SymphonyIRI: Soaring PL Growth Threatens National Brands in Europe

SHARE:

Email

Print

LinkedIn

Facebook

Twitter

December 20, 2011

Store brands are on the rise and gaining further traction in Europe where economically pressed shoppers are looking for deeper savings and stores amp up promotions.

Shoppers are helping to strengthen store brands market share even in Europe, home of the most mature private label market in the world, according to SymphonyIRI’s special report, Retail Label Brands in Europe.

Europeans buy nearly as many private label products as they do national brands, and in some countries they are viewed as equal to, or better than, many nationally branded products.

European consumers are more price driven than ever before. Store brands save shoppers an average of 30 percent on their total grocery bill, according to SymphonyIRI. The share of private label goods has increased in every country – and is now an average of 30 percent across the region.

Shoppers are also paying close attention to both quality and value. Retailers are recognizing that price is not the single differentiator for all shoppers and won’t successfully lure them away from national brands. As a result, retailers have invested in developing a wider variety of competitive offerings in a multi-tiered approach, including premium offerings.

Retailers have developed clear branding and assortment strategies and are leveraging control of shelf space and pricing to highlight store brands. This presents a real threat to national brands as SKUs are rationalized in categories to make way for new private label products, according to the report.

Increasingly, private label products are perceived as brands in their own right, making it seem increasingly likely that retailers will be able to grow market share further and build shoppers’ loyalty, according to SymphonyIRI.

There are some roadblocks to private label growth, however.

“Despite the advances of private label, penetration is lower in categories where the consumer has a strong relationship with [national] brands,” the report concludes. “National brands manufacturers have not rested on their laurels. They are developing new products and technologies that will bolster their differentiation, becoming more aggressive with pricing and continue to evolve new merchandising and promotional strategies.”

Other key finding of the report include:

• The share of private label products varies from as much as 49.2 percent of all FMCG (fast-moving consumer goods) products sold in the U.K. to 16.1 percent in Italy. This compares to 18.5 percent in the United States.
• Consumers still prefer to buy national brands if they can do so at the same price as a store brand.
• Private label products are now available in nine out of every 10 product categories.
• The biggest dollar share and unit share increases in private label were seen in Spain, where dollar share was up 1.2 percent and unit volume up 0.9 percent, bringing it closer to the U.K.’s 40.4 percent dollar share.
• The use of promotions by private label brands is increasing in countries where the price gap with national brands is the lowest, namely the United Kingdom and Italy.

Read These Related Articles:

• Nielsen on the Global Future of Store Brands
• Research: Consumer Frugality Persists in the Post-Recession
• Nielsen: Global Private Label Phenomenon is Here to Stay
• Center Store Competition Heats Up
• TreeHouse Foods 3Q Profits Fall on Rising Sales

Most Read

Guest Columns

Grocery Aisle Innovation Key to Retailer and Consumer Cost Savings

Retailers are redesigning the aisle, appealing to environmentally friendly consumers and capitalizing on market trends to make their private label brands more competitive.

Source: Tetra Pak Inc.

How to Develop a Private Label Expression Aligned with Retail Brand Strategy

By creating private label as a marketing tool rather than just a price alternative, retailers gain the opportunity to tell a complete brand story while simultaneously boosting customer loyalty.

Source: CBX

Using the Store Banner to Endorse Private Label Architecture

Although the economic downturn accelerated private label growth in Europe, there was another key driver -- retailers started to brand their stores.

Source: IPLC

See All Guest Columns »

Press Releases