The battle for the supermarket floor between “private label brands” and “branded goods” has never been more competitive then in recent years. Economic pressures have encouraged consumers, who were previously much more loyal to branded goods, to discover the quality of, and buy, private label brands because they’re invariably cheaper.
Private/Own Label << versus >> Branded Products
Own label brands have become a lot more sophisticated, moving beyond the early ears of perceived poorer quality “me too” copy cats, thinly disguised from their branded counterparts, to stand alone quality brands in their own right. Indeed the private label sector is now distinguished by sub-brand segmentation with a variety of offerings such as value, mid-tier, premium, organic, healthy, speciality, allergenic, vegetarian and child friendly etc.
Private Label or Own Label in Ireland still holds a smaller relative market share of approximately 20% then the more mature UK market of over 40%, but it is growing rapidly. With profit margins up to 25% higher and prices between 10-18% lower, private label proliferation is a very strong economic motivator for retail groups. Amongst other things it is a very compelling vehicle to grow retailer market share through consumer loyalty to their “brand”.
Private label brands are very much in the lime light in the UK at present with both Asda and Sainsbury’s relaunching or launching new own label brand ranges motivated by the need to increase their market share. Asda’s, the UK’s second largest supermarket group owned by Wal-Mart, has relaunched it’s entire range of more than 3,500 own label food products and invested over £100m in a drive to improve product quality without impacting on prices. The Asda own brand ranges, “Smart Price”, “Chosen by You” and “Extra Special”, account for close to 50% of group sales with 85% of that accounted for by the mid-tier range “Chosen By You”.
From a branding perspective the Asda own label “Chosen By You” range, while price positioned as a mid tier offering, has sought to really connect with the hearts and minds of their consumers. No other retailer to date has visibly endeavoured to so actively seek both the counsel and consent of the very people who buy and eat their products.
What better way to engender positive brand sentiment, trust and loyalty ? Their dedicated “Chosen By You” website is totally focussed on engaging with their customers at multiple levels in a very tangible way to really demonstrate they care about what their customers want, and most importantly, what they think.
What does this kind of private label brand challenge mean for “branded goods” ? Retailers have a significant impact on what brands get to shelf and stay on shelf. Shelf facings are a premium but ultimately it’s the decisions of consumers that decide whether brands survive and thrive or disappear.
Consumers buying decisions directly impact the bottom line. If a brand sells it stays on shelf. If consumers care about a brand it sells. Their choices are made at both rational and emotional levels.
Branding is about winning and keeping customers. It’s about influencing choice. The onus then lies with the brand custodians to really connect with their customers, build enduring relationships and really give them a compelling reason to try and continuing buying their brand.
What do you think ?