Type to search

A battle in the aisles!


A battle in the aisles!


Many have said that the tightening of belts brought on by the recession will pass once the good times return, but this would depend on the lessons consumers have learnt being unlearnt. It also ignores past experience, when we’ve seen emerging trends in the consumer landscape accelerate and establish themselves during a crisis more often than come and go. In the supermarket, shoppers have learnt that cheaper can be just as good, with private label products reaching a record share (over 20%) of the market in Australia. While there may be some relaxation of the purse strings when things improve, the trend towards private label is a new purchasing mentality that is here to stay.

Research we conducted in July found that, having been given permission to reassess what constitutes value, shoppers are more likely to select the less expensive option – be it branded or private label – unless convinced that a dearer product is tangibly or emotionally better. Even historically resistant categories are under threat. For instance, Huggies nappies were once bullet proof against private label due to the high level of involvement and trust linked to the category, but Aldi has shaken the market up with its cheaper offer gaining advocacy amongst the most viral of groups – mothers. Across all categories, we’re seeing consumers trading down from branded offers, with the popularity of private label products growing amongst adult households, young singles and young couples. And they’re doing so for a variety of reasons – some out of preference for private label and others despite an aversion to it.

The most common reasons pro-private label shoppers buy these products are to save money to spend on the family, the belief that brands are all hype and not of superior quality, and to display thrift by being smart selectors. But surprisingly, many (up to 40%) who buy private label do so despite being concerned over the perceived lower quality of the products and packaging, its inferior status image and lack of innovation. Regardless of their negative opinions, these shoppers are slipping private label products into their trolleys highlighting that purchasing behaviour does not always reflect loyalty. In this case, it is more an indication that branded manufacturers have few true ‘brand believers’. As a result, branded products face a challenge – offer something that private label cannot or face losing market share.

Branded products need to invest in one of two key areas to provide reasons for consumers to buy their products – brand or innovation. With all categories under threat, a brand must be compelling in order to outstrip competitors that are essentially the same. The world’s top brand, Coca-Cola, has reaped the rewards of investing in brand – other colas come close on taste but lag behind on image. Colgate is also a good example, able to hold off competitors in a category where differentiation is difficult by using a strong brand.

Innovation is the area where products resisting the challenge are doing it most effectively, having found a USP to differentiate themselves from competitors. Vegemite is an example of a product that is relatively private label proof due to a unique recipe that is yet to be replicated. Despite this, Vegemite has shown it will not rest on its laurels with the launch of a new product for the first time in decades. We can learn from Apple also, in that if you offer something people want, they will pay for it even in a downturn – they can’t make the new iPhones fast enough!

Armed with an increasingly sophisticated offer, private label is whittling away the strongholds of brands in the supermarket. Elements such as indulgence, where brands have held off private label in the past, are opening up as private label evolves, moving into tiered offerings and improving perceptions of its quality. The new purchasing mentality that has emerged is driven by trends accelerated by the downturn, such as thrift and simplicity, and is undoubtedly here to stay. A battle between private label and brands is brewing in all categories and no one can afford to be complacent.


You Might also Like

Leave a Comment