The report, which outlines where the private label market is today and how it is likely to evolve over the next year, highlights the rising price of retailers’ own brands as they reduce promotions and increase their focus on quality, with many relaunching premium ranges.
The price gap between national brands and private label products has narrowed in every country except Germany. A reduction in promotions by retailers has increased the product price of private label, while national brands maintain promotional levels as they fight for share in a highly competitive market. The increased price of private label netted retailers an extra €0.5bn (a 0.4% increase).
The price gap is closing fastest in non-food products as shoppers become less brand-sensitive in many of these categories, including household.
“With its three-tier approach, private label continues to play a vital role for retailers as shopper confidence remains fragile,” said Tim Eales, director of strategic insight at IRI. “Shoppers want quality as well as value, and so as the perceived quality increases, with more premium ranges being launched, they are more confident to buy private label and pay more for it.
“As private label gains ground in the quality and price debate, this creates even more pressure for national brands that must work harder than ever to tell a compelling and shopper-focused story. Sharing category level insight and engaging in localised assortment optimisation will maximise sales for entire ranges.”
IRI advises retailers and manufacturers to collaborate, using predictive analysis tools to find the optimum assortment and price mix for individual products and categories that will benefit everyone, including shoppers.
“In many countries, private label already marginally under-performs its share of assortment vs its share of value sales,” said Eales. “In Germany for example, it contributes 34% of value sales from a 27% share of assortment.”
IRI is a Fast Moving Consumer Goods (FMCG) market and shopper intelligence firm.
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