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Private Label Share Rises In Europe

October 17, 2012
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The continuing recession in Europe has helped push dollar share and unit share in private label up in the past year, a new report from Chicago-based SymphonyIRI Group says.

Private label’s dollar share rose 0.5 percent across the continent to 35.6 percent, according to the report, titledPrivate Label in Europe 2012.

Unit share also rose 0.5 percent in the past year and now is at 45.1 percent.

“The increase in shares of both volume and value obviously is due to the need to find cheaper alternatives in many countries,” Planet Retail Analyst Matthias Queck said.

Dollar share peaks at 50.5 percent in the United Kingdom, while it is as it lowest measure in Italy at 16.8 percent.

“In other markets, such as Germany or the Netherlands, where the (economic) crisis may not be the priority or the first reason to buy more private label, even in these countries, everyone knows about the ongoing discussion of the euro and such,” Queck said. “So even if they’re not directly affected in these countries, consumer confidence is.”

The report says private label products cost an average of 30 percent less than national brands, with the price gap the widest in Greece, France and Germany.

Queck said that comparing the price gap across countries was difficult, with countries such as Austria or Germany starting on a hard discount, lower end of private label, while others such as the U.K. are dealing with more expensive items.

“In Germany private label is very much defined by discount stores, but in the UK, the private label market is very much influenced by convenience foods, lunches and so on,” he said. “So you see the price difference in the UK widening slightly, I think that’s pressure on the consumers to save in the UK also increasing, and retailers are responding by increasing the gap between national brands and private labels.”

 The SymphonyIRI reports says that the recession has caused retailers to cut back on product development budgets and promotional support for their private label products. Meanwhile, Queck said that consumer product goods manufacturers have been increasing their promotional support each year for the past decade.

“It’s increasing pressure from the promotional activity of national brands to fight the growing private label threat,” he said. “Naturally, with private label, you don’t find that often in price promotions, especially not at very competitive price levels.”

Retailers have not increased their promotional spending, he said, likely because they are trying to secure their current profit margins on private label items given the price discount necessary to attract value-conscious consumers.

The report says that SymphonyIRI in the Netherlands has an innovation monitor in place the past 12 years, and it finds innovation among national brands at its lowest point over that period. It also discusses the trend toward smaller stores, something Queck said would continue in difficult economic times.

“That trend toward smaller stores is obvious to us, and the private label share increases because of limited space,” he said. “Hypermarkets continue to struggle here, even moreso in economic hard times like you see in France and also Greece and Spain. Where the price-aggress retailers are, they are thriving, and these have strong private label offerings.”

Included in that group, he said, are retailers such as Aldi, Mercadona, Lidl and Dia.

“This is obviously helping push private label sales in Europe,” he said.

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