Private label: What is the impact of private label growth?

A recent Symphony IRI survey points out that private label is thriving. Across Europe, own & private label is saving customers 30%, when compared to an equivalent branded product. These own label products have reached 36.6% by value, of Europe’s FMCG market.

Does this mean that those suppliers who are not part of a particular multiple’s private label club will be precluded, or at the very least, find it harder to thrive in the current climate?

Not necessarily – the growth in sales of private label products in the UK has brought into sharper focus the need for suppliers, whether they produce own label or branded products – or both – to bring greater clarity and intelligence to their understanding of  how both work  within the category in order to  maximise all commercial opportunities. Failure to do so would put them at a colossal disadvantage.

With private label and branded products, it’s not a case of “either/or” in terms of category development, rather how suppliers can make it work for shoppers and grow value and volume across a total range. Branded products continue to inspire both innovation and investment and, as such, will always be critical to market development. Suppliers which offer improved category vision and development and ensure that the shopper’s needs are met at the point of purchase can assist retailers in the tailored implementation of the right range, space, promotions, layout, merchandising and marketing based on identified needs and the way that shoppers shop. These suppliers will be the ones which steal a march on the competition.

This means suppliers adding value to the relationship with the retailer by identifying short and long term, quantified strategic opportunities for the category rather than just its individual brand.

A further report from Symphony SRI published in September this year identifies a growing trend towards convenience and comfort foods with products like Cottage Pie, Mashed Potato, Cumberland Pie and Shepherds Pie leading the market by sales value. Moreover, the same report also outlined how innovation and changing tastes have driven growth in sauces and snacks.

The point is that trends aren’t always economic. The supplier which understands what is  happening in its category, why and the factors that are influencing  are those that will be best able to increase value and often volume. This work should be underpinned by consumer and shopper research and data driven insights which allows the retailer to take advantage of the manufacturer’s expertise in category development in order to drive incremental sales.

Suppliers need to identify short and long term quantified strategic opportunities for the category and the brand.  This will increase expertise and multi – dimensional levels of influence in the category leading to brand growth ahead of the category.