Private Brand – who really benefits?

This piece comes from Sixth Sense the blog of e Australian brand of research provider TNS.

Who really benefits from Private Label?
There has been significant press coverage recently on the topic of private label supermarket products, ranging from Woolworth’s announcement that they intend to double the share of private label products in their supermarkets over the next 5 years; to brands such as Heinz stating that the supermarkets’ growth in private label is damaging the brands that have helped them to grow in the first place.

There is almost a blind assumption that the proliferation of private label products is being driven by consumer demand, in times where the pressure on the consumer wallet remains. It is assumed that consumers welcome private label, as they are helping people to control their spending. But is this really the case?

Over the past 3 years, TNS Australia has been tracking consumer attitudes to Private Label products, originally just within the supermarket, but more recently in the bottle-shop too. What is interesting is that we have observed a number of shifts in attitude towards private label products during this time.

Private Label purchasing is not always driven by budgetary issues
For every person buying a private label product for budgetary reasons, there is a person buying private label products because they want to. But additionally, the increase in share of private label products on shelf (which is being noticed by consumers), suggests growth is coming as much from supply side dynamics as demand side.

The growth of Private Label brands is not welcomed by all
Whilst most consumers now buy private label products (to varying degrees), we are beginning to see an attitudinal shift towards private label brands. A desire to buy Australian made supermarket products is increasing, but also a dislike of the fact private label brands are increasing their share in the supermarket (at the detriment to other brands) is becoming more prevalent. People increasingly believing that private label brands are simply copying the original and that the products are of inferior quality. Of course this varies a lot by category – or more to the point consumer’s desire to buy the original product varies by category – but these shifts in perception indicate that there is a growing sense of discontent with the influence of private label brands.

People protesting with their purchases
When we explore in more detail consumer attitudes to private label and the impact on purchasing behaviour, we discover some interesting points. The growth in dislike of ‘these (private label) brands dominating the supermarket’ over the past 3 years is a key shift in sentiment.  But interestingly, they still buy Private Label brands – it is simply that they buy less than everyone else. With the size of this group growing from 24% of main grocery buyers to 34% in the last 3 years, it certainly appears a conflict is growing between consumer needs and supermarket strategies.

The prevalence of Private Label is driven by category dynamics
There are some categories such as bread, margarine or milk which are more susceptible to private label products carving out significant share – hence why the supermarkets have embarked on a price war within certain categories. Other categories – such as vegetable extract spread (e.g. Vegemite) are largely immune. Fundamentally the ability of private label brands to capture share comes down to 3 things: 1, the ability of the private label brand to replicate the performance (taste, integrity, packaging) of the branded product, 2, the brand equity the original product has generated previously and 3, the price differential between the branded product and private label equivalent.

But of course things do not stand still. Chocolate was traditionally a category somewhat immune to private label, driven by heavy marketing investments behind several iconic brands, but consumer attitudes towards chocolate is beginning to shift. In 2009, 39% of main grocery buyers would have considered buying private label chocolate, but in 2011, this proportion has grown to 47%.

Read the full report here:Private Label – TNS Positioning 201211


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Christopher Durham is the president of My Private Brand and the co-founder of The Vertex Awards. He is a strategist, author, consultant and retailer who built brands at Delhaize-owned Food Lion, and lead strategy and brand development for Lowe’s Home Improvement. He has consulted with retailers around the world on their private brand portfolios including: Family Dollar, Petco, Staples, Office Depot, Best Buy, Metro (Canada), TLW (Taiwan) and Hola (Taiwan). Durham has published five definitive books on private brands, including his first book, Fifty2: The My Private Brand Project. In 2017, he will debut his newest book, Vanguard: Vintage Originals, a visual tour of innovation and disruption in private brand going back to the mid-1800’s. Dynamic in his presentation while down to earth and frank in his opinions, he has presented at numerous conferences, including FUSE, The Dieline Conference, Packaging that Sells, Omnishopper and PLMA’a annual trade show in Chicago. Durham lives in Charlotte, NC with his wife, Laraine, and two daughters, Olivia and Sarah.