Store Brands: Insights on Private Label Brands

From cheap versions of products that were perceived to be poor quality and embarrassing to be seen with, to award winning products with serious creds, private label brands have come a long way in the past 5-10 years. But just how far have they come in the hearts and minds of the Australian shopper?
Field Agent asked 500 shoppers how their attitudes to private label brands have changed over the past 5-10 years. A resounding 51% said that they liked private label brands more than they used to, with a further 31% reporting that they have always liked them.
So where and when does that translate to shoppers picking up a private label over a brand name and vice versa? Let’s delve deeper into the current state of play from the mouths of everyday Australians and find out what the opportunities are for brands.

Private label is making serious inroads in the shopping trolley
We asked shoppers to estimate how much of their average grocery shop consisted of private label brands, and over a third estimated up to 25%, with another third estimating between 26% and 50% to be private label brands.
Whilst this may sound disheartening for brands, the ‘glass is half full’ way to read this, is that there’s still more than half a trolley to nab in almost 70% of trolleys and baskets!
Interestingly, almost 4 in 5 shoppers (86%) stated that they would continue to purchase the same amount of private label brands even if their household income increased.


What’s driving private label purchases?
Shoppers want their hard-earned dollars to go as far as possible with the savings offered by private label brands, without compromising on quality, most important.
Out of stocks can be disastrous for brands, who risk a shopper picking up a private label instead and deciding that the quality is comparable or at least justifies the savings, potentially losing a customer for life.

From zero to hero
Only 28% of shoppers still consider private label products to generally be inferior to branded products. A whopping 72% of shoppers now consider private label products to be of comparable quality or even better than their branded counterparts.
Certainly the quality and design of packaging has improved, and the expansion into premium brand extensions goes a long way to improve quality perceptions of private label products overall. Just take a look at the example below. A humble tin of peeled tomatoes, presented differently by lower tier private label (Franklins, Black & Gold, Coles Smart Buy, Woolworths Essentials), a more upmarket version of a private label (ALDI’s Remano, Coles, Woolworths Select), and finally, known FMCG brands (Ardmona, Val Verde).
Isn’t marketing a magnificent beast? ALDI’s positioning of their brands as ‘ALDI exclusives’ even has some shoppers believing that they are not actually buying private label products.
Woolworths is capitalising on this trend in a number of key value categories where shoppers traditionally shirk private label. Since July 2016, Woolworths shoppers with keen eyes will have noticed some brands, like the Balnea range of bodycare products, are “Specifically developed and produced for Woolworths”.
It can’t all be marketing, though. Recently a $6.99 bottle of Shiraz from ALDI made headlines after winning a double gold medal at the 2017 Melbourne International Wine Competition, and a Woolworths Half Leg of Ham took out the title of Best Nationally available Ham at the 2017 PorkMark Awards.

Winning categories for private label products

Grocery staples top the list of products that shoppers are most likely to reach for a private label. Dollar a litre milk has not been without controversy but it appears that the movement for supporting Farmers through boycotting private label milks has been short-lived.

So where do branded products win?
Australian shoppers are reluctant to compromise on little luxuries like cosmetics, hair care and their morning cuppa. A special mention goes to the pet products category in 6th position with 42% never or rarely purchasing private label for their fur-babies versus 32% for their human babies – talk about pampered pets!

Shoppers are happy to trade-up to a brand name if the price variation is deemed to be insignificant, or if the product delivers on superior quality and wider ranges.

With the improved perception of private label brands being synonymous with quality and better value, now more than ever it’s important for brands to understand and listen to their shoppers and know what drives their decision making. Eroding margins and endless promotional cycles are not sustainable. What gives your brand the edge on private label products in your category? Is your planned innovation likely to hit the mark? Find out with Field Agent.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s