An interesting Private Brand blog post by Jonathan Sinton for the Australian site Marketing Mag. The post illustrates that the Private Brand story in Australia is intriguingly similar to the U.S.
A battle in the aisles!
Many have said that the tightening of belts brought on by the recession will pass once the good times return, but this would depend on the lessons consumers have learnt being unlearnt. It also ignores past experience, when we’ve seen emerging trends in the consumer landscape accelerate and establish themselves during a crisis more often than come and go. In the supermarket, shoppers have learnt that cheaper can be just as good, with private label products reaching a record share (over 20%) of the market in Australia. While there may be some relaxation of the purse strings when things improve, the trend towards private label is a new purchasing mentality that is here to stay.
Research we conducted in July found that, having been given permission to reassess what constitutes value, shoppers are more likely to select the less expensive option – be it branded or private label – unless convinced that a dearer product is tangibly or emotionally better. Even historically resistant categories are under threat. For instance, Huggies nappies were once bullet proof against private label due to the high level of involvement and trust linked to the category, but Aldi has shaken the market up with its cheaper offer gaining advocacy amongst the most viral of groups – mothers. Across all categories, we’re seeing consumers trading down from branded offers, with the popularity of private label products growing amongst adult households, young singles and young couples. And they’re doing so for a variety of reasons – some out of preference for private label and others despite an aversion to it.
The most common reasons pro-private label shoppers buy these products are to save money to spend on the family, the belief that brands are all hype and not of superior quality, and to display thrift by being smart selectors. But surprisingly, many (up to 40%) who buy private label do so despite being concerned over the perceived lower quality of the products and packaging, its inferior status image and lack of innovation. Regardless of their negative opinions, these shoppers are slipping private label products into their trolleys highlighting that purchasing behaviour does not always reflect loyalty. In this case, it is more an indication that branded manufacturers have few true ‘brand believers’. As a result, branded products face a challenge – offer something that private label cannot or face losing market share.