New research from Planet Retail indicates private label sales are set for accelerated growth as retailers employ more sophisticated private label strategies to combat the economic downturn. According to the report figures, private label products are gaining in importance for virtually all major retailers and markets as the economy weakens. However, discount retailers remain the true experts based on the higher proportion of private label sales. Among them, German discounter Aldi leads the way with over 94% of total sales attributed to private label merchandise.
Not surprising, consumer price focus in the wake of the economic crisis is the main driver behind private label growth. However, the report studies several other factors underpinning demand and price sensitivity; in particular, rising consumer confidence in private label products and retailers desire to control the supply chain. The report goes further to predict private label growth until 2013. These figures indicate that while private label penetration is currently lower in emerging markets, like India, Brazil and Mexico, these countries are poised for the fastest growth over the next four years.
The study also highlights the sophisticated positioning of own-label products emerging from some retailers, much to the dismay of many brand manufacturers. Matthias Queck, Planet Retail analyst and private label specialist says: Retailers are cherry-picking consumers at both ends of the markets by developing their economy ranges as well as premium lines. This will intensify the arguments with brand suppliers.
One such example of a shift in strategy is Tescos new discount brand. Representing a shift away from the traditional 3-tier strategy, Tesco is launching its first labels without the Tesco brand in order to fight German discounters Aldi and Lidl.
Another hot trend identified by Planet Retail is the emergence of new hybrid forms of private label products. These types of private labelling include co-operation between retailers and manufacturers to develop co-branded and tailor-made solutions. Also, foodservice companies are getting into the game by bringing their own-label products onto the shelves of retailers.
Source: Planet Retail