today-is-a-good-day
Tuesday, March 19, 2024

Private label leads the charge

Private label accounted for 18.1 per cent of all Australian FMCG dollar sales in the 52 weeks to May 21 this year, outpacing national brands, according to a report from market researcher IRI.

“Private label has reached an important pivot point in Australia as supermarkets refine their strategies to respond to elevated consumer expectations and shifting market dynamics,” IRI Channel Insights Manager Daniel Bone said.

“Retailers are making changes in their private-label ranging strategies, which is driven by a need to counter ALDI’s private-label share gains. But there’s also the prospect of intensifying private-label competition from international retailers and those operating in adjacent channels.”

The IRI report says ALDI’s current double-digit dollar growth in Australia and the share gains of discounters worldwide prove that private label is critical to a retailer’s value image and, by implication, overall performance. More than three-quarters of ALDI sales currently derive from private-label products, compared with less than a quarter in the supermarket majors. The affinity ALDI shoppers have for the retailer’s private-label range underpins why two-thirds of Australian households now shop with the discounter, according to IRI’s research.

The report also showed that the private-label price advantage is still strong.

The price gap between private label and national brands remains significant across packaged grocery, petrol and convenience (P&C), liquor and OTC-healthcare channels.

Private label products are, on average:

  • 44% cheaper in packaged grocery.
  • 28% cheaper in P&C.
  • 54% cheaper in liquor.
  • 16% cheaper in OTC healthcare.

According to the report, IRI’s research indicated that almost three-quarters of Australian shoppers always compare price before choosing brands. With wage growth at a record low and household debt surging to record highs, IRI says it expects the private-label price advantage will place further downward pressure on ranging and margins for national brands for the foreseeable future.

IRI predicts the next wave of private-label growth will be from range diversification and premiumisation. In identifying high-performing private-label products in Australia and overseas, IRI foresees four key themes that will accelerate private label gains:

  • Natural and organic: a focus on natural, organic and fresh.
  • Free-from: catering to more specific dietary requirements.
  • Ethics and purpose: aligning with consumers’ values and passions.
  • Upscale and celebrity: a higher level of quality and creativity.

“We expect more specialised and sophisticated private-label innovation to emerge as a source of inspiration for Australian shoppers and to show that ranged products are truly unique,” Mr Bone said. “It will be especially important in the grocery channel where retailers will need to inspire more food-curious and healthy-minded Australian shoppers.”

Related Articles

Stay Connected

533FansLike
944FollowersFollow
699FollowersFollow

Subscribe to our newsletter

To be updated with all the latest news, offers and special announcements.