Big name brands under pressure from private labels on quality, not just cost
3 March 2011 | by The Retail Bulletin
Spend on private labels in the UK is set to increase between 2009 and 2014 on food, non-alcoholic drinks , alcoholic drinks and household care products.The big brands on supermarket shelves are under increasing pressure, as British consumers will choose own-brand consumer packaged goods even when finances are not so tight, finds Datamonitor.
In fact, more than two thirds believe that own-brand foods are as good as , if not better than, leading famous brands: 50% think they are identical in quality and 19% go so far as to say that they are superior.
Research* by the independent market analyst has revealed that we are so impressed with the store brands (also known as private labels) offered by supermarkets that nearly half of us (46%) are choosing where to shop based on where we can buy our favorite own-brand products.
Sales of private labels notably increased as a result of the recession, when consumers were looking for ways to reduce their spend on groceries. However, many have since found the products to be very credible alternatives, and as a result have continued this buying behavior despite the ongoing economic recovery.
Mark Whalley, an analyst at Datamonitor, said, “Private label is no longer about offering consumers the cheapest product; instead it is about offering value. Consumers won’t just buy the lowest-priced item on the shelf – they’re looking for products that deliver on their promises and exceed expectations; and this is something that private labels have been very successful in doing.”
Datamonitor believes that with high levels of satisfaction regarding private labels, national brands face a significant challenge to try to win customers back, even as the economy improves over the next five years.
Mr. Whalley continued: “Although famous-name brands still dominate the market in consumer packaged goods, they need to consider private labels as serious competition both now and in the future. Consumer perceptions are evolving and no longer is there an overwhelmingly 'snobbish' mentality towards supermarket brands. With the amount consumers spend on private labels set to increase, competition is expected to rise at an unprecedented rate as brands work hard to differentiate their products from private labels.”
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