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C'est si Bon

March 29, 2012
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Consumers across Europe are shopping smarter when it comes to the products they buy. And retailers are responding with expanding private label programs that go beyond price to include innovative new products and greater value.


Private label continues to gain market share across Europe as it grows in popularity with European shoppers

Consumers across Europe are shopping smarter when it comes to the products they buy. And retailers are responding with expanding private label programs that go beyond price to include innovative new products and greater value.
“In addition to offering private label products that are tasty, indulgent and good, retailers cater to consumers need for added value characteristics by offering products that are more ethical, of higher quality and at a lower price point,” says Lee Linthicum, head of global food research, with Mintel International, Ltd. “Were private label in Europe to compete only in terms of price, as it does in the U.S. by contrast, it probably wouldn’t do as well.”
DOUBLE DIGIT GROWTH 
Private label penetration rates are in the double digits across Europe. The highest penetration rates are in Switzerland, 46 percent; the U.K., 43 percent; Germany, 32 percent; Spain, 31 percent; and Austria and France, both at 28 percent.
In addition, private label gained market share in 18 countries across Europe, according to the 2011 PLMA International Private Label Yearbook.
In the U.K., private label accounts for nearly half of all products sold, according to the yearbook (for more on U.K. private label sales, see page 28). Private label climbed in 12 of the 14 store departments in Germany, with dry grocery, paper and pet departments posting the biggest increases. Market share for private label gained in eight of the 12 store departments in France. As competition heats up between discounters and supermarkets in Switzerland, private label share stayed at about 50 percent.
“We’ve seen a mixed performance in different markets over the past months and years, with penetration of private label on the rise in many markets, but also stagnation in some major private label markets,” says Matthias Queck, research director for London-based retail consulting firm Planet Retail. “In other markets, where private label products are still in their infancy, private label has seen record growth rates simply thanks to retailers extending their ranges.”
THE PL LANDSCAPE
France’s Carrefour has announced plans to increase its private label market share from its current 25 percent to 40 percent with the help of consumer marketing programs and new product rollouts. In addition to a packaging redesign, the retailer planned to add more than 1,500 new products by the end of 2011, according to a Planet Retail report.
In order to compete with rivals and boost profitability, several U.K. food retailers revamped their private labels as well.
Morrisons recently began a relaunch of its entire private label offering.
Sainsbury's also has been updating and adding new products to its 6,000 mid-tier by Sainsbury's range.
Waitrose has invested heavily in its private labels by adding 3,500 new SKUs this year.


Private Label in Africa

Private labels are seeing substantial growth in the South African market as shoppers seek more value, according to an extensive syndicated qualitative and quantitative study done by TNS Research Surveys, a South African marketing and social insights firm.
While a large majority of people are open to buying private label, there are variations in interest depending on the category and also the demographics of the shopper, the study states. Most shoppers (65 percent) feel that private label brands have become more popular; 60 percent feel that private labels are becoming more attractive to buy – and 45 percent claim that they are buying more private label now than in the past.
While the main driver seems to be the recession, which has led to price becoming a stronger driver than usual, this is not the whole story. People feel that there have been quality and range improvement, as well as an improved look and feel. Retailers throughout Africa are starting to take note of these consumer sentiments and applying them to their private label programs.
South African retailer Pick ‘n Pay recently took steps to improve its fresh food offering in terms of range and redeveloped and repackaged its private label brands.
Another South African retailer, Woolworths, launched a range of private label basic products called Woolworths Essentials early last year to cater to consumers’ quest for quality at a low price.


Europe at-a-glance

MAJOR RETAILERS
Tesco
Sainsbury’s
Carrefour
Waitrose
Morrisons
Asda
Rewe
Edeka
 
PL PENETRATION RATES
Average roughly 35 percent
 
WHAT’S AHEAD?
Further expansion
More innovation

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