Ed Garner: value own label is rocketing
Sales of value own labels at UK supermarkets have risen sharply, according to the latest data from TNS Worldpanel.
It reports value own labels rose by 41.6% in the 12 weeks ending 2 November 2008 compared with the same period last year and now command a 3.8% share of total grocery spend.
In contrast, premium own label sales fell by 4.6% in the 12-week period compared with 2007. Healthy and organic own labels have also been hit with sales down by 7% and 10.2% respectively.
Ed Garner, communications director, TNS Worldpanel, told Global Convenience Store Focus: “The trends are clear. Premium, healthy and organic are all suffering with year-on-year declines. However, value own label is rocketing upwards.”
UK own label trends. Source: TNS Worldpanel
Kids’ own label is also enjoying strong growth with sales up by 8% in the 12-week period. However, it still only commands a 0.3% share of total spend.
Unlike organic, Fairtrade continues to expand with sales up by 12.5%.
Garner credited this sector’s gain to the wider availability of Fairtrade bananas.
Sales of standard own label, which has the lion’s share of own label sales and 37.1% of total grocery spend, and branded products are broadly in line with the total market growth of 6.1%.
The recent upturn in total branded sales, shown in the chart below, reflects a seasonal trend, said Garner, and is in line with last year.
The growth in value private labels has been boosted by activity at the major multiples including Tesco and Sainsbury’s.
Tesco launched a range of 350 discount brands in September to rival the hard discounters Aldi and Lidl. The discounter range spans 10 categories including meat, dairy, bakery, beer, household and beauty and features sub-brands such as Market Value, Oatland Oaties, All About Shine, Trattoria and Country Barn. It is designed to offer better quality than Tesco’s Value range at prices cheaper than the leading brands.
Tesco has subsequently extended the range last month (November) with a further 40 new lines. The supermarket reports sales have been “very strong” with one in three customers adding at least one product to their usual shop.
Sainsbury’s, meanwhile, has reported sales of its Basics value own label are up by 40% year-on year with sales lifted by a ‘Switch and Save’ campaign that encourages shoppers to switch to its own brands.
The surge in value own label is not peculiar to the UK market, however.
In Spain, the upmarket retailer, El Cortes Ingles, has launched a new economy grocery brand called aliada (allied). The initial range comprises 200 products and will increase to 400 before the end of the year. It boasts prices up to 25% cheaper than the current private label offer.
New economy range in El Cortes Ingles
Planet Retail, the global intelligence company, reports the value trend is a worldwide phenomenon.
Matthias Queck, senior discount retail analyst, said: “I think the significant growth in value lines can be seen in the UK and every other country.”
Queck said that while markets in continental Europe have lesser private label penetration than the UK, value will begin to take centre stage and at smaller stores too.
“Convenience stores can expect that value will be of increasing importance in future because the focus has shifted more on to price,” he said.
Queck said the balance of power was shifting in favour of retailers who can decide which products they put on shelf.
For convenience operators, with smaller store formats, that power is intensified, added Queck.
“Smaller stores have to decide what brands they have on shelf and if in doubt, they can put the brand manufacturer under pressure.”