25 July 2012 | Gillian Farrell
According to Checkout Magazine (June issue), Retailers own brands continue to appeal to shoppers in the face of depressed household incomes, growing at 2.3% year on year, as shoppers focus on saving rather than spending. Sales of branded goods have dropped over the past year and now account for 53% of the market, down from 54.1% last year. In contrast, we are seeing Private Label products thriving for retailers like Tesco, SuperValu, Aldi and Lidl.
So is it just price that is encouraging people to shift from luxury brands to private labels?
Or might it be the increased investment in marketing activities by the retailers for their own brands?
SuperValu unveiled its new “Private Label Range” in June. It is called the SuperValu Range. Simple but effective, it would seem. The new line-up includes over 1,500 products and represents a €20 million investment for the retailer.
The introduction of this new range represents the biggest product launch in SuperValu’s history. SuperValu claim that all products will continue to deliver on quality and value, yet the new range will be priced on average 33% less than the brand equivalent. By shopping across the SuperValu Range, and replacing their usual brand choice, with the Own Brand equivalent, it is claimed that consumers can cut €45.26 off a shopping basket that would normally cost €110.35.
Aldi ads – Aldi like brands only cheaper
Aldi have followed a similar line as SuperValu, focusing on price, with their price comparison ads. They’ve created some very clever, highly competitive marketing campaigns of late comparing the leading brands with their own brands and quoting the price comparisons. Take a look at the Aldi cereal advertisement. It’s making a big statement in regards to price comparison but also has a funny twist to it which helps with brand recognition.
In the past it was unheard of for retailers to invest this heavily in advertising for own brand labels and just as unlikely for them to invest in high gloss colourful packaging.
Think back to the 80’s & 90’s, what did private label goods look like? If you can’t remember or even better, you’re too young to remember let me remind you. They were wrapped in lifeless, colourless packaging (usually black & white) with the same quality reflected in the ingredients as with the packaging (cheap).
If you think about how own brands are presented now you’d be forgiven for even mixing some up with the luxury brands.
Taste test activities in store are also helping Lidl to gain further market share over the leading brands and get consumers over the line with their private labels. They are running an integrated campaign across digital, TV, press and in-store to gain the confidence of consumers with their “own brands”.
A research survey carried out by Empathy Research on behalf of Checkout showed that the image and perception of own-label has also changed significantly in recent times, with 83% of those surveyed (1,017 respondents) believing that the quality of such products has improved.
The old perception of own-brand lines as 'cheap imports' has clearly passed, with a majority (86%) of the 1,017 respondents saying they are aware that a number of Irish producers make own-label products for shops. With ‘Irish’ a key selling tool for consumers, the Discounters and SuperValu, for example, have been promoting their portfolio of Irish suppliers.
So with a little extra marketing effort, higher investment in packaging and quality ingredients (especially from Irish manufacturers), but yet low cost affordable goods, retailers are winning the war in store with their Private Labels.