Special Report: Private Label 2013 Retailers re-assess quality as shoppers focus on value instead...
-
Upload
iriworldwide -
Category
Documents
-
view
218 -
download
0
Transcript of Special Report: Private Label 2013 Retailers re-assess quality as shoppers focus on value instead...
-
8/13/2019 Special Report: Private Label 2013 Retailers re-assess quality as shoppers focus on value instead of price
1/37
SPECIAL REPORT
Private Label
NOVEMBER 2013
Introduction page 2Executive Summary page 3Turning Key Insights Into Actions page 5Retailers Close the Price Gap page 7Private Label is Quality, Not Just Low Price page 9The impact of Evolving Range Assortment page 11Food and Non-Food Private Label Trends Across Europe page 13Appendix Country by Country Review page 17
Balancing quality and value
-
8/13/2019 Special Report: Private Label 2013 Retailers re-assess quality as shoppers focus on value instead of price
2/37
PRIVATE LABEL: BALANCING QUALITY AND VALUE SPECIAL REPORT
Introduction
2
This IRI Private Label 2013 Special Report provides insight into how private label is performing across
seven European countries. This year, we have added some measurements of the huge United States
(U.S.) market.Private label helps consumers reduce their weekly shopping costs and provides retailers in the United
Kingdom (U.K.), France, Germany, Italy, the Netherlands, Spain, Greece and the United States (U.S.)
with an opportunity to boost sales and grow their margin.
More consumers are learning to love private label as the quality of the offer improves and the price
remains attractive. At the same time, the price of standard and premium tier solutions is increasing
steadily in many countries and the price gap with national brands narrowing as manufacturers look to
protect their market share with aggressive promotions.
This report outlines where the private label market is today and how it is likely to evolve over the next
year and beyond. Manufacturers know they must work even closer with retailers to improve the range of
assortment so that both parties benefit.
All of us at IRI look forward to discussing these findings with you and helping FMCG retailers and
manufacturers as the global economy gradually improves.
Tim Eales
Director of Strategic Insight
IRI
-
8/13/2019 Special Report: Private Label 2013 Retailers re-assess quality as shoppers focus on value instead of price
3/37
PRIVATE LABEL: BALANCING QUALITY AND VALUE SPECIAL REPORT
Executive Summary
3
maximise sales and margins in
every category.
Retailers and manufacturersacross Europe and in the U.S. are
taking a more analytical
approach to range assortment to
avoid stocking duplicate products
when it comes to serving and
satisfying customer needs.
Emphasis on assortment is
strongest in northern Europe and
the United States. In many
European countries, notably the
Netherlands, Italy and France,private label under-indexes its
share of assortment versus its
share of value sales.
Across surveyed countries, there
is a growing concern that some
categories are approaching a
ceiling when it comes to private
label. Retailers must determine
the appropriate balance of
private label and national brands
assortment, since having too
much private label in a category
turns off consumers. Additionally,
national brands invest heavily in
marketing to drive shoppers into
store and the importance of their
presence on the shelf must not
be underestimated.
Country Highlights
Spain - Retailers and
manufacturers have becomemore shopper-centric and are
adapting to changing
consumer habits and needs.
Private labels share of value
sales in Spain grew from
41.5% to 42.8% as the
Retailers are not promoting their
own ranges to the extent they
were a year ago, but nationalbrands continue to increase their
volume on deal which is having a
negative impact on price gap.
Overall across Europe, the price
of private label was on average
29.9% less per pack than
national brands with the price
gap widest in France and
Germany and narrowest in the
Netherlands, the U.K. and Italy.
The price gap has narrowed more
slowly in food and beveragesthan in non-food sector.
Only in France, the U.S. and for
the U.K. packaged foods, are we
not seeing growth in private label
food value share, whilst for non-
food growth it is in Greece, the
Netherlands, Italy, Spain and the
United States.
With private label prices
increasing, shoppers must be
convinced they are getting value
as well as quality.However if
difficult economic times continue
the market could see a further
narrowing of the price gap versus
national brands. This is a
strategy of price gap reduction
that many retailers are following.
In addition to honing promotion
strategies, retailers and
manufacturers are focused on the
issue of range assortment offeredby private label lines. In tough
times it is critical to have the
right offer on the shelves and the
correct mix of private label and
national brands to entice
shoppers into the store and
Current and Emerging Trends
In an environment where some
countries are emerging fromrecession at different speeds and
some remain in a gloomy
economic environment, private
label plays a vital role for
retailers and manufacturers,
since shopper confidence remains
incredibly fragile.
Private labels three-tier
approach with economy,
standard and premium ranges
means there are often savings tobe made for consumers who
switch from national brands.
Retailers are winning the
argument when it comes to
persuading shoppers that private
label can give them quality as
well as value. In the U.K. it has
been reported that it is the
standard sector that is seeing the
fastest growth.
In the European countries we
have analysed, private label has
a value share of 36.7% and a
47.1% slice of unit sales. The
U.K. has the largest private label
share (value an unit) and this
grew again during the past year,
whilst the biggest unit growth
came in Spain and Greece where
the economic situation remains
incredibly difficult for shoppers.
In 2013 more private label
ranges are being treated as realbrands as the quality rises and
the trust that consumers have in
the retail brand translates into
confidence to buy private label
across food and non-food
categories.
-
8/13/2019 Special Report: Private Label 2013 Retailers re-assess quality as shoppers focus on value instead of price
4/37
PRIVATE LABEL: BALANCING QUALITY AND VALUE SPECIAL REPORT
Executive Summary
4
brands need to be more
innovative to retain sales.
Overall private label share ofvalue sales has risen by 0.5
points, to 40.4% as economic
difficulties continue.
Greece - Only Spain achieved
a higher annual increase in
private label values share than
Greece, where private labels
slice of the market rose by 0.9
points to 14.6%, as austerity
measures, unemployment and
wage cuts continued to take
their toll. However, in unitterms Greece saw the biggest
evolution of all the countries,
+0.9 points. The larger
supermarkets are servicing
shoppers at all three tiers of
private label and many smaller
retail chains are expanding
their private label lines.
United States - Private label
dollar sales grew 2.3% in
2013, but macro-level trendspoint to a proverbial glass
ceiling. Private label
penetration has reached
100%, but penetration varies
drastically at the channel,
banner and category level.
Retailers across channels are
focusing more on building,
expanding and strengthening
their private label programmes
in attempt to spur continued
growth. The good news forprivate label marketers is that
consumer perceptions of
private label are favourable.
Private label share is highest
in the supermarket channel,
whilst share growth is
strongest in the drug channel.
sales in Germany, in a country
with a solid discounter and
private label culture and thelowest promotional pressure.
This could change as the
discounters stock more
national brands. The challenge
for retailers is to add value
and change the perception
that private label must always
be low price. Private label
increased value share by 0.3
points to 34.3% and unit
share by 0.5 points to 48.6%.
Italy- Private label increasedits share of value sales by 0.8
points to 18.4%. Unit share is
up 0.5 points to 22.4%, as
Italian shoppers reacted to
price increases by hunting out
deals. Retailers have focused a
lot more on non-food private
label during the last year,
introducing new ranges of
household, gardening and
even underwear to meet hard-
pressed shoppers needs.
Across all fast moving
consumer goods (FMCG)
categories, shoppers continue
to trade down, to the benefit
of private label.
Netherlands- Retailers here
are going against the
European trend by focusing
more on the value end of
private label. This strategy is
an attempt by the mainstreamstore chains to combat the
discounters who are
convincing shoppers that their
products not only cost less but
are also good quality.
Supermarkets and national
economic crisis continued and
retailers fought to increase
consumption. It was thebiggest share jump of any
country. Tough times have
meant more deals for national
brands and range assortment
is a big topic of conversation
in the Spanish industry.
France- Private label is a
mature market in France, but
its share of value and unit
share is falling. Value share
slipped 0.6 points to 36.0%
and unit share slid 0.9 pointsto 49.6%. Behavioural shifts
indicates that French shoppers
look for quality more than
price and the quality
perception gap between
private label and national
brands has widened. The
retailers response has been to
launch more premium end
private label.
U.K.- The U.K. was thebirthplace of private label and
the market has matured, with
retailers now confident enough
to leverage their own retail
brand to boost sales of their
own brand. Overall, private
labels value share has
increased by 0.6 points to
51.1% and unit share is up
0.2 points to 57.6%. This
coincides with a fall in private
label volume sold withpromotional support, from
40.3% to 36.3%, at a time
when national brands deals
rose.
Germany- Discounters hold
two-thirds of private label
-
8/13/2019 Special Report: Private Label 2013 Retailers re-assess quality as shoppers focus on value instead of price
5/37
PRIVATE LABEL: BALANCING QUALITY AND VALUE SPECIAL REPORT
Turning Key Insights into Actions
5
Private label has increased in all countries
across Europe with the exception of France.
Private label value share is 36.7% and unit
share is 47.1%.
Manufacturers must focus on joint business
planning with their retail partners and
convince them that stocking their brands
benefits everyone, including shoppers. They
need to work together with predictive
analysis to identify best prices for a whole
category and then optimise shelf space,
assortment and promotions.
INSIGHT ACTION
Private label sales are in growth across most
markets, and performing well in countries
where overall sales are in decline due to
tough economic conditions.
Manufacturers must build strong brand
loyalty with a direct access to their
consumers. Retailers will also benefit from
these efforts, as the result will drive
shoppers to their store and loyalty programs
Private label share of food is up across
Europe, except in France. Private label share
of non-food varies considerably across the
continent.
Food manufacturers in particular must
review brand propositions to appeal more to
shoppers in the face of continued pressure
on shoppers. Variation by country andcategory illustrates how crucial it is that
manufacturers and retailers work together
with predictive analysis.
In several countries, a reduction in the
promotion share for private label and an
increase in deals for national brands, has
meant that the price gap has closed.Private
labels were priced, on average, 29.9% lowerthan national brands.
Be very straightforward on your promotion
strategy. Set goals and gain appropriate
analytics solutions to simulate price and
promotion tactics to improve margins,
revenue, category and your competitiveadvantage.
-
8/13/2019 Special Report: Private Label 2013 Retailers re-assess quality as shoppers focus on value instead of price
6/37
PRIVATE LABEL: BALANCING QUALITY AND VALUE SPECIAL REPORT
Turning Key Insights into Actions
6
INSIGHT ACTION
Shoppers are buying more private label
based on quality and not just price as they
demand overall value.
Brands need a clear view of what impacts
each shoppers trip mission for each shopper
segment if they are to gain market share
and/or develop margins.
The narrowing of the price gap between
national brands and private label means that
private label shoppers are getting a worse
deal than they used to, although national
brand shoppers can still save money if they
switch. It also has the tendency to drive
private label value share relative to unit
share.
KPIs that measure both price gaps and share
trends are a critical part of metrics for
managing category positions effectively.
These should relate to shopper behaviour for
a fuller picture of what drives change. The
price gap will more likely be maintained or
widened where a category is shrinking due to
recessionary pressure.
Retailers and manufacturers across Europe
and in the U.S. are taking a more analytical
approach to range assortment.
A national brand must demonstrate that it
not only sells well and generates a healthy
margin for the store but that it entices
shoppers through the door in the first place.
National brands marketers must think not
only about its own brand and category, but
must address the assortment issue from a
broader shopping basket perspective, using
powerful predictive analysis to identify best
scenarios for sales optimisation.
Private label sales trends are out-performing
national brands in most countries.
Manufacturers must assess the category
competitive risk from private label growth
and development and adjust their portfolio
and retail approach accordingly.
-
8/13/2019 Special Report: Private Label 2013 Retailers re-assess quality as shoppers focus on value instead of price
7/37
PRIVATE LABEL: BALANCING QUALITY AND VALUE SPECIAL REPORT
Retailers Close the Price Gap
7
National Brands Promotions:
A Complex Challenge
Manufacturers will note with envyhow retailers are managing to
boost their margins because it is
the national brands spending on
promotions which, in many
cases, is driving footfall. Though
it is national brand marketing
that often lures shoppers into the
store, they will often choose
private label products at the
shelf.
Some manufacturers areseriously considering reducing
the number of promotions to
reclaim some of their own
margin, which has taken a
hammering since the economic
downturn began in 2008.
In non-food, Reckitt Benckiser,
for instance, whose brands
include Dettol, Finish and Vanish,
has publicly said that too many
deals simply create a short-term
market share spike and do little
to grow a category.
Retailers have embarked on a
deliberate strategy to focus on
those product areas that deliverthe best margin. And, as more
retailers position their private
label as brands in their own
right, they are able to increase
prices effectively by stealth. More
effective range assortment (see
page 11) is also part of this
strategy.
Quality Enhancement for
Private LabelMore premium private label is
being introduced with higher
prices and higher margins across
a number of categories.
Consumers want to buy private
label, which they perceive as
good quality solution that is a
lower priced alternative to a
national brand.
It appears that most consumers
will pay a little more for a privatelabel alternative than they used
to. Indeed, shoppers have not
reacted negatively to rising
private label prices because they
are still saving money.
In Germany retailers are
strategically notching up prices of
their premium and standard
private label products at the
expense of their economy lines,
which remain the foot soldiers inthe fight against the discounters.
At the same time, the national
brand marketers in Germany are
looking at how best to increase
their distribution within the
discounters marketplace.
Price Gap is Narrowing
A reduction in the number of
promotions for private label andan increase in deals for national
brands means the price gap has
closed by 0.9 points, as retailers
increase prices for their own
ranges to reclaim some margin.
Overall across Europe, private
label is priced, on average,
29.9% less than a similar
national brand, with the price gap
widest in France and Germany
and narrowest in theNetherlands, the U.K. and Italy.
The percentage of private label
volume on deal has fallen from
16.5% to 16.2% , while
promotions for national brands
jumped from 31.2% to 32.3%
over the same period.
There have been reductions in
private label promotional support
in the United Kingdom, Italy,
Greece and France. The U.K. wasthe only country to see a
reduction in total volume on deal
but still have the highest trade
promotion activity.
Price gap has narrowed more
slowly in food and beverages
than in non-food.
In non-food, the price gap
diminished in most countries, but
widened in Greece, the U.K. and
Germany. Average savingsdeclined most notably in the
Netherlands, Spain and Italy.
The narrowing in the overall price
gap may be only 0.9 points but
this is equivalent to a gain of 0.5
billion euros returning to the
retailers bottom line.
-
8/13/2019 Special Report: Private Label 2013 Retailers re-assess quality as shoppers focus on value instead of price
8/37
PRIVATE LABEL: BALANCING QUALITY AND VALUE SPECIAL REPORT
Price and Promotion Evolutions in Europe
8
The gap between private label and national brands continues to narrow year over year, with private label becomingrelatively more expensive in all countries with the exception of Germany.
At a total FMCG level, all countries in Europe, with the exception of the United Kingdom, have seen increased levels ofpromotional support year over year. The picture for promotional support behind private label products is more mixed,with significantly reduced levels in Italy (temporarily) and the United Kingdom. There have been strong increases inGermany and the Netherlands.
Source: IRI Infoscan; 52 weeks ending 30thJune 2013 versus same period prior year. Excluding hard discounters.
* Source: IRI Market InsightTM; 52 weeks ending 14thJuly 2013.
Source: IRI Infoscan; 52 weeks ending 30thJune 2013 versus same period prior year. Excluding hard discounters.
*Source: IRI Market InsightTM; 52 weeks ending 14thJuly 2013.
+0.4 pts
-0.1 pts+0.2 pts
+0.7 pts
+1.9 pts
+1.7 pts
+0.3 pts
+1.3 pts
+0.2 p
40%
50%
60%
70%
80%
90%
Total Europe Germany France Netherlands Spain Italy U.K. Greece U.S.*Privatelabelpriceindexvs.nationalbrands
Private Label Price Level and Evolution versus National BrandsLatest two years, total FMCG
Private label price index vs. national brands 2012 Private label price index vs. national brands 201
+0.6 pts
+1.5 pts
+0.1 pts
+2.7 pts+0.8 pts
+0.4 pts
-1.2 pts
+0.9 pts
-0.0 pts
-0.3 pts
+1.9 pts -0.3pts+3.7 pts
+0.3 pts
-1.2 pts
-3.9 pts
-1.0 pts
+0.4
0%
10%
20%
30%
40%
50%
60%
TotalEurope
Germany France Netherlands Spain Italy U.K. Greece U.S.*
%v
olumesalessoldonpromotion
Trade Promotion - % Volume on Deal and EvolutionTotal FMCG and private label
Total FMCG % volume on deal and change vs. year ago Total private label % volume on deal and change vs. year
Labels above 2013 bar shows year over year percentage point change in private label price index
Year over year evolution is expressed as percentage point change in volume sold on deal
-
8/13/2019 Special Report: Private Label 2013 Retailers re-assess quality as shoppers focus on value instead of price
9/37
PRIVATE LABEL: BALANCING QUALITY AND VALUE SPECIAL REPORT
Private Label is for Quality and Not Just Low Price
9
of many premium ranges, private
label is still struggling in some
countries to convince shoppers.In the Netherlands, the hard
discounters enjoy a high quality
perception, but supermarkets are
drawing a more neutral response
from shoppers.
While wealthier shoppers are
willing to switch from national
brands to premium private label
solutions, many poorer
households continue to turn to
lower price private label options.
IRI has observed that lowerincome families continue to drive
the market for economy private
label.
In the United States,
expectations for private label are
solid for the coming year, with
39% of consumers indicating
plans to increase their purchase
of private label products during
this timeframe. As evidenced in
Europe, U.S. consumers havefavorable perceptions of private
label quality, with 82% of
consumers finding the quality of
private label is the same or
better as compared to national
brand alternatives1.
As private label wins the quality
and price debate, it heaps even
more pressure on national
brands. But manufacturers are
still arguably more innovativethan retailers when it comes to
creating products.
The difficulty manufacturers face
is that innovation tends to come
at the premium end, where the
price gap with private label is
widest. They also expect a new
farmers. Some 400 new products
have been added to the line and,
200 items were discontinued.In France, theIntermarchchain
has launched a cosmetics range
called Labell Paris. It has been
pitched at the standard and
premium tiers, with the motto
low prices, expertise and
accessibility.
In Italy, the strong quality
reputation of private label is
helping retailers to export their
ranges. Conad has started toexport its private label premium
line, Sapori & Dintorni, which
contains typical and regional
Italian food. The retailer has just
started exporting to the United
States.
The Power of Private Label
Brand
This new development
demonstrates the power of a
private label brand when it gains
a reputation for quality.
Additionally, in Italy, Conad has
Sapori & Dintorni mono-brand
shops.
U.K. retailer Waitrose is having
success with its private label
ranges in Singapore and across
Asia where, until now, private
label has been relatively under-
developed compared to Europeand the United States.
Nonetheless, shoppers
perceptions of private label
quality does vary across Europe.
Whilst the French, British and
Italians may have a high opinion
Perceived Quality of Private
Label is Rising
Private label is a multi-tieredstrategy covering economy,
standard and premium lines and,
in many countries, shoppers are
switching as they become
convinced that the quality of
many products is as good as
national brands.
This is particularly true in France,
Germany and the United
Kingdom, where shoppers feel
they are getting a good deal and,despite a narrowing price gap,
savings remain attractive.
In France the premium sector
grew 3.3%, whilst economy is
down by 2.0%. In the U.K.,
standard private label is the most
successful sector.
Private label ranges are being
increasingly marketed as real
brands, bolstered by solid and
improving quality perception andthe trust consumers have in their
retailer, which provides
confidence to spend their limited
budget on private label. This is
certainly true in the United
Kingdom, particularly at top-end
retailers such as Marks & Spencer
and Waitrose.
Tesco is responding by
relaunching its Finest food range,
to reassure shoppers of thequality of the line following the
horsemeat scandal and the
subsequent effect on sales. The
move includes updating recipes,
redesigning packaging and
adjusting marketing to focus
more on partnerships with British
1Source: IRI MarketPulse survey, Q3 2013
-
8/13/2019 Special Report: Private Label 2013 Retailers re-assess quality as shoppers focus on value instead of price
10/37
PRIVATE LABEL: BALANCING QUALITY AND VALUE SPECIAL REPORT
+0.4 pts +0.3 pts -0.6 pts+0.5 pts
+1.4 pts
+0.8 pts
+0.6%
+0.9 pts +0.0 pts
+0.3 pts +0.5 pts-0.9 pts +0.3 pts +0.7 pts
+0.5 pts
+0.2 pts
+0.9 pts+0.0
0%
10%
20%
30%
40%
50%
60%
70%
TotalEurope Germany France Netherlands Spain Italy U.K.* Greece U.S.**
Privatelabelshareoftotalmarket
Private Label Share and EvolutionTotal FMCG, in value and units
Private label value share 2013 and share point change vs. year ago
Private label unit share 2013 and share point change vs. year ago
FMCG Trends in Europe
10
Private label share has increased in all countries across Europe with the exception of France. Private label value shareis 36.7% and unit share 47.1% in the latest year. The U.K. has the largest private label share in Europe whilst Spainhas seen value share growth accelerate ahead of other markets. Greece has the fastest growing private label sector interms of unit share.
All countries have seen FMCG value sales growth in the latest year, with the exception of Italy and Greece (wherethere has been significant decline). Private label sales are growing in all markets, contributing to more than 50% ofthe growth in Europe, and are performing strongest in countries where overall sales are in decline (Italy and Greece)or where overall growth is less than 1% (Germany, Netherlands and Spain) as well as in the United Kingdom.Countries where total growth is stronger, except for the U.K., are primarily driven by national brands performance.
Source: IRI Infoscan; 52 weeks ending 30thJune 2013 versus same period prior year.
*Source: Kantar Worldpanel; 52 weeks ending 10thJune 2013 versus same period prior year. Channel coverage: all outlets.
**Source: IRI Market InsightTM; 52 weeks ending 14thJuly 2013 versus same period prior year.
Source: IRI Infoscan; 52 weeks ending 30thJune 2013 versus same period prior year. Excluding hard discounters.
*Source: IRI Market InsightTM; 52 weeks ending 14thJuly 2013 versus same period prior year.
1.6%
0.9%1.5%
0.9%
0.6%
-0.3%
3.8%
-2.4%
1.8%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
TotalEurope
Germany France Netherlands Spain Italy U.K. Greece U.S.*To
talFMCGvaluesales%c
hangeYOY
% change driven by private label % change driven by national brands
Value Sales Evolution National Brands and Private LabelTotal FMCG, year over year
Labels show % change in value sales year over year
-
8/13/2019 Special Report: Private Label 2013 Retailers re-assess quality as shoppers focus on value instead of price
11/37
PRIVATE LABEL: BALANCING QUALITY AND VALUE SPECIAL REPORT
The impact of Evolving Range Assortment
11
Addressing Assortment from a
Shopping Basket Perspective
Each national brand mustdemonstrate thatit not only sells
well and generates a healthy
margin for the store, but also
that it entices shoppers through
the door in the first place. This
Private Label has a Stronger
Presence on the Shelf
Retailers and manufacturersacross Europe and in the U.S. are
taking a more analytical
approach to range assortment.
In a stagnating or falling market,
retailers cannot simply add more
products to their shelves.
Rather, they must think more
strategically about space
constraints and consumer
demand.
Stores have been spending more
time and money ensuring they
have the right mix of private
label and national brands. They
must avoid adding products that
duplicate what is already on the
shelf while also ensuring that no
gaps exist in the range, which
could jeopardize shopper loyalty.
Private label is increasingly
taking priority on the shelf. And,
with the fast development of
Click-and-Collect e-commerce in
countries like France and the
United Kingdom, its a new
challenge for national brands to
maintain visibility on retailers
portals. National brands must
work harder than ever to tell a
compelling and shopper-centric
story. They must focus on joint
business planning withtheir retail
partners and convince them thatstocking their brands benefits
everyone, including shoppers.
product or variant to be heavily
promoted by the retailer, and the
price and their margin to bepushed down over time.
Quality brands and their
extensive advertising still bring
shoppers into stores. But, to the
growing frustration of
manufacturers, shoppers are
increasingly choosing private
label solutions at the moment of
purchase.
During the past five years,
shoppers have becomeaccustomed to the idea of more
affordable groceries. Now, their
expectations for value are even
higher, and this is increasingly
influencing purchase decisions.
Going forward, retailers must be
mindful of engineering their
private label products to achieve
even more cost savings and
value. But, they must tread
lightly. Reducing the quality of
the meat used in economy
ranges or reducing pack sizes
may upset loyal shoppers. While
small pack sizes may be suitable
in some countries, such as
France, where households are
becoming smaller and demand is
less, other shoppers in Europe
and the U.S. are more likely to
feel aggrieved if they are paying
the same price for less product.
This type of situation couldnegatively impact the trust in
private label brands that retailers
have worked so hard to earn.
A Prize Worth Having
The Challenge
A French retailer operates in two
channel formats: hypermarkets
and supermarkets. The premium
gastronomy range of private
label in its supermarkets is
underperforming.
The Solution
With an assortment benchmark,
IRI enabled the retailer to identify
gaps and growth opportunities by
reviewing the private label
premium segments in all
categories, identifying all the
competitors in both channels
using the IRI SKU counting and
product matching dictionary
capabilities.
The Outcome
Some 21 new private label items
that were available in
hypermarkets were introduced in
supermarkets to offer a larger
choice to the premium products
seekers.First results show that on two
SKUs listed the revenue is above
$100k per year with full
distribution in supermarkets.
-
8/13/2019 Special Report: Private Label 2013 Retailers re-assess quality as shoppers focus on value instead of price
12/37
PRIVATE LABEL: BALANCING QUALITY AND VALUE SPECIAL REPORT
The Impact of Evolving Range Assortment
12
In Spain, retailers are focusing
on improving assortment to
counter declining consumption,particularly around their fresh
offer.
The Differentiation Challenge
When it comes to private label
and assortment, retailers
certainly face challenges.
Private label segmentation was
introduced a few years ago by
leading chains, such as Carrefourand Tesco, who discovered how
difficult it can be to create new
but distinct products in the
private label space. It is difficult
for stores to differentiate
themselves from other private
label brands and there is always
the risk that any new product will
simply replicate what is already
on the shelves, leading to
stagnant growth for the category.
Still, retailers intense focus on
assortment means national
brands must fight harder to
justify a price premium and
continually demonstrate
innovation.
As shoppers across Europe get
used to private label and realise
the quality is acceptable, they
will not pay more for a national
brand unless they can see real
added value.
means national brands must
think beyond their ownbrand to
address the assortment issuefrom a broader shopping basket
perspective.
Today, the assortment question
is as important to retailers as
getting price and promotion
strategy right.
As food retailing, in particular,
enters a dynamic period of
change, there is an increasing
need for joint business plans that
acknowledge the shared goals ofimproving margins.
Join Business Planning to
Grow Business for All
Sharing category-level insight will
maximise sales for entire ranges
and categories. There must be a
mutual recognition that both
national and private label
marketers want to improve their
return on investment and boost
profits.
The aim for retailers is to get a
higher share of sales for private
label relative to the amount of
space allocated to the private
label offer.
In many European countries
private label already marginally
performs better in terms of sales
versus its share of assortment. In
Germany private label
contributes 34% of value sales
from a 27% share of assortment.
This trend is also present in the
Netherlands (30%/29%), Italy
(22%/17%) and France
(30%/26%).
-
8/13/2019 Special Report: Private Label 2013 Retailers re-assess quality as shoppers focus on value instead of price
13/37
-
8/13/2019 Special Report: Private Label 2013 Retailers re-assess quality as shoppers focus on value instead of price
14/37
PRIVATE LABEL: BALANCING QUALITY AND VALUE SPECIAL REPORT
Food and Non- Food Trends in Europe
14
Source: IRI Infoscan; 52 weeks ending 30thJune 2013 versus same period prior year. Excluding hard discounters.
*Source: IRI Market InsightTM; 52 weeks ending 14thJuly 2013.
Source: IRI Infoscan; 52 weeks ending 30thJune 2013 versus same period prior year. Excluding hard discounters.
*Source: IRI Market InsightTM; 52 weeks ending 14thJuly 2013.
** IRI UK data for packaged foods only.
1.6%1.7% 1.7%
1.4%1.2%
0.5%
2.5%
-2.5%
1.7%
-4%
-2%
0%
2%
4%
6%
8%
TotalEurope
Germany France Netherlands Spain Italy UK** Greece US*
Totalfoodvaluesales%c
hangeYOY
% change driven by private label % change driven by national brands
Value Sales Evolution National Brands and Private Label for FoodYear over year, by country
Labels show % change in value sales year over year
-0.8%
-2.4%
0.7%
-2.8%
-1.3%
-3.6%
1.5%
-2.3%
1.8%
-5%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
TotalEurope
Germany France Netherlands Spain Italy UK Greece US*
Tota
lnon-foodvaluesales%c
hangeYO
Y
% change driven by private label % change driven by national brands
Labels show % change in value sales year over year
Value Sales Evolution National Brands and Private Label for Non-FoodYear over year, by country
-
8/13/2019 Special Report: Private Label 2013 Retailers re-assess quality as shoppers focus on value instead of price
15/37
PRIVATE LABEL: BALANCING QUALITY AND VALUE SPECIAL REPORT
About the Report
15
This report contains data gathered from seven countries in Europe: France, Italy, Spain, the United
Kingdom, Germany, the Netherlands and Greece. The data has been sourced from IRI Infoscan
retail databases; 52 weeks ending June, 2013 versus the same period prior year. The report also
highlights data from the United States sourced from IRI MarketInsightTM
; 52 weeks ending 14th
July, 2013, versus same period the prior year.
Macro-categories analysed: chilled and fresh food, ambient food, frozen food, non-alcoholic drinks
(including tea and coffee), household, personal care, confectionery, pet food/pet care and alcoholic
drinks (note: does not include wine and spirits for the United Kingdom; Greece includes beer and
ouzo only).
The market channels used for each country in this report are as follows:
Country Channels used
U.K. Hypermarkets, supermarkets, pharmacies and impulse outlets
Spain Hypermarkets and supermarketsGreece Hypermarkets and supermarkets
Germany Hypermarkets, supermarkets and hard discounters
Netherlands Supermarkets
Italy Hypermarkets and supermarkets
France Hypermarkets, supermarkets and hard discounters
U.S. Supermarkets, drug stores, mass merchandisers, military commissaries,select dollar and club retail chains and convenience stores
-
8/13/2019 Special Report: Private Label 2013 Retailers re-assess quality as shoppers focus on value instead of price
16/37
-
8/13/2019 Special Report: Private Label 2013 Retailers re-assess quality as shoppers focus on value instead of price
17/37
SPECIAL REPORT
Country by Country Review
Appendix
-
8/13/2019 Special Report: Private Label 2013 Retailers re-assess quality as shoppers focus on value instead of price
18/37
PRIVATE LABEL: BALANCING QUALITY AND VALUE SPECIAL REPORT
Trends in Spain
18
variations, manufacturers andretailers are developing regionalbrand strategies.
A variety of innovative programsare being implemented byretailers as they seek to addressregional preferences. Carrefourdeployed a program, called
Panel Test Carrefour, to gathershopper insight and opinion. ElCorte Ingls has launched a newrange of cosmetics, dubbed AllIntense, and redesigned itsonline store to make promotions
and offers more obvious.Meanwhile, Alcampo has a newin-store area for environmentallyfriendly products, both nationalbrands and private label, and hasexpanded its online business.
Ultimately, retailers and
manufacturers have had to
become more shopper-centric
and adapt much more quickly to
changing consumer habits and
needs.
Loyalty to particular stores has
declined in the face of on-going
economic hardship. The Spanish
shopper is savvier than two years
ago: up from 20% in 2011 to
24% in 2013, and the share of
shoppers who say they prefer
national brands over private label
solutions declined from 40% to
36%1.
result they are cautious and
hesitant about spending.
In Spain, 60% of private labelshoppers have changed their
shopping behaviour due to the
economy, and half of them have
switched to less expensive
brands. When the economy
improves, only 21% will trade
back up to more expensive
brands, which indicates that
consumers have been largely
satisfied with trade-offs made
due to economic pressure1.
The challenging economic and
consumer landscape has
prompted more promotional
activity across national brands
and private label. The percentage
of branded volume sold with
promotional support rose from
24.2% to 25.8% during the past
year, while private label
increases were less drastic, up
from 10.7% to 11.0%.
The quality perception of private
label has improved in Spain and,
with cheaper prices, private label
market share continues to rise
despite a narrowing price gap.
National brands prices have
remained flat while private label
marketers have managed to push
through higher prices.
Private label trends in Spain vary
at the regional level. Private
labels share is lower in thenorthern part of the country.
Across the country, private label
popularity is dictated by various
factors, including the level of
unemployment and social
deprivation. As a result of these
Private labels share of value
sales in Spain grew by 1.4 points
to 42.8% in the midst of on-going economic challenges,
supported by retailer efforts to
increase consumption. Spain
demonstrated the biggest share
jump of any of the countries
surveyed.
Private label value share peaked
at 43.6% in April. Unit volume
share for private label is also up
significantly (+0.7 points) to
51.6%.
Among the retailers benefitting
from Spanish consumers growing
affinity for private label are
discount retailers, including
Mercadona, Dia and Lidl, each of
which is viewed as responding to
shoppers economic needs.
Auchan is also gaining sales,
whilst El Corte Ingls, Eroski and
Carrefour are losing ground.
The increase in VAT from 18% to
21% in September 2012 made
consumers even more reluctant
to spend money and forced
retailers to try different
strategies because volume sales
slid. Retailers are focused on
ensuring that their product
assortment maximises sales
across private label and national
brands. Carrefour also removed
VAT from its fresh products for
some specific groups ofshoppers, such as the elderly and
those with large families.
Spanish shoppers are struggling
against tax hikes, rising
unemployment, frozen wages
and austerity measures and, as a
1Source: Latest IRI Shopper Insight survey in Spain.
-
8/13/2019 Special Report: Private Label 2013 Retailers re-assess quality as shoppers focus on value instead of price
19/37
PRIVATE LABEL: BALANCING QUALITY AND VALUE SPECIAL REPORT
2.7
3.0 1.5
2.3
1.4
2.21.5
-0.35.2
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Privatelabelpriceindexvs.nationalbrands
Trends in Spain
19
Private label is growing value sales in all categories in Spain, with the exception of frozen food and personal care.Additionally, the majority of value sales growth in all expanding categories has been driven by private label. The onlyexception is pet food, where national brands have been responsible for 60% of the category growth.
Across the nine macro-categories, private label priced 28% cheaper than equivalent national brands in Spain and thisdifference has narrowed by 1.9 points during the latest year. The only category where the price gap has widened yearover year is personal care.
0.7%
3.1%
-0.1%
2.9%
-2.7%
-1.4%-0.1%
-2.8%
7.6%
-4%
-2%
0%
2%
4%
6%
8%
Macro-categoryvaluesales%c
hangeYOY
% change driven by private label % change driven by national brands
Value Sales Evolution National Brands and Private Label in SpainBy macro-category, year over year
Labels show % change in value sales year over year
Labels show year over year change expressed as percentage point change in private label price index vs. national brands
Private Label Price Level and Evolution versus National Brands in Spain
By macro-category, latest two years,
-
8/13/2019 Special Report: Private Label 2013 Retailers re-assess quality as shoppers focus on value instead of price
20/37
PRIVATE LABEL: BALANCING QUALITY AND VALUE SPECIAL REPORT
Trends in France
20
solutions. Still, on average,
overall private label prices have
risen faster than national brands.For the first time, shoppers are
starting to buy smaller packs.
This is a significant call to action
for private label marketers, since
private label has focused on the
family-size pack. Private label
marketers must adapt their pack
sizes to cater to French shoppers,
who are looking to control the
quantities they are buying to
satisfy the needs of theirshrinking household sizes.
France, like other countries, has
seen this trend accelerate in
private label during the past
year. Private label marketers will
need to continue to adapt to the
French shoppers desire for
smaller packs if they are to grow
market share in many categories.
channel, that are not included in
the report, where private label is
over-assorted and over-sold.Drive represents more than 40%
of private label value sales in
drive, versus a greater than 50%
share of value sales in
competing. The drive channel is
mainly used by young shoppers.
Retailers have increased
assortment at the premium end
of the private label spectrum by
about 8.0%, which helped drive
growth of top-end value sales by
3.3%. More premium privatelabel products have appeared in
food and in non-food categories,
including cosmetics. Meanwhile,
sales for value-tier private label
sales are declining.
The percentage of national brand
volume sold on deal in France
rose from 17.0% to 17.3%
during the past year, as a result
of a price war that is growing
across many categories, due totelevision advertising and in-
store flyers. In contrast, private
label sold on deal fell from 8.8%
to 8.6% during the same period.
The emphasis on quality, whether
private label or national brand, is
amplifying promotional pressures
for manufacturers and retailers.
It is also contributing to market
share losses among hard
discountersFrench shoppersmay be price-conscious, but they
remain reluctant to compromise
on quality.
Manufacturers have tried to
remain price competitive and
match price hikes instituted
across standard tier private label
France is the only country where
private labels share of value and
volume sales is falling. Thesedeclines are occurring despite
continuing economic hardship for
French shoppers.
Value share fell 0.6 points to
36.0% and volume fell 0.9 points
to 49.6%. National brands
captured share by increasing
promotional activity.
During the past three years, IRI
has conducted an annual analysis
of how consumers perceiveprivate label versus national
brands in terms of quality.
Findings from this work indicate
that the quality perception gap
between private label and
national brands in France has
widened considerably during the
past three years. French
consumers are simply not
convinced that the quality of
private label solutions is
measures up to that of nationalbrand alternatives.
As in the United Kingdom, private
label is a very mature market in
France. Consumers have grown
up with the concept and many
older shoppers regard own label
lines as strong brands in their
own right. Because private label
is so engrained in French culture,
they compete on near equal
terms to national brands, andthey face the same challenges.
The decline that we can notice
here of private label sales in
hypermarkets, supermarkets and
hard discounters has been
exacerbated by the development
of the Click-and-Collect (Drive)
-
8/13/2019 Special Report: Private Label 2013 Retailers re-assess quality as shoppers focus on value instead of price
21/37
PRIVATE LABEL: BALANCING QUALITY AND VALUE SPECIAL REPORT
Trends in France
21
Private label is lagging behind national brands in all sectors, with minimal year over year sales growth in fivecategories and declines in chilled and frozen food, confectionery and pet food.
Across the nine macro-categories, private label is priced an average 38% lower than equivalent national brands inFrance. This difference has narrowed by 0.2 points in the latest year. Generally, there has been minimal change inprice positioning between private label and national brands year over year, with the exception of alcoholic drinks,where private label has become more than 2 points cheaper, and non-alcoholic drinks, where the price differential hasnarrowed by a similar margin.
3.9%
2.1%
1.0% 1.2%
0.3% 0.6%
1.8%
0.2%
3.0%
-1%
0%
1%
2%
3%
4%
5%
Macro-categoryvaluesales%c
ha
ngeYOY
% change driven by private label % change driven by national brands
Value Sales Evolution National Brands and Private Label in FranceBy macro-category, year over year
Labels show % change in value sales year over year
-2.3 0.5
0.1
-0.2
0.1
-0.4
2.1
0.8 1.0
0%
10%
20%
30%
40%
50%
60%
70%80%
90%
Privatelabelpriceindexvs.nationalbrands
Private Label Price Level and Evolution versus National Brands in FranceBy macro-category, latest two years
Labels show year over year change expressed as percentage point change in private label price index vs. national brand
-
8/13/2019 Special Report: Private Label 2013 Retailers re-assess quality as shoppers focus on value instead of price
22/37
-
8/13/2019 Special Report: Private Label 2013 Retailers re-assess quality as shoppers focus on value instead of price
23/37
PRIVATE LABEL: BALANCING QUALITY AND VALUE SPECIAL REPORT
Trends in the United Kingdom
23
inevitably means going to the
lower end of the price range. This
then brings with it the issue ofcompetition with the incumbent
economy private label.
Private label can help to engage
shoppers and boost long-term
loyalty. In September, forinstance, Co-Op relaunched its
private label offer under the
name Love By Us in a bid to
entice younger shoppers.
In the United Kingdom, retailers
want private label to be seen as a
key differentiator. Here, there is
no single private label journey for
a shopper and retailers are
successfully adapting and
introducing products across all
three private label tiers to meetspecific consumer needs. They
are doing this by becoming better
at understanding shopper habits.
Private labels value share has
increased 0.6 points, to 51.1%,
and unit share increased 0.2
points, to 57.6%.
The aim for retailers is to
continue to give their products
more personality as brands and
focus less on low prices. U.K.
shoppers will only continue to
choose own brand if they are
convinced it meets their needs
while saving them money.
U.K. retailers must also decide
whether to go down the umbrella
brand or venture brand route to
really engage with shoppers.
Using the umbrella brand route,
they build on their established
reputation and engage shopperswith their brand image. Using the
venture brand route relies more
on price positioning to establish
brand credentials, which almost
The strengths of retailers own
brands stimulated private label
sales in the United Kingdom,where shopper trust built up over
many years armed retail chains
with the confidence to launch
new ranges despite a fragile
economic recovery.
Retail brands such as Tesco and
Asda and premium retailers such
as Waitrose and Marks & Spencer
are competing effectively with
discounters such as Aldi and Lidl
by leveraging their heritage and
brand reputation.
Tesco, for instance, has created
the Goodness brand for
children and Pro Formula
beauty range, covering skin care
hair care. Waitrose has
introduced Love Life a line of
meal solutions. Marks & Spenser
now offers a snacking collection,
called Guilt Free. And, Asda has
revamped its 3,500-strong
private label food products underthe Chosen By You name.
Aldi remains focused on
protecting and growing its share
of the private label pie. The
retailer is still pushing its Swap &
Save promotion to tempt
disgruntled supermarket
shoppers. This program is
certainly having a positive
impact, evidenced by the fact
that Aldisshare is growing by30% a year (source: IGD). Lidl,
too, remains committed to
private label. Today, 80% of
Lidlsoffer is now own label.
-
8/13/2019 Special Report: Private Label 2013 Retailers re-assess quality as shoppers focus on value instead of price
24/37
PRIVATE LABEL: BALANCING QUALITY AND VALUE SPECIAL REPORT
Trends in the United Kingdom
24
National brands are growing value sales in all categories in the United Kingdom, with the exception of alcoholic drinks.Private label is lagging behind national brands in all sectors except chilled and fresh food, with minimal year over yearsales growth in most categories and declines in household and alcoholic and non-alcoholic drinks.
Across the nine macro-categories, private label is priced an average 27% below equivalent national brands in theUnited Kingdom. This gap has narrowed by 0.4 points during the past year. However, the relative price of private labelversus national brands has decreased quite significantly in the two categories where the price differential is closest(chilled and frozen food). These are the two sectors where private label demonstrated the strongest performanceduring the past year.
-0.4%
3.2%
1.4%
7.4%
1.6% 1.2%
2.7%
1.4%
2.7%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
8%
Macro-categoryvaluesales%c
hangeYOY
% change driven by private label % change driven by national brands
Value Sales Evolution National Brands and Private Label in the U.K.By macro-category, year over year
Labels show % change in value sales year over year
-0.8
1.2
-1.2
1.0
-1.5
0.8-0.5
0.7
2.1
0%
20%
40%
60%
80%
100%
120%
Private
labelpriceindexvs.nationalbrand
s
Private Label Price Level and Evolution versus National Brands in the U.K.By macro-category, latest two years
Labels show year over year change expressed as percentage point change in private label price index vs. national brand
Note: UK food sector data for packaged foods only
-
8/13/2019 Special Report: Private Label 2013 Retailers re-assess quality as shoppers focus on value instead of price
25/37
PRIVATE LABEL: BALANCING QUALITY AND VALUE SPECIAL REPORT
Trends in Germany
25
The strength of the discounters
in recent years means shoppers
trust the quality of their privatelabel. Aldi has a corporate
strategy to be at the top of the
quality rankings, as measured
regularly by research agency
Stiftung Warentest. There is no
promotional activity on private
label in the discounters.
What IRI expects to see are more
price increases in private label,
as shoppers move to premium
and standard ranges at the
expense of economy and valuelines and stores concentrate
more on the well-known national
brands that consumers buy most
often.
Germany currently has a solid
discounter and private label
culture and low promotionalpressure. In Germany,
discounters account for two-
thirds of private label sales. But,
as more chains, such as Aldi,
Lidl, Netto, Penny and Norma,
begin to offer more national
brands, this environment may
change.
Aldi South, for instance, has
increased the number of national
brands within its assortment,
while Penny, the discountchannel of the REWE Group, has
consolidated its private label
under one brand to make room
for the introduction of more
national brands. Other retailers,
such as Edeka and Metro,
meanwhile are extending their
private label ranges.
Private label increased value
share by 0.3 points, to 34.3%, in
Germany, food sector privatelabel share increased 0.4 points
(to 36.1%) and non-food
declined 0.2 points. Private label
increased unit share across all
categories by 0.5 points to
34.3%.
Whilst the national brand
manufacturers ponder the
benefits of discounters, the big
challenge for German retailers,
particularly the supermarkets, ishow to enhance consumer
perception of private label and to
find innovative ways to add
value.
-
8/13/2019 Special Report: Private Label 2013 Retailers re-assess quality as shoppers focus on value instead of price
26/37
PRIVATE LABEL: BALANCING QUALITY AND VALUE SPECIAL REPORT
Trends in Germany
26
Across the nine macro-categories, private label is priced an average 45% cheaper than equivalent national brands inGermany and this spread has widened by 0.2 points during the past year.
There is a clear split in category performance in Germany between the food and beverage sectors, which are all growinyear over year, and the non-food categories, which have all declined by an estimated 2% during the same period. Withthe exception of frozen food, where the growth is being driven entirely by private label, the directional performance ofprivate label and national brand is the same and national brands tend to be contributing the majority of growth ordecline in the category.
1.2%
2.6%
1.3%1.6%
3.5%
-2.3%
0.4%
-2.1% -2.1%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
Macro-categoryvaluesales%c
han
geYOY
% change driven by private label % change driven by national brands
Value Sales Evolution National Brands and Private Label in GermanyBy macro-category, year over year
Labels show % change in value sales year over year
-1.50.2
-1.0
1.2
-0.2
0.0
-0.8-0.8
0.1
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Privatelabelpriceindexvs.nationalbrands
Private Label Price Level and Evolution versus National Brands in GermanyBy macro-category, latest two years
Labels show year over year change expressed as percentage point change in private label price index vs. national brand
-
8/13/2019 Special Report: Private Label 2013 Retailers re-assess quality as shoppers focus on value instead of price
27/37
PRIVATE LABEL: BALANCING QUALITY AND VALUE SPECIAL REPORT
0.8
-0.2
0.0
4.5
-0.8
1.9
2.1
-4.1
1.7
0
2040
60
80
100
120
140
160
180
200
Privatelabelindexofvaluesharetoshareof
assortment
Trends in Germany
27
At an overall FMCG level, private label earns disproportionately high share of value sales relative to its assortmentlevel, with an index of 128. Private label contributes 34% of value sales from 27% share of assortment.
Category label above each bar shows year over year evolution in private label assortment index
Fair Share
Private labe
under perfor
relative to
share ofassortmen
Private labe
over perform
relative to
share of
assortmen
Private Label Index Value Share versus Share of Assortment
and Evolution in GermanyBy macro category, year on year evolution
above the index below the index
Note: average index is 100
-
8/13/2019 Special Report: Private Label 2013 Retailers re-assess quality as shoppers focus on value instead of price
28/37
PRIVATE LABEL: BALANCING QUALITY AND VALUE SPECIAL REPORT
Trends in Italy
28
Some categories do struggle
when it comes to private label.
As is common in most countries,Italian shoppers are less willing
to buy private label personal care
lines, for instance.
Across all categories, national
brands are starting to fight back
by leveraging the added value
they offer consumers and
demonstrating product
innovation. Nevertheless, they
are struggling protect and grow
market share.
Private label marketers are
focusing their messages on
convenience.
Conad has a new campaign, Low
and Fixed Prices, covering a
basket of 100 commonly-bought
items. Prices for these goods
have come down and discounts
are running until November
2013.
Coop is promoting convenience intelevision and radio advertising.
The retailer is also trying to be
innovative with private label by
promoting health and
sustainability.
Inflation among FMCG is on the
rise in Italy (about 0.6%) and
this could boost private labelperformance during the next few
months.
Italian shoppers are spending
less as they look to save money
and the average basket value
continues to fall. Consumers are
hunting out deals and the best
prices and this has helped private
label increase its share of value
sales in Italy by 0.8 points, to
18.4% this year. Unit share is up
by 0.5%, to 22.4%.
The big retail players (including
Coop, Conad, Esselunga and
Carrefour) account for about
60% of the private label market
by revenue. In unit terms, one in
four products sold by these
chains is now private label.
Retailers have focused on non-
food private label during the past
year, introducing new ranges of
household, gardening and even
underwear to meet hard-pressed
shoppers needs.
Across all FMCG categories,
shoppers continue to trade down,
which benefits private label due
to their relatively low price
points. This is certainly true in
the south of the country, where
discounters are strengthening
their grip. In the north, the more
structured distribution networkhelps retailers to promote their
own brands.
When it comes to discounters, a
shopper insights survey by IRI
discovered that 30% of people
visit a discounter for their weekly
shop.
-
8/13/2019 Special Report: Private Label 2013 Retailers re-assess quality as shoppers focus on value instead of price
29/37
PRIVATE LABEL: BALANCING QUALITY AND VALUE SPECIAL REPORT
5.5
1.5
2.0
2.5
1.02.5
1.0
1.51.6
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Privatela
belpriceindexvs.nationalbrands
Trends in Italy
29
Across the nine macro-categories, private label is priced an average 22% below than equivalent national brands inItaly and this difference has narrowed by 1.7 points during the past year. The relative price of private label versusnational brands has increased in all categories year over year, with the largest private label price increase occurring alcohol, confectionery and household sectors.
Private label is growing value sales in all categories in Italy. Additionally, private label has out-performed nationalbrands in terms of year over year value growth in all categories, with the sole exception of pet food.
0.6%0.8% 1.2%
-1.0%-0.9%
-0.6%
-4.0%
-4.5%
2.7%
-6%
-4%
-2%
0%
2%
4%
Macro-categoryvaluesales%c
han
geYOY
% change driven by private label % change driven by national brands
Value Sales Evolution National Brands and Private Label in ItalyBy macro-category, year over year
Labels show % change in value sales year over year
Private Label Price Level and Evolution versus National Brands in ItalyBy macro-category, latest two years
Labels show year over year change expressed as percentage point change in private label price index vs. national brand
-
8/13/2019 Special Report: Private Label 2013 Retailers re-assess quality as shoppers focus on value instead of price
30/37
PRIVATE LABEL: BALANCING QUALITY AND VALUE SPECIAL REPORT
-0.3
6.7
-3.419.3
1.2
-2.8 -1.5
-0.7
19.8
0
20
40
60
80
100
120
140
160
180200
Privatela
belindexofvaluesharetoshareof
assortment
Trends in Italy
30
At an overall FMCG level in Italy, private label earns disproportionately high sales, relative to assortment levels, withan index of 127. Private label contributes 22% of value sales from 17% share of assortment.
Fair Shar
Category label above each bar shows year over year evolution in private label assortment index
Private lab
under
perform
relative t
share ofassortme
Private lab
over perfor
relative t
share of
assortme
Private Label Index Value Share versus Share of Assortment
and Evolution in ItalyBy macro-category year over year evolution
above the index below the index
Note: average index is 100
-
8/13/2019 Special Report: Private Label 2013 Retailers re-assess quality as shoppers focus on value instead of price
31/37
PRIVATE LABEL: BALANCING QUALITY AND VALUE SPECIAL REPORT
Trends in the Netherlands
31
As seen in the United Kingdom,
retailers are working to link their
strong store banner brand equityto products to help solidify the
price-value image in consumers
minds. This was a motivation
behind Albert Heijn putting AH
on its new look AH Basic range.
Despite the investment and
efforts put forth by national
brands on innovations to retain
sales in food and non-food, it
seems that its not re-engaging
shoppers who have switched to
private label.
Overall, private labels share of
value sales has risen 0.5 points,
to 40.4%, as economic difficulties
continue in the Netherlands.
Promotional activity for private
label is less than for brands.
Private labels share is higher in
the west of the region where
Albert Heijn is strongest.
Whilst there is an acceptance
across much of Europe that
shoppers are prepared to pay forbetter quality in private label, it
is interesting to note how
retailers in the Netherlands are
focusing more on the value end
of the market.
Market leader, Albert Heijn, has
rebranded its value range from
Euroshopper to AH Basic to
reinforce the AH heritage. Rival
C1000/Jumbo is working with
U.S. company Daymon to
implement Jumbos private label
strategy, which has set an
ambitious target to get a private
label share of 40%.
Finally, the Superunie buying
organisation is focusing on value
with a new range called Ok,
and seven retailers are already
marketing this offer.
One of the main reasons for this
shift to value private label is a
deliberate attempt by
mainstream retailers to combat
the discounters who are
managing to convince shoppers
that their products are not only
cheaper but are also good
quality.
In fact, perception of quality of
private label varies significantly
within the Netherlands. Quality
perception within hard
discounters is high, neutral insupermarkets and poor among
low price national brands.
-
8/13/2019 Special Report: Private Label 2013 Retailers re-assess quality as shoppers focus on value instead of price
32/37
PRIVATE LABEL: BALANCING QUALITY AND VALUE SPECIAL REPORT
Trends in the Netherlands
32
Across the nine macro-categories, private label is on average priced 24% cheaper than equivalent national brands inthe Netherlands and this difference has decreased by 0.7 points in the latest year. The price relationship variesconsiderably across the categories, ranging from the biggest differential on alcoholic drinks, personal care and petfood (c.45% cheaper) through no significant price difference on chilled and fresh food.
The categories with the largest value growth in the latest year (alcoholic drinks, ambient and frozen food) have allseen increased expenditure on both private label and national brands, with national brands driving a significantproportion of growth. However, in those categories which are showing slower growth or are in decline, there is a cleardivergence in national brands versus private label performance all national brands sales are in decline whilst privatelabels are all in growth.
5.5%
2.6%
-1.9%-1.2%
1.3%
-3.2%
0.1%
-3.4%
0.5%
-6%
-4%
-2%
0%
2%
4%
6%
8%
Macro-categoryvaluesales%c
hangeYOY
% change driven by private label % change driven by national brands
Value Sales Evolution National Brands and Private Label in the NetherlandsBy macro-category, year over year
Labels show % change in value sales year over year
4.1
-0.7
0.5
0.5
0.9
3.1
2.0
-0.5 1.6
0%
20%
40%
60%
80%
100%
120%
Privatelab
elpriceindexvs.national
brands
Private Label Price Level and Evolution versus National Brands in the NetherlandsBy macro-category, latest two years
Labels show year over year change expressed as percentage point change in private label price index vs. national brand
-
8/13/2019 Special Report: Private Label 2013 Retailers re-assess quality as shoppers focus on value instead of price
33/37
PRIVATE LABEL: BALANCING QUALITY AND VALUE SPECIAL REPORT
2.7
-0.6 2.6
6.9
0.9
2.5
-0.53.4 -1.1
0
20
40
60
80
100
120
140
160
Private
labelindexofvaluesharetoshareof
assortment
Trends in the Netherlands
33
At an overall FMCG level in the Netherlands, private label captures a slightly disproportionate share of sales relative tits assortment level, with an index of 105. Private label contributes 30% of value sales from a 29% share ofassortment.
Fair Share
Category label above each bar shows year on year evolution in private label assortment index
Private labe
under
performs
relative to
share of
assortmen
Private labeover perform
relative to
share of
assortmen
Private Label Index Value Share vs. Share of Assortment
and Evolution in NLBy macro-category, year on year evolution
above the index below the index
Note: average index is 100
-
8/13/2019 Special Report: Private Label 2013 Retailers re-assess quality as shoppers focus on value instead of price
34/37
-
8/13/2019 Special Report: Private Label 2013 Retailers re-assess quality as shoppers focus on value instead of price
35/37
PRIVATE LABEL: BALANCING QUALITY AND VALUE SPECIAL REPORT
-3.3% -2.6%
-1.3%
2.9%
-4.1%
1.2%
-5.3%-6.0%
-4.3%
-8%
-6%
-4%
-2%
0%
2%
4%
M
acro-categoryvaluesales%c
hange
YOY
% change driven by private label % change criven by national brand
Trends in Greece
35
Across the nine macro-categories, private label is priced an average 35% below equivalent national brands in Greeceand this difference has narrowed by 1.3 points during the latest year. The price gap has primarily narrowed on foodcategories and widened on the drinks and personal care sectors.
All macro-categories, with the exception of confectionery and household, have seen value sales decline in Greeceduring the past year. In all categories other than confectionery, the private label products are outperforming thenational brands in their contribution to total category sales change, either comprising a smaller proportion of thedecline or, in the cases of ambient, chilled and fresh, confectionery and household, actually growing year over year.
Value Sales Evolution National Brands and Private Label in GreeceBy macro-category, year over year
Labels show % change in value sales year over year
-0.3
0.5
4.4
-0.2 4.1
0.5
-1.8
-2.5-0.3
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Privatelab
elpriceindexvs.nationalbrands
Private Label Price Level and Evolution versus National Brands in GreeceBy macro-category, latest two years
Labels show year over year change expressed as percentage point change in private label price index vs. national brand
-
8/13/2019 Special Report: Private Label 2013 Retailers re-assess quality as shoppers focus on value instead of price
36/37
PRIVATE LABEL: BALANCING QUALITY AND VALUE SPECIAL REPORT
Trends in the United States
National brand and private label
marketers have long been locked
in a dance, each vying for shareof consumers $725+ billion
FMCG expenditures. The
recession served to intensify the
dance, and private label led for a
time. Since the recessions end,
private labels momentum
continues, but at a diminished
pace.
During the past year, private
label share of FMCG unit sales
remained unchanged, at 17.2%.
Meanwhile, share of dollar sales
inched up slightly, to 14.6%,
bolstered, at least in part, by
private label price inflation, which
has outpaced national brands
during the past several years.
A granular analysis of private
label growth confirms what IRI
posited one year agowithin the
United States, private label and
national brands are eachshowing
areas of strengthin selectchannels, retail banners and/or
categories.
Private label performance within
the drug channel has been quite
strong during the past year.
Though private label share
inched up slightly in the
convenience channel during the
same time period, it remains well
below industry average.
Growth across the drug andconvenience channels is
attributable to a number of
factors, including retailer efforts
to broaden and enhance private
label programs. These efforts
have been well-timed, for
consumers remain entrenched in
conservative purchase behaviors
that were initially adopted earlier
in the economic downturn.Private label efforts to drive
growth have met with success
across some important
categories. Private label share of
volume increased across five of
the 10 largest private label
categories during the past three
years.
During the same time period,
though, national brand marketers
gained ground in the remainingtop private label categories,
increasing the revenue they
generate in these categories by a
combined total of more than $1.7
billion across IRIs multi-outlet
geography.
To provide insights into
strategies that will guide both
national and private brand
manufacturers along the path to
continued growth, IRI conductedextensive analysis of the
interaction between private label
and national brand packaged
goods solutions. Findings from
this research are detailed in IRIs
November 2013 edition of Times
& Trends,Private Label &
National Brands: Paving the Path
to Growth Together.
36
-
8/13/2019 Special Report: Private Label 2013 Retailers re-assess quality as shoppers focus on value instead of price
37/37
PRIVATE LABEL: BALANCING QUALITY AND VALUE SPECIAL REPORT
2.0
0.1
0.0
-2.1
0.2
0.3
1.6 0.9
3.9
0%
20%
40%
60%
80%
100%
120%
Private
labelpriceindexvs.nationalbrand
s
Trends in the United States
Across the nine macro categories, private label is priced an average 13% lower versus equivalent national brands inth U it d St t Thi diff h d b 0 2 i t d i th t Th l t t th i
All macro-categories demonstrated value sales growth in the United States during the past year. National brands arethe driving force behind the significant majority of growth in all categories excepting household, where private labelgrew and national brands sales declined during this time period.
4.2%
1.9% 1.8% 1.9%
0.7%0.3%
0.8%
2.7%
3.7%
-1%
0%
1%
2%
3%
4%
5%
6%
Macro-categoryvaluesales%ch
ange
YOY
% change driven by private label % change driven by national brands
Value Sales Evolution National Brands and Private Label in the Unite StatesBy macro-category, year over year
Labels show % change in value sales year over year
Private Label Price Level and Evolution versus National Brands in the USBy macro-category, latest two years
Labels show year over year change expressed as percentage point change in private label price index vs. national bran