AMS Sourcing, arguably the most far-reaching of the ‘big five’ supermarket sourcing alliances, counts among its members some of Europe’s top retailers, including Albert Heijn, Delhaize, Système U and Migros. Stephen Wynne-Jones chats to the company’s managing director, Bert Swartsenburg, about the challenge of maintaining such a comprehensive buying network.
With a customer base of over 80 million shoppers per week across 20 European countries, and a combined member sales value of over €100 billion, AMS Sourcing is one of the largest strategic buying alliances operating in Europe. As one of the ‘big five’ European buying groups (alongside Alidis, BIGS, Coopernic and EMD), AMS is the parent company of the popular Euro Shopper discount brand, and sources both Europe-wide and country-specific private label products for approximately 10,000 stores in Europe. As managing director and former Ahold vice-president European sourcing Bert Swartsenburg explains, there’s never been a better time to be a major player in the private label business.
“The recession certainly worked in our favour,” he explains. “Customers are looking more and more for value for money products. Private label is increasingly being seen as an opportunity to boost their brand, and as well as using our Euro Shopper brand, most of our members now offer up to three tiers of private label, from premium national brand equivalents to the economy range. In some cases, such as Albert Heijn and Migros, we’re seeing as much, if not more innovation than with some A-brand suppliers.”
AMS was created in Switzerland in 1987 to “create synergy in commodity buying” for Europe’s top supermarket groups. A relocation to a new headquarters at Schiphol, Amsterdam, followed in 2006, and since then, the group has grown significantly; there are now eleven shareholder partners, Ahold, Dansk Supermarked, ICA, Jeronimo Martins, Kesko, Migros, Morrisons, Superquinn, Esselunga, Delhaize and Système U, with the latter three joining the group just last year. In addition, Booker, Elomas, and Hagar are Euro Shopper distributors. According to Swartsenburg, AMS is traditionally strong in the “dry grocery” segment, but has recently invested heavily in its fresh offering, which “requires close co-operation, very skilled people and a constant focus on product development.” As well as Euro Shopper, which recently underwent a brand overhaul, AMS buys multiple-tiered products for its partners, who are responsible for the logistical operations in their respective countries.
“We mainly buy across three tiers for our partners,” says Swartsenburg. “Economy products represent only a small part of the total – around 10 per cent of our business is focussed on the sourcing of the Euro Shopper range, and the remainder is spent on other private label ranges. The decision in what areas to introduce new products is taken by our partners themselves. Each of the partners is responsible for their own operations, whether that be private label development, logistics, these sort of issues. All individual retailers develop their own private label and marketing strategy, including the entry-level price.” AMS has recently also started an A-brand initiative for its members, and is in regular contact with top brand manufacturers to discuss enhanced cooperation on a European scale.
With shareholders hailing from ten different European countries, it’s unsurprising to learn that communication plays a vital role in the group, with regular meetings between partners and visits to different markets to allow members to understand the different business environments. It’s all about sharing knowledge, and communicating experience.
“All the partners meet on a quarterly basis in the AMS advisory board meeting,” says Swartsenburg. “From a logistical point of view, our location beside the airport here in the Netherlands is ideal, and in most cases we have one-day meetings and our partners fly in and fly out the same day. A lot of our partners do speak English so it’s not that much of a problem to communicate with each other. That said, of course, the cultures are different, and while we are first and foremost a sourcing organisation, discussion is also very important, so our partners should be fully aware of the challenges of the different markets. It’s a very attractive part of our job – we talk to people right across Europe, and it makes it a very exciting organisation to work for.”
Supply and Demand
With a large, pan-European supplier portfolio, AMS relies on a database of market and supplier intelligence, which allows the group to create an efficient, transparent sourcing process across all product categories, and the ability to align product specs and packaging as much as possible without ignoring local consumers preferences. “It’s crucial to have a very accommodating structure in place,” Swartsenburg explains. “We have a very fixed six-step sourcing process. Ideally, at the start of a project, we will have a buyers meeting, where our partners come to our office and we discuss which items are to be sourced, which suppliers to invite, where and how can we harmonise specifications and packaging. We then invite suppliers to quote, we start into negotiations with these suppliers, and then we reach step number six, the signing off of the contract.”
As food is the core assortment of all our partners, AMS sources most of its products in Europe, although the company is currently expanding its joint sourcing efforts in Asia. Around 90 per cent of the food in the company’s Food & Beverages and Fresh & Frozen segment originates in Europe.
As new members come into the fold, as Delhaize, Essenlunga and Système U did last year, so the sourcing reach of the group expands, with each bringing their own suppliers and ideas to the table. “It’s a very structured process,” Swartsenburg explains. “With new members, we start building a few cases, and they participate in a few projects to build their own experiences, not only when it comes to buying conditions, but also in terms of the whole way of working. If that’s successful, then they speed up and accelerate in their participation. In the case of the three newest members, the first experiences have been very successful. We now source almost everything by now for Delhaize, at Système U we source most of the Bien Vu economy range, and have increased participation in other private label ranges. Each partner’s interests are a little bit different.”
The Euro Shopper range, however, is available to all members, however some members choose to opt out of the programme, to focus on their own key private label tiers. While commodity items make up the bulk of the Euro Shopper range – “we are mainly focusing on products with a proven track record,” explains Swartsenburg, “each member has the freedom to source local Euro Shopper products for their home market, and suggest products that could work for other partners. In total, the Euro Shopper range consists of more than 1,000 items, but only 450 of those are available to all 16 markets. “If you take a very Dutch product, like chocolate hail, nobody else will stock it in Europe,” says Swartsenburg. “It’s very much a case of Albert Heijn sourcing it themselves for their home market. They can use the Euro Shopper branding, but it’s a locally sourced product.
“Of course, in our buyers meetings, we share a lot of knowledge, and we all bring in a lot of the experiences from our home markets, which means products that are sold in one market could be sold in other markets in the future.”
United We Stand
It’s testament to the sense of community at AMS that none of its members have hit a financial dead end, even when faced with some of the most challenging market conditions the European economy has seen in decades. Swartsenburg points to the example of Hagar hf, the largest retailer in Iceland, and a member of AMS, as an example of a retailer that is continuing to make strides, despite the country’s near collapse last year.
“We have been in partnership with Hagar since 2005,” he explains, “and from the beginning, there have been no issues affecting this relationship. Even though Iceland has been hit hard with the collapse of the banking system, AMS has not been affected at all by the situation; on the contrary, in fact. Sales were up 18 per cent for the Euro Shopper brand in 2009 compared to 2008, and despite the recession and collapse of the banking system, Hagar have fulfilled all their obligations towards their suppliers and are up to date with all payments to vendors.”
With the addition of three retailers last year, and the continued growth of private label, you would expect AMS to be actively seeking further additions to what is already proving itself to be a very strong partnership. On the other hand, it could be argued, a sudden influx of new members could disrupt the flow of the group. Swartsenburg is adopting a measured approach.
“Being interviewed for this position with AMS [he took on the role of managing director last year], I think I was the only candidate that did not talk about proactively hunting for new partners. If you take into account at the end of 2008 we welcomed Esselunga, System U and Delhaize – very big partners, that really added value to the existing partners. If you go back another year, to 2007, Migros joined AMS, so all of a sudden we grew incredibly fast.
“I really think there’s still a lot of potential among our existing 11 partners. I think that if we are able to increase the participation level of all our partners in AMS, there’s a lot more that we can achieve. That said, if we do meet a potential interested partner – a Spanish or German partner is high on our list – we would act of course. But partner expansion is not the first priority. We have a lot of requests from retailers from across Europe, and we will talk to everyone, but it’s important that any new partner adds value to the existing partners in the group.”
Innovation, on the part of both retailers and suppliers, is crucial to the future development of the group, and Swartsenburg hails the development of new sub-tiers (such as the ‘Pure and Honest’ range in Albert Heijn) as an indication of how retailers are constantly evolving their private label ranges. “In recession times, I think it’s important to stay innovative, and many suppliers slow down when it comes to innovation. I think even in times of recession, you should not only take on the competition in terms of pricing or positioning, but also distinguish yourself from your competition and stay active in terms of innovation.
“In the case of Albert Heijn, it’s a retailer with a long-lasting history of private label brands; since the company was founded, they have had private labels. Customers grew more and more confused by the claims being made on packaging in terms of things like sustainability, or ethical sourcing. Albert Heijn created an umbrella brand for all these labels, and called it Pure and Honest. Other retailers are at different stages in their private label development, of course, and I’m very impressed by the premium range of Migros – the packaging is brilliant and the product itself is a very high quality product that would have no problem competing with any A-brand.”
The continued growth of private label is something that AMS have been predicting for some time; back in 2005, the company’s former managing director, Arjan Both, predicted that “private label turnover [would] be doubled as a result of market share growth as well as entry into new categories.” Five years on, private label development has far exceeded that prediction, and has gone on to penetrate almost every sub-category of the supermarket industry. Swartsenburg believes that while private label has developed to a stage where it is finally able to tackle major brands head on in terms of quality and range, it wouldn’t be wise to start writing off the big brands. “I think there will always be room for private label, and there are retailers that have developed such a strong private label position over time that it will never disappear. But every label has to prove itself on the shelf. It’s important that retailers stay innovative in terms of their private labels, as you can be certain that A-brands will continue to innovate and develop concepts further.
“Our partners need to be very careful in terms of how they balance our private label assortment and A-brand assortment, and I think they are doing that. After all, at the end of the day, it’s the consumer that makes the choice.”
Showing posts with label Private Label News. Show all posts
Showing posts with label Private Label News. Show all posts
Monday, June 14, 2010
Wednesday, June 9, 2010
Private Label News
MMM, Selection, Gourmet, Exclusive, Select, Quality, Fine, Luxury, Exclusive… supermarket shelves are filling up with new and improved premium private label products. Ben Webb feasts his eyes on the brand new menus coming to a supermarket near you…
When a major supermarket chain launches an economy private label range the grocery industry shrugs its shoulders and asks one question: what’s the price? The consumer, who expects a lot of simple white packaging – Waitrose essentials, is a fine example – asks exactly the same question and waits for a heart-warming affect on the weekly budget.
But when the industry hears about a new premium private label range, it gets very curious. There are so many questions to ask: How good is it? Is the packaging revolutionary? Will it extend their brand? Is it good enough to beat the national brands? Is it good enough to suck in new customers and grow market share? Is it, supermarket executives ask nervously, better than ours?
The consumer also starts to ask a host of more sophisticated questions. Just how good is it? Is it good enough to replace a restaurant meal and save the bill? Is it sufficiently superior to the discount and standard private label brands to merit the higher price? Will it save me time cooking and still satisfy the family? Is it good enough – if I disguise it – for a dinner party?
It is a very interesting time in the European supermarket private label premiumship. As the worst of the recession becomes an unwelcome part of our shared history, there are signs the consumer is opening their purses a little wider and trading up to higher quality options. And supermarket chains are very keen to boost their sales of premium private labels.
Trading up, of course, means higher margins. Tesco's chief executive Terry Leahy, basking in the glow of his Christmas takings, revealed a quarter of all festive season shopping baskets contained a ‘Finest’ Product’. "We've delivered a very strong performance over the Christmas and New Year period," he declared.
Edward Garner of TNS Worldpanel confirmed such green shoots were not just a figment of Leahy's imagination. Other retailers were prospering, with many showing good sales of premium private labels, suggesting an end to recessionary buying behaviour. “We are now seeing a growth in Premium ranges,” he said.
Tried and tested labels like Tesco’s finest and Sainsbury’s Taste the Difference have been around a while, but there is new momentum building towards the development of enhanced private label offerings. Across
Europe, new or improved products are hitting the shelves. Auchon’s ‘MMM’ and Migros’ ‘Selection’ are wowing critics. Launched last autumn, Rewe’s ‘Feine Welt’ looks fabulous on the shelf. Ahold’s ‘Excellent’ is excelling as part of the company’s well-hone private label hierarchy. The new ‘real, - SELECTION, is another new premium range turning heads.
A glance at the names alone reveals the battle for the discerning consumer is on. Fine(st) is the choice of the marketing men at Tesco, Coles in Australia, and Co-op in Switzerland. Select(ion) is the vital word chosen by the gurus at Migros, Carrefour, Real and both Safeway and Kroger in the US.
As Joanne Denney-Finch, Chief Executive, IGD said: “In such a vibrant marketplace, in which new shopper loyalties are emerging, retailers and food manufacturers are responding very rapidly to the challenges presented by the recession. They are each vying to excel at delivering value – and the most effective are reaping the rewards.”
It could be a truly fascinating decade of innovation as supermarket chains go head-to-head in a brazen beauty parade as they battle to produce ever more sophisticated premium private label products. IGD’s research conducted with shoppers in France, Germany, Spain & UK gives an insight into what is happening. Investment in the quality and variety of supermarket own-label is paying off as almost a third (31%) of shoppers in these markets are buying more own-label.
Big questions spring to mind. What will be the price strategy for premium private labels compared to the brand leaders? Is it possible that we will soon be talking about the rise of super-premium private labels? What will happen to the variety of brands in the market? The balance of power between the big brands and private label that has stood for many years has shifted, it seems, and is set to shift further still.
Premium private label and the crunch
In the glorious years BC – Before the Crunch – premium private label was going steady, especially in the UK where Sainsbury’s Taste the Difference and Tesco’s Finest had both established their place as firm family favourites. However, when it came to quality and innovation, new packaging ideas and great design, the brands remained superior.
At the opposite end of the market, the economy private labels were pottering along quite happily. In the years AD – After the Depression – however, the focus was on discounting and these economy range private labels started to flourish. More than 30 Million people are now opting for supermarket own labels in an attempt to save money, according to a new report by www.uswitch.com.
Edeka’s CEO Markus Mosa reported sales increases of 30 to 40 percent for its economy private label products and warned brand manufactures they have to lower their prices if they want to stay competitive. Some 73 per cent of consumers are buying own brands compared with 25 percent last year. A further 74 percent of consumers use coupons, compared with only 26 percent last year.
Price is clearly now vital, but as the first shock waves from the crunch start to subside, it seems as though value and not just price is becoming part of the equation. In other words, consumers will pay more as long as they know they are getting a good deal. Such consumer behaviour is perfect for supermarket chains with a superb premium label proposition.
A Verdict Research report on major retailers’ private label relaunches during the economic downturn revealed that although the rapid growth seen by private label is coming to and end, branded FMCG are set for a rough path ahead. Consumers’ loyalty shift from branded to private label lines is permanent and the new battle for market share will be contested between retailers and within existing range architectures. Across the EU, private label will emerge as one of the winners.
Here is an interesting question: as grocers plan their new premium private label offerings, will they be ambitious enough to take on the brands and try to surpass them?
Why premium private label?
The desire to expand premium private label in the present economic climate is entirely logical. Grocers love to hook customers with value and then get them to trade up. What’s the margin on a €0.45 tin of economy private label plum tomatoes? What’s the margin on €1.00 of premium private label finest?
Having said that, there is clearly a benefit to attracting spend on private label at all price points – supermarkets want a balance of sales at discount, standard and premium. The mantra at Sainsburys is “good, better, best” when it comes to its own brands. It’s not hard to imagine Justin King striding the aisles of his kingdom for chinks in his private label armour. If it’s there, he’ll want to fill it.
In the recession, supermarkets lured in new customers of own label by relaunching their products and often cutting prices or offering promotions. “In September 2008, we relaunched our standard own-brand range, which accounts for over 40 per cent of sales, with our ‘Switch and Save’ campaign,” King says. “This offered savings of at least 20 per cent when selecting Sainsbury’s equivalent product over the leading brand.”
The quality of the ‘good’ product is very important. If it is good enough, then the shopper who has switched from the brands may stick with it. The supermarket can start to build trust in the private label proposition. The next stage in the process is to encourage the customer to trade up to the ‘better’ and the ‘best’ products. It’s no secret.
“Customers have increasingly looked to own-brand products during the year to help them save money and they have unrivalled trust in Sainsbury’s own-brand products,” Justin King told the rapt audience at the Sainsbury’s AGM.
“’Taste the difference’ remains an important part of the product offer. In the current economic environment the range allows ‘savvy shoppers’ to make conscious decisions about the quality they want for different ingredients and meal occasions. In particular, ‘Taste the difference’ ready meals are fulfilling a trend towards customers treating themselves at home rather than eating out or buying more expensive takeaways to eat at home.”
Suddenly, premium private label goods are not just about taking the fight to the big brands with their huge development budgets and marketing resources, but our very lifestyles. Don’t pop down to the local restaurant. Treat yourself at home with a premium ready-meal. Private label strategies are so sophisticated they allow supermarkets to talk to their customers in an increasingly effective and strategic way.
Sainsbury’s ‘Feed your Family for a Fiver’ campaign used a mix of ‘Taste the difference’, standard and ‘basics’ products in meal ideas. “It helps customers manage tighter budgets as they make their own choices to substitute individual ingredients to get significantly below the £5 threshold or add more premium products if they wish,” King explained.
All the time, the level of trust – reliance, even – between supermarket and customer is being increased. Adding more premium products to the portfolio has enhanced opportunities for strategic advertising and marketing. A recent campaign for Tesco’s Finest Champagne in the build up to Valentine’s Day illustrates the idea. The quality bottle of bubbly was a snip at €24.99 [check] but, and here’s the interesting part, it was only available in certain stores. In other words, with all the vital demographic data and purchasing trends revealed by the Tesco Card, premium products do not have to be stocked universally. They only need to appear on the shelves in areas with consumers prosperous enough to make it worthwhile.
The premium label ranges
Rewe has launched a premium range called Rewe Feine Welt – or Fine World – to boost its private label penetration from 20% in its full-range grocery stores in Germany to 30%. It includes about 100 fresh and ambient products sourced from around the world and is priced around 15 per cent lower than branded goods of comparable quality. In complements the economy line ja!, the standard store brand REWE and the organics offer Rewe Bio. More products are inevitable. Martin Brüening, Rewe’s head of corporate communications, says: "’REWE Feine Welt’ was launched last year very successfully and will be expanded to about 115 products in 2010.”
Similarly, Real launched ‘real, - SELECTION’ in December 2008 with 50 different product lines – such as chocolate, potatoes, cold meat and vinegar – and plans to extend it to some 200. The most successful product is ‘Original Swiss Dark Chocolate’. “One important aspect of our strategy is the placement of ‘real,- SELECTION’ products beside comparable premium branded goods,” says Dirk Koenigsfeld, division manager own brand management.
“A premium brand like real,- SELECTION is not supposed to be a "mass-market" brand, but sales figures show real,- SELECTION is increasing in popularity. Therefore we expect a positive development for the future.”
Packaging, he adds, is vital. “A high-value packaging is essential for establishing a successful premium private label. The relation between design, packaging and product quality has to fulfil customer's expectations towards a premium brand.”
Migros Selection
Across the border in Switzerland, both the name and story are the same where the Migros Selection brand is doing well, with the desserts proving a stand-out performer. Monika Weibel says: “The packaging is very important - it must display its own uniqueness and indicate at first glance, the quality and value of a product. The Sélection range promises our customers (not only our core values of freshness, value for money, sustainability, and Swissness) interesting innovations and novelties,.
“Customers expect good value at Migros, a large and varied selection of products in different price ranges. Selection products that are the most expensive, we tend to run as a niche product. Despite the economic crisis the sale of these products has met our expectations. With the demand for these products generally down, the customer tends to choose them for special occasions especially on holidays.”
It is interesting to note that organic products are also standing up. Weibel adds: “Despite the recession, the organic label products are in high demand despite the fact that they are 30 to 40% more expensive than conventional products,” she says. “In our annual customer survey, we found that many customers want an enlargement of the choice of organic food - a demand we intend to meet.
Rise of premiums hits restaurants
The timing is also ideal as in the economic climate Rewe’s customers are looking to eat at home more – cutting expenditure, but not quality. “Recession seems to enforce a general tendancy towards cocooning,” Brüening explains. “Customers rather tend to stay at home than to go out. So it’s important for retailers to be able to offer a premium private label particularly in times of recession. Those premium private labels enforce the entire brand image of the retailer. People invite friends in order to cook together and to enjoy something special: REWE Feine Welt to soothe their souls.”
Bad news for restaurant owners has been a boon to purveryors of premium private label. Meike ter Braak, Albert Heijn’s brand and marketing manager for private label, says the AH Excellent brand, which is pitched above the standard Huismark brand, is faring well. “We have seen some general trading down in the current economic climate,” she says. “On the other hand, with fewer people eating out that means they may prefer to buy an “Excellent” product to re-create that ‘eating out’ feeling.”
Private label architecture
When Superquinn launched SQ, a range of Superior Quality food, it wanted to product food that was "unbeatable among supermarkets for taste and quality". After an initial investment of more than half a million euros, the first 100 lines appeared in neat and effective packaging. It was the first step in Superquinn's product development strategy to offer an extensive range of food products to meet every taste and budget.
Bruce Langlands, Head of Product Development at Superquinn, said: “Our aim was to develop a top range of products for all stores, without compromising on quality. We tasted over 400 different recipes and products before choosing the select 100 that we are launching. The SQ Collection represents a badge of quality for these products where we've gone that extra mile to ensure taste and provenance of the ingredients is unrivalled and we have worked very closely with our suppliers to develop recipes that consistently reach this high standard."
SQ is a success as Superquinn claimed 22 titles at the 2009 ‘Great Taste Awards,’ in
London, the Oscars of the food industry. It took home five 3 star gold awards, the highest level of prize any producer can aspire to. The SQ Ultimate Chocolate ice-cream produced in Fermoy, Co. Cork and SQ Blackcurrant Preserve which is produced by a family run business based in Offaly were very highly praised. .
The “good, better, best” hierarchy of private labels mentioned by Sainsbury’s Justin King is becoming the norm. "Selection", the gourmet line of Migros, is expanding all the time. Monika Weibel, from the Migros corporate communications department, says: “We have a clear brand strategy. Discount Products (M-Budget), product pricing in the mid-price range (M-Classic) and new products in an upmarket (Migros Premium: from mid-year) as well as products in the upper price range (Selection, the gourmet line).
The foreign brands make up only about 5% of the total inventory.”
Offering a private label at three price points also boosts loyalty. “Premium private labels strengthen customer loyalty,” Brüening says. “Many customers who appreciate "REWE Feine Welt" products are also interested in other private labels like REWE quality label or REWEbio. On the other hand, customers who are already convinced of REWE quality label and REWEbio also buy REWE Feine Welt products - because they already trust REWE's private labels.”
A striking and admired premium private label range can speak volumes for a brand. A glitzy advertising campaign showing off superb products enhances all aspects of a supermarket’s proposition. Consumers will find it more attractive which builds loyalty and trust. Brüening adds: “REWE Feine Welt" serves as differentiation and helps to create an emotional relationship between the customers and REWE's retail outlets as well as the REWE brand.
Battle with the Brands
Will the premium private labels ever surpass the brands. The answer, at present, is clear. Monika Weibel from Migros says: “When we speak of Selection - then no.
Brands also have a number of shopper trends in their favour. Almost half (49%) of French shoppers say that a major strength of brands is their reliable "taste and quality", compared to over a third (37%) of Spanish shoppers. Some 27% of shoppers in the UK particularly favour brands because they have “grown up” with them - the highest figure compared to its European counterparts and no surprise as strong heritage has become an important attribute for UK shoppers.
Will premium private label ever beat the main brands? Real’s Dirk Koenigsfeld says: It is not our intention to replace brand products with real,- SELECTION. But with real,- QUALITY as well as with real,- SELECTION we used the chance to replace ineffective B- or C-brands. Furthermore our own-brand products are used to distinctive from our competitors. They also have a positive advertising effect, when a lot of products with the company's logo are present in customer's fridge.
REWE’s Brüening says: “Private labels are self-contained brands which shape today's picture of REWE essentially. We are not able to predict if main brands will be beaten by premium private labels in the future. As a matter of fact, the unaided awareness of REWE's private brand "ja!" is at 68%.It is mentioned more often spontaneously than some other main brand. Nonetheless, the main brands will definitely not dissolve.”
Box – The Supplier’s tale
The rise of premium private label is an opportunity for existing suppliers to rethink their offerings and for a whole new raft of suppliers to expand their client base. Cranswick, for example, the premium pork product supplier, enjoyed a surge in third-quarter sales. The company supplies the meat to Britain's four biggest supermarkets, which use it for their own label lines. As the worst memories of the recession recede, consumers seem to have started trading up to the grocers' premium own-label lines, such as Sainsbury's Taste the Difference, which Cranswick supplies. Total sales at Cranswick soared by 31 per cent to £200m in the three months to 31 December. Sales were boosted by the acquisition of CCF Norfolk in June 2009 last year, but the company still boasted an underlying growth of 17 per cent. You know success is in the air when TV celebrity chef Jamie Oliver gets involved and he has signed a joint venture with Cranswick to supply him with all the meat for his own range of fresh pork joints, marinated ribs, bacon and Italian charcuterie.
When a major supermarket chain launches an economy private label range the grocery industry shrugs its shoulders and asks one question: what’s the price? The consumer, who expects a lot of simple white packaging – Waitrose essentials, is a fine example – asks exactly the same question and waits for a heart-warming affect on the weekly budget.
But when the industry hears about a new premium private label range, it gets very curious. There are so many questions to ask: How good is it? Is the packaging revolutionary? Will it extend their brand? Is it good enough to beat the national brands? Is it good enough to suck in new customers and grow market share? Is it, supermarket executives ask nervously, better than ours?
The consumer also starts to ask a host of more sophisticated questions. Just how good is it? Is it good enough to replace a restaurant meal and save the bill? Is it sufficiently superior to the discount and standard private label brands to merit the higher price? Will it save me time cooking and still satisfy the family? Is it good enough – if I disguise it – for a dinner party?
It is a very interesting time in the European supermarket private label premiumship. As the worst of the recession becomes an unwelcome part of our shared history, there are signs the consumer is opening their purses a little wider and trading up to higher quality options. And supermarket chains are very keen to boost their sales of premium private labels.
Trading up, of course, means higher margins. Tesco's chief executive Terry Leahy, basking in the glow of his Christmas takings, revealed a quarter of all festive season shopping baskets contained a ‘Finest’ Product’. "We've delivered a very strong performance over the Christmas and New Year period," he declared.
Edward Garner of TNS Worldpanel confirmed such green shoots were not just a figment of Leahy's imagination. Other retailers were prospering, with many showing good sales of premium private labels, suggesting an end to recessionary buying behaviour. “We are now seeing a growth in Premium ranges,” he said.
Tried and tested labels like Tesco’s finest and Sainsbury’s Taste the Difference have been around a while, but there is new momentum building towards the development of enhanced private label offerings. Across
Europe, new or improved products are hitting the shelves. Auchon’s ‘MMM’ and Migros’ ‘Selection’ are wowing critics. Launched last autumn, Rewe’s ‘Feine Welt’ looks fabulous on the shelf. Ahold’s ‘Excellent’ is excelling as part of the company’s well-hone private label hierarchy. The new ‘real, - SELECTION, is another new premium range turning heads.
A glance at the names alone reveals the battle for the discerning consumer is on. Fine(st) is the choice of the marketing men at Tesco, Coles in Australia, and Co-op in Switzerland. Select(ion) is the vital word chosen by the gurus at Migros, Carrefour, Real and both Safeway and Kroger in the US.
As Joanne Denney-Finch, Chief Executive, IGD said: “In such a vibrant marketplace, in which new shopper loyalties are emerging, retailers and food manufacturers are responding very rapidly to the challenges presented by the recession. They are each vying to excel at delivering value – and the most effective are reaping the rewards.”
It could be a truly fascinating decade of innovation as supermarket chains go head-to-head in a brazen beauty parade as they battle to produce ever more sophisticated premium private label products. IGD’s research conducted with shoppers in France, Germany, Spain & UK gives an insight into what is happening. Investment in the quality and variety of supermarket own-label is paying off as almost a third (31%) of shoppers in these markets are buying more own-label.
Big questions spring to mind. What will be the price strategy for premium private labels compared to the brand leaders? Is it possible that we will soon be talking about the rise of super-premium private labels? What will happen to the variety of brands in the market? The balance of power between the big brands and private label that has stood for many years has shifted, it seems, and is set to shift further still.
Premium private label and the crunch
In the glorious years BC – Before the Crunch – premium private label was going steady, especially in the UK where Sainsbury’s Taste the Difference and Tesco’s Finest had both established their place as firm family favourites. However, when it came to quality and innovation, new packaging ideas and great design, the brands remained superior.
At the opposite end of the market, the economy private labels were pottering along quite happily. In the years AD – After the Depression – however, the focus was on discounting and these economy range private labels started to flourish. More than 30 Million people are now opting for supermarket own labels in an attempt to save money, according to a new report by www.uswitch.com.
Edeka’s CEO Markus Mosa reported sales increases of 30 to 40 percent for its economy private label products and warned brand manufactures they have to lower their prices if they want to stay competitive. Some 73 per cent of consumers are buying own brands compared with 25 percent last year. A further 74 percent of consumers use coupons, compared with only 26 percent last year.
Price is clearly now vital, but as the first shock waves from the crunch start to subside, it seems as though value and not just price is becoming part of the equation. In other words, consumers will pay more as long as they know they are getting a good deal. Such consumer behaviour is perfect for supermarket chains with a superb premium label proposition.
A Verdict Research report on major retailers’ private label relaunches during the economic downturn revealed that although the rapid growth seen by private label is coming to and end, branded FMCG are set for a rough path ahead. Consumers’ loyalty shift from branded to private label lines is permanent and the new battle for market share will be contested between retailers and within existing range architectures. Across the EU, private label will emerge as one of the winners.
Here is an interesting question: as grocers plan their new premium private label offerings, will they be ambitious enough to take on the brands and try to surpass them?
Why premium private label?
The desire to expand premium private label in the present economic climate is entirely logical. Grocers love to hook customers with value and then get them to trade up. What’s the margin on a €0.45 tin of economy private label plum tomatoes? What’s the margin on €1.00 of premium private label finest?
Having said that, there is clearly a benefit to attracting spend on private label at all price points – supermarkets want a balance of sales at discount, standard and premium. The mantra at Sainsburys is “good, better, best” when it comes to its own brands. It’s not hard to imagine Justin King striding the aisles of his kingdom for chinks in his private label armour. If it’s there, he’ll want to fill it.
In the recession, supermarkets lured in new customers of own label by relaunching their products and often cutting prices or offering promotions. “In September 2008, we relaunched our standard own-brand range, which accounts for over 40 per cent of sales, with our ‘Switch and Save’ campaign,” King says. “This offered savings of at least 20 per cent when selecting Sainsbury’s equivalent product over the leading brand.”
The quality of the ‘good’ product is very important. If it is good enough, then the shopper who has switched from the brands may stick with it. The supermarket can start to build trust in the private label proposition. The next stage in the process is to encourage the customer to trade up to the ‘better’ and the ‘best’ products. It’s no secret.
“Customers have increasingly looked to own-brand products during the year to help them save money and they have unrivalled trust in Sainsbury’s own-brand products,” Justin King told the rapt audience at the Sainsbury’s AGM.
“’Taste the difference’ remains an important part of the product offer. In the current economic environment the range allows ‘savvy shoppers’ to make conscious decisions about the quality they want for different ingredients and meal occasions. In particular, ‘Taste the difference’ ready meals are fulfilling a trend towards customers treating themselves at home rather than eating out or buying more expensive takeaways to eat at home.”
Suddenly, premium private label goods are not just about taking the fight to the big brands with their huge development budgets and marketing resources, but our very lifestyles. Don’t pop down to the local restaurant. Treat yourself at home with a premium ready-meal. Private label strategies are so sophisticated they allow supermarkets to talk to their customers in an increasingly effective and strategic way.
Sainsbury’s ‘Feed your Family for a Fiver’ campaign used a mix of ‘Taste the difference’, standard and ‘basics’ products in meal ideas. “It helps customers manage tighter budgets as they make their own choices to substitute individual ingredients to get significantly below the £5 threshold or add more premium products if they wish,” King explained.
All the time, the level of trust – reliance, even – between supermarket and customer is being increased. Adding more premium products to the portfolio has enhanced opportunities for strategic advertising and marketing. A recent campaign for Tesco’s Finest Champagne in the build up to Valentine’s Day illustrates the idea. The quality bottle of bubbly was a snip at €24.99 [check] but, and here’s the interesting part, it was only available in certain stores. In other words, with all the vital demographic data and purchasing trends revealed by the Tesco Card, premium products do not have to be stocked universally. They only need to appear on the shelves in areas with consumers prosperous enough to make it worthwhile.
The premium label ranges
Rewe has launched a premium range called Rewe Feine Welt – or Fine World – to boost its private label penetration from 20% in its full-range grocery stores in Germany to 30%. It includes about 100 fresh and ambient products sourced from around the world and is priced around 15 per cent lower than branded goods of comparable quality. In complements the economy line ja!, the standard store brand REWE and the organics offer Rewe Bio. More products are inevitable. Martin Brüening, Rewe’s head of corporate communications, says: "’REWE Feine Welt’ was launched last year very successfully and will be expanded to about 115 products in 2010.”
Similarly, Real launched ‘real, - SELECTION’ in December 2008 with 50 different product lines – such as chocolate, potatoes, cold meat and vinegar – and plans to extend it to some 200. The most successful product is ‘Original Swiss Dark Chocolate’. “One important aspect of our strategy is the placement of ‘real,- SELECTION’ products beside comparable premium branded goods,” says Dirk Koenigsfeld, division manager own brand management.
“A premium brand like real,- SELECTION is not supposed to be a "mass-market" brand, but sales figures show real,- SELECTION is increasing in popularity. Therefore we expect a positive development for the future.”
Packaging, he adds, is vital. “A high-value packaging is essential for establishing a successful premium private label. The relation between design, packaging and product quality has to fulfil customer's expectations towards a premium brand.”
Migros Selection
Across the border in Switzerland, both the name and story are the same where the Migros Selection brand is doing well, with the desserts proving a stand-out performer. Monika Weibel says: “The packaging is very important - it must display its own uniqueness and indicate at first glance, the quality and value of a product. The Sélection range promises our customers (not only our core values of freshness, value for money, sustainability, and Swissness) interesting innovations and novelties,.
“Customers expect good value at Migros, a large and varied selection of products in different price ranges. Selection products that are the most expensive, we tend to run as a niche product. Despite the economic crisis the sale of these products has met our expectations. With the demand for these products generally down, the customer tends to choose them for special occasions especially on holidays.”
It is interesting to note that organic products are also standing up. Weibel adds: “Despite the recession, the organic label products are in high demand despite the fact that they are 30 to 40% more expensive than conventional products,” she says. “In our annual customer survey, we found that many customers want an enlargement of the choice of organic food - a demand we intend to meet.
Rise of premiums hits restaurants
The timing is also ideal as in the economic climate Rewe’s customers are looking to eat at home more – cutting expenditure, but not quality. “Recession seems to enforce a general tendancy towards cocooning,” Brüening explains. “Customers rather tend to stay at home than to go out. So it’s important for retailers to be able to offer a premium private label particularly in times of recession. Those premium private labels enforce the entire brand image of the retailer. People invite friends in order to cook together and to enjoy something special: REWE Feine Welt to soothe their souls.”
Bad news for restaurant owners has been a boon to purveryors of premium private label. Meike ter Braak, Albert Heijn’s brand and marketing manager for private label, says the AH Excellent brand, which is pitched above the standard Huismark brand, is faring well. “We have seen some general trading down in the current economic climate,” she says. “On the other hand, with fewer people eating out that means they may prefer to buy an “Excellent” product to re-create that ‘eating out’ feeling.”
Private label architecture
When Superquinn launched SQ, a range of Superior Quality food, it wanted to product food that was "unbeatable among supermarkets for taste and quality". After an initial investment of more than half a million euros, the first 100 lines appeared in neat and effective packaging. It was the first step in Superquinn's product development strategy to offer an extensive range of food products to meet every taste and budget.
Bruce Langlands, Head of Product Development at Superquinn, said: “Our aim was to develop a top range of products for all stores, without compromising on quality. We tasted over 400 different recipes and products before choosing the select 100 that we are launching. The SQ Collection represents a badge of quality for these products where we've gone that extra mile to ensure taste and provenance of the ingredients is unrivalled and we have worked very closely with our suppliers to develop recipes that consistently reach this high standard."
SQ is a success as Superquinn claimed 22 titles at the 2009 ‘Great Taste Awards,’ in
London, the Oscars of the food industry. It took home five 3 star gold awards, the highest level of prize any producer can aspire to. The SQ Ultimate Chocolate ice-cream produced in Fermoy, Co. Cork and SQ Blackcurrant Preserve which is produced by a family run business based in Offaly were very highly praised. .
The “good, better, best” hierarchy of private labels mentioned by Sainsbury’s Justin King is becoming the norm. "Selection", the gourmet line of Migros, is expanding all the time. Monika Weibel, from the Migros corporate communications department, says: “We have a clear brand strategy. Discount Products (M-Budget), product pricing in the mid-price range (M-Classic) and new products in an upmarket (Migros Premium: from mid-year) as well as products in the upper price range (Selection, the gourmet line).
The foreign brands make up only about 5% of the total inventory.”
Offering a private label at three price points also boosts loyalty. “Premium private labels strengthen customer loyalty,” Brüening says. “Many customers who appreciate "REWE Feine Welt" products are also interested in other private labels like REWE quality label or REWEbio. On the other hand, customers who are already convinced of REWE quality label and REWEbio also buy REWE Feine Welt products - because they already trust REWE's private labels.”
A striking and admired premium private label range can speak volumes for a brand. A glitzy advertising campaign showing off superb products enhances all aspects of a supermarket’s proposition. Consumers will find it more attractive which builds loyalty and trust. Brüening adds: “REWE Feine Welt" serves as differentiation and helps to create an emotional relationship between the customers and REWE's retail outlets as well as the REWE brand.
Battle with the Brands
Will the premium private labels ever surpass the brands. The answer, at present, is clear. Monika Weibel from Migros says: “When we speak of Selection - then no.
Brands also have a number of shopper trends in their favour. Almost half (49%) of French shoppers say that a major strength of brands is their reliable "taste and quality", compared to over a third (37%) of Spanish shoppers. Some 27% of shoppers in the UK particularly favour brands because they have “grown up” with them - the highest figure compared to its European counterparts and no surprise as strong heritage has become an important attribute for UK shoppers.
Will premium private label ever beat the main brands? Real’s Dirk Koenigsfeld says: It is not our intention to replace brand products with real,- SELECTION. But with real,- QUALITY as well as with real,- SELECTION we used the chance to replace ineffective B- or C-brands. Furthermore our own-brand products are used to distinctive from our competitors. They also have a positive advertising effect, when a lot of products with the company's logo are present in customer's fridge.
REWE’s Brüening says: “Private labels are self-contained brands which shape today's picture of REWE essentially. We are not able to predict if main brands will be beaten by premium private labels in the future. As a matter of fact, the unaided awareness of REWE's private brand "ja!" is at 68%.It is mentioned more often spontaneously than some other main brand. Nonetheless, the main brands will definitely not dissolve.”
Box – The Supplier’s tale
The rise of premium private label is an opportunity for existing suppliers to rethink their offerings and for a whole new raft of suppliers to expand their client base. Cranswick, for example, the premium pork product supplier, enjoyed a surge in third-quarter sales. The company supplies the meat to Britain's four biggest supermarkets, which use it for their own label lines. As the worst memories of the recession recede, consumers seem to have started trading up to the grocers' premium own-label lines, such as Sainsbury's Taste the Difference, which Cranswick supplies. Total sales at Cranswick soared by 31 per cent to £200m in the three months to 31 December. Sales were boosted by the acquisition of CCF Norfolk in June 2009 last year, but the company still boasted an underlying growth of 17 per cent. You know success is in the air when TV celebrity chef Jamie Oliver gets involved and he has signed a joint venture with Cranswick to supply him with all the meat for his own range of fresh pork joints, marinated ribs, bacon and Italian charcuterie.
Sunday, February 7, 2010
Trends in Private label
Euromonitor analyst Carrie Lennard noted some general trends in beauty, including a move to more budget and private label color cosmetics brands, a continued presence by minerals and naturals and strong performance within facial makeup, namely foundation and formulas with antiaging properties. With high-profile exits in 2009 — such as Max Factor withdrawing from the U.S. market — the decision by other players to enter the sector during such a difficult year remains questionable.
Premium fragrance vendors, such as the Estée Lauder Cos. Inc., are shifting toward smaller packs to keep prices down for money-strapped consumers. Celebrities will still fuel fragrance sales in 2010, said Lennard, and fragrance will also move even closer to masstige positioning and distribution.
Hair care “has been hit by the threat of private label, like in shampoo, which is more of a commodity,” Lennard noted, adding hair color has done well as consumers cut back on visits to the hairdresser. “Products such as Clairol Root Touch Up target those cutting back on the salon,” she said.
Department stores are taking a knock in sales as consumers move toward mass channels, such as supermarkets, drugstores and even discounters. “Even though we are seeing an improvement in the economy, people find it easy to trade down, but more difficult to trade back up,” Lennard said. This trend is being seen especially in the men’s category as “there has been a shift toward mass, even though men’s started in prestige. It has shifted down. Men’s skin care is also beginning to mimic women’s with tinted moisturizers.”
According to Euromonitor, a trend toward “cross-category ‘spread betting’ and increased brand diversity has emerged as a key strategy for many players in beauty and personal care as it is seen as being lower risk than putting all one’s eggs in one basket,” said a recent report by the data firm. “Even though the beauty industry is starting to show signs of recovery, 2010 should see more companies shifting their category focus. Euromonitor International predicts that the most popular choices for new category entry will be skin care and men’s grooming.”
Resource: wwd.com
Thursday, April 30, 2009
Private Label News from around Europe
Private label has helped Delhaize profits grow by more than 30%. CEO Pierre Oliver-Beckers said: “Due to measures such as the increased offering of private brand products, improved price competitiveness and store remodelling, consumers have stayed loyal to our stores.”
Albert Heijn in the Netherlands is planning to extend its nonfood ranges by the end of this year.
Auchan plans to launch two new retail formats in the next few years. The first will be Auchan Maison, a large store offering household goods and furnishings. The other format, Auchan Gourmand, will be smaller and emphasise food products.
Two German retailers, Bünting and Kaiser, will start a procurement partnership this month. The programme will involved both A-brands and private label.
UK supermarket retailer Morrisons will revamp 500 of its nonfood lines, including items such as cookware and dinner party goods.
Rewe is testing a new fascia for its hypermarket format in three stores.
Makro and Auchan have created InterCompra in Portugal, a company to negotiate buying contracts for them.
Aldi will offer a range of Marine Stewardship Council (MSC) certified sustainable seafood in all its Australia stores. The MSC certification process follows third-party evaluations of a fishery’s sustainability.
Co-op in the UK is introducing the Simply Value range in all its stores. Simply Value was created by Somerfield, the supermarket retailer which was acquired by Co-op. The line will now have the cooperative’s logo on its package.
Pharmacy Chain 36.6 in Russia plans to expand its Natura and Naturage cosmetics brands. The Express Care line of new face masks has been introduced and marketed under the tag line “5 minutes for myself”.
UK retailer John Lewis has launched a collection of kitchen furniture and accessories called Leckford, allowing shoppers to customise purchases by mixing and matching colours.
Zabka Polska, a convenience store retailer in Poland, will launch a network of stores under the FreshMarket name. The retailer plans 15 stores this year and as many as 1,000 in the future.
Metcash in Australia is introducing the Signature range through its 1,300 IGA supermarkets. The range will include biscuits, cereals and coffee. More than 40 retailer brands will be consolidated into the Signature brand.
Albert Heijn in the Netherlands is planning to extend its nonfood ranges by the end of this year.
Auchan plans to launch two new retail formats in the next few years. The first will be Auchan Maison, a large store offering household goods and furnishings. The other format, Auchan Gourmand, will be smaller and emphasise food products.
Two German retailers, Bünting and Kaiser, will start a procurement partnership this month. The programme will involved both A-brands and private label.
UK supermarket retailer Morrisons will revamp 500 of its nonfood lines, including items such as cookware and dinner party goods.
Rewe is testing a new fascia for its hypermarket format in three stores.
Makro and Auchan have created InterCompra in Portugal, a company to negotiate buying contracts for them.
Aldi will offer a range of Marine Stewardship Council (MSC) certified sustainable seafood in all its Australia stores. The MSC certification process follows third-party evaluations of a fishery’s sustainability.
Co-op in the UK is introducing the Simply Value range in all its stores. Simply Value was created by Somerfield, the supermarket retailer which was acquired by Co-op. The line will now have the cooperative’s logo on its package.
Pharmacy Chain 36.6 in Russia plans to expand its Natura and Naturage cosmetics brands. The Express Care line of new face masks has been introduced and marketed under the tag line “5 minutes for myself”.
UK retailer John Lewis has launched a collection of kitchen furniture and accessories called Leckford, allowing shoppers to customise purchases by mixing and matching colours.
Zabka Polska, a convenience store retailer in Poland, will launch a network of stores under the FreshMarket name. The retailer plans 15 stores this year and as many as 1,000 in the future.
Metcash in Australia is introducing the Signature range through its 1,300 IGA supermarkets. The range will include biscuits, cereals and coffee. More than 40 retailer brands will be consolidated into the Signature brand.
Wednesday, April 29, 2009
Tesco challenges discounters in Poland
Tesco is taking steps to meet the competitive challenge by discounters in Poland. Tesco Polska’s chief executive Ryszard Tomaszewski, said: “According to market research, the highest share of turnover from supermarkets and hypermarkets is taken by discount stores. As a result, we have decided to put on sale 700 ‘first need’ products at discount prices under 40 newly created brands by Tesco”. The UK-based retailer also will look to increase its premium business by changing the product offer in some of its Savia supermarkets.
Tuesday, April 28, 2009
UK discounters expand as supermarkets lower prices
The food retailing battle in the UK is heating up as discounters make aggressive expansion plans while supermarkets focus on private label and promotions to win back lost market share.
Aldi’s UK managing director foresees that the discounters may eventually capture 20% of retail sales, up from the current 6%. Aldi now has 460 stores across Britain and Ireland and plans to continue opening around 40-50 stores a year, with an ultimate goal of about 1,500.
Aldi sales in Britain climbed 25% in 2008. Aldi said its success was not just a result of the economic downturn, but stemmed from an emphasis on more fresh foods, larger stores, and the introduction of a premium Specially Selected range.
The other big UK discounter, Lidl, plans to add 50 stores this year, one more than last year. Part of that expansion will come through the purchase of stores from other retailers. The discounter will be using a smaller store format to enter more urban areas. It has opened 10 stores of 200 to 500 sqm and another 10 stores are planned for this year.
Meanwhile supermarkets are hoping that their new value ranges will grow popular as shoppers looking to save money. Tesco says 25% of its customers have tried its new discount ranges. Sainsbury reports big increases in its value line, while Spar plans to revamp its entire 900 SKU range with an emphasis on offering “value”.
Aldi’s UK managing director foresees that the discounters may eventually capture 20% of retail sales, up from the current 6%. Aldi now has 460 stores across Britain and Ireland and plans to continue opening around 40-50 stores a year, with an ultimate goal of about 1,500.
Aldi sales in Britain climbed 25% in 2008. Aldi said its success was not just a result of the economic downturn, but stemmed from an emphasis on more fresh foods, larger stores, and the introduction of a premium Specially Selected range.
The other big UK discounter, Lidl, plans to add 50 stores this year, one more than last year. Part of that expansion will come through the purchase of stores from other retailers. The discounter will be using a smaller store format to enter more urban areas. It has opened 10 stores of 200 to 500 sqm and another 10 stores are planned for this year.
Meanwhile supermarkets are hoping that their new value ranges will grow popular as shoppers looking to save money. Tesco says 25% of its customers have tried its new discount ranges. Sainsbury reports big increases in its value line, while Spar plans to revamp its entire 900 SKU range with an emphasis on offering “value”.
Carrefour has big plans for a turnaround
Carrefour’s new CEO is looking to turnaround the retailer’s lagging performance with the introduction of a major private label range, a management reorganization and new retail branding. CEO Lars Olofsson said the retailer plans to spend €600 million on price cutting, promotions and the new Carrefour Discount line.
The range of 1,000 low-priced products will focus on everyday products. The line has simple white packaging and will not be discounted. The first 180 SKUs are expected to be launched next month. This is the second time Carrefour launched a budget line to battle the discounters. In 2003 it introduced an extensive range under the Premiere Prix brand.
Carrefour also plans on restructuring its buying departments. The private label food management group in France will be coordinated more closely with the international buying department. For nonfood, the European buying divisions will be tied more closely with the Spanish division.
The retailer’s discounter division, Dia, has new senior management, changed its logo and launched a corporate website to communicate with consumers.
In Belgium, Carrefour is switching to a multi-format, single brand strategy. The GB name will gradually disappear and be replaced by Carrefour for hypermarkets, Carrefour Market for some supermarkets and Carrefour Express for neighbourhood stores.
The range of 1,000 low-priced products will focus on everyday products. The line has simple white packaging and will not be discounted. The first 180 SKUs are expected to be launched next month. This is the second time Carrefour launched a budget line to battle the discounters. In 2003 it introduced an extensive range under the Premiere Prix brand.
Carrefour also plans on restructuring its buying departments. The private label food management group in France will be coordinated more closely with the international buying department. For nonfood, the European buying divisions will be tied more closely with the Spanish division.
The retailer’s discounter division, Dia, has new senior management, changed its logo and launched a corporate website to communicate with consumers.
In Belgium, Carrefour is switching to a multi-format, single brand strategy. The GB name will gradually disappear and be replaced by Carrefour for hypermarkets, Carrefour Market for some supermarkets and Carrefour Express for neighbourhood stores.
Friday, March 27, 2009
Retailers expand value Private Label ranges in UK
Value ranges are growing more popular in the UK as shoppers look to save money and traditional retailers compete against the fast-growing discounters.
Tesco has added 100 products to its discount range. The new products will include a kids range, under the name Molly and Jack, and skincare lines. These products complement the 350 SKUs initially launched last year. Tesco says 25% of its customers had tried the discount products. “If you take Tesco Value and the discount range together, we have an Aldi within Tesco,” the retailer said.
Sainsbury reports big increases in its value line. “We are seeing a significant switch among consumers to own brand products—sales of Sainsbury’s Basics range are up 40% year-on-year,” an executive said. “Our research also shows 30% of shoppers claim once they’ve switched from branded to own-label products they won’t switch back.”
Spar plans to revamp its entire 900 SKU private label range early this year with an emphasis on offering “value” during the recession. Products will be rebranded as Spar Extra Value, using new red and white packaging designs and price marking.
In addition, Somerfield is ramping up its Simply Value economy line in response to the recession, while Musgrave, which own Londis and Budgens stores, has launched 50 products under its Good Value label.
Tesco has added 100 products to its discount range. The new products will include a kids range, under the name Molly and Jack, and skincare lines. These products complement the 350 SKUs initially launched last year. Tesco says 25% of its customers had tried the discount products. “If you take Tesco Value and the discount range together, we have an Aldi within Tesco,” the retailer said.
Sainsbury reports big increases in its value line. “We are seeing a significant switch among consumers to own brand products—sales of Sainsbury’s Basics range are up 40% year-on-year,” an executive said. “Our research also shows 30% of shoppers claim once they’ve switched from branded to own-label products they won’t switch back.”
Spar plans to revamp its entire 900 SKU private label range early this year with an emphasis on offering “value” during the recession. Products will be rebranded as Spar Extra Value, using new red and white packaging designs and price marking.
In addition, Somerfield is ramping up its Simply Value economy line in response to the recession, while Musgrave, which own Londis and Budgens stores, has launched 50 products under its Good Value label.
Thursday, March 26, 2009
Private label gains in Spain
Private label is attracting more shoppers in Spain. TNS Worldpanel consulting firm reports that retailer brands have increased their share by nearly 3 percentage points compared to 2007, reaching 32.5% of total expenditure on packaged food & beverages & drug store products (in 2007 it had a share of 29.9%). The food sector ended the year with a positive balance, while others, such as drug store products, perfumes and textiles suffered slight losses in the volume purchased.
This study, based on weekly purchases of 8,000 households living in Spain, shows that they spent 4,470 euros per year on “mass consumer products” (which include fresh food, packaged food, beverages, laundry and home cleaning products, and hygiene products and cosmetics). Almost half of this expenditure was for fresh produce (48%), while 4 out of 10 euros went to packaged food and beverages, 8% to perfume products and 4% drug store products.
This study, based on weekly purchases of 8,000 households living in Spain, shows that they spent 4,470 euros per year on “mass consumer products” (which include fresh food, packaged food, beverages, laundry and home cleaning products, and hygiene products and cosmetics). Almost half of this expenditure was for fresh produce (48%), while 4 out of 10 euros went to packaged food and beverages, 8% to perfume products and 4% drug store products.
Monday, March 23, 2009
EU study: nutrition Private labels confuse shoppers
A European Food Information Council study found that only about one in five of European consumers check processed food labels for nutrition information. The study reports that that colour-coded “traffic light” schemes provide a high level of awareness but are open to misinterpretation. For example, a majority of consumers believe that the red light signal on a label means that they should avoid eating the product.
The study, which questioned some 17,300 people in France, Germany, Hungary, Poland, Sweden and the UK, both in supermarkets and at home, found that people spend an average of 30 seconds selecting a product. This is substantially more time than in previous studies. UK shoppers spent the least time, 25 seconds per product, while shoppers in Hungary spent the most time, 47 seconds.
The study, which questioned some 17,300 people in France, Germany, Hungary, Poland, Sweden and the UK, both in supermarkets and at home, found that people spend an average of 30 seconds selecting a product. This is substantially more time than in previous studies. UK shoppers spent the least time, 25 seconds per product, while shoppers in Hungary spent the most time, 47 seconds.
Friday, March 20, 2009
Private Label in the Stores
Leclerc is reformulating about 4,000 Marque Repère products to reduce salt, sugar and fat levels. The retailer plans to cut sugar levels in cereal by 10%, reduce salt in ready meals by 20% and cut the fat content in potato snacks by 15%.
Asda will soon launch a healthy eating range for children, based on the TV show LazyTown. The range builds on existing initiatives, with the retailer already listing LazyTown clothing within its George children’s clothing offer.
Lidl is opening its first 13 stores in Switzerland this month and plans call for 70 stores in the country. The German discounter expects to offer around 1,800 SKUs in Switzerland, including a significant number of its private label ranges and a dedicated Swiss organic food private label named BioTrend.
Aldi’s Moser Roth chocolate truffles were chosen as “Product of the Year” in Britain by a panel of 12,000 consumers.
Auchan plans to remodel all of its supermarkets to the Simply Market discount brand by the end of this year. Under the move, Atac in France, Sma in Italy, Elea in Poland and Sabeco in Spain will convert to the banner.
German drugstore Schlecker announced that is adding more stores in Spain but is withdrawing from Denmark.
Carrefour is creating a special edition of orange juice and milk containers to promote recycling and energy saving.
UK retailer Morrisons has launched a range of meals called Fresh Ideas that gives shoppers all the ingredients they need to cook the meal, accompanied by simple cooking instructions.
ITM in France has launched a “discount utile” TV advertising spot. The ad focuses on fruit and vegetables under the Top Budget economy line.
Dansk Supermarked plans to open a new format named Føtex Food. It will be smaller in size compared to traditional Føtex supermarket and focus on premium goods.
Casino has opened the first Iceko store, a frozen food discount store, in Paris. The 200 sq. m. stores offer 600 SKUs including branded and private label.
Asda will soon launch a healthy eating range for children, based on the TV show LazyTown. The range builds on existing initiatives, with the retailer already listing LazyTown clothing within its George children’s clothing offer.
Lidl is opening its first 13 stores in Switzerland this month and plans call for 70 stores in the country. The German discounter expects to offer around 1,800 SKUs in Switzerland, including a significant number of its private label ranges and a dedicated Swiss organic food private label named BioTrend.
Aldi’s Moser Roth chocolate truffles were chosen as “Product of the Year” in Britain by a panel of 12,000 consumers.
Auchan plans to remodel all of its supermarkets to the Simply Market discount brand by the end of this year. Under the move, Atac in France, Sma in Italy, Elea in Poland and Sabeco in Spain will convert to the banner.
German drugstore Schlecker announced that is adding more stores in Spain but is withdrawing from Denmark.
Carrefour is creating a special edition of orange juice and milk containers to promote recycling and energy saving.
UK retailer Morrisons has launched a range of meals called Fresh Ideas that gives shoppers all the ingredients they need to cook the meal, accompanied by simple cooking instructions.
ITM in France has launched a “discount utile” TV advertising spot. The ad focuses on fruit and vegetables under the Top Budget economy line.
Dansk Supermarked plans to open a new format named Føtex Food. It will be smaller in size compared to traditional Føtex supermarket and focus on premium goods.
Casino has opened the first Iceko store, a frozen food discount store, in Paris. The 200 sq. m. stores offer 600 SKUs including branded and private label.
Metro expands its private label in Eastern Europe
Metro Cash & Carry plans to expand its private label in Eastern Europe. Metro’s brands account for around 7% of the its product portfolio, but the share will grow to around 10% in the next year and a half as more products are added, the company said. Metro has 24 brands that comprise about 800 products.
Jerónimo Martins has big private label gains
Jerónimo Martins in Portugal reports big private label gains last year at its supermarkets and discounters. The retailer said sales of private label at its Pingo Doce’s supermarkets grew 44%, reaching 39% of the total sales. At Biedronka, its discounter in Poland, sales of private label products grew 33%, reaching a total of 57% of its total sales in Poland.
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