The Grocer Conference 2017 was a sell-out event this year, with a wealth of speakers from the height of the industry. Delegates from across the UK came together to discuss and participate in the question every small and medium supplier wants to know the answer to - How to get a listing in own label.
For a long time now the UK has led the way in the amount of own brand products present in our supermarkets, and it looks like it’s showing no signs of slowing down!
Kantar World Panel 2017
In the UK, a huge 49% of all annual sales, to the value of £50 billion in revenue comes from private brand products. This is even more impressive when you compare this to the rest of the world; with the average in Europe at 35% and the US not too far behind with around 20%. This is a significant achievement by the UK grocery sector and demonstrates how much faith retailers are putting on selling their own brands at the expense of the bigger national brands.
Own label and branded growth
Own label growing ahead of brands. Both accelerated into 2017
Kantar World Panel 2017
Many reasons could be offered as to why the UK is leading the way in private brands, not least the effects of the growth in UK so called ‘discounters’ since 2008; namely Aldi and Lidl. Both have disrupted the market with their lean retail model, claiming 92% private label products within their standard 1500 product line offering per store. However, and more interestingly; according to Kantar, despite the discounters undoubted market growth success, this only equates for 1% of the shift.
So, what’s really driving own labels success?
Own label products appeal to all shoppers.
Another fitting example, again from Kantar. Tesco’s biggest selling brand is Warburtons and is purchased by 9% of its shoppers. When compared to their own label equivalent which is purchased by 87% of its shoppers. Impressive numbers, right?
It provides the retailer with store differentiation.
Factors like inertia and geography will always play a part in where people shop, but over the last few years the level of own label offering is also becoming a big deciding factor for shoppers. Fresh Food is a major driver for store choice and own label brands creating the opportunity for differentiation. It’s no surprise that 76% of fresh and chilled sales are own label. Supermarkets are now applying different strategies to retain and attract customers, using ‘hooks’ like claims of provenance within their own label farm brands.
Own label can drive consumer store choice for their favourite products.
In many cases the retailers own research confirms own brand offers have become more trusted than their branded equivalents, particularly in fresh and prepared meals. This is good news for shoppers since not only does own brand offer better value than their branded equivalents but also at the premium end e.g. Tesco’s ‘Finest’, Sainsbury’s ‘Taste the Difference’ products are also perceived to be of superior quality.
Finally, and perhaps most importantly, it provides the retailer with cheaper options.
The tactics for the discounters has been slightly different, whereby they often copy the style and packaging of the national brand with their own designs and even adopt similar names i.e. Lurpak v Norpak as a premium butter; offering the ‘same’ butter content and very similar copy-cat packaging but at a fraction of the price.
Importance of growing private brand strategy in retail
The growth of own brand is likely to increase further as it provides the supermarkets with many benefits that enhance their customer offering.
Managing the transition to increased levels of own brand however is not always easy and as local producers and growers are added to the supply chain, retailer must be confident that they can achieve the necessary levels of: Quality, Compliance, Sustainability to meet and exceed all aspects of regulation and legislation in food supply.
To help this, many retailers recognise they need to be working ever closer with their suppliers across all aspects of food supply, to not only achieve these standards but also to foster a trusted relationship for information sharing and collaboration to achieve faster development of new and innovative products.
This can be a complex area where thousands of products are involved and regularly reviewed to refresh ranges and categories to innovate and grow sales. Hence specialists like S4RB have emerged and developed a unique sets of tools that enable the retailer to act as ‘One Team’ with its suppliers and share data for providing ‘One View’ of product performance that ensures the correct levels of: communication, accuracy and transparency are achieved in response to consumer trends and demand.
For an example of S4RB’s consultancy led solutions take a look at the following case study; Bespoke private label system deployed in 7 weeks.