Assessing the brand/private label trade-off in food discounters

Date : 04 August 2015
Assessing the brand/private label trade-off in food discounters

Acceptance of private label products

Retailers have invested heavily in the range and quality of private label over the last few years as they try and drive differentiation from the competition.

Our ShopperVista tracking data shows that fewer shoppers claim to have purchased well-known brands, as the popularity of standard private label grows.

% who claim to have purchased the following the last month

% who claim to have purchased the following the last month

Source: IGD ShopperVista; base: all main British grocery shoppers, June’15

Shoppers are also switching between different tiers:

  • The number of shoppers who say they purchase standard private label ranges has increased marginally over the past four years
  • While the number claiming they have purchased premium private label products has decreased in the same period

We are now seeing that the majority of shoppers claim to trust private label ranges as much as well-known brands.

Trust in private label is being driven in part by a significant number (67%) of shoppers who view private label products similarly to brands; almost half of all shoppers say those products have the same status as well known manufacturer brands (47%).

Most shoppers (62%) believe the values and benefits of well-known brands mean less today than a few years ago and will mean even less in the future (44%). This is highest among shoppers aged 25-44.

Source: IGD ShopperVista; base: all main British grocery shoppers, March’15

Food discounter ranges helping drive footfall

Footfall in food discounters is being driven, to some extent, by exclusive products, as a quarter of food discount shoppers now say they visit for that reason.

Most of the food discount shoppers that we surveyed tell us that they are satisfied with the quality of discounter products - even higher amongst those who conduct their main shop in the channel (90%).

Shoppers are noticing improvements to the quality and four in five agree that it has improved in recent years. Furthermore, two in five food discount shoppers agree that discounter products tend to be made by the same companies as well known brands.

Quality perceptions of food discounter brands

As shoppers become more familiar with food discounter private label products, the majority equate the quality of their private label products to be similar to standard supermarket private label, or better than the equivalent ranges in supermarkets.

% quality perceptions of discounter private label amongst food discount shoppers

Quality perceptions of food discounter brands

Source: IGD ShopperVista Channel Focus food discount April-June 2015 (Base: food discount shoppers)

Unsurprisingly, current marketing campaigns focus on promoting the similarity between well-known brands and their own private label products by encouraging shoppers to ‘swap’ and by claiming the quality is comparable.

AldiLidl

Source: Retailer websites

With the quality perception of private label products at food discounters being so positive, half of food discount shoppers claim to be ‘making the swap’.

Shoppers are most likely to have swapped in the fresh product category, followed by breakfast cereal (53%), biscuits/cakes (50%), household paper (51%) and crisps/snacks (49%). Skincare, petcare, baby products, spirits and chilled desserts are the least swapped categories.

Role of well-known brands in food discounters

Despite the popularity of private label products in food discounters, only a third are satisfied with the range of well-known brands available.

The recent ShopperVista Channel Focus report on ‘Triggers and barriers to conducting a main shop in food discounters’ showed that:

  • 43% of food discount shoppers would use them further if they stocked more well-known brands
  • 35% of food discounter shoppers do not conduct a main shop in those stores as they believe they don’t stock the brands required

This suggests that there is still a role for well-known brands in food discounters.

Implications

As more shoppers use food discounters and with the channel expected to double market share over the next five years, do you, as a manufacturer, have a dedicated strategy in place to maximise on the opportunities presented?

  • As shoppers increasingly accept private label brands, what is your strategy to encourage food discount shoppers to purchase yours? Is your marketing focusing on communicating brand values and not just price?
  • Are you targeting your products in line with how food discounter shoppers are changing their behaviour? What is your multi-channel strategy?
  • Could you differentiate your products to try to discourage your brands being swapped - through pack size, added value or convenience?
  • Does your product portfolio maximise the opportunity of the private label products shoppers are claiming to buy in food discounters?

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