Private Brand Down Under – Global Retail Brands

woolworths

This is the next in a series of posts from the latest issue of Global Retail Brands magazine this article features a look at Private Brands down under by Tom Prendergast, Research Director, PLMA.

Private Brand in Australia & New Zealand – Global Retail Brands

Tom Pendergast
Tom Prendergast, Research Director, PLMA

If you want to find countries where consumers love private label, retail sales and store brands sales are growing, and international retailers are flocking to set up shop, you need to turn your attention to Australia and New Zealand.

Australia, with a population of 22 million, the sixth largest land mass country in the world, and New Zealand, with four and a half million, have both become major players in private label and the retail world and the future looks bright.

While Australia has two of the world’s largest supermarket chains, Woolworth’s and Wesfarmers Ltd., the owner of Coles, it was only in the past 10-15 years private label began to become an integral part of their sales.

In the early 2000’s both countries’ store brand products, had more in common with the generic products of the 1970’s in the west than the modern interpretation of the industry. While labels like Franklin’s “No Frills” did well, for the most part, store brands were a weak sector of retailing and private label share remained stuck in the 10% range for years.

Aldi Changes the Landscape
All that began to change when Aldi opened its first store in Australia in 2001. Many thought Aldi’s focus on its private label products and discount strategy would not work with Australian consumers. Today Aldi has 340 stores throughout the continent and are opening about 25 new stores a year. It also just passed IGA to become Australia’s 3rd largest supermarket chain.

“Aldi has been largely responsible for driving this home brand trend and renewed focus from the other retailers in the Australian marketplace,” said Bill Trainor, the General Manager for PLMA Australia/New Zealand.

“Certainly the introduction of Aldi into the market in Australia drove positive consumer perception towards store brands, as they discovered that quality was on par with national brands, and regarded the private label offerings from Aldi as being ‘brands only available at Aldi.’” Trainor explained.

Local retailers also took notice. Soon Coles, the second largest supermarket chain in the country, rolled out its “You’ll Love Coles” and Smart Buy brands. Today in Coles 741 stores you can find their house labels Coles Organic, Coles Finest, Coles Green Choice, and Coles Simply Less.

The continent’s largest supermarket chain, Woolworth’s, with over 870 stores, followed with its “Select,” line and today its brands include Homebrand, Gold, Macro, and Fresh. This March the company launched a new line of gluten-free products under the new “Free From” label.

The loyalty of Australian consumers for their local retailers also helped translate that faith to their store brands, as many other retailers around the world have discovered.

Coles

“Coles and Woolworths have both improved and increased their store programs in the last 2-3 years in particular,” Trainor said. “While Coles is promoting the overall ‘fresh’ and ‘quality’ position of their store brand, the fact their main private label brand is labeled ‘Coles’ has no doubt played a role in this brand’s growth.”

This effort by the major retailers to increase the selection and quality of their home brands was successful, especially in the minds of consumers. In a recent GFK study, 82% of Australian consumers said private label brands were equal to or better quality than the national brands. In addition predictions for the future were also grand with IBIS World seeing Australia with a 30% share of private label by 2016.

“It is expected that with the focus on quality, innovation and packaging improvement, this consumer perception of store brands as being bona fide brands that happen to be available as exclusive offerings by retailers will continue,” Trainor added.

The change to the industry has been remarkable. In just the past few years Australian private label value share has risen to 25% according to Nielsen. Meanwhile Coles home brand sales topped 22% while Woolworth’s was just below 20%.

While not as dramatic, the growth of store brands in New Zealand is apparent as well. According to Nielsen, New Zealand is not far behind Australia’s with 14% of sales and growing. The major retailers in New Zealand have seen what was happening across the Tasman Sea and found success with home brands as well. The story of New Zealand’s largest retailer, Foodstuffs, which controls 52% of the market, and their home brand Pam’s, is a prime example.

“Foodstuffs has a strong private label brand Pams (see Global Retail Brands, April 2014), which consists of over 2,500 products and is reportedly the largest selling brand sold in the New Zealand grocery market,” Trainor explained.

The other major retailer in New Zealand is Progressive Enterprises, which is owned by Australia’s Woolworth’s group. They have taken their store brand lines Select, Macro, Wholefoods and others into their New Zealand stores in hopes of having the same success the retailer has seen in its home market

READ THE ENTIRE STORY.



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Christopher Durham

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.