Private label has become big business for supermarkets in recent years, in contrast to the generic offerings of the past. Retailers are increasingly managing and marketing own-brand food and beverage in order to improve their competitive edge, market research has found.
According to Euromonitor, private labels are now being seen as brands in their own right, with manufacturers having shifted their emphasis over the last decade from aggressive own-brand promotion and discounting to providing better quality and a unique position.
“Private label growth has been driven both by the expansion of large grocery retailers and the trend towards more sophisticated lines that command higher prices and margins,” it found.
In an analysis of the Asia-Pacific retail market from 2017-21, fellow market researcher Technavio identified the increasing use of technology and digitisation by grocery chains to promote their own products amid mounting competition between stores and growing online sales.
With Amazon’s presence extending into the region to bring its grocery channels to Singapore and Australia, traditional retailers will redouble their focus on competing online by focusing on private-label goods sales.
In addition, according to Manjunath Reddy, Technavio’s lead food analyst, retailers will increase their use social media to “search and communicate with potential business partners and clients”.
Meanwhile, sustainability is quickly becoming central to the strategies employed by private label brands, including the use of more eco-friendly packaging materials, to cater for more environmentally conscious consumers.
Packaging is now becoming a crucial factor to differentiate private label products, and as a means to improve the image of their goods retailers are increasingly designing unique and different packaging designs.
As a result, they will invest more in research and development to devise eco-friendly, temperature-resistant and insulated packaging that can keep the packaged goods fresh for longer periods, Technavio predicts.
According to a Nielsen report: “Long gone are the days of no-frills packaging intended only for those on a tight budget.”
It went on to say: “Innovation is a differentiator for both private label and name brands. This has typically been a core strength for name brands, but retailers are increasingly stepping up their game [by] developing award-winning packaging, taking products up-market and appealing to consumers’ [sustainable] values.”
At the same time, consumers are becoming increasingly particular about their health. Alongside cost, purchasing decisions are now more often being formed by the ingredients used in a product, with health-conscious consumers looking for simplicity and clean labels.
A retailer’s private label portfolio must contain healthy foods, such as gluten-free and organic ingredients, which are growing in popularity among consumers, said Technavio’s Reddy.
“Consumers prefer such products because they are certified to be safe. With the growing demand for healthy foods, products made with natural ingredients and organic colours are gaining more shelf space.
“This has led private label brands to associate their products to health and wellness, environmental stewardship, and sustainability. This trend is expected to help in the growth of the market during the forecast period,” he added.