Magazine article Marketing

Helen Dickinson on Retail: Choice Is Brand Ally in Own-Label War

Magazine article Marketing

Helen Dickinson on Retail: Choice Is Brand Ally in Own-Label War

Article excerpt

On a recent trip to my local supermarket I picked up a packet of a branded cereal, but quickly put it back after realising it was twice the price of the store's own-label equivalent.

According to ACNielsen, I am not alone in putting own-label goods in my shopping basket. It calculates that as many as 82% of shopping trips undertaken by UK consumers include purchases of these items. This is the highest level of any country and highlights the appetite that UK consumers have for non-branded products.

This growth has been fuelled by the development of own-label goods across a range of price points. Whereas once the category offered only 'value' products, in recent years it has spread into all areas of the food chain. This includes premium goods, as reflected in the emergence of Tesco's Finest and Sainsbury's Taste the Difference ranges.

This proliferation has helped refrigerated ready-meals grab the most significant market share of any own-label category, accounting for 47% of total sales in this area.

Retailers have also been using own-label as a point of differentiation from rivals. This has certainly been the case in the clothing sector, where the scope of these ranges continues to increase. Some retailers have gone a step further by creating in-house 'brands', such as George at Asda, Tu at Sainsbury's and the more upmarket Per Una at Marks & Spencer, all of which represent a clear threat to established clothing brands.

Differentiation is also a key driver of own-label food ranges. Last month Tesco announced that it was to launch cholesterol-lowering foods including a yoghurt drink. This comes amid a barrage of innovation in the development of low-salt, low-sugar and low-cholesterol products by all the major food retailers. Such products often provide a healthy profit margin for retailers.

This boost to margins has proved more difficult to come by in the personal care and cosmetics sector. This is chiefly down to the high costs of undertaking the necessary research and development for such products.

Not surprisingly, the penetration of own-label in this market is much lower than it is for food.

But do not be fooled into thinking that retailers are not developing these products. A quick look at the shelves in your local supermarket or the likes of Boots will reveal an array of own-label personal care and cosmetics products jostling for space with well-known brands. …

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