Standard own label lines under pressure as Value ranges continue to grow
As the Value own label lines continue to improve and austerity bites it has put pressure on the Standard ranges, which is leading to some new own label initiatives as retailers seek out new avenues of growth. By Glynn Davis
Collaborations are one way of boosting sales and such initiatives are being undertaken by a growing number of retailers. These include Target linking-up with Neiman Marcus in the US for non-food lines, and in the UK, Boots is undertaking a trial with food retailer Musgrave.
Speaking at the recent World Retail Congress 2012 Ken Murphy, chief operating officer of Boots UK, told delegates that the company had done collaborations with other retail brands such as Ted Baker in non-food and that in food it had run a pilot with Waitrose. Latterly it had linked up with Musgrave.
“We’ve found Musgrave a viable alternative [to Waitrose]. They’ve a great can-do mentality and are able to provide, and brand, food products for us. We’ve also just announced collaboration with Jamie Oliver for a lunchtime offer. This is the way to go in the future,” he says.
Never Miss a Retail Update!This is not the only area that is lively in own label – the Value end of the market continues to grow as such products become more mainstream.
Natalie Berg, global research director at Planet Retail, says: “The old Value lines served a purpose of competing with the discounters and only poorer people bought them. But they’ve now gone from cheap and nasty to cheap and cheerful in attractive packaging. Frugality is good today and 50% of Sainsbury’s shoppers buy both its Premium and Value ranges.”
This move to frugality has driven great business at the discounters, according to Murphy, but on branded goods there has been a trend for them to offer smaller pack sizes in order to compete with the own label alternatives at the supermarkets.
The flight to value is putting some pressure on the Standard own label lines, according to Berg, who says one answer could be to capitalise on customer empowerment. “Get customers involved in the decision making process [of making products]. Get them to try it, to endorse it, and then get shoppers involved online and in social media.”
Carrefour in France has a blue mark of approval for goods that have had customer input, and Asda has a ‘Chosen by You’ range. “The retailers can then say, ‘it’s such good quality because you chose it’,” explains Berg.
Such own label initiatives are being undertaken at a cracking pace by the supermarkets who Murphy says are “agile to respond to their customers.”
In contrast, he believes the large global brand manufacturers have sought to globalise their categories, which has resulted in their speed to market with new products being slower.
“We pride ourselves on being two to three times faster to market [with new products]. We can exploit a trend and can drive it hard,” suggests Murphy.
