When I look at retailers and what they've done, or branded retailers, call it Huckberry, call it, and I can give you an example from Backcountry. They're a $100 million business or more. But they're still placing 600 unit buys across 3 colors, because they still have to test it from a place to make sure that, well, yes, the belief is that it will do well, but we have to start somewhere. And so, that's the nature of them, kind of, stewarding their capital, and the risk that they have. The ability to power up at that point, as best as they can. One other thing, too, that's interesting is, I think as a retailer, and I would take this because Huckberry's a great case study. They're gonna go, hey, we are selling in a third-party environment denim up the wazoo. It's a great category for us. So, if you're not selling a ton of shorts, but you're selling a ton of denim. The advisement from someone on the apparel side would be like, well, lean into the category that you know has a ton of movement and opportunity for growth. So you're like, we sell this medium wash. flood cut, or this medium wash carrot, or barrel cut, it slays it for us. Okay. Well, let's develop something in that element for you. that kind of fills up, whether it's a price gap that you see as open, or whatever else. It's, like, part of the strategic element of why it's not just offering more noise into your environment, but offering something strategic, so you're like, I know this will be dollars and cents, like, it's gonna be good for us, based on these elements of data.
Dane Cohen: Yeah, and again, you know, something that we, you know, preach daily to our clients is that you know, you really have to be tracking your data by category in a really specific way, because if you have these broad categories, if you're not kind of really analyzing what's moving your business, going into Private Label is just going to be you know, shooting in a bucket. So, you know, having that ability to have a great class structure, really understand what's driving business, and then using that data in order to build off of, right? Because. Unless, you know, you're kind of going in a little blind, and that is not going to be a great strategy when you have 300 units coming your way, and you don't have the customer to sell it to. So, one of the things that we kind of talked about right before this, and I think this is one of the coolest things, you know, we want data, that's for sure, but Huckberry has a very interesting way that they start testing the market. And I think this is, you know, let's… you know, for private label, or even just for new vendors or new product categories that you're going into, I think this is a great takeaway for retailers. So tell us a little bit about how Huckberry starts to, you know, test out the waters with product.
Steve Trayner: Yeah, it's probably one of the most interesting and awesome ideas that I'd ever heard of. So when I was down there in March, I was down in Austin, and some of the initial samples that we are coming through for some products with some knits or whatever else. And they're like, man, we already got feedback from our our our customers. I said, what do you mean you already got feedback from your customers? They're like, we do a once a month. whiskey tasting and product review for anybody who wants to come. They're like, we'll have, you know, charcuterie, we'll have a couple whiskeys to choose from, and we put out all the product that we are considering saying yes to. And we want the customer to touch it, feel it, if it fits them, try it on, and fully engage with it. And I was like, that is utterly brilliant. Really? I mean, as a retailer, your job is to engage the customer and go, I know what you want. And I guess what? I have it for you. And so, I would say in this environment, obviously, the whiskey's gonna loosen their emotions a little bit, which I totally get, it's gonna be fun, but… they feel like they have an opportunity to engage the process for the product that they potentially would get to choose. And I would say, as a customer, that's an exciting And really exhilarating endeavor for them to be like, I'm part of this. Whatever level they may understand, but I think it creates loyalty in, like, an nth degree. And I was I was like, this is probably one of the best things I've ever heard. And they'll do it not only just in their Austin office, but wherever they have a retail store. They'll invite, hey, if you're on our list, we're reviewing some new product, they'll figure out whatever the assortment is, send it out to the store, and then just that connection that happens in the fun, and it's… it was… it's been really cool, and very successful for them, and them choosing what product works.
Dane Cohen: And what a way to make a customer feel special, right? You know, you're gonna get such long-term, you know, engagement with that customer because you just made them a super VIP. So, again, I think that, you know, on the private label discussion, that's a no-brainer, but even when we're talking about Hey, that's a great idea for, again, new product categories, new vendors, you know, that's something that a retailer. at any size could really start to engage with. So Gina in the questions is asking if we have some sort of class or guide to setting up our retailers for success. We're going to jump into some slides and hopefully we could send those slides out. Steve will get those out to all of our listeners and everyone that signed up. So I think that's going to offer a little bit more structure around this conversation. But before we jump into those, I just want to ask a question about sourcing. Because, you know, at Management One, we've started, and, you know, that's where we kind of reconnected, we've started doing an actual retail tour of the sourcing show, and that's in Vegas. You know, we're kind of taking retailers on the floor and guiding them through some of the tips and tricks to starting to enter into these conversations with manufacturers and factories.
Steve Trayner: Meaning.
Dane Cohen: and really getting them acclimated to what sourcing could be. So, I do want to get your opinion on, you know, how does a retailer start to approach, if they're at Magic, if they're at a show that has a sourcing component to it, how would you walk into that, right? Because I think it's something that's very intimidating. You know, there's different countries, different types of manufacturing. What's a little bit of the lay of the land, just to, you know, to get into it a little bit?
Steve Trayner: Yeah, totally. The sourcing show is giant. It can be a daunting endeavor, that's for sure. And I guess, you know, it's a little bit of kinda like where CFL comes in because it can kind of I guess you could say, not you don't have to do that if you don't want to. But if I was walking a show, here's what I would do. I would first have an understanding of what are the best categories in my store. Right? What's the best stuff that sells? Okay. And the beauty of, like, looking at retail data, you can see exactly what's selling your best margin product. Give yourselves top three options. I know that. Denim, we'll use that example. These things really, really kill it for us. Our denim bar nails it. And so I know that if we added another brand into it and it fit great. Then our salespeople would probably sell it really well. Or you can go, I know that, you know, we look we work really, really well with, say, a lower cost knitwear program. So, we need a value-oriented, like, multicolored knitwear program. Super basic, but it's high margin. And say, what's the what's the third party brand you've seen that does it? Maybe they make it in Portugal. Maybe they make it in Asia, Vietnam, Cambodia, whatever. Who knows? And so then you're like, do your top three. Here's the three categories that I would want to if I could make something, here's what I would do based on the data for what I sell currently. And then I would go and find out, you know, maybe bring an example with me. Here's the thing that I love. And I would say, I want to find three manufacturers that do each of these types of garments. And, you know, when you look on the inside of the garments that you're using as your reference point, where are they from? Where are they made? And then you'll be able to find that manufacturer in sourcing. It's really easy, because all of the booths are separated by country, and then you can see all the categories that people do, and go on from there. Yeah, so that would be… that would be the place that I would start. Like, you have a great access to data, which is unrivaled with many people.
Dane Cohen: By the way, I love that example of actually bringing a garment or two to sourcing. I hope there are no brands on the call listening, but that is a great way to kind of really give a picture of exactly what you're looking for and exactly what's driving business in your store. And just a quick note, and this would really be for more women's apparel, especially in the fast fashion world, at Magic and, you know, a lot of the the women's trade shows, there's opportunity to work with brands that allow you to flip labels. And so we always think that that's a great place to start, and really a great, place to really start to get to testing product and seeing what's… what would work with your own, you know, brand equity and starting to build there is those fast Fast fashion brands, the trend-driven brands. That, again, allow you to flip those labels. And you can start building brand equity there before you're ready maybe to go to a sourcing show and really kind of jump into the, jump into the.
Steve Trayner: Yeah.
Dane Cohen: Own brand game.
Steve Trayner: Yeah, I think it's, you know, thinking about your brand. I would say, you know, Virgil Abloh, the founder of Off-White, said, you know, great stuff usually is just 3% different than the next thing. And, I think that that's a really important thing. Like, it doesn't have to be… you can do 10%, 50%, 90% different. Those things do exist, but sometimes the biggest change you need to do to make something identifiable and unique in your environment is just 3%. So understand what it is. Am I making the rivets on denim? Am I changing the pocket stitching? We only do this type of wash, whatever the scenario would be. Like and you wanna go, like, every element says something about what you're trying to do. And so great label, figuring out what the name of it is, why is it, you know, the brand mark, all the stuff around it. But I think with the beauty of the tools we have access to, you can do that really in a low cost format these days, which is pretty amazing.
Dane Cohen: Yeah, and just another quick tip that, you know, I really also like to think about is you can go to your vendors, right? Your top brands, and that's another way to dip into some exclusivity is asking them to produce, you know, styles that are exclusive to you, right? And maybe you want that, hey, I love this top, I love this dress, but I envision it a little bit different. I kind of want a pocket here. My customer really likes, you know. An elastic band there, so you can really kind of work with your best brands. and talk to them about some exclusivity with product. And then another place to really enter into this, because I see some people asking, is in the accessories world. So, candles, fragrance, these are great ways, again, to start to get brand equity out there, to start to build a little bit of a name around something, and you're not dipping into this, you know, larger commitments and really kind of going for it, but you're starting to build those… that groundwork of brand equity and starting to build that margin groundwork, so that's just, like, another tip, and I see a ton of stores. I know it may be… you know, kind of easy advice. But the candles, I think, are a great place to start. You see that a lot now with retailers. And again, just building that brand equity. So Go. Steve's.
Steve Trayner: gonna say, yeah, sorry, go ahead. You just broke up.
Dane Cohen: No, go for it, go for it.
Steve Trayner: I think types of products that are sizeless are a great place to start sometimes, depending on your kind of appetite for risk. I remember back in the day we dealt with a brand that was out of Sweden called Daniel Wellington. You may remember this, Dane.
Dane Cohen: Cheers!
Steve Trayner: Watches and.
Dane Cohen: I had a ton of Daniel Wellington.
Steve Trayner: So yeah. And so I remember going to like Sweden, finding these guys, which said, hey, one of the things that I was looking for in that moment as kind of distributor was I want a product that I can sell. Anytime. It's not going to be seasonally constrained. I wanted a seasonless hero product because I knew, at least as the entity selling Dr. And dealing with the risk of warehousing it, I want to be able to move it as often as possible and not be constrained by the seasonality that sometimes we deal with with garments. And so also it would sit at the cash wrap. And so its ability to be sold out in a way that could capitalize that square footage in a way that was really remarkable and was super high margin. I would say creating a hero product is a really important thing, which everybody kind of has an opportunity, whether it's a candle or something else. You're like, hey, if… because if traditional third-party retail Is kind of an IMU of 50%, maybe 58%. Your own retail element is going to have an IMU of 71-79%. So… I don't know.
Dane Cohen: Yeah, and Steve, why don't we get up some of those slides? Because I know that you came prepared, and we love that. Just on a, you know, that sizeless mentality, you know, we have… we're talking a lot about apparel, but we have home and gift stores, and kitchen stores, and pet stores, and so when we're thinking about that size list as a great entry point in, right, we don't need to just think about this as apparel. There's, you know, a whole host of private label opportunity, you know, outside of the apparel world as well.
Steve Trayner: Totally. No. It's it's yes. I mean, anything that has sizes is gonna be a higher risk profile for you. You know that. You understand. You're like, I sold all of my four sixes, eights, and tens, but I have twelves and twos left over or whatever the scenario is. So you're like, if something does not have a size, well, then you're not ever constrained by someone coming in and be like, it doesn't fit me. You know, obviously they cannot like it, but it allows your risk profile to change, which I think is a dynamic element to be aware of in any retail environment. Let me see, I'm gonna pull up this slide. It's, here we go. Okay.
Dane Cohen: And again, I just want to remind everyone, if you have questions, jump in in the chat. We'd love to hear from you. Steve can answer questions as we go, so don't be shy, jump into the Q&A or the chat. We're watching it, so we'd love to hear from you.
Steve Trayner: I love it. Okay, so I'm just gonna show you this really quick. Okay. here is an element on margin that I think is really, really interesting. And obviously, that can change a little bit. So. For instance, I'll keep this up, and then I'm just going to talk through something so you can kind of see it real time. Okay, let's just take, for instance, that we have a 300-unit program. And… We're paying $30 wholesale, okay? So, $30 wholesale, times 300 units. We have a$9,000 order at that point, right? Am I doing my math right? Let's see, 30 times 300. Yes, we got a$9,000 order. There we go. You know, you question yourself. You're like, I got it right. Right? Let's see. So it's gonna sell for $60. So we have a gross margin per unit for $30. That's a 50% IMU. So after markdown, say we sell 70% sold at full price, and then 30% at 40% off. That means we have a 43% margin we are left with. So, our gross margin On 300 units sold that we spent 9 grand on. We made $6,840. Not bad. Not bad. Not bad. Okay.
Dane Cohen: And I'm sure a lot of retailers are, that's their reality.
Steve Trayner: Right. So let's go through the same thing with a private label product. Okay? So, say our landed price is $17.50, okay? So, $17.50, So it's less times 300. We spent 5250. It's almost 50% less in our capital outflow for the same amount of pieces. Our gross margin was $42.50, so we're still selling it for $60, and our IMU was 71%. So even at the same 70% sold at full price, 30% at 40% off, where it's a 67% margin. And we make almost $11 off that 5250 that we spent. So it's almost a 2X, it's a 2X return on the same amount of product. But with a 40% less risk exposure. And so I think that's a really just it's super interesting paradigm where you're like, okay, you could spend less to get the same amount of units. And also then make more, even with a markdown, schedule and cadence that you follow, depending on the seasonality of whatever it is you're ordering.
Dane Cohen: Right, and as we know, right, that IMU, you know, when you start increasing that, those are bottom line dollars we're talking about. So… and on top of that, you're controlling the markdown cycle, so you have a lot more, you know, leeway to make markdown decisions where you're not being beholden to brands and, you know, their cadences. So that's going to be a big help to you to really, you know, if product's not working, you can move it out. The product that is working, you're going to sell as much as you can at full price. So, you know, that's a kind of doubles down on your ability to really, you know, get as much margin as possible. But I do want to ask you, right, because There's a big thing that has changed the dynamic here, and that is tariffs. So, obviously, that is a big topic. I don't think anyone has missed out on the news around tariffs, and it seems to be changing every day, so how do you even keep up? But is that preventing people from getting these margins, right? How does that factor into this play?
Steve Trayner: You know, for the last year, whenever I was in Vegas or New York, I was doing tariff-based talks. I would say, I don't know, we did so many of them. I had this whole thing called the tariff toolkit. There was a ways to play out how to do it well. Like, so the reality of some countries would be unbeneficial, and some would be beneficial. I think the nature of obviously the Supreme Court kind of making the choice that they did on not allowing the tariffs to go forward. was welcome for many of us who would import items from countries in Southeast Asia or wherever. But part of this scenario is that, at this moment, most of everything that I'm telling you is going to be a DDP-based price. That means that it's not Tariff included over and above that. This is a final price. That's what you want to try to do when you're with your supplier. I don't want an FOB price, I want a DDP price. It's just better, it's more consistent. And I would say things have come down now because we source from 30 different countries.
Dane Cohen: Wait, Steve, I'm just gonna, I'm just gonna jump in. Could you explain some of those terms? 'cause we wanna make sure everyone kind of, you know.
Steve Trayner: Totally.
Dane Cohen: Thank you.
Steve Trayner: Totally. So FOB stands for freight on board. It basically means that once the freight gets on board the boat, that's all they're doing. They're just putting it on board of wherever it's going. And so to get it from the moment it gets onto whatever vessel it is that it is being transported within, then you have to pay the remainder getting it to you. DDP stands for duty paid. So that means that it is done and dusted. it is finished. And that's what you want. You want a DDP-based product. Unless you somehow have, like, a, you know, a customs broker that is somehow getting really… you know, it's all the same prices, realistically, so, I mean, it's… I guess it's… sometimes they mark it up a little bit differently, but I guess the nature of how we work as a business is that you get large volume rates, even if you're not doing large volume. So you get to kind of benefit from that. But from a tariff and a duty standpoint, things are a lot more palatable and digestible, kind of similar to where they were in 2024. So, prior, when we kind of had April 25, when stuff really was, you know, the current administration was going after some elements to try to kind of get something. That has changed back to what it was. There's a little bit of things here and there, but it's all in the single digits. So I would say that the actual feeling that you're having, in feeling that price element. The conversations that I was having a year ago in New York in September are very different to what they are now. It feels like everything has kind of been alleviated and it is a lot more palatable, and so whatever was very intense a year and a half ago does not exist anymore.
Dane Cohen: Yeah, and what we find is, right, the market absorbs the cost. As things go up, you know, even inflation, right, you start to see the costs just get absorbed. And… that is also on the consumer demand, right? And one of the most, you know, the best things about owned brands, private label, is that you control the pricing 100%. And so, you know, when you look at that 70%, 75% initial markup You could get more, like, if you're getting… depending on the price that you're getting it at cost and landed. You could go higher if your customer will support that price point, right? Because you're not beholden to an MSRP or what a brand's pricing it at, or being competitive with brands online. So that also makes a big difference. You gotta be smart about your pricing of things. You know, you want to be in line with other product out there, but you control that full. pricing dynamic.
Steve Trayner: 100%. And I I have a little outlet thing here. So for instance, an FO, we talked about that 1750, if you all remember, 1750 for that landed price. Like if I broke it down, what would it be? So I have a little breakdown for you. So usually, yeah.
Dane Cohen: If you want to bring that up, if you have that.
Steve Trayner: This is, how can I present? I'll present this to you if this works. So that's my. Let me see. Do you? You should be able to see this. Do you see this?
Dane Cohen: There we go.
Steve Trayner: Okay, okay, so see this here.
Dane Cohen: Little retail math coming for you.
Steve Trayner: Okay, here we go. So, landed costs on private label items. Here's the example, okay? FOB is 12 bucks. Duty and tariffs assumed it's a 25% of FOB. Obviously, your real rate depends on your HTS code. That is the code that customs and customs enforcement, so it's based on obviously fiber and country. I have a whole other kind of deck and talk that I've done that says, how do you build garments to best utilize HTS codes? to make sure that your duty rate can be as good as it possibly can be. Because if you choose 100% cotton over like, 98% cotton and 2% nylon, you have a totally different rate, and it's actually more beneficial to add that other portion of fabric into your fabric, which is wild. And it can change something from 20% to literally 2%. So it's part of that's really interesting. And obviously you see ocean freight and inland,$1.20, brokerage insurance, 50 cents, labels, hang tags, packaging, 80 cents. And that's how we kind of come out with the landed costs. So. In essence, this is… and this is what I was talking about before. Here's the two differences, right? Per unit retail, branded label versus. private label that whole thing. So… and this is… I'm a huge… a huge proponent of, like, open source kind of stuff, so whatever I can help you with that can help dissect the problem of how do I, as a retailer. capitalize on my customer base and potentially get to a higher level of profitability and growth? You know, it has to be in line with what you want, but if owned brands is a way to kind of dip your toe into less risk and more return. That's an exciting format. Most brands start without the ability to test their product. You already have an environment. to test the product and the customer base that you can offer it to immediately. So there's already a head start that you have as a retailer in whatever amount of stores you have, which I find is really, really, really compelling.
Dane Cohen: And where are we at with U.S. manufacturing? Is that really an option? Is that on the table anymore? Or, you know, because obviously you're not paying the… you know, you're not paying all the tariffs, and… but is it really kind of… because we got some questions on that as well, what's the reality going on with U.S. manufacturing?
Steve Trayner: I think it's hit or miss, it depends. I'm a huge proponent of US manufacturing. We as a current business do not deal with US manufacturing, but I used to live in LA. I was in East LA, the denim brand that I got my first job in in fashion. I mean, we made everything in East LA off Lawson Avenue. Like, it was the fabric mill was down the street. It was it was all there. You can still find great things made in The US. It's just kinda figuring out, is it the quality that I want, and is it the price that makes sense? And sometimes that's the case. For instance, Buck Mason, which is, like, $108 million a year U.S. men's brand. They bought a factory in, like, North Carolina, probably about 6 years ago, and they do all of their mill-spun tees in North Carolina. And they provided, I think, 200 jobs for people locally, which is… I mean, that's fantastic. But because they have a fully vertical integrated scenario, they're made in the US, T is still affordable. So I think you have to engage that process. You're like, is the price that I can get a US-based garment at, number one, does it support the margin that makes sense for my business? Number two, does my customer also support the price that I have to sell it at to support the margin for me even getting it? And so, there's a diversity of opportunity and kind of where you would go to figure out how that works, but yeah. I mean, you know, I just thought about this. There's an amazing, talking about stuff that does not have a size constraint. Blankets. Blankets and towels. Awesome, really, really easy things. But, like, there's an amazing retailer in Connecticut that actually, I read a New York Times story about it where I I have to find it. I can send it to you. But they started doing, those types of tapestry or related kind of other kind of really, really cool types of products. They are also have an amazing job thing that they've started in that area, and… but it's pretty affordable, if I could say it like that, but it allows a non-size-constrained U.S.-made product, and you go from there. So, there's options.
Dane Cohen: Yeah, and I just want to make a call out, and that was great to see that pricing breakdown. Two things on that. If you are kind of going and maybe checking out sourcing, you gotta have very explicit conversations, and you have to do your homework, because what they're gonna tell you, that first price they're gonna tell you, is gonna sound amazing, but there are gonna be all these costs that start to add up. And the second part of this is, you know, the juice has to be worth the squeeze. Just because something is private label does not automatically make it a home run. So, you really have to go into things with your eyes wide open, understanding the costs. understanding, you know, how everything breaks down, so that you can make sure you are targeting that 70-75% margin, or else you went through all this work, and you're getting just a tiny bit more than you would from a third party. So… You know, there is a lot of nuance to this, and, you know, going in and, you know, hopefully, and we're gonna try to send out a guidebook on how to start getting involved in private labels. So, Steve, maybe you'll help us out with that, that would be incredible. But, you know, we're just getting so many questions and such feedback on the desire to start to move in this direction that we're gonna work on a white paper, a guidebook that we can send out and help retailers kind of You know, get involved in this process. I do want to ask if there's any questions, put it in the chat now. We'd love to hear from you, we'd love Steve to answer, and Steve was gracious enough to put his email out there, so if you have questions, if you want to know more about, getting involved, or, you know, what CFL does specifically, we're gonna put in the chat some information so that you could get in touch with Steve. And, Steve, I always like to end our podcast on this note. What's your outlook? I mean. On the industry, on where retail is at. it seems like we're coming off a really nice point right now. I think we're going to end the year really strong. We're seeing that growth continue through Q3. I think you're going to see momentum, you know, into Q4. What's the… what's the year outlook for retail? What's… what's your gut kind of telling you?
Steve Trayner: Yeah. I think it's always interesting to see, like, the expansion and contraction that we view in our industry. But even just looking at some of the past numbers that Macy and Nordstrom's reported, it's encouraging. Which I think it's, you know, like, we're trying to judge whether inflation is kind of dealing a blow to, obviously, our consumer base and what we're spending. But to see consumer spending still be robust is interesting. Either people are making way more money or they're not managing their own money well enough. But it's I I would say as the retailer or as the someone who's selling stuff to people who need it, it seems like there is still an appetite for compelling product. So what that means is if retailers like Macy's, Nordstrom, whoever else is reporting, they're seeing single digit growth. then they're buying, and I would say, you know, like, I'm aware of a Nordstrom's and Urban, and, like, where they're at. I think they have been trend-centric, and they have been smart with how they've been merchandising, so they are appealing to the flow that perhaps you see, so being, ever-changing throughout our industry. Maybe it's following social and following other elements that are like, oh, it's prop this, now it's barrel this. All these elements that we see moving quickly, I think they're being being as observant as that trend changes so that they can follow suit with making sure they're merchandised. And it's kind of, I guess, happening in their. In their stores, which is great. So if we continue in that and you can be wise in your merchandising, then I think you'll benefit from the flow and the momentum that we're seeing in the market right now.
Dane Cohen: Yeah, we never want to see a retailer cut themselves off at the knees because you could be seeing headlines about the gas prices and about inflation. And if consumer spending still holds, you don't want to start pulling back on orders, on purchasing. or even exploration of private label, because you're, you know, getting scared off by headlines. If consumers are buying, and we're seeing those numbers, you know, stay, you know, stay stable and even growing, you know, we need to make decisions on the reality on the ground, and not just headlines we're seeing. So, we have a question here, which asks, should you do a direct-to-consumer website for your private label brand? Different from your retail e-com site.
Steve Trayner: I would say you already have the best way to vet your customers and to engage loyalty. And so I would say it's almost the second thing. If you wanted to do that later on, you could. But I wouldn't say it's a mandatory thing to do first and foremost. You know? Do the scotch, do the wine situation, have people come in and try your product, your best customers. then put it into your store, put it on your store website, and then if you see the momentum through that process, you're like, dang, we're doing great. We wanna… we wanna up the ante. Well, then do… do the branded website, and go from there. And there's always… a thousand ways you can expand beyond that, but I don't think that's… you don't have to do it first. You could do a landing page, you could do a social media feed. I would say that's the easiest lower capital way to engage what you want in that particular kind of itemization. But you already have the platform. There's not really a need to kind of separate it in some of those other factors that maybe would just cost time and not have the return that you'd want.
Dane Cohen: Right. And as Nico points out, that's another monetary cost that's going to start dipping into. that margin that you're building, so that those overhead expenses that are gonna, you know, be caused by doing a new website, maybe having someone manage it, that's gonna factor into those IMU as well. And, you know, taking that one step further, and we're going, you know, pretty far out, what about… you build this private label. You know, do you take it to wholesale?
Steve Trayner: Yeah. You know, it's interesting. So okay. There's a brand that I'm consulting for right now, and they're $5,000,000 a year DTC. There's, like, three guys, and they want to go to wholesale. What a great privilege that you guys have a $5,000,000 a year business at literally 80% margin. That's wild. But you're like, we know there's more. So, kind of, we started the wholesale process for them, and now they're kind of engaging in that, but they were going for 5 years prior, because they had to get a lot of systems and the flow of that product right. So there always is a point. For instance, Huckberry. is now taking their own brands, Flint and Tinder, Wills, and Proof, and they're selling it into wholesale. So there's these amazing concessions in Dick's Sporting Goods and Nordstrom, and it's really doing really well. But I think it comes down to, they spent time, first and foremost, to build the loyalty internally. They could control the entire environment, they could… the entire narrative, and then once it was strong enough from a brand and product quality standpoint, and they understood their pricing, then they're like, let's go further.
Dane Cohen: Yeah, and Steven says, that was my next question, so I'm… Glad we could answer it. And so with that, we're going to wrap up here. Steve, thank you so much for joining us. Thanks for having me. Again, Private Label is such a big conversation out there in the market, and we appreciate you bringing your expertise here to Indie Insights Live. We will be taking off next week and then be back. the following. So, thank you everyone for joining us. We will be sending out the recording, and of course, you can always go on YouTube and see the playlist of Indie Insights Live. We'll see you in a few.do, we love retail, it's in our blood, Lyn.
Lyn Falk: No, it's so true. All right, thanks everyone.
Dane Cohen: Bye-bye. Bye.